SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Sectioin 240.14a-12
Equitex, Inc.
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(Name of Registrant as Specified in its Charter)
John W. Kellogg, Esq.
RaLea, Sluga, Esq.
Friedlob Sanderson Paulson & Tourtillott, LLC
1775 Sherman Street
21st Floor
Denver, Colorado 80203
(303) 571-1400
(303) 595-3970
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuat to Exchange Act Rule 0-11:____________________________
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(5) Total Fee Paid:_______________________________________________
[ ] Fee previously paid with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by regitration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:__________________________________
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Equitex, Inc.
7315 East Peakview Avenue
Englewood, Colorado 80111
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Notice of Annual Meeting of Stockholders
To Be Held on December 29, 2003
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November 25, 2003
To the Stockholders of Equitex, Inc.
An Annual Meeting of Stockholders of Equitex, Inc., a Delaware
corporation, will be held at the Palm Beach Gardens Marriott, 4000 RCA
Boulevard, Palm Beach Gardens, Florida 33410, on December 29, 2003 at 10:00 a.m.
Eastern Standard Time, to consider and take action on the following matters:
1. The election of three directors to serve until the next annual
meeting of stockholders and until their successors have been
elected and qualified.
2. A proposal to ratify the appointment of Gelfond Hochstadt
Pangburn, P.C. as the independent auditors of Equitex for the
year ending December 31, 2003.
3. Such other business as may properly come before the meeting,
or any adjournment or adjournments thereof.
Stockholders holding shares of common stock of record at the closing of
business on November 21, 2003, will be entitled to receive notice of and vote at
the meeting.
Stockholders, whether or not they expect to be present at the meeting,
are requested to sign and date the enclosed proxy and return it promptly in the
envelope enclosed for that purpose. Any person giving a proxy has the power to
revoke it at any time by following the instructions provided in this proxy
statement.
By Order of the Board of Directors:
Thomas B. Olson
Secretary
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVING OF SUCH PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
Your vote is important.
Equitex, Inc.
7315 East Peakview Avenue
Englewood, Colorado 80111
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Proxy Statement
Annual Meeting of Stockholders
December 29, 2003
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To our Stockholders:
This proxy statement is furnished to stockholders of Equitex, Inc.
("Equitex"), a Delaware corporation in connection with the solicitation of
proxies by and on behalf of Equitex's board of directors for use at the Annual
Meeting of Stockholders of Equitex to be held on December 29, 2003 at the Palm
Beach Gardens Marriott, 4000 RCA Boulevard, Palm Beach Gardens, Florida 33410,
at the time and for the purposes set forth in the accompanying notice of annual
meeting of stockholders. This proxy statement, the accompanying proxy card and
the notice of annual meeting, hereinafter referred to as the proxy materials,
will be first sent to stockholders on or about November 25, 2003.
AVAILABLE INFORMATION
Equitex is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission. Such reports, proxy statements and other information filed with the
Securities and Exchange Commission can be inspected and copied at the public
reference facilities maintained by the Securities and Exchange Commission at
Room 1024, 450 Fifth Street, NW, Washington, DC 20549 or at the Regional Offices
of the Securities and Exchange Commission which are located as follows:
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained from the Securities
and Exchange Commission at prescribed rates. Written requests for such material
should be addressed to the Public Reference Section, Securities and Exchange
Commission, 450 Fifth Street, NW, Washington, DC 20549. The Securities and
Exchange Commission maintains a Web site that contains reports, proxy statements
and other information filed electronically by Equitex with the Securities and
Exchange Commission which can be accessed over the Internet at
http://www.sec.gov.
GENERAL INFORMATION
As of the close of business on November 21, 2003, the record date for
entitlement to notice of a vote at the annual meeting, Equitex had outstanding
30,830,726 shares of common stock, $.02 par value per share. The presence, in
person or by proxy, of holders of one-third of the shares of common stock
entitled to vote at the annual meeting constitutes a quorum for the transaction
of business at the annual meeting.
Each share of common stock outstanding on the record date is entitled
to one vote on each matter presented at the annual meeting.
Abstentions will be treated as shares present or represented and
entitled to vote for purposes of determining the presence of a quorum, but will
not be considered as votes cast in determining whether a matter has been
approved by the stockholders. As to any shares a broker indicates on its proxy
that it does not have the authority to vote on any particular matter because it
has not received direction from the beneficial owner thereof, said shares will
not be counted as voting on a particular matter.
A stockholder who gives a proxy may revoke it at any time before it is
voted by giving notice of the revocation thereof to the secretary of Equitex, by
filing another proxy with the secretary or by attending the annual meeting and
voting in person. All properly executed and unrevoked proxies delivered pursuant
to this solicitation, if received in time, will be voted in accordance with the
instructions of the beneficial owners contained thereon.
Equitex will bear the cost of the solicitation. In addition to
solicitation by mail, Equitex will request banks, brokers and other custodian
nominees and fiduciaries to supply proxy materials to the beneficial owners of
Equitex's common stock for whom they hold shares and will reimburse them for
their reasonable expenses in so doing.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Set forth below is certain information as of October 31, 2003, with
respect to ownership of Equitex's common stock held of record or beneficially by
(i) Equitex's executive officers, (ii) each director of Equitex, (iii) each
person who owns beneficially more than five percent of Equitex's outstanding
common stock; and (iv) all directors and executive officers as a group:
Shares of Shares of
Shares of Common Common Percentage
Common Stock Stock of Common
Name and Address of Stock Owned Underlying Underlying Stock
Beneficial Owner (1) Options (1) Warrants (1) Total Owned (6)
- ------------------------------ ----------------- --------------- ---------------- -------------- -----------
Henry Fong 606,375 (3) 1,273,700 49,239 1,929,314 6.3%
President & Director (2)
7315 East Peakview Ave.
Englewood, CO 80111
Russell L. Casement 146,795 465,900 (4) 759 613,454 2.1%
Director
1355 S. Colorado Blvd.,
Suite 320
Denver, CO 80222
Aaron A. Grunfeld 32,700 479,500 (5) 0 512,200 1.7%
Director
10390 Santa Monica
Blvd., Fourth Floor
Los Angeles, CA 90025
Thomas Olson 0 166,300(6) 0 166,300 0.6%
Secretary
7315 East Peakview
Avenue
Englewood, CO 80111
Daniel L. Bishop (7) 4,185,554 0 280,000 4,465,554 15.1%
3811 21st Street
Racine, WI 53405
All officers and directors 785,870 2,385,400 49,998 3,221,260 10.2%
as a group (four persons)
1. The beneficial owners exercise sole voting and investment power.
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2. Includes 945,700 shares underlying options granted under the 1999 Stock
Option Plan and 328,000 shares underlying options granted under the 2003
Stock Option Plan. 3 . Includes shares owned by a corporation in which Mr.
Fong is an officer and director and a partnership in which Mr. Fong is
partner.
4. Includes 36,400 shares underlying options granted under our 1993 Stock
Option Plan for Non-Employee Directors, 329,500 shares underlying options
granted under the 1999 Stock Option Plan and 100,000 shares granted under
the 2003 Stock Option Plan.
5. Includes 50,000 shares underlying options granted under our 1993 Stock
Option Plan for Non-Employee Directors, 329,500 shares underlying options
granted under our 1999 Stock Option Plan and 100,000 shares granted under
the 2003 Stock Option Plan.
6. Includes 66,300 shares underlying options granted under our 1999 Stock
Option Plan and 100,000 shares granted under the 2003 Stock Option Plan.
7. Ownership information obtained from Form 13-D filing dated September 23,
2002.
PROPOSAL 1
ELECTION OF DIRECTORS
The following three persons are to be elected as directors of Equitex
for a term of one year and until the election and qualification of their
successors: Henry Fong, Russell L. Casement and Aaron A Grunfeld. These three
directors will constitute the entire board of directors of Equitex. The persons
named in the proxy intend to vote for Messrs. Fong, Casement and Grunfeld who
have been recommended for election by the board of directors unless a
stockholder withholds authority to vote for any or all of the nominees. If any
nominee is unable to serve or, for good cause, will not serve, the persons named
in the proxy reserve the right to substitute another person of their choice as
nominee in his place. Each of the nominees has agreed to serve, if elected.
VOTE REQUIRED
A majority of the votes cast at the meeting by stockholder entitled to
vote thereon will be required for election to the board of directors.
INFORMATION ABOUT DIRECTORS AND OFFICERS
HENRY FONG, Age 67
Mr. Fong has been the president, treasurer and a director of Equitex
since its inception. Mr. Fong has been president and a director of Equitex 2000,
Inc. since its inception in 2001. Mr. Fong has been President and a Director of
Torpedo Sports USA, Inc. since March 2002. Torpedo Sports USA, Inc. is a
publicly traded manufacturer and distributor of recreational equipment. From
December 2000 to January 2002, Mr. Fong was a director of Popmail.com, Inc., a
publicly traded Internet marketing company. From January 1993 to January 20,
1999, Mr. Fong was chairman of the board and chief executive officer of
California Pro Sports, Inc., a publicly traded manufacturer and distributor of
in-line skates, hockey equipment and related accessories. From 1959 to 1982 Mr.
Fong served in various accounting, finance and budgeting positions with the
Department of the Air Force. During the period from 1972 to 1981 he was assigned
to senior supervisory positions at the Department of the Air Force headquarters
in the Pentagon. In 1978, he was selected to participate in the Federal
Executive Development Program and in 1981, he was appointed to the Senior
Executive Service. In 1970 and 1971, he attended the Woodrow Wilson School,
Princeton University and was a Princeton Fellow in Public Affairs. Mr. Fong
received the Air Force Meritorious Civilian Service Award in 1982. Mr. Fong has
passed the uniform certified public accountant exam. In March 1994, Mr. Fong was
one of twelve CEOs selected as Silver Award winners in FINANCIAL WORLD
magazine's corporate American "Dream Team."
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THOMAS B. OLSON, Age 37
Mr. Olson has been secretary of Equitex since January 1988 and has been
a director of Chex Services since May 2002. Since March 2002, Mr. Olson has been
the secretary of Torpedo Sports USA, Inc., a publicly traded manufacturer and
distributor of recreational equipment. Mr. Olson has been Secretary of Equitex
2000, Inc. since its inception in 2001. Since August 2002, Mr. Olson has been
the secretary of El Capitan Precious Metals, Inc., a publicly traded company
with ownership interest in a mining property. From February 1990 to February
2000, Mr. Olson was a director, and from May 1994 to February 2000 secretary, of
Immune Response, Inc. a publicly held investee of Equitex which merged with
Opticon Medical, Inc., in February 2000. Mr. Olson has attended Arizona State
University and the University of Colorado at Denver.
AARON A. GRUNFELD, Age 56
Mr. Grunfeld has been a director of Equitex since November 1991. Mr.
Grunfeld had been a director of Equitex 2000, Inc. since its inception in 2001.
Mr. Grunfeld has been engaged in the practice of law since 1971 and has been of
counsel to the firm of Resch Polster Alpert & Berger, LLP, Los Angeles,
California since November 1995. From April 1990 to November 1995, Mr. Grunfeld
was a member of the firm of Spensley Horn Jubas & Lubitz, Los Angeles,
California. Mr. Grunfeld received an A.B. in Political Science from UCLA in 1968
and a J.D. from Columbia University in 1971. He is a member of the California
Bar Association.
RUSSELL L. CASEMENT, Age 59
Dr. Casement has been a director of Equitex since February 1989. Dr.
Casement has been a director of Equitex 2000, Inc. since its inception in 2001.
Since 1969, Dr. Casement has been the president of his own private dental
practice, Russell Casement, D.D.S., P.C., in Denver, Colorado. Dr. Casement
earned a Doctor of Dental Science degree from Northwestern University in 1967.
Dr. Casement is a member of the American Dental Association, the Colorado Dental
Association and the Metro Denver Dental Association.
MEETINGS OF THE BOARD OF DIRECTORS
During the last full fiscal year, Equitex held six meetings of the
board of directors and took action through unanimous consent on twenty separate
occasions.
AUDIT AND NOMINATING COMMITTEES
Equitex has appointed an audit committee currently consisting of Dr.
Casement as chairman and Mr. Grunfeld. All members of the audit committee are
independent, as that term is defined in Rule 4200(a)(14) of the National
Association of Securities Dealers' listing standards. Equitex does not have a
nominating committee of the board of directors, or any other committees
performing similar functions.
The audit committee has a written charter, which is filed as Exhibit A
to the this Proxy Statement. The audit committee reviews and approves the scope
of the annual audit undertaken by Equitex's independent public accountants and
meets with them as necessary to review the progress and results of their work as
well as any recommendations they may make. The audit committee also reviews the
fees of the independent public accountants and recommends to the board of
directors the appointment of independent public accountants. In connection with
the internal accounting controls of Equitex, the audit committee reviews
internal control and reporting systems in conjunction with management and the
accountants.
During the year ended December 31, 2002, the audit committee formally
met four times.
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REPORT OF AUDIT COMMITTEE
The audit committee has discussed with the independent auditors the
matters required to be discussed by SAS 61, as may be modified or supplemented.
The audit committee has received the written disclosures and the letter from the
independent accountants required by the Independence Standards Board Standard
No. 1, as may be modified or supplemented, and has discussed with the
independent accountant the independent accountants' independence. The audit
committee has reviewed and discussed the financial information for the quarters
ended March 31, 2002, June 30, 2002 and September 30, 2002, as well as the
quarters ended March 31, 2003, June 30, 2003 and September 30, 2003 with
management of Equitex. In accordance with its charter, the audit committee
reviewed and discussed the audited financial statements for the year ended
December 31, 2002 with management of Equitex. The audit committee recommended to
the board of directors that the audited financial statements be included in
Equitex's annual report on Form 10-K for the year ended December 31, 2002.
Russell L. Casement
Aaron A. Grunfeld
COMPENSATION COMMITTEE
Equitex has appointed a compensation committee currently consisting of
Mr. Grunfeld as chairman and Dr. Casement.
The compensation committee reviews Equitex's compensation arrangements
as necessary and makes recommendations to the board of directors.
During the year ended December 31, 2002, the compensation committee met
once and took action through unanimous written consent on one occasion.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In January 1998, the Compensation Committee of our Board of Directors
retained an independent consultant to review the President's compensation. The
compensation committee directed the consultant to review both the salary and
bonus structure. The independent consultant analyzed the compensation structure
and compared it to the compensation structures of companies similar to us. The
consultant recommended no change in the President's salary but did recommended
an annual bonus plan equaling 1% of our total assets combined with 5% of the
increase in the market value of our common stock not held by the President. The
bonus was calculated and paid quarterly from January 1 to December 31 of any
fiscal year based on a formula provided by the consultant. The Compensation
Committee felt this compensation arrangement, tied primarily to the market
performance of our common stock while including incentives for increases in
assets, was the most equitable method for compensating the President. This
provided a quantitative measure on which to reward the President's performance,
by directly emphasizing market performance, which correlates directly with the
expectations and goals of us and our stockholders.
This plan was in place until June 30, 2001. At that time, the President
approached the Compensation Committee and voluntarily proposed an end to the
bonus portion of his compensation in connection with the acquisition of Key
Financial Systems and Nova Financial Systems. The Compensation Committee agreed
and thereafter for the period frombeginning July 1, 2001 until the Compensation
Committee reviews the compensation arrangements for 2003, the President will
receive an annual salary of $183,013 and no bonus.
No changes were made by the Compensation Committee to the President's
compensation plan in 2002, however, the Compensation Committee reviewed
executive compensation for adjustment in 2003.
Aaron A. Grunfeld
Russell L. Casement
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Henry Fong, our President and the only officer of Equitex whose total
compensation exceeded $100,000 for the fiscal year ended December 31, 2002,
received an annual salary of $183,013. Beginning July 1, 2001, the only
compensation Mr. Fong receives from Equitex is his annual salary, which
presently remains $183,013 for the year ended December 31, 2002. Of the
compensation expense to Mr. Fong during 2001, $76,255 was expensed during the
period from August 6, 2001 to December 31, 2001 following our merger with Key
and Nova with the balance paid by Equitex 2000.
In January 1998, the Compensation Committee of our Board of Directors
retained an independent consultant to review the President's compensation. As a
result of that review, a new compensation arrangement was instituted based on
recommendations made by the independent consultant. In addition to Mr. Fong's
annual salary, beginning January 1, 1998 and ended June 30, 2001, Mr. Fong
received an annual bonus equaling 1% of our total assets combined with 5% of the
increase in the market value of our common stock, excluding shares owned by him,
calculated quarterly from January 1 to December 31 of any fiscal year. If there
was a negative computation in any given quarter, no bonus was accrued and that
negative amount was carried forward to offset the subsequent quarter's bonus
during the fiscal year. Negative amounts were not accumulated nor carried into
subsequent fiscal years. During the year ended December 31, 2001, this bonus
totaled $223,294. Following our acquisition of Nova and Key in August 2001, Mr.
Fong, in consultation with the Compensation Committee, agreed to end the bonus
plan beginning July 1, 2001 through December 31, 2002. In addition, all accrued
bonuses due under the plan became the responsibility of Equitex 2000 following
the spin-off in August 2001.
We have no retirement or pension plan for our President, Mr. Fong. In
April 1992, we obtained a life insurance policy with retirement benefits for Mr.
Fong, which pays his beneficiary $2,600,000 in the event of Mr. Fong's death or
provides for retirement benefits for Mr. Fong upon his retirement, provided he
is at least 65, utilizing the cash value of the policy at that time. This
benefit was provided to Mr. Fong in consideration of his nineteen years of
service to us and in anticipation of his serving until retirement. All
liabilities under this plan were transferred to Equitex 2000 in the spin-off
transaction that took place effective August 6, 2001. The annual premium on this
policy was $105,414 per year for such period as may be necessary to fully fund
the policy, and was considered other future compensation to Mr. Fong in previous
years.
Summary Compensation Table
The following table sets forth information regarding compensation paid
to the officers of Equitex during the years ended December 31, 2002, 2001 and
2000:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
-------------------------------- ---------
Name & Other Annual All Other
Principal Salary Bonus Compensation Options Compensation
Position Year ($) ($) ($) & SARs(#) ($)
- -------- ---- --- --- --- --------- ---
Henry Fong 2002 183,013 -0- -0- -0- -0-
President,
Treasurer 2001 76,255 -0- -0- -0- -0-
Principal (1)
Executive
Officer and 2000 183,013 161,668 -0- 476,000 165,000(2)
Accounting
Officer
(1) Includes salary paid and accrued during the period from August 6, 2001 to
December 31, 2001 following our merger with Key and Nova.
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(2) Includes payments and tax liability on the life insurance policy as
discussed above in "Compensation of Directors and Executive Officers."
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End (#) at FY-End (#)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- ---- ------------ ------------ ------------- -------------
Henry Fong -0- -0- 945,700/-0- $-0-/-0-
PERFORMANCE GRAPH
12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
NASDAQ US 100.00 140.99 261.48 157.77 125.16 86.53
NASDAQ FINANCIAL 100.00 97.15 96.50 104.23 114.52 117.85
EQUITEX 100.00 845.63 984.01 592.00 445.26 50.43
COMPENSATION OF DIRECTORS
Each independent member of our board of directors, Messrs. Russell L.
Casement, Aaron A. Grunfeld and Joseph W. Hovorka, who resigned in the first
quarter of 2003, receive $10,000 per year payable monthly and $500 for each
board of director's meeting attended either in person or by telephone. For the
year ended December 31, 2002, Mr. Grunfeld and Mr. Hovorka each received
$15,500, while Dr. Casement received $15,000. Members of our board of directors
also receive reimbursement for expenses incurred in attending board meetings.
On January 5, 1999, our Board of Directors adopted a new stock option
plan, the 1999 Stock Option Plan. On January 5, 1999, our two independent
directors each received options to purchase 158,700 shares of our common stock
at an exercise price of $6.75 per share expiring on January 5, 2004. These
options were granted in lieu of the 75,000 options at $3.19 per share authorized
on June 2, 1998 under a previous plan, which were canceled. In addition, each
director received 86,800 options to purchase 86,800 shares of our common stock
at an exercise price of $6.75 per share under the 1999 Plan.
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On April 17, 2000, our Board of Directors granted 84,000 options to
purchase our common stock to each of our two independent directors at that time.
These options, granted under the 1999 Stock Option Plan, are exercisable at
$5.50 per share and expire on April 17, 2005.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
There is no compensation plan or arrangement with respect to any
executive officer which plan or arrangement results or will result from the
resignation, retirement or any other termination of such individual's employment
with Equitex. There is no plan or arrangement with respect to any such persons,
which will result from a change in control of Equitex or a change in the
individual's responsibilities following a change in control.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our
officers, directors and persons who own more than ten percent of our voting
securities to file reports of their ownership and changes in such ownership with
the Securities and Exchange Commission. The Securities and Exchange Commission's
regulations also require that such persons provide Equitex with copies of all
Section 16 reports they file. Based solely upon our review of such reports
received by us, or written representations from certain persons that they were
not required to file any reports under Section 16, we believe that, during 2001,
our officers and directors have complied with all Section 16 filing
requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
We currently lease approximately 1,800 square feet of office space in
Greenwood Executive Park, 6400 South Quebec, Englewood, Colorado from a
partnership in which our President is the sole partner, on terms comparable to
the existing market for similar facilities.
During 2001, our President, and two companies in which he is the sole
officer and director, loaned us a total of $88,150 of which $26,525 was repaid
prior to year end. During 2002, Mr. Fong and these same companies loaned us an
additional $116,050 and in 2003 an additional $53,400 in varying amounts from
time-to-time. The remaining principal balance of $421 is due on demand and bears
interest at 10% per annum. These loans were due on demand and carried interest
rates of 8% and 10% depending on the loan.
In November 2001, Scott Lucas, a director of Equitex from December 2001
to December 2002 and formerly President of Key, loaned $100,000 to us. This note
is due in November 2003 and bears interest at 9% per annum. The total principal
and interest balance on this note remains outstanding. In connection with this
note, Mr. Lucas also received 10,000 warrants to purchase 10,000 shares of our
common stock at $4.00 per share and 10,000 warrants to purchase 10,000 shares of
our common stock at $5.00 per share both exercisable until November 2004.
PROPOSAL 2
APPOINTMENT OF INDEPENDENT AUDITORS
Our board of directors has appointed the firm of Gelfond Hochstadt
Pangburn, P.C. as independent auditor of Equitex for the year ending December
31, 2003. A representative of Gelfond Hochstadt Pangburn, P.C. is not expected
to be present at the meeting.
-8-
AUDIT FEES
Gelfond Hochstadt Pangburn, P.C. served as Equitex's auditors for the
year ended December 31, 2002. Fees billed by Gelfond Hochstadt Pangburn, P.C.
for audit and review services rendered with respect to the year ended December
31, 2002 were $183,000, which includes out-of-pocket costs incurred in
connection with these services.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
For the year ended December 31, 2002, we paid no fees to Gelfond
Hochstadt Pangburn, P.C. for financial information systems design and
implementation.
ALL OTHER FEES
All other fees billed by Gelfond Hochstadt Pangburn, P.C. with respect
to the year ended December 31, 2002 were $50,000. These fees were billed for tax
services, services related to mergers and acquisitions, services related to due
diligence, and services related to Equitex's filings with the Securities and
Exchange Commission other than those on Forms 10-K and 10-Q.
The audit committee of our board of directors has reviewed the fees
charged by Gelfond Hochstadt Pangburn, P.C. and determined they are compatible
with maintaining auditor independence.
VOTES REQUIRED
A majority of the votes cast at the meeting by stockholders entitled to
vote thereon will be required to ratify the appointment of the independent
auditors.
FINANCIAL INFORMATION
A copy of Equitex's annual report on Form 10-K for the year ended
December 31, 2002, is being sent to stockholders with this proxy statement.
OTHER MATTERS
Management of Equitex knows of no other matter which may come before
the annual meeting. However, if any additional matters are properly presented at
the annual meeting, it is intended that the person named in the enclosed proxy
statement, or his substitute, will vote such proxy in accordance with his
judgment on such matters.
STOCKHOLDER PROPOSALS
Any stockholder proposing to have any appropriate matter brought before
the 2003 Annual Meeting of Stockholders, tentatively scheduled for June 30,
2004, must submit such proposal in accordance with the proxy rules of the
Securities and Exchange Commission. Such proposals should be sent to Thomas B.
Olson, Secretary, Equitex, Inc., 7315 East Peakview Avenue, Englewood, Colorado
80111, for receipt no later than March 31, 2004.
EQUITEX, INC.
By Order of the Board of Directors:
Thomas B. Olson
Secretary
Date: November 25, 2003
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Exhibit A
EQUITEX, INC.
AUDIT COMMITTEE CHARTER
MAY 2000
The audit committee is a committee of the board of directors of the Company. Its
primary function is to assist the board in fulfilling its oversight
responsibilities by reviewing the financial information which will be provided
to the Company's stockholders and others, the systems of internal controls which
management and the board of directors have established, and the audit process.
In meeting its responsibilities, the audit committee is expected to:
1. Provide an open avenue of communication between the Company's management,
the independent accountant, and the board of directors.
2. Review and update the Audit Committee Charter annually.
3. Recommend to the board of directors the independent accountant to be
nominated, approve the compensation of the independent accountant, and
review and approve the discharge of the independent accountant.
4. Confirm and assure the independence of the independent accountant,
including a review of management consulting services provided by the
independent accountant and related fees.
5. Inquire of management and the independent accountant about significant
risks or exposures and assess the steps management has taken to minimize
such risk to the Company.
6. Consider with management and the independent accountant the audit scope
and plan of the independent accountant.
7. Consider and review with the independent accountant and management:
a. The adequacy of the Company's internal controls including
computerized information system controls and security.
b. Any related significant findings and recommendations of the
independent accountant together with management's responses thereto.
8. Review with management and the independent accountant at the completion
of the annual examination:
a. The Company's audited financial statements and related footnotes.
b. The independent accountant's audit of the financial statements and
their report thereon.
c. Any significant changes required in the independent accountant's
audit plan.
d. Any serious difficulties or disputes with management encountered
during the course of the audit, if any.
e. Other matters related to the conduct of the audit which are to be
communicated to the committee under generally accepted accounting
standards.
9. Consider and review with management:
a. Significant findings during the year and management's responses
thereto.
b. Any difficulties encountered in the course of the audits, including
any restrictions on the scope of the work or access to required
information.
c. Any changes required in the planned scope of th audit plan.
10. Review SEC filings and other public documents containing the Company's
financial statements and consider whether the information contained in
those documents is consistent with the information contained in the
financial statements.
11. Review with management and the independent accountant, if necessary, all
interim financial reports prior to filing with the SEC.
12. Review legal and regulatory matters that may have a material impact on
the financial statements, related company compliance policies and
programs, and any reports or correspondence received from regulators.
13. Meet with the independent accountant and management in separate executive
sessions to discuss any matters that the committee or these groups
believe should be discussed privately with the audit committee.
14. Report committee actions to the board of directors with such
recommendations as the committee may deem appropriate.
15. The audit committee shall have the power to conduct or authorize
investigations into any matters within the committee's scope of
responsibilities. The committee shall be empowered to retain independent
counsel, accountants, or others to assist it in the conduct of any
investigation.
16. The committee shall meet at least four times pe year or more frequently
as circumstances require. The committee may ask members of management or
others to attend the meeting and provide pertinent information as
necessary.
17. The committee will perform such other functions as assigned by law, the
Company's bylaws or the board of directors.
The membership of the audit committee shall consist of at least two independent
members of the board of directors who shall serve at the pleasure of the board
of directors. Audit committee members and the committee chairman shall be
designated by the full board of directors.
The duties and responsibilities of a member of the audit committee are in
addition to those duties set out for a member of the board of directors.
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PROXY
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EQUITEX, INC.
7315 East Peakview Avenue
Greenwood Executive Park, Building 8
Englewood, Colorado 80111
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 29, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stock-holder of Equitex, Inc. appoints Henry Fong or Thomas B.
Olson as attorneys and proxies to attend and vote all of the shares of the
common stock of Equitex standing in the name of the undersigned at the 2003
Annual Meeting of Stockholders on December 29, 2003, at 10:00 a.m. Eastern
Standard Time, and at any postponements or adjournments that may take place:
1. To elect the following three directors to serve until the next annual
meeting of stockholders and until their successors have been elected
and qualified: Henry Fong, Russell L. Casement and Aaron A. Grunfeld.
For all nominees: _____
Withhold authority to vote for all nominee(s): _____
Withhold authority to vote for the following nominee(s): ___________
2. To ratify the appointment of Gelfond Hochstadt Pangburn, P.C. as the
independent auditor of the Company for the year ending December 31,
2003.
For ______ Against ______ Abstain ______
3. To transact such other business as may properly come before the
meeting.
The shares represented by this proxy card will be voted as specified by
you. This proxy will be voted in accordance with the discretion of the proxies
on any other business.
Please mark, date and sign your name exactly as it appears on the
label, and return it in the enclosed envelope as promptly as possible. It is
important to return this proxy properly signed to exercise your right to vote if
you choose not do not attend the meeting and vote in person. When signing as
agent, partner, attorney, administrator, guardian, trustee or in any other
fiduciary or official capacity, please indicate your title. If stock is held
jointly, each joint owner must sign.
Date:___________________________ Signature(s):_________________
Address, if different from that on label: ______________________________
Street Address
______________________________
City, State and Zip Code
______________________________
Number of shares
Please check if you intend to be present at the meeting: ______