SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
o Preliminary Information Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14c-
5(d)(2))
x Definitive Information Statement
MANAGEMENT TECHNOLOGIES, INC.
-----------------------------
(Name of Registrant As Specified In
Charter)
Payment of Filing Fee (Check the appropriate box):
x No Fee required.
o Fee computed on table below per Exchange Act Rules 14c-5(g) 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 pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4)Proposed maximum aggregate value of transaction:
(068443.1)
5)Total fee paid:
o Fee paid previously with preliminary materials.
o 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 registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
October 22, 1997
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Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Management Technologies, Inc. (the "Company") on Friday, November 21, 1997, at
5:00 p.m. EST, at the offices of Management Technologies, Inc., 630 Third
Avenue, 15th Floor, New York, New York. Your Board of Directors and management
look forward to greeting those stockholders who are able to attend.
The Notice of Annual Meeting of Stockholders and Information Statement
containing information pertaining to the business to be transacted at the
meeting appear on the following pages.
On behalf of the Board of Directors and management, I would like to thank
you for your interest and participation in the affairs of the Company.
Sincerely,
/s/ Michael J. Edison
---------------------
Michael J. Edison
Chairman and CEO
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MANAGEMENT TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY, NOVEMBER 21, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders of
Management Technologies, Inc. (the "Meeting") will be held at 5:00 p.m. on
Friday, November 21, 1997 at the offices of Management Technologies, Inc. (the
"Company"), 630 Third Avenue, 15th Floor, New York, New York 10017, for the
following purposes:
1. To elect a board of five directors to serve until the next Meeting or
until their successors are duly elected and qualified;
2. To approve a proposal to amend the Company's Certificate of Incorporation
to authorize a reverse stock split of the outstanding shares of common
stock;
3. To approve a proposal to amend the Company's Certificate of Incorporation
to authorize 20,000,000 shares of Preferred Stock.
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(068443.1)
4. To ratify the selection, by the Board of Directors, of independent auditors
for the year ending April 30, 1998; and
5. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on October 8, 1997 as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the Meeting.
Stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors,
/s/ Patrick Huguenin
- --------------------
Patrick Huguenin
Chief Financial Officer
October 22, 1997
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
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MANAGEMENT TECHNOLOGIES, INC.
630 THIRD AVENUE
NEW YORK, NEW YORK, 10017
INFORMATION STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, NOVEMBER 21, 1997
INTRODUCTION
This Information Statement is furnished by the Board of Directors of
Management Technologies, Inc. (the "Company"), in connection with the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held on Friday,
November 21, 1997 at 5:00 p.m. at the Company's offices at 630 Third Avenue,
15th Floor ,New York, New York for the purposes set forth in the attached Notice
of Annual Meeting of Shareholders.
The holders of record of the Company's common stock, par value $.01 per
share, as of the close of business on October 8, 1997 (the "Record Date"), are
entitled to vote on all matters brought before the Meeting. As of July 31,
1997 there were 141,703,439 common shares outstanding.
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Each stockholder is entitled to one vote for each share of common stock held
by him or her at the close of business on the Record Date. All stockholders are
encouraged to attend the Meeting and vote his or her shares in person as the
Company is not providing proxies herewith or soliciting any proxies.
This Information Statement is first being mailed to stockholders on or about
October 28, 1997. A copy of the Company's Annual Report for the year ended
April 30, 1997 is being mailed to all stockholders with this Proxy Statement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of July 31, 1997, certain information
regarding beneficial ownership of Common Stock (i) by each person who is known
to the Company to be the beneficial owner of more than 5% of the Common Stock,
(ii) by each of the directors and executive officers of the Company and (iii) by
all directors and executive officers of the Company as a group. Ownership is
expressed in post May 15, 1995 split shares:
Name and Address of Amount and Nature Percent of
Beneficial Holder or of Class
Identity of Group Beneficial Common Stock(1)
Ownership
Common stock
Michael Awerbuch 0 0
216 Seventh Avenue,
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# 4A
New York, NY 10011
Anthony J. Cataldo 212,985 0.2%
63 North East
Village Rd
Concord, NH 03301
Paul Ekon 35,714 0.0%
22 Wellington Garden
Hampstead
London NW3
Michael J. Edison 10,000,000 (2) 7.2%
3540 W Sahara, Suite
469
Las Vegas, Nevada
89102
Patrick Huguenin 500,000 (3) 0.4%
319 East 78th
Street, Apt 2A
New York, NY 10021
Peter Morris 0(4) 0
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Shottley Hall
Church Walk
Shottley
United Kingdom
John Ridley 0 (5) 0
117 Highfield Way
Rickmansworth
Hertfordshire
WD3 2TL
England
Peter Svennilson 0 0
12 Old Bond Street
London, England
S. Keith Williams 0 0
18 Broomfield Road
Oxshott, Surrey
England
All Officers and 10,748,699 7.72%
Directors as a Group
(9 persons)
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(1) Based on an aggregate of post May 15, 1995 split shares of Common Stock
("Shares") outstanding as of August 8, 1997 of 139,203,435.
(2) Excluding options to purchase 15,000,000 common shares of the Company, not
vested as of April 30, 1997.
(3) Excluding options to purchase 750,000 common shares of the Company, not
vested as of April 30, 1997.
(4) Excluding shares issuable on conversion of $310,000 of Series SA
convertible debenture held by Mr. Morris. See Note 11 to the Financial
Statements for conversion terms.
(5) Excluding shares issuable on conversion of $7,750 of Series SA convertible
debenture subscribed by Mr. Ridley. See Note 11 to the Financial Statements for
conversion terms.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PETER J. MORRIS
Mr. Morris was appointed President and Chief Operating Officer of the Company in
November of 1995. On February 14, 1996, the Company issued Mr. Morris a Series
SA convertible debenture in the amount of $310,000 in settlement of all bonuses
due Mr. Morris at that date. The convertible debenture is convertible into
common shares of the Company at the lower of $0.48 or 62.5% of the average close
bid for the Company's common stock for the five days immediately preceding the
declaration of conversion. The Series SA convertible debenture yields 9%
interest and matures on December 31, 1997.
JOHN RIDLEY
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On February 13, 1996, Mr. Ridley subscribed to a Series SA convertible debenture
in the amount of $7,750. The convertible debenture is convertible into common
shares of the Company at the lower of $0.48 or 62.5% of the average close bid
for the Company's common stock for the five days immediately preceding the
declaration of conversion. The Series SA convertible debenture yields 9%
interest and matures on December 31, 1997.
ITEM 1 - ELECTION OF DIRECTORS
Five directors are to be elected at the Meeting to hold office until the
next Meeting or until their successors have been duly elected and qualified.
The election of directors requires the affirmative vote of at least the majority
of shares of common stock present or represented at a meeting at which a quorum
(one-third of the outstanding shares of common stock) is present or represented.
The following table sets forth the name and age of each nominee for director
and each executive officer other than such nominees, the year first elected a
director or, in the case of the other executive officers, the year first
appointed an executive officer, and the positions held by them with the Company.
YEAR
NAME FIRST
AG ELECTED POSITION(S) HELD
E
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NOMINEES:
- ---------
Michael J. Edison 52 1997 Chairman of the Board,
President, Chief Executive
Officer and Director
Patrick Huguenin 50 1997 Vice President - Finance &
Administration, Chief
Financial Officer,
Secretary, Treasurer and
Director
Paul Ekon 38 1995 Director
Joe Mermis 54 n/a Director
William Gustafson 42 n/a Director
MICHAEL J. EDISON has served as a Director, Chief Executive Officer and
President of the Company from February of 1997. Mr. Edison served as Chairman
and Chief Executive Officer of the Edison Companies Inc. since 1991. Mr.
Edison founded Insur USA in 1984 and served as its Chairman from 1984 to 1991.
PAUL EKON was appointed a Director and Chief Executive of the Company in
October of 1995. Mr. Ekon was engaged in various manufacturing and marketing
businesses in South Africa since 1990.
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PATRICK HUGUENIN has served as Chief Financial Officer and as Director from
April of 1997. Mr. Huguenin served as Vice President for Finance and
Administration and in various management positions with the Company since 1985.
He holds a law degree and an Master of Business Administration.
WILLIAM GUSTAFSON served as a Director of Big Top Productions Corp, a California
based CD ROM & Internet software development company from 1993 to 1996 and as a
Director of Darwin Mineral Ventures, Inc., a Nevada company engaged in mineral
processing patent development and production from 1993 to 1997. Mr. Gustafson
is private real estate developer in the United States.
JOE MERMIS has served as Chief Executive Officer of Mermis Investment Co., a
California based venture capital company from 1994 to present. He also served
as Director of VTX Corporation, a California based venture capital company
focusing on the television cable business, between 1992 and 1993 and as
Chairman and Director of Pinnacle Entertainment Group Corp., a California based
real estate investment company from 1992 to 1995.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
In the fiscal year ending April 30, 1997 the Board of Directors held 24
meetings and all Directors attended at least 75% of the meetings held. In
addition, a number of actions were approved by unanimous written consent
resolutions of the directors. There were no committees of the Board of
Directors. All decisions pertaining to audit, compensation and option grants
were under the direct jurisdiction of the Board of Directors.
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(068443.1)
ITEM 2 - PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO
AUTHORIZE A REVERSE STOCK SPLIT OF THE OUTSTANDING SHARES OF COMMON STOCK
Approval of this proposal would permit the Board of Directors, in its
discretion, to implement a reverse stock split (the "Reverse Stock Split") of
the Company's outstanding shares of common stock in any ratio between 1:10 and
1:30, which would reduce the number of outstanding shares of common stock (as
well as affecting the amount and exercise price of shares underlying warrants
and certain options) on a pro-rata basis, would affect all stockholders
proportionately and would, therefore, increase the amount of common stock
available for future issuance. The shares of common stock outstanding after the
proposed reverse stock split would have the same rights and privileges as the
shares of common stock currently held.
Adoption of the Reverse Stock Split will reduce the presently issued and
outstanding shares of Common Stock from 163,036,772 to approximately 16,303,677
if in the ratio 1:10 and approximately 5,434,559 if in the ratio of 1:30 (as a
result of rounding, the actual number may be slightly higher). The number of
authorized shares of Common Stock shall remain at 200,000,000. The Company
believes that the decrease in the number of shares of Common Stock outstanding
as a consequence of the proposed Reverse Stock Split should increase the per
share price of the Common Stock, which may encourage greater interest in the
Common Stock and possibly promote greater liquidity for the Company's
stockholders. However, the increase in the per share price of the Common Stock
as a consequence of the proposed Reverse Stock Split may be proportionately less
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than the decrease in the number of shares outstanding. In addition, any
increased liquidity due to any increased per share price could be partially or
entirely off-set by the reduced number of shares outstanding after the proposed
Reverse Stock Split. Nevertheless, the proposed Reverse Stock Split could
result in a per share price that adequately compensates for the adverse impact
of the market factors noted above. There can, however, be no assurance that the
favorable effects described above will occur, or that any increase in per share
price of the Common Stock resulting from the proposed Reverse Stock Split will
be maintained for any period of time. In addition, there can be no assurance
that a public market for the Company's securities will continue.
No fractional shares will be issued. All fractional interests resulting
from the Reverse Stock Split will be increased to the next higher whole number
of shares. The Company believes that the approximate total number of beneficial
holders of the Common Stock of the Company is in excess of 6,000. After the
Reverse Stock Split the Company estimates that it will continue to have
approximately the same number of stockholders.
The number of issued shares after the Reverse Stock Split is approximate.
Except for changes in the number of shares owned resulting from the Reverse
Stock Split, the rights and privileges of holders of shares of Common Stock will
remain the same, both before and after the proposed Reverse Stock Split.
There can be no assurance that the market price of the Common Stock after
the proposed Reverse Stock Split will be proportionately greater than the market
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price before the proposed Reverse Stock Split, or that such price will either
exceed or remain in excess of the current market price.
Federal Income Tax Consequences
------- ------ --- ------------
The following information is based on discussions with counsel. No opinion
of counsel has been obtained. Stockholders are advised to consult with their
own tax advisors for more detailed information relating to their individual
federal state and local tax circumstances.
1. The proposed Reverse Stock Split will be a reorganization described in
section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended.
2. The Company will recognize no gain or loss as a result of the proposed
Reverse Stock Split.
3. Stockholders will recognize no gain or loss to the extent that currently
outstanding shares of Common Stock are exchanged for new shares of Common
Stock pursuant to the proposed Reverse Stock Split.
4. The tax basis of the new Common Stock received in exchange for Common Stock
pursuant to the proposed Reverse Stock Split will be the same as the
stockholders' basis in the stock exchanged. Therefore, the new shares of
Common Stock in the hands of a stockholder will have an aggregate basis for
computing gain or loss equal to the aggregate basis of shares of Common
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Stock held by that stockholder immediately prior to the proposed Reverse
Stock Split.
Any reverse split would be implemented solely in the discretion of the Board
of Directors which reserves the right to implement the reverse split at the time
of its choosing and at any ratio from one-to-ten to one-to-thirty. If the
application of the ratio causes any stockholder to have a fractional share of
stock, such share will be rounded up to the next highest whole share.
While approval of this proposal would not increase the authorized capital of
---
the Company, additional shares of common stock would be available to the Company
for issuance due to the decrease of currently outstanding common stock caused by
a reverse stock split. Any additional shares of common stock made available by
this amendment could be issued at the direction of the Company's Board of
Directors from time to time for any proper corporate purpose, including, without
limitation, the acquisition of other businesses, the raising of additional
capital for use in its business, a split of, or dividend on, then outstanding
shares or in connection with any employee stock plan or program. Any future
issuances of authorized shares of common stock may be authorized by the Board of
Directors without further action by the stockholders.
Although the Company's Board of Directors will issue common stock only when
required or when the Board considers such issuance to be in the best interests
of the Company, the issuance of additional common stock may, among other things,
have a dilutive effect on earnings per share and on the equity and voting rights
of stockholders. Furthermore, since New York law requires the vote of a
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majority of shares of each class of stock in order to approve certain mergers
and reorganizations, the additional authorized but unissued shares of common
stock available as a result of the reverse stock split could permit the Board to
issue shares to persons supportive of management's position. Such persons might
then be in a position to vote to prevent a proposed business combination which
is deemed unacceptable to the Board, although perceived to be desirable by some
stockholders, including, potentially, a majority of stockholders. This could
provide management with a means to block any majority vote which might be
necessary to effect a business combination in accordance with applicable law.
Additionally, the presence of such additional authorized but unissued shares of
common stock could discourage unsolicited business combination transactions
which might otherwise be desirable to stockholders. The Board of Directors is
not currently aware of any contemplated hostile or friendly takeover attempt or
business combination proposal.
Except for (i) shares of common stock reserved for issuance pursuant to
stock option plans and other agreements, (ii) shares of common stock reserved
for issuance upon exercise of outstanding warrants and, (iii) shares of common
stock reserved for issuance upon exercise of any Underwriters' Option, the
Company's Board of Directors has no current plans to issue additional shares of
common stock. However, the Board believes that the benefits of providing it
with the flexibility to issue shares without delay for any proper business
purpose, including as an alternative to an unsolicited business combination
opposed by the Board, outweigh the possible disadvantages of dilution and
discouraging unsolicited business combination proposals, and that it is prudent
and in the best interests of stockholders to provide the advantage of greater
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flexibility which will result from this amendment as well as permitting the
proposed offering to proceed.
The affirmative vote of a majority of the shares present and entitled to
vote at the Meeting are required for approval of the amendment to the
Certificate of Incorporation. Abstentions will be treated as "NO" votes and
Broker Non-Votes will be disregarded.
ITEM 3 - PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO
AUTHORIZE A CLASS OF PREFERRED STOCK
The Company is not currently authorized to issue Preferred Stock and the
Board of Directors recommends approving this proposal to authorize 20,000,000
shares of Preferred Stock. If approved, these shares of Preferred Stock would
be "blank check" which would give the Board of Directors the authority to
designate the rights, terms and preferences of each issuance of Preferred Stock.
If approved, shares of Preferred Stock will be readily available for use in any
acquisition or financing or upon the exercise of options, if granted.
Shares of Preferred Stock that will be authorized but not issued are
issuable at any time and from time to time, by action of the Board of Directors
without further authorization from the Company's stockholders, except as
otherwise required by applicable law or rules and regulations, to such persons
and for such consideration as the Board of Directors determines. This will
permit the Company to consider financings, acquisitions or other transactions
which may require the issuance of shares of Preferred Stock. The Company is not
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currently considering any financing transactions which would involve the
issuance of Preferred Stock, and the Company has no commitments which would
require the issuance of any shares of Preferred Stock.
The issuance of preferred stock by the Board of Directors could adversely
affect the rights of the holders of Common Stock. For example, such issuance
could result in a class of securities outstanding that would have preferences
with respect to voting rights and dividends and in liquidation over the Common
Stock, and could (upon conversion or otherwise) enjoy all of the rights
appurtenant to Common Stock. The authority possessed by the Board of Directors
to issue preferred stock could potentially be used to discourage attempts by
others to obtain control of the Company through a merger, tender offer, proxy
contest or otherwise by making such attempts more difficult or more costly to
achieve. There are no issued and outstanding shares of preferred stock, and
there are no agreements or understandings regarding the issuance of preferred
stock.
The affirmative vote of a majority of the shares present and entitled to
vote at the Meeting a re required for approval of the amendment to the
Certificate of Incorporation. Abstentions will be treated as "NO" votes and
Broker Non-Votes will be disregarded.
ITEM 4 - RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors recommends the appointment of KPMG Peat Marwick LLP
to audit the books and financial records of the Company for the year ending
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April, 30 1997 Representatives of KPMG Peat Marwick LLP are expected to be
present at the Meeting, will be available to respond to appropriate questions,
and will be afforded the opportunity to make a statement if they desire to do
so.
The affirmative vote of the majority of the outstanding stock entitled to
vote thereon is required to approve the appointment.
COMPENSATION OF OFFICERS AND DIRECTORS
The following table shows, for the years ended April 30, 1997, 1996 and 1995,
the total cash compensation paid by the Company to its chief executive officers
and most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
NAME AND FISCALSALARY BONUS OTHER RESTRSECURITIESIP ALL
PRINCIPAL YEAR ($) ($) ANNUAL ED UNDERLYINGY- OTHER
POSITION COMPEN- STOCKOPTIONS OUT COMP
SATION AWARDSARS ($) ENSA
($) ($) (#) TION
Anthony J. 1996 54,167 4,498 287,108
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Cataldo, 1995 225,000 10,000 52,896 400,000
Chief
Executive
Officer,
President
(1)
Michael J. 1997 68,400
Edison (2)
Paul Ekon 1997 90,598 0
(3) 1996 105,916 16,714
Peter 1997 338,434
Morris, 1996 252,650 108,000 0
President 1995 77,000 124,500
and Chief
Operating
Officer
(4)
Peter 1996 0 0 0
Svennilson 1995 0 0 0
Chairman,
Chief
Executive
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Officer
and
Director
John 1997 164,941
Ridley
S. Keith 1996 100,104 0 16,114
Williams, 1995 196,389 99,511 34,546
President
and Chief
Operating
Officer
(5)
(1) Effective December 31, 1991, Mr. Cataldo entered into an employment
agreement with the Company to serve as its President. The term of the agreement
expired on July 31, 1995, and was extended to July 31, 1997 by an Amendment and
Extension Agreement dated August 1, 1994 (the "Amendment and Extension
Agreement"). Under the terms of Mr. Cataldo's original employment contract, he
received an annual salary of $150,000, plus a bonus equal to 2% of the Company's
annual revenues as reported in the Company's annual report. Mr. Cataldo was
also entitled to receive an expense allowance of $2,000 per month. Pursuant to
his employment agreement, Mr. Cataldo also received options, to purchase 700,000
shares of Common Stock at $0.25 per share and options to purchase 700,000 Class
C Warrants at $0.43 per warrant. The employment agreement provided that options
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to purchase 150,000, 200,000, 200,000 and 150,000 options of each type are to be
exercisable as of December 31, 1991, 1992, 1993 and 1994, respectively. Mr.
Cataldo received $12,500 for consulting services rendered in November and
December of 1991. On September 22, 1993 and September 15, 1994, Mr. Cataldo
exercised options to purchase 75,000 and 100,000 shares of Common Stock,
respectively, at an exercise price of $.25 per share. Under the terms of the
Amendment and Extension Agreement, Mr. Cataldo's contract was extended to August
1, 1997. He was entitled to a annual compensation of $250,000 and to an expense
allowance of $25,000 per annum. He no longer received a bonus. In addition,
the Amendment and Extension Agreement provided for the grant, each year, of
options to purchase 400,000 common shares of the Company at $0.625 each.
Effective July 13, 1995, Mr. Cataldo resigned as Chairman and Chief Executive
Officer. By Separation Agreement and Release dated July 6 and 7, 1995 (the
"Separation Agreement"), the Company agreed to pay Mr. Cataldo $300,000 in
consulting fees in twelve $25,000 monthly installments, to be applied against
fees for financial consulting services Mr. Cataldo may render to the Company;
in addition, the Company agreed to grant Mr. Cataldo a non-recourse, interest
free $280,000 loan to purchase common shares of the Company; the loan is
secured by said common shares. The Separation Agreement also provides that Mr.
Cataldo relinquishes all stock options and warrants granted to him under his
employment agreements. By amendment to the Separation Agreement, Mr. Cataldo
and the Company agreed to cancel the $280,000 non-recourse loan granted Cataldo
and to retire the common shares subscribed by Cataldo and pledged to secure said
loan. The Company further agreed to pay Mr. Cataldo $20,000 in addition to
$105,000 previously paid to Cataldo under the Separation Agreement and to issue
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Mr. Cataldo 212,700 shares of common stock of the Company in full and final
satisfaction of the Company's obligations to Mr. Cataldo.
(2) Effective December 18, 1996, Mr. Edison entered into an employment agreement
with the Company to serve as its President and Chief Executive Officer. for a
period ending December 18, 1999. Mr. Edison is entitled to a bas compensation
of 10,000 British pounds per month, or approximately $195,000 per annum. In
addition, Mr. Edison was granted 10,000,000 shares of common stock of the
Company, in lieu of additional compensation. Mr. Edison is entitled to a
performance bonus of (i) 5,000,000 shares of common stock of the Company in the
event the market price of the Company's common stock closes at or above $0.25
for ten consecutive trading days, and (ii) 5,000,000 shares of common stock of
the Company in the event the market price of the Company's common stock closes
at or above $0.50 for ten consecutive trading days. The Company is obligated to
register one half of the shares granted to Mr. Edison as soon as practical.
Mr. Edison was granted options to purchase 15,000,000 shares common stock of the
Company at $0.16. Such options shall vest as follows:
. 5,000,000 when the Company achieves annual sales of $50,000,000 and
$3,500,000 in pre-tax profits;
. 5,000,000 when the Company achieves annual sales $100,000,000 and
$7,000,000 in pre-tax profits; 5
. 5,000,000 when the Company achieves annual sales of $150,000,000 and
$10,000,000 in pre-tax profits;
(3) Mr. Ekon serves as the Company's Chief Executive Officer. His base salary
is 60,000 British Pounds per year or approximately $93,000. Mr. Ekon is also
entitled to a car allowance of 6,000 British Pounds per year, or approximately
$9,300. Mr. Ekon's contract was terminated effective September 30, 1996 by
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agreement between Mr. Ekon and the Company. Mr. Ekon served as Chief Executive
Officer through February, 1997 and continues to serve as a Director of the
Company.
(4) Effective January 20, 1995, Mr. Morris entered into an employment agreement
with the Company to serve as Managing Director of its wholly owned subsidiary,
MTi Trading Systems. Under the terms his employment contract, Mr. Morris was
entitled to an annual base salary of 150,000 British Pounds or approximately
$230,000 and to a stock option equivalent to half of one percent of the
Company's registered shares, plus a 50,000 British Pounds or approximately
$77,500 sign on bonus. Subsequent to Mr. Morris' appointment as the Company's
President and Chief Operating Officer, the Company agreed to raise Mr. Morris'
base salary to 200,000 British Pounds or approximately $310,000 and to grant Mr.
Morris a 100,000 British Pound or approximately $155,000 bonus and a 50,000
British Pounds or approximately $77,500 success bonus on completion of the MDIS
Acquisition, in exchange for unpaid sign on bonus plus cancellation of his
stock options. The MDIS Acquisition was closed on March 1, 1996. Mr. Morris is
also entitled to the use of a company car at a cost of 7,500 British Pounds or
approximately $11,000. Mr. Morris' employment contract can be terminated by
either party on a one year notice. Mr. Morris resigned as a director and as an
officer of the Company effective April 1, 1997. The Company agreed to pay Mr.
Morris 63,941.99 British pounds as full and final settlement under his
employment agreement.
(5) On July 12, 1994, Mr. Williams entered into an employment agreement with
the Company which was due to terminate on May 31, 1997, providing for a minimum
base salary of 155,000 British pounds per annum, or approximately $248,000. Mr.
Williams resigned on September 25, 1995.
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OPTION GRANTS IN LAST FISCAL YEAR
The Company granted options to purchase 15,000,000 common shares to Mr. Edison
and options to purchase 750,000 common shares to Mr. Huguenin. These options
will vest as follows:
. One third when the Company achieves annual sales of $50,000,000 and
$3,500,000 in pre-tax profits;
. One third when the Company achieves annual sales $100,000,000 and
$7,000,000 in pre-tax profits;
. One third when the Company achieves annual sales of $150,000,000 and
$10,000,000 in pre-tax profits;
No options or SAR's were exercised by officers or directors of the Company
during the year ended April 30, 1997.
The Company does not have Long-Term incentive plans.
Other than health, life and 401(k) plan benefits available to all employees, and
the stock option plans described below which the Company may determine to pay to
officers and/or employees, the Company does not currently have in effect any
pension, profit sharing or other employee benefit plans.
The Company does not have a Directors and Officers liability insurance policy in
force.
COMPENSATION OF DIRECTORS
The Company pays $5,000 per year to non-employee directors and reimburses them
for travel and lodging expenses incurred in connection with their services in
that capacity.
In addition, Mr. Guazzoni, a Director of the Company from February 1994 to March
1996, was granted 50,000 warrants exercisable at $0.01 from July 15, 1996 to
27
(068443.1)
January 15, 1997 as additional compensation for his services as a Director of
the Company. He exercised these warrants.
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT:
The Company has received a copy of reports on Form 5 filed by Messrs. Edison,
Huguenin and Ekon, and has not received copies of any other Form 5 with respect
to the fiscal year ended April 30, 1997 or any representations from any other
officer or director or 10% shareholder of the Company, that any such Form 5
was not required to be filed. Accordingly, Messrs. Morris, Ridley, Awerbuch, as
well as any other person who, at any time during such fiscal year, was a
director, officer or beneficial owner of more than ten percent of the Company's
Common Stock may not have filed, on a timely basis, reports required by Section
16(a) during the most recent fiscal year.
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS WITH MANAGEMENT:
None.
ANNUAL REPORT/FORM 10-KSB
The Company's 1997 Annual Report to its stockholders is a reproduction of
its Form 10-KSB filed with the United States Securities and Exchange Commission
("SEC"), excluding the Index to Exhibits and any filed exhibits, and is being
28
(068443.1)
mailed to all stockholders concurrently with this information statement. Copies
of the Company's Form 10-KSB (without exhibits) as filed with the SEC may be
obtained by writing to the Corporate Secretary, Management Technologies, Inc.,
630 Third Avenue, New York, NY 10017.
INCORPORATION BY REFERENCE
The Financial Statements contained in the Annual Report accompanying this
Information Statement are incorporated herein by reference.
By Order of the Board of Directors,
/s/ Patrick Huguenin
- --------------------
Patrick Huguenin
Chief Financial Officer
New York, New York
October 22, 1997