SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Amendment No. ]
Filed by the Registrant [X]
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Check the appropriate box:
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[_] Confidential, for Use of the
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Rule 14a-6(e)(2))
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[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(C) or (S) 240.14a-12
INDUSTRIAL DATA SYSTEMS CORPORATION
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INDUSTRIAL DATA SYSTEMS CORPORATION
June 1, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
("Annual Meeting") of Industrial Data Systems Corporation to be held at 10:00
a.m. on Thursday, June 28, 2001, at the corporate offices of the Company, 600
Century Plaza Drive, Building 140, Houston, Texas 77073-6013.
At the Annual Meeting, the stockholders will be asked to elect five
directors. The Notice of the 2001 Annual Meeting of Stockholders and the Proxy
Statement on the following pages describe the nominees for election to our Board
of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU CAST YOUR VOTE IN
FAVOR OF EACH OF THE NOMINATED DIRECTORS.
Whether or not you plan to attend the Annual Meeting, we hope that you will
have your stock represented by marking, signing, dating, and returning your
proxy card in the enclosed envelope as soon as possible. Your stock will be
voted in accordance with the instructions you have given in your proxy card.
You may, of course, attend the Annual Meeting and vote in person even if you
have previously returned your proxy card.
We look forward to your attendance at the meeting.
Sincerely,
/s/ William A. Coskey
William A. Coskey
President and Chief Executive Officer
IMPORTANT
A proxy card is enclosed herewith. All stockholders are urged to complete
and mail the proxy card promptly. The enclosed envelope for return of the proxy
card requires no postage. Any stockholder attending the Annual Meeting may
personally vote on all matters that are considered, in which event the signed
proxy will be revoked.
INDUSTRIAL DATA SYSTEMS CORPORATION
600 Century Plaza Drive
Building 140
Houston, Texas 77073-6013
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 28, 2001
________________________________________________________________
To the Stockholders of
Industrial Data Systems Corporation
Notice is hereby given that the 2001 Annual Meeting of Stockholders
("Annual Meeting") of Industrial Data Systems Corporation, a Nevada corporation
(the "Company"), will be held in the corporate offices of Company, at 600
Century Plaza Drive, Houston, Texas 77073-6013 on Thursday, June 28, 2001, at
10:00 a.m., Central Daylight Saving Time, for the following purposes:
1. To elect five directors to the Board of Directors of the Company to
serve until the next Annual Meeting of Stockholders or until their respective
successors are elected and qualified. The nominees for director are William A.
Coskey, P.E., Hulda L. Coskey, David W. Gent, P.E., Gordon R. Wingate, and Ken
J. Hedrick.
2. To approve and ratify the appointment of Hein + Associates LLP as the
Company's independent auditors.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
A record of stockholders has been taken as of the close of business on May
31, 2001 and only those stockholders of record on that date will be entitled to
notice of and to vote at the meeting. A stockholders list will be available at
the offices of the Company commencing June 18, 2001 and may be inspected during
the normal business hours prior to the Annual Meeting and during the Annual
Meeting.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON, BUT
EVEN IF YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE REQUESTED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION. YOUR PROXY
MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY SIGNING AND RETURNING A LATER-
DATED PROXY WITH RESPECT TO THE SAME SHARES, BY FILING WITH THE SECRETARY OF
INDUSTRIAL DATA SYSTEMS CORPORATION A WRITTEN REVOCATION BEARING A LATER DATE OR
BY ATTENDING AND VOTING IN PERSON AT THE ANNUAL MEETING. STOCKHOLDERS ATTENDING
THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE PREVIOUSLY SENT IN A
PROXY CARD.
By Order of the Board of Directors,
/s/ Hulda L. Coskey
Hulda L. Coskey
Secretary
Houston, Texas
Date: June 1, 2001
INDUSTRIAL DATA SYSTEMS CORPORATION
600 Century Plaza Drive, Building 140
Houston, Texas 77073-6013
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Thursday, June 28, 2001
_________________________
PROXY STATEMENT
_________________________
This Proxy Statement and accompanying Proxy are solicited by the Management
of Industrial Data Systems Corporation ("IDS" or the "Company") for use at the
Annual Meeting of Stockholders (the "Annual Meeting") of the Company to be held
on Thursday, June 28, 2001 at 10:00 a.m. at the principal executive offices of
the Company, 600 Century Plaza Drive, Building 140, Houston, Texas 77073, and at
any adjournment or postponement thereof, for the purposes set forth in this
Proxy Statement and the accompanying Notice of Annual Meeting. This Proxy
Statement and accompanying Proxy are being mailed on or about June 14, 2001, to
stockholders of record on May 31, 2001.
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL
MEETING, TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE. Your executed Proxy may be revoked at any time before it is
exercised by filing with the Secretary of the Company, at the Company's
principal executive offices, a written notice of revocation or a duly executed
Proxy bearing a later date. The execution of the enclosed Proxy will not affect
your right to vote in person, should you find it convenient to attend the
Meeting and desire to vote in person. Attendance at the Annual Meeting will not
in and of itself constitute the revocation of a Proxy.
The purpose of the Annual Meeting is to elect five directors to serve one-
year terms until the next Annual Meeting, or until their respective successors
shall be elected and qualified; and considering and acting upon the ratification
of the Company's independent auditors.
The Company intends to solicit proxies principally by the use of the mails
and will bear all expenses in connection with such solicitations. In addition,
some of the directors, officers and regular employees of the Company may,
without extra compensation, solicit proxies by telephone, telegraph and personal
interview. Arrangements have been made with banks, brokerage houses and other
custodians and nominees to forward copies of the Proxy Statement and the
Company's Annual Report for the fiscal year ended December 31, 2000, to persons
for whom they hold stock of the Company and to request authority for the
execution of proxies. The Company will reimburse the foregoing persons for
their reasonable expenses, upon request.
VOTING SECURITIES
On May 31, 2001, the Record Date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, 12,964,918 shares of
the Company's Common Stock ("Common Stock") were outstanding. Stockholders are
entitled to one vote per share on all matters to be considered at the Meeting.
Stockholders are not entitled to cumulative voting.
In accordance with the Company's Articles of Incorporation, a majority of
the shares entitled to vote represented in person or by proxy shall constitute a
quorum at a meeting of stockholders. Any action to be taken by stockholders of
the corporation at the Annual Meeting requires the vote or concurrence of the
holders of a majority of the outstanding shares entitled to vote thereon.
Except as otherwise specified by law, if a quorum is present, the affirmative
vote of a majority of the shares represented in person or by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders. If a quorum is present, directors are elected by a majority of
the votes cast by the shares entitled to vote.
The stockholders shall also vote to ratify the selection of Independent
Auditors. As to any other business which may properly come before the Annual
Meeting, the proxy holders will vote in accordance with their best judgment.
Management of the Company does not presently know of any other such business.
If you are the beneficial owner of shares held in "street name" by a
broker, the broker, as the record holder of the shares, is required to vote
those shares in accordance with your instructions. If you do not give
instructions to the broker, the broker will nevertheless be entitled to vote the
shares with respect to "discretionary" items but will not be permitted to vote
the shares with respect to "non-discretionary" items (in which case, the shares
will be treated as "broker non-votes").
1
If you ABSTAIN from voting on one or more proposals, your shares will
nevertheless be included in the number of shares represented for purposes of
determining whether a quorum is present. If you ABSTAIN from voting on the
approval and ratification of Hein + Associates LLP as the Company's independent
auditors, your shares will also be included in the number of shares voting on
the proposal, and consequently, your abstention will have the same practical
effect as a vote AGAINST the proposal. Because directors are elected by a
plurality of the votes, an abstention would have no effect on the outcome of the
vote on the election of directors and, thus, is not offered as a voting option
for that matter.
The shares represented by an executed proxy will be voted for the election
of directors, or withheld if so specified, and to approve and ratify the
selection of Independent Auditors. If no specification is made in said proxy,
the proxy will be voted "FOR" the nominees listed herein, and "FOR" the
selection and ratification of Hein + Associates, LLP, Certified Public
Accountants.
ELECTION OF DIRECTORS
At the meeting, five directors are to be elected, each director to hold
office until the next Annual Meeting of Stockholders or until his successor is
elected and qualified. The Board of Directors has designated the persons named
in the accompanying proxy and, unless authority is withheld, they intend to vote
for the election of the nominees named below to the Board of Directors. If any
nominee should become unavailable for election, the proxy may be voted for a
substitute nominee selected by the persons named in the proxy, or the board may
be reduced accordingly; however, the Board of Directors is not aware of any
circumstances likely to render any nominee unavailable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF EACH NOMINEE FOR
DIRECTOR.
Information Regarding Directors and Nominees
The Board of Directors of the Company presently consists of five members.
Five Directors are to be elected at the Meeting, each for a term expiring at the
next Annual Meeting.
The following table and the notes thereto state the names of all the
persons proposed to be nominated for election as Directors. Also disclosed are
their ages, all positions and offices with the Company now held by them, their
principal occupations or employment within at least the five preceding years and
the dates upon which they became directors of the Company.
Name Age Director Since Position Held
- ---- --- -------------- -------------
William A. Coskey, P.E. (1) 48 1985 Chairman of the Board, Chief Executive
Officer and President
Hulda L. Coskey (1) 46 1985 Chief Financial Officer, Secretary,
Treasurer, Director
David W. Gent, P.E. (2) 48 1994 Director
Gordon R. Wingate (2) 45 1998 Director
Ken J. Hedrick 54 1998 Controller, Director
(1) William A. Coskey and Hulda L. Coskey are husband and wife.
(2) Member of Audit and Compensation Committees.
William A. Coskey, P.E. is the founder of the Company and has served as
Chairman of the Board, Chief Executive Officer and President since the Company's
formation in September 1985. Mr. Coskey also serves as President and Director of
the Company's subsidiaries: Industrial Data Systems, Inc.; IDS Engineering,
Inc.; Thermaire, Inc., and Constant Power Manufacturing, Inc. Prior to founding
the Company, Mr. Coskey served as Manager of Corporate Development for Keystone
International, Inc., a public company listed on the New York Stock Exchange, and
was responsible for all acquisition and merger activities of Keystone
International, Inc. during the period 1984 to 1985. Mr. Coskey had formerly held
the position of President of Syntech Associates, Inc., an engineering services
company located in Houston, Texas for the period 1979 to 1984. Mr. Coskey, an
Honors Graduate, received a B.S. in Electrical Engineering from Texas A&M
University in 1975 and serves on the Texas A&M University Electrical Engineering
Department Advisory Council. He is a Registered Professional Engineer, and is
also a member of the Instrument Society of America. William A. Coskey is the
spouse of Hulda L. Coskey.
2
Hulda L. Coskey has served as Chief Financial Officer and
Secretary/Treasurer of the Company since June 1994. During her sixteen years
with the Company and its predecessors, Mrs. Coskey has served in the following
capacities within the Company's subsidiaries: Vice President,
Secretary/Treasurer, and Director of Industrial Data Systems, Inc.; Vice
President, Secretary, and Director of IDS Engineering, Inc.; Secretary/Treasurer
and Director of Thermaire, Inc., and as Secretary and Director of Constant Power
Manufacturing, Inc. Her primary responsibilities include SEC reporting, investor
relations, and other corporate secretary functions. In prior years, Mrs. Coskey
has been responsible for management and supervision of the Company's operations,
including but not limited to all accounting, finance and personnel functions.
Prior to joining the Company, she served the banking industry in the Houston
area both as a Loan Review Officer, and as a Credit Officer. Mrs. Coskey majored
in Accounting at the University of Houston. Mrs. Coskey has served as a
committee member for various civic organizations. Hulda L. Coskey is the spouse
of William A. Coskey.
David W. Gent, P.E. has served as a director of the Company since June 1994
and is a member of the Audit and Compensation Committees. Since September 1991,
Mr. Gent has held the position of Director of International Engineering and
Chief Information Officer of Bray International, Inc., located in Houston,
Texas, with the responsibility of overseeing several departments that include
Engineering, Information Services, and Quality Control. Mr. Gent founded SofTest
Designs Corporation, a privately held electronic test equipment company, in 1980
and has served as a director since its inception and as its President for the
period 1986 to 1991. Prior to 1986, Mr. Gent was General Manager of the USA
Controls Division of Keystone International, Inc. Mr. Gent, an Honors Graduate,
received a B.S. in Electrical Engineering from Texas A&M University in 1975 and
an MBA from Houston Baptist University. He is a Registered Professional
Engineer, and a Senior member of the Instrument Society of America. Mr. Gent
serves on the Texas A&M University Electrical Engineering Department Advisory
Council, the Bray International, Inc. 401(k) committee, and as a Bray
representative on various councils including Fieldbus Foundation and the Open
DeviceNet Vendors Association. He also holds several patents in the field of
industrial flow controls.
Gordon R. Wingate has served on the Board of Directors since June 1998 and
is a member of the Audit and Compensation Committees. Mr. Wingate has served as
President and Chief Executive Officer of SynchroNet since 1989. SynchroNet is a
computer internetworking service provider based out of Houston that designs and
implements secure corporate networks for data, voice, and video, some of which
are global in scope. Prior to this time Mr. Wingate owned and operated Wingate
Services, a computer cabling and installation provider, which in 1989 changed
its name to SynchroNet and became involved with system design and computer
integration. Mr. Wingate earned his Bachelors of Arts degree from the University
of Texas at Austin. He is professionally certified as a Cisco Certified
Networking Associate, a Cisco Certified Design Associate, a Novel Certified
NetWare Engineer 5, a Microsoft Certified Product Specialist for Windows NT and
a Citrix Certified Administrator for Citrix Winframe and Metaframe.
Ken Hedrick has served as Corporate Controller of Industrial Data Systems
Corporation since December 1997. Mr. Hedrick was initially appointed as an
interim Director upon the resignation of Rex S. Zerger in August 1998 and was
later elected to the Board of Directors by the stockholders in June 1999.
Beginning his career in public accounting over 20 years ago, Mr. Hedrick worked
on auditing assignments and on management consulting projects while in the
public sector. Moving into the private business sector, Mr. Hedrick has held
Chief Financial Officer, General Manager and Controller positions with public
and privately held companies primarily in the construction and the manufacturing
industries. In these various positions, Mr. Hedrick has been responsible for
start-up operations, information systems conversion and implementation, as well
as typical financial, accounting and general administrative functions. Mr.
Hedrick received a B.B.A. degree in Accounting and Management from Southwest
Texas State University in 1970 and received a C.P.A. certification in 1973.
Director's Compensation
Employee directors and independent directors of the Company do not receive
any compensation for each board meeting attended, nor do they receive
compensation for each committee meeting attended. The Company does not pay out-
of-pocket expenses incurred by independent directors to attend board and
committee meetings. As specified in the Industrial Data Systems Corporation 1998
Incentive Plan (the "Incentive Plan"), non-employee directors are eligible to
receive non-statutory stock options. Under the Incentive Plan, awards may be
granted to directors of the Company and its majority-owned subsidiaries. In
recognition of the services provided by its Board of Directors and in compliance
with the Incentive Plan, 15,000 shares were approved and awarded as stock
options to Directors and Non-Employee Directors on November 21, 2000. The
following Directors were awarded 5,000 shares each for service provided to the
Company in 2000: Mr. Gent, Mr. Wingate, and Mr. Hedrick. All of these stock
options were issued at an exercise price of $1.00 and vest over a five-year
period with an expiration date of
3
November 21, 2010. The following Directors were previously awarded 5,000 shares
each for each year or partial year of service provided to the Company through
1999: Mr. Gent (30,000 shares), Mr. Wingate (10,000 shares) and Mr. Hedrick
(10,000 shares). In addition to the shares awarded for director service, Mr.
Hedrick was also awarded 20,000 shares of stock options for his services as a
key employee to the Company, which is disclosed further in this Proxy Statement
under "Incentive Plan". All of the stock options issued in 1999 were at an
exercise price of $1.25 and vest over a five-year period with an expiration date
of December 12, 2009. The stock options awarded to directors represent 37.6% of
all stock options issued to directors and key employees. As of the Record Date
no options have been exercised nor shares issued under the Incentive Plan.
Board of Directors Meetings and Committees
During 2000, there were four meetings of the Board of Directors and one
action taken by unanimous consent. Mr. Wingate was able to attend fewer than 75%
of the board and committee meetings on which he served. The Board of Directors
has established a standing Audit Committee and Compensation Committee. The Board
does not have an Executive Committee or a Nominating Committee. The President
and Chief Executive Officer have determined compensation for the past several
years for the Company's executive officers and employees.
Compensation Committee. The Compensation Committee is responsible for
administering the Company's Incentive Stock Plan and granting stock options and
other awards under the Plan. The members of this Committee are Messrs. David W.
Gent and Gordon R. Wingate, both of whom are independent directors. The
committee met one time during 2000. Both directors were present.
Audit Committee. The Audit Committee serves as an independent and objective
party to monitor the Company's financial reporting process and internal control
system, reviews and appraises the audit efforts of the Company's independent
accountants, and provides an open avenue of communication among the independent
accountants, financial and senior management and the Board of Directors. The
members of this Committee are Messrs. David W. Gent and Gordon R. Wingate, both
of whom are independent directors. Information regarding the functions performed
by the Committee and its membership is set forth in the "Report of the Audit
Committee," included in this annual proxy statement. A written charter approved
by the Board of Directors governs the Audit Committee. The Committee held two
meetings during fiscal year 2000. Both directors were present.
AUDITOR INDEPENDENCE
Audit Fees
In the year 2000, the aggregate fee paid by the Company for the annual
audit and for the review of the Company's financial statements included in the
Company's Form 10-QSB's totaled $77,892.
Financial Information Systems Design and Implementation Fees
In the year 2000, the Company's auditors provided no financial information
systems design and implementation services.
All Other Fees
In the year 2000, the aggregate fee paid by the Company for all other fees
billed for non-audit services, including fees for tax-related services, billed
by the issuer's principal auditor totaled $36,571.
Report of the Audit Committee
The responsibilities of the Audit Committee, which are set forth in the
Audit Committee Charter adopted by the Board of Directors, include providing
oversight to the Company's financial reporting process through periodic meetings
with the Company's independent auditors and management to review accounting,
auditing, internal controls and financial reporting matters. The management of
the Company is responsible for the preparation and integrity of the financial
reporting information and related systems of internal controls. The Audit
Committee, in carrying out its role, relies on the Company's senior management,
including senior financial management, and its independent auditors.
We have reviewed and discussed with senior management the Company's audited
financial statements included in the 2000 Annual Report to Stockholders.
Management has confirmed to us that such financial statements (i) have been
prepared with integrity and objectivity and are the responsibility of management
and (ii) have been prepared in conformity with generally accepted accounting
principles.
4
We have discussed with Hein + Associates, LLP, our independent auditors,
the matters required to be discussed by SAS 61 (Communications with Audit
Committee). SAS 61 requires our independent auditors to provide us with
additional information regarding the scope and results of their audit of the
Company's financial statements, including with respect to (i) their
responsibility under generally accepted auditing standards, (ii) significant
accounting policies, (iii) management judgments and estimates, (iv) any
significant audit adjustments, (v) any disagreements with management, and (vi)
any difficulties encountered in performing the audit.
We have received from Hein + Associates, LLP, a letter providing the
disclosures required by Independence Standards Board Standard No. 1.
(Independence Discussions with Audit Committees) with respect to any
relationships between Hein + Associates, LLP and the Company that in their
professional judgment may reasonably be thought to bear on independence. Hein +
Associates, LLP has discussed its independence with us, and has confirmed in
such letter that, in its professional judgment, it is independent of the Company
within the meaning of the federal securities laws.
Based on the review and discussions described above with respect to the
Company's audited financial statements included in the Company's 2000 Annual
Report to Stockholders, we have recommended to the Board of Directors that such
financial statements be included in the Company's Annual Report on Form 10-KSB
for filing with the Securities and Exchange Commission.
As specified in the Audit Committee Charter, it is not the duty of the
Audit Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and in accordance with generally
accepted accounting principles. That is the responsibility of management and the
Company's independent auditors. In giving our recommendation to the Board of
Directors, we have relied on (i) management's representation that such financial
statements have been prepared with integrity and objectivity and in conformity
with generally accepted accounting principles, and (ii) the report of the
Company's independent auditors with respect to such financial statements.
David W. Gent
Gordon R. Wingate
May 14, 2001
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The directors and officers of the Company are not aware of any person or
company that beneficially owns, directly or indirectly, or exercises control or
direction over, shares carrying more than five percent (5%) of the voting rights
attached to the Common Stock of the Company as at the close of business on March
19, 2001 other than:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
---------------- -------------------- ----------------
Alliance 2000, Ltd. (1) 9,530,100 73.5%
William A. Coskey, P.E. (1) (2) (3)
Hulda L. Coskey (1)
600 Century Plaza Drive, Building 140
Houston, Texas 77073-6013
David W. Gent, P.E. (4) 9,374 *
Gordon R. Wingate (4) 3,125 *
Ken J. Hedrick (4) 9,375 *
All executive officers and directors as a group 9,551,974 73.5%
- -----------------------------------------------
(1) Alliance 2000, Ltd. is the record holder of 9,500,000 shares, shown above.
William A. Coskey and Hulda L. Coskey serve as General Partners of Alliance
2000, Ltd.
(2) Includes 100 shares owned by William A. Coskey purchased on June 16, 1998
at the time the Company became listed on the American Stock Exchange.
(3) Includes 30,000 shares of the Company's Common Stock held in the name of
William A. Coskey, as Custodian for his children.
(4) Includes shares the direct ownership of which may be acquired within 60
days of March 19, 2001 through the exercise of stock options and represents
less than 1% of the outstanding shares of Common Stock.
5
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
The Board of Directors has adopted a policy requiring that all transactions
between the Company and its officers, directors, principal stockholders and
their affiliates be on terms no less favorable to the Company than could be
obtained from unrelated third parties and that any such transactions be approved
by a majority of the disinterested members of the Company's board.
As of May 31, 2001, William A. Coskey, Chairman of the Board, Chief
Executive Officer, and President of the Company was indebted to the Company for
two unsecured promissory notes in an amount totaling $150,000. The notes are
due on demand and bear interest at a rate of 9% per annum. The outstanding
balance at December 31, 2000 was $150,000 in principal and $46,500 in accrued
but unpaid interest. The largest aggregate amount of indebtedness outstanding
at any time during the last twelve months owed by William and Hulda Coskey was
$196,500.
EXECUTIVE COMPENSATION
Compensation Summary
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by, or paid to, the Company's
Chief Executive Officer, and the most highly compensated executive officers of
the Company whose aggregate cash compensation exceeded $100,000 (the "Named
Executive Officers") during the years ended December 31, 1998, 1999 and 2000.
Annual Compensation
------------------------------
Other Annual All other
Name and Principal Position Year Salary Bonus Compensation Compensation
- --------------------------- ---- ------ ----- ------------- ------------
($) ($) ($) ($)
William A. Coskey, P.E., Chief 2000 111,040 - - -
Executive Officer and President 1999 109,224 - - -
1998 109,200 - - -
Key Man Insurance
William A. Coskey is a key employee of the Company and the loss of Mr.
Coskey's services could adversely affect the Company's business. The Company
maintains, and is the beneficiary of, a life insurance policy on the life of Mr.
Coskey. The face amount of such policy is $600,000. The continuance of such
policy is at the discretion of the Board of Directors and the policy may or may
not be maintained in the future.
Incentive Plan
Since the approval and adoption of the Industrial Data Systems Corporation
1998 Incentive Plan in June 1998, the Company has granted options to acquire
266,000 shares of its Common Stock with Option Agreements for 226,000 shares
remaining in effect. In 2000, options for 40,000 shares were canceled due to
employment termination with two employees. No options have been exercised nor
have any shares been issued under the Incentive Plan. As of the Record Date, a
total of 45,000 options were vested but not exercised.
Issuance and cancellation of stock options are detailed in the table below.
- -----------------------------------------------------------------------------------------------------------------------------
DATE OPTIONS TO OPTIONS TO EXERCISE EXPIRATION
KEY EMPLOYEES DIRECTORS PRICE DATE
---------------------------------------------------------------
OPTIONS OPTIONS OPTIONS OPTIONS
ISSUED CANCELED ISSUED CANCELED
- -----------------------------------------------------------------------------------------------------------------------------
1999 150,000 0 50,000 0 $1.25 12/12/09
- -----------------------------------------------------------------------------------------------------------------------------
2000 51,000 40,000 15,000 0 $1.00 11/21/10
- -----------------------------------------------------------------------------------------------------------------------------
Stock options awarded to directors are specifically disclosed elsewhere in
this Proxy Statement, under "Director Compensation".
6
401(k) Plan
On January 1, 1993, the Company adopted a Section 401(k) Profit Sharing
Plan and Trust (the "Plan"). The Plan is intended to qualify for tax exemption
under Section 401(k) of the Code and is subject to the Employee Retirement
Income Security Act of 1974. Management of the Company administers the Plan and
all of the Company's employees who elect to do so are allowed to participate,
subject to certain eligibility requirements. Eligible employees may contribute
up to 15% of their annual compensation up to the maximum dollar amount allowed
by law, which is matched by the Company under a defined formula. In addition,
the Company may make discretionary contributions to the Plan, for the benefit of
all participants, at the election of the Board of Directors. Employee
contributions are fully vested at all times and contributions by the Company
vest on a schedule of 25% per year over a four-year period, commencing with the
second year of employment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors, executive officers and 10% beneficial owners ("insiders") to file
with the United States Securities and Exchange Commission reports of ownership
and change in ownership of equity securities of the Company. Based solely on its
review of Forms 3 and 4 and amendments thereto furnished to the Company under
Rule 16a-3(e) during its most recent fiscal year and Forms 5 and amendments
thereto furnished to the Company with respect to its most recent fiscal year,
the Company believes that during the year ended December 31, 2000, no reporting
person failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act since such reporting persons became subject to reporting
requirements except that Mike M. Patton, Vice President of Business Development
of a subsidiary of IDS failed to file a timely Form 5 during the year 2000.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation provide that, to the fullest extent
permitted under Nevada corporation law, the Company will indemnify any officer
or director who is, was, or is threatened to be made a party to any proceeding
because he or she (1) is or was a director or officer, or (2) while a director
or officer, at the Company's request, was serving as a director, officer,
partner, venturer, proprietor, trustee, employee or agent of another entity.
The Company's Articles of Incorporation also provide that a director of the
Company shall not be personally liable to the Company or its stockholders for
monetary damages from breaches of fiduciary duties, except for liability (i) for
any breach of the duty of loyalty to the Company or its stockholders; (ii) for
acts or omissions not in good faith or in knowing violation of the law; or (iii)
for any transaction from which a director or officer has derived an improper
personal benefit.
Insofar as indemnification for liabilities arising under the Securities
Exchange Act of 1934 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
APPOINTMENT OF AUDITORS
The Board of Directors recommends, and unless otherwise directed the
designated persons named in the enclosed form of proxy will vote for, the
appointment of Hein + Associates LLP, 5075 Westheimer, Suite 970, Houston, Texas
77056, as auditors of the Company to hold office until the next Annual Meeting
of Stockholders and to authorize the Directors to fix the remuneration of the
auditors so appointed. Hein + Associates LLP has been the Company's auditors
since 1994. The auditors will be invited to attend the meeting to make such
comments as they deem appropriate and to answer any appropriate questions.
7
OTHER MATTERS
To the best of the knowledge, information and belief of the Directors,
there are no other matters which are to be acted upon at the Annual Meeting. If
such matters arise, the form of proxy provides that discretionary authority is
conferred on the designated persons in the enclosed form of proxy to vote with
respect to such matters.
The Company has received no notice of any other items submitted for
consideration at the meeting and except for reports of operations and activities
by Management, which are for informational purposes only and require no action
of approval or disapproval, and consideration of the minutes of the preceding
annual meeting for approval, which may involve technical corrections to the text
where actions taken were incorrectly recorded, but which require no action of
approval or disapproval of the subject matter, Management neither knows of nor
contemplates any other business that will be presented for action by the
stockholders at the meeting. If any further business is properly presented at
the meeting, the persons named as proxies will act in their discretion on behalf
of the stockholders they represent.
The 2002 annual meeting of stockholders is expected to be in June 2002. For
inclusion in the Company's proxy materials, the Company must receive by March
15, 2002 any stockholder proposal intended to be presented at the next annual
meeting of stockholders.
APPROVAL OF THE BOARD OF DIRECTORS
The contents of the Proxy Statement have been approved and the Board of
Directors of the Company has authorized the mailing thereof to the stockholders
of the Company.
ANNUAL REPORT
A copy of the Company's 2000 Annual Report is being mailed with this Proxy
Statement to each stockholder of record. Stockholders not receiving a copy of
the Annual Report may obtain one without charge by contacting Hulda L. Coskey,
Chief Financial Officer, 600 Century Plaza Drive, Building 140, Houston, Texas
77073-6013, (281) 821-3200, or by email at idscorp@inddata.com.
DATED at Houston, Texas, the 1st day of June, 2001.
By Order of the Board of Directors,
/s/ Hulda L. Coskey
Hulda L. Coskey
Secretary
8
INDUSTRIAL DATA SYSTEMS CORPORATION (IDS)
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 28, 2001
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Industrial Data Systems Corporation (the
"Company") hereby appoints William A. Coskey, Hulda L. Coskey and/or any of
them, attorneys and proxies of the undersigned, each with full power of
substitution to vote on behalf of the undersigned at the Annual Meeting of
Stockholders of Industrial Data Systems Corporation to be held at the corporate
offices located at 600 Century Plaza Drive, Building 140, Houston, Texas
77073-6013, Thursday, June 28, 2001, at 10:00 a.m. Central Daylight Saving Time,
and at any adjournments of said meeting, all of the shares of Common Stock in
the name of the undersigned or which the undersigned may be entitled to vote.
The board of directors recommends a vote FOR the nominees named on reverse
and if no specification is made, the shares will be voted for such nominees.
PLEASE VOTE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
5952--INDUSTRIAL DATA SYSTEMS CORP.
INDUSTRIAL DATA SYSTEMS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
1. ELECTION OF DIRECTORS:
Nominees: 01-William A. Coskey, P.E., For Withhold For All
02-Hulda L. Coskey, 03-David W. Gent, P.E., All All Except
04-Gordon R. Wingate, and 05-Ken J. Hedrick [ ] [ ] [ ]
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S
NAME ON THE LINE PROVIDED BELOW:
_____________________________________________
2. For the appointment of Hein + Associates, For Against Abstain
LLP as the Company's independent auditors. [ ] [ ] [ ]
3. In their discretion, upon such other matters as may properly come before the
meeting; hereby revoking any proxy or proxies heretofore given by the
undersigned.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished herewith.
Dated:_________________________________, 2001
________________________________________________________________________
Stockholder's Signature
_________________________________________________________________________
Stockholder's Signature
SIGNATURE SHOULD AGREE WITH THE NAME PRINTED HEREON. IF STOCK IS HELD IN THE
NAME OF MORE THAN ONE PERSON, EACH JOINT OWNER SHOULD SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS AND ATTORNEYS SHOULD INDICATE THE CAPACITY
IN WHICH THEY SIGN. PERSONS ACTING PURSUANT TO POWER OF ATTORNEY SHOULD SUBMIT
POWERS OF ATTORNEY.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.
5952--INDUSTRIAL DATA SYSTEMS CORP.