INFINITY, INC.
211 West 14th Street
Chanute, Kansas 66720
(316) 431-6200
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 19, 2001
TO THE SHAREHOLDERS OF INFINITY, INC.:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of
Infinity, Inc., a Colorado corporation (the "Company"), will be held at the
Company's headquarters at 211 West 14th Street, Chanute, Kansas, on Thursday,
July 19, 2001, at 9:00 a.m., Central Time, and at any and all adjournments
thereof, for the purpose of considering and acting upon the following matters.
1. The election of four (4) Directors of the Company to serve until the
next Annual Meeting of Shareholders and until their successors have been duly
elected and qualified;
2. The ratification of the appointment of Sartain Fischbein & Co. as the
Company's independent auditors;
3. The approval of the Company's 2001 Stock Option Plan; and
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of the $.0001 par value Common Stock of the Company of
record at the close of business on June 20, 2001, will be entitled to notice
of and to vote at the Meeting or at any adjournment or adjournments thereof.
The proxies are being solicited by the Board of Directors of the Company.
All shareholders, whether or not they expect to attend the Annual Meeting
of Shareholders in person, are urged to sign and date the enclosed Proxy and
return it promptly in the enclosed postage-paid envelope which requires no
additional postage if mailed in the United States. The giving of a proxy will
not affect your right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
STANTON E. ROSS, PRESIDENT
Chanute, Kansas
June 20, 2001
INFINITY, INC.
211 West 14th Street
Chanute, Kansas 66720
(316) 431-6200
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 19, 2001
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Infinity, Inc., a Colorado corporation (the "Company"), for use
at the Company's Annual Meeting of Shareholders to be held at the Company's
headquarters at 211 West 14th Street, Chanute, Kansas, on Thursday, July 19,
2001, at 9:00 a.m., Central Time, and at any and all adjournments thereof. It
is anticipated that this Proxy Statement and the accompanying Proxy will be
mailed to the Company's shareholders on or about June 26, 2001.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report on Form 10-KSB for the fiscal year ended
March 31, 2001, is being simultaneously mailed to the Company's shareholders,
but does not constitute part of these proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
$.0001 par value Common Stock, with each share entitled to one vote. Only
shareholders of record at the close of business on June 20, 2001, are entitled
to notice of and to vote at the Meeting or any adjournment thereof. On June
20, 2001, the Company had 3,248,237 shares of its $.0001 par value Common
Stock outstanding, each share of which is entitled to one vote on all matters
to be voted upon at the Meeting, including the election of Directors.
Cumulative voting in the election of Directors is not permitted.
A majority of the Company's outstanding common stock represented in
person or by proxy shall constitute a quorum at the Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of the
Company's $.0001 par value common stock owned beneficially, as of June 20,
2001, by any person, who is known to the Company to be the beneficial owner of
5% or more of such common stock, and, in addition, by each Director, Nominee
for Director and Executive Officer of the Company, and by all Directors,
Nominees for Director and Executive Officers of the Company as a group.
Information as to beneficial ownership is based upon statements furnished to
the Company by such persons.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------- --------------------- --------
Stanton E. Ross 499,544 (1) 14.9%
211 West 14th Street
Chanute, KS 66720
Jon D. Klugh 20,000 (2) 0.6%
211 West 14th Street
Chanute, KS 66720
George R. Jones 85,000 (3) 2.6%
Suite 100
200 East 1st Street
Wichita, KS 67202
Leroy C. Richie 50,000 (3) 1.5%
585 Shirley Road
Birmingham, MI 48009
Jeffrey L. Dale 30,375 (4) 0.9%
1027 West 5th
Chanute, KS 66720
O. Lee Tawes 160,000 4.9%
350 Madison Avenue
New York, NY 10017
All Directors, Nominees 844,929 24.2%
for Director, and Executive
Officers as a group
(6 persons)
____________________
(1) Includes 102,500 shares which may be purchased within 60 days under
stock options held by Mr. Ross.
(2) Includes 20,000 shares which may be purchased within 60 days under
stock options held by Mr. Klugh.
(3) Includes 45,000 shares which may be purchased within 60 days under
stock options held by the named person.
(4) Includes 30,000 shares which may be purchased within 60 days under
stock options held by the named person.
There are no known agreements, the operation of which may at a subsequent
date result in a change in control of the Company.
ELECTION OF DIRECTORS
The number of Directors of the Company is currently set at four (4)
Directors. The Board of Directors recommends the election as Directors of the
four (4) nominees listed below, to hold office until the next Annual Meeting
of Shareholders and until their successors are elected and qualified or until
their earlier death, resignation or removal. Each of the current members of
the present Board of Directors has been nominated for reelection, except for
Jeffrey L. Dale, who's term will end at the Meeting. The person named as
"Proxy" in the enclosed form of Proxy will vote the shares represented by all
valid returned proxies in accordance with the specifications of the
shareholders returning such proxies. If at the time of the Meeting any of the
nominees named below should be unable to serve, which event is not expected to
occur, the discretionary authority provided in the Proxy will be exercised to
vote for such substitute nominee or nominees, if any, as shall be designated
by the Board of Directors.
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently
held, and the period during which each person has served as a Director:
POSITIONS AND OFFICES HELD AND
NAME AGE TERM AS A DIRECTOR
- ----------------- --- --------------------------------------------
Stanton E. Ross 39 President, Treasurer and Director since
March 1992
George R. Jones 72 Director since June 1999
Leroy C. Richie 59 Director since June 1999
O. Lee Tawes 53 Nominee for Director
There is no family relationship between any Director or Executive Officer
of the Company.
The Company presently has no nominating committees, but does have an
audit committee and a compensation committee each of which presently consist
of George R. Jones, Leroy C. Richie and Jeffrey L. Dale. During the fiscal
year ended March 31, 2001, each of these committees held one meeting.
Set forth below are the names of all directors, nominees for director and
executive officers of the Company, all positions and offices with the Company
held by each such person, the period during which he has served as such, and
the principal occupations and employment of such persons during at least the
last five years:
STANTON E. ROSS. Mr. Ross has been President, Treasurer and a Director
of the Company since March 1992, and serves as an officer and director of each
of the Company's subsidiaries. From 1991 until March 1992, he also founded
and served as President of Midwest Financial, a financial services corporation
involved in mergers, acquisitions and financing for corporations in the
Midwest. From 1990 to 1991, Mr. Ross was employed by Duggan Securities, Inc.,
an investment banking firm in Overland Park, Kansas, where he primarily worked
in corporate finance. From 1989 to 1990, he was employed by Stifel, Nicolaus
& Co., a member of the New York Stock Exchange, where he was an investment
executive. From 1987 to 1989, Mr. Ross was self-employed as a business
consultant. From 1985 to 1987, Mr. Ross was President and founder of Kansas
Microwave, Inc. which developed a radar detector product. From 1981 to 1985,
he was employed by Birdview Satellite Communications, Inc. which manufactured
and marketed home satellite television systems, initially as a salesman and
later as National Sales Manager.
GEORGE R. JONES. Mr. Jones has been a Director of the Company since June
1, 1999. Since 2000 he has been President of Jones Gas Company. From 1986 to
2000, he was President of Stroud Oil Properties, Inc. Earlier in his career,
Mr. Jones served as Senior Supervisory Geologist with Creole Petroleum, a
subsidiary of Exxon Corporation. Stroud Oil Properties, Inc. has extensive
waterflood and coalbed methane experience. Recently, Stroud Oil Properties,
Inc. served as managing partner and part owner of Apache Canyon Gas, L.L.C.,
owner of a large leasehold in the Raton Basin of Colorado producing in excess
of 20 million cubic feet of gas per day. Mr. Jones received a BS Degree in
Geology from Kansas State University in 1948.
LEROY C. RICHIE. Mr. Richie has been a Director of the Company since
June 1, 1999. Since September 2000 he has been Chairman and Chief Executive
Officer of Q Standards World Wide, Inc. From April 1999 to August 2000, he
was President of Capitol Coating Technologies, Inc. From September 1998 to
April 1999 he was President of Intrepid World Communications. Mr. Richie was
formerly Vice President of Chrysler Corporation and General Counsel for
automotive legal affairs, where he directed all legal affairs for that
company's automotive operations from 1986 to 1997. He is currently a member
of the Board of Directors of Kerr-McGee Corporation and J.W. Seligman & Co.
Before joining Chrysler, he served as Director of the New York office of the
Federal Trade Commission. Mr. Richie received a BA Degree from City College
of New York in 1970 and a JD Degree from the New York University School of Law
in 1973.
O. LEE TAWES, III. Mr. Tawes joined C.E. Unterberg Towbin, an investment
banking firm, in November 1999 as a Managing Director and Director of Equity
Research. He is also a member of the Management and Commitment Committees of
that firm, and is Head of the Investment Policy Committee. From 1991 through
1999 he was Director of Equity Research and Chairman of the Stock Selection
Committee at CIBC World Markets (formerly Oppenheimer & Co. Inc.). From 1979
to 1990, he was a food analyst and diversified company analyst at Oppenheimer
& Co., and from 1972 to 1979 he was a food analyst at Goldman Sachs & Co. He
was named to the Institutional Investor All America Team five times. Mr.
Tawes is a graduate of Princeton University and received his MBA from the
Darden School at the University of Virginia. He currently also serves as a
Director of Baywood International, Inc., which is publicly-held.
JON D. KLUGH. Mr. Klugh has been the Company's Chief Financial Officer
since September 1999, and its Secretary since October 1999. He also serves as
an officer of each of the Company's subsidiaries. Prior to joining the
Company, Mr. Klugh was the Manager of Regulatory Reporting and had supervisory
responsibility for operating processes and procedures with Continental
Resources, Inc., a privately held, independent oil and gas company located in
Enid, Oklahoma from March 1996 until September 1999. From April 1994 until
March 1996, Mr. Klugh worked for Koch Exploration Company, an oil and gas
exploration company in Wichita, Kansas. Mr. Klugh began his career at Conoco,
Inc., an integrated, international energy company based in Houston, Texas in
1985, and worked in various accounting, finance and regulatory positions until
joining Koch Exploration Company in 1994. Mr. Klugh received a B.A. Degree,
with an emphasis in Accounting, from Southwestern College, Winfield, Kansas,
in 1985. He is 38 years old.
The Company's Directors hold office until the next annual meeting of the
shareholders and until their successors have been elected and qualified.
The Officers of the Company are elected by the Board of Directors at the
first meeting after each annual meeting of the Company's shareholders, and
hold office until their death, or until they shall resign or have been removed
from office.
During the fiscal year ended March 31, 2001, the Company's Board of
Directors held two formal meetings. Each of the Directors were in attendance
at each meeting of the Board of Directors and of the Committees of which they
were members. The Board of Directors also acted by consent on ten separate
occasions.
The Company's Executive Officers hold office until the next annual
meeting of the directors of the Company which is currently scheduled for July
19, 2001. There are no known arrangements or understandings between any
director or executive officer and any other person pursuant to which any of
the above-named executive officers or directors or nominees was selected as an
officer or director or nominee for director of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year and certain written representations, no persons who were either a
Director, Officer or beneficial owner of more than 10% of the Company's Common
Stock, failed to file on a timely basis reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year, except that Stanton E.
Ross, George R. Jones, Jeffrey L. Dale, Leroy C. Richie and Jon D. Klugh each
filed a Form 5 reporting a grant of an exempt stock option late.
COMPENSATION
The following tables set forth information regarding executive
compensation for the Company's President and Chief Executive Officer. No
other executive officer received compensation in excess of $100,000 for any
of the years ended March 31, 2001, 2000 and 1999:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------- ----------------- -------
SECURI-
TIES
RE- UNDERLY-
OTHER STRICT- ING ALL
ANNUAL ED OPTIONS OTHER
NAME AND PRINCIPAL COMPEN- STOCK /SARs LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION AWARD(S) (NUMBER) PAYOUTS SATION
- ------------------ ---- ------ ----- ------ -------- -------- ------- ------
Stanton E. Ross, 2001 $80,000 $40,000 $ -0- -0- 25,000 -0- $1,083(1)
President and 2000 $80,000 -0- $6,000(2) -0- 40,000 -0- $ -0-
Chief Executive 1999 $80,000 -0- $7,800(2) -0- -0- -0- $ -0-
Officer
- -----------------
(1) Represents premium paid on life insurance policy for Mr. Ross' benefit.
(2) Represents an automobile allowance.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base Expiration
Name Granted(#) in Fiscal Year Price($/Sh) Date
---- ------------ -------------- ----------- -------------
Stanton E. Ross 25,000* 14% $7.63 July 20, 2006
_____________
* These options are contingent on shareholder approval of the Company's 2001
Stock Option Plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SECURITIES
UNDERLYING VALUE OF UNEXER-
SHARES UNEXERCISED CISED IN-THE
ACQUIRED OPTIONS MONEY OPTIONS/
ON SARs AT FY-END SARs AT FY-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (NUMBER) REALIZED UNEXERCISABLE UNEXERCISABLE
---- -------- -------- -------------- ----------------
Stanton E. Ross -0- -0- 77,500 / 25,000 $337,031/$20,313
The Company has no employment agreements with any of its executive
officers.
Effective April 1, 1999, members of the Board of Directors who are not
employees of the Company receive a fee of $5,000 per quarter. They are also
entitled to reimbursement of reasonable travel expenses incurred by them in
attending Board meetings.
The Company has no retirement, pension, profit sharing or other plans
covering its Officers and Directors except as disclosed below and except for a
401(k) Plan to which the Company has made no contributions.
1992 STOCK OPTION PLAN
On February 1992, the Board of Directors adopted a Stock Option Plan (the
"1992 Plan") which was approved by the Company's shareholders in March 1992.
The 1992 Plan allows the Board to grant stock options from time to time to
employees, officers and directors of the Company and consultants to the
Company. The Board has the power to determine at the time the option is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options will
only be granted to persons who are employees or officers of the Company.
Vesting provisions are determined by the Board at the time options are
granted. The total number of shares of Common Stock subject to options under
the 1992 Plan may not exceed 208,333 subject to adjustment in the event of
certain recapitalizations, reorganizations and so forth. The option price
must be satisfied by the payment of cash. The Board of Directors may amend
the 1992 Plan at any time, provided that the Board may not amend the 1992 Plan
to materially increase the benefits accruing to participants under the 1992
Plan, or materially change the eligible classes of participants without
shareholder approval.
As of March 31, 2001, options to purchase 3,000 shares of Common Stock
were outstanding under the 1992 Plan with exercise prices ranging from $3.00
to $8.00 per share.
1999 STOCK OPTION PLAN
On September 9, 1999, the Board of Directors adopted the 1999 Stock
Option Plan (the "1999 Plan") which was approved by the Company's shareholders
in October 1999. The 1999 Plan allows the Board to grant stock options from
time to time to employees, officers and directors of the Company and
consultants to the Company. The Board has the power to determine at the time
the option is granted whether the option will be an Incentive Stock Option (an
option which qualifies under Section 422 of the Internal Revenue Code of 1986)
or an option which is not an Incentive Stock Option. However, Incentive Stock
Options will only be granted to persons who are employees or officers of the
Company. Vesting provisions are determined by the Board at the time options
are granted. The total number of shares of Common Stock subject to options
under the 1999 Plan may not exceed 140,000, subject to the adjustment in the
event of certain recapitalizations, reorganizations and so forth. The option
price may be paid in cash, or, at the sole discretion of the Board of
Directors, by other means such as the cancellation of indebtedness and the
surrender of securities of the Company. The Board of Directors may amend the
1999 Plan at any time, provided that the Board may not amend the 1999 Plan to
materially increase the benefits accruing to participants under the Plan, or
materially change the eligible class of participants without shareholder
approval.
As of March 31, 2001, options to purchase 99,300 shares of Common Stock
were outstanding under the 1999 Plan with exercise prices ranging from $3.00
to $6.00 per share.
2000 STOCK OPTION PLAN
On September 22, 1999, the Board of Directors adopted a Stock Option Plan
(the "2000 Plan") which has not yet been approved by the Company's
shareholders. The 2000 Plan allows the Board to grant stock options from time
to time to employees, officers and directors of the Company and consultants to
the Company. The Board has the power to determine at the time the option is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options will
only be granted to persons who are employees or officers of the Company.
Vesting provisions are determined by the Board at the time options are
granted. The total number of shares of Common Stock subject to options under
the 2000 Plan may not exceed 140,000 subject to adjustment in the event of
certain recapitalizations, reorganizations and so forth. The option price
must be satisfied by the payment of cash. The Board of Directors may amend
the 2000 Plan at any time, provided that the Board may not amend the 2000 Plan
to materially increase the benefits accruing to participants under the 2000
Plan, or materially change the eligible classes of participants without
shareholder approval.
As of March 31, 2001, options to purchase 127,500 shares of Common Stock
were outstanding under the 2000 Plan with exercise prices ranging from $3.00
to $6.00 per share.
2001 STOCK OPTION PLAN
On July 20, 2000, the Board of Directors adopted a Stock Option Plan (the
"2001 Plan") which has not yet been approved by the Company's shareholders.
The 2001 Plan allows the Board to grant stock options from time to time to
employees, officers and directors of the Company and consultants to the
Company. The Board has the power to determine at the time the option is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options will
only be granted to persons who are employees or officers of the Company.
Vesting provisions are determined by the Board at the time options are
granted. The total number of shares of Common Stock subject to options under
the 2001 Plan may not exceed 160,000 subject to adjustment in the event of
certain recapitalizations, reorganizations and so forth. The option price
must be satisfied by the payment of cash. The Board of Directors may amend
the 2001 Plan at any time, provided that the Board may not amend the 2001 Plan
to materially increase the benefits accruing to participants under the 2001
Plan, or materially change the eligible classes of participants without
shareholder approval.
In July 2000, the Board of Directors granted options to purchase an
aggregate of 160,000 shares of Common Stock at $7.63 per share under this
Plan. Included in these options are options to purchase 25,000 shares granted
to Stanton E. Ross, the Company's President, 10,000 shares granted to Jon D.
Klugh, the Company's Secretary and CFO; and 15,000 shares each granted to
Leroy C. Richie and George Jones, Directors of the Company. These options
will become fully vested on approval of the 2001 Plan by the Company's
Shareholders prior to July 20, 2001.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 6, 1998, the Company's Consolidated Oil Well Services, Inc.
("Consolidated") subsidiary obtained credit facility for a total of
$4,000,000. This facility is secured by substantially all oilfield service
equipment and other assets of Consolidated. Further security is provided by
the personal guaranty of Stanton E. Ross, the Company's President, of up to
$1,000,000, which guaranty is secured by the pledge of 100,000 shares of the
Company's Common Stock held by Mr. Ross. Effective January 22, 2001, this
credit facility was extended for one year.
During the fiscal year ended March 31, 2000, the Company, through a
subsidiary, acquired an interest in the Manson Lease in the Cherokee Basin of
Eastern Kansas through a joint venture with Verde Oil Company ("Verde").
Jeffrey L. Dale, a Director of the Company is Partner and Operations Manager
of Verde. The Company paid Verde $150,000 for the acquisition of the rights
under the lease. The Company received a 100% working interest until payout
and an 80% net revenue interest, and a 50% working interest, 40% net revenue
interest, after payout. Verde serves as the operator of the property and
retained a 50% working interest after payout. During the fiscal years ended
March 31, 2001 and 2000, the Company incurred $795,415 and $254,163 in
development costs associated with this property, respectively. Verde has also
given the Company three options to participate in the development of leases
adjacent to the Manson Lease on similar terms. The exercise of one of the
options would require a payment of $300,000 to Verde upon exercise. This
option, which was originally to expire on March 31, 2001, was extended to
March 1, 2002. The other options do not require a payment on exercise and
expire on March 1, 2002.
REPORT OF THE AUDIT COMMITTEE
The Company has a standing Audit Committee (the "Audit Committee") of the
Board of Directors. The Audit Committee currently consists of George R. Jones
and Leroy C. Richie, who are independent (as defined in Rule 4200(a)(14) of
the National Association of Securities Dealers' listing standards), and
Jeffrey L. Dale, who is not independent. The Audit Committee operates
pursuant to a charter (the "Audit Committee Charter") approved and adopted by
the Board. The Audit Committee Charter is attached as Exhibit A to this Proxy
Statement. The Audit Committee, on behalf of the Board, oversees the
Company's financial reporting process. In fulfilling its oversight
responsibilities, the Audit Committee reviewed with Management the audited
financial statements and the footnotes thereto in the Company's Annual Report
on Form 10-KSB for the fiscal year ended March 31, 2001, and discussed with
management the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of the
disclosures in the financial statements. The Audit Committee held one (1)
meeting during the fiscal year ended March 31, 2001.
The Company's outside independent public accountants, Sartain Fischbein &
Co., are responsible for expressing an opinion on the conformity of the
Company's audited financial statements in all material respects, to accounting
principles generally accepted in the United States. The Audit Committee
reviewed and discussed with the independent public accountants their judgments
as to the quality, not just the acceptability, of the Company's accounting
principles and such other matters as are required to be discussed by the Audit
Committee with the Company's independent public accountants under Statement on
Auditing Standards 61, as amended by SAS 90. The Company's independent public
accountants have expressed the opinion that the Company's audited financial
statements conform, in all material respects, to accounting principles
generally accepted in the United States. The independent public accountants
have full and free access to the Audit Committee.
The Audit Committee discussed with the Company's independent public
accountants their independence from management and the Company, and received
from them the written disclosures and the letter concerning the independent
accountants' independence required by the Independence Standard Board Standard
No. 1.
The Audit Committee discussed with the Company's independent public
accountants the overall scope and plans of the audit. The Audit Committee met
with the independent public accountants to discuss the results of their audit,
their evaluations of the Company's internal controls and the overall quality
of the Company's financial reporting.
In reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Annual Report on Form 10-KSB for the year ended March 31,
2001, for filing with the Securities and Exchange Commission. The Audit
Committee also recommended to the Board of Directors the selection of Sartain
Fischbein & Co. to serve as the Company's independent public accountants for
the fiscal year ending March 31, 2002.
MEMBERS OF THE AUDIT COMMITTEE
George R. Jones
Leroy C. Richie
Jeffrey L. Dale
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The independent accounting firm of Sartain Fischbein & Co., audited the
financial statements of the Company for the year ended March 31, 2001, and has
been selected in such capacity for the current fiscal year. At the direction
of the Board of Directors, this appointment is being presented to the
shareholders for ratification or rejection at the Annual Meeting of
Shareholders. If the shareholders do not ratify the appointment of Sartain
Fischbein & Co., the appointment of auditors will be reconsidered by the Board
of Directors.
It is expected that representatives of Sartain Fischbein & Co., will be
present at the meeting and will be given an opportunity to make a statement if
they desire to do so. It is also expected that the representatives will be
available to respond to appropriate questions from shareholders.
AUDIT FEES. The fees billed for professional services rendered by the
independent auditors for the audit of the Company's financial statements for
the year ended March 31, 2001, and for the reviews of the financial statements
included in the Company's Form 10-QSB's during the last fiscal year amounted
to $24,026.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
independent auditors did not provide professional services during the fiscal
year ended March 31, 2001, relating to financial information systems design
and implementation.
ALL OTHER FEES. The fees billed by the independent auditors during the
fiscal year ended March 31, 2001, for non-audit services rendered amounted to
$5,968. These services consisted of tax return review and preparation and the
review of other filings made with the SEC. The Audit Committee has considered
the other fees paid to Sartain Fischbein & Co. and concluded that they do not
impair the independence of Sartain Fischbein & Co.
APPROVAL OF 2001 STOCK OPTION PLAN
DESCRIPTION OF THE PLAN
On July 20, 2000, the Company's Board of Directors approved the
establishment of a Stock Option Plan (the "2001 Plan"). The Board of
Directors believes that the 2001 Plan advances the interests of the Company by
encouraging and providing for the acquisition of an equity interest in the
success of the Company by employees, officers, directors and consultants, and
by providing additional incentives and motivation toward superior Company
performance. The Board believes the 2001 Plan enables the Company to attract
and retain the services of key employees, officers, directors and consultants
upon whose judgment, interest and special effort the successful conduct of its
operations is largely dependent.
The 2001 Plan allows the Board to grant stock options from time to time
to employees, officers and directors of the Company and consultants to the
Company. The Board has the power to determine at the time the options are
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options may
only be granted to persons who are employees of the Company. Vesting
provisions are determined by the Board at the time options are granted. The
total number of shares of Common Stock subject to options under the 2001 Plan
may not exceed 160,000, subject to adjustment in the event of certain
recapitalizations, reorganizations and similar transactions. The option price
must be satisfied by the payment of cash, or, at the sole discretion of the
Board of Directors, by other means such as the cancellation of indebtedness
and the surrender of securities of the Company.
The Board of Directors may amend the 2001 Plan at any time, provided that
the Board of Directors may not amend the 2001 Plan to materially increase the
number of shares available under the 2001 Plan, materially increase the
benefits accruing to participants under the 2001 Plan, or materially change
the eligible class of employees without shareholder approval.
On July 20, 2000, the Board of Directors granted options to purchase an
aggregate of 160,000 shares of Common Stock at $7.63, contingent on
shareholder approval of the 2001 Plan.
NEW PLAN BENEFITS
The following table sets forth information as to the benefits or amounts
that will be received by each of the following persons or groups with respect
to options which have been granted under the 2001 Plan:
2001 Stock Option Plan
Number of Shares
Underlying
Name and Position Dollar Value ($)(1) Options Granted
----------------- ------------------- ----------------
Stanton E. Ross, President and $ 94,250 25,000
Chief Executive Officer
All current Executive Officers $131,950 35,000
as a Group (2 persons)
All non-Executive Officer $113,100 30,000
Directors as a Group (3
persons)
All non-Executive Officer $358,150 95,000
Employees as a Group (48
persons hold options
in this group)
________________
(1) The dollar value of the options granted was calculated by multiplying
the number of options by the difference in the fair market value of the
Company's Common Stock on June 18, 2001 ($11.40) less the exercise
price.
VOTE REQUIRED; BOARD OF DIRECTORS RECOMMENDATIONS
Approval of the 2001 Plan requires the affirmative vote of a majority of
the shares of Common Stock represented at the meeting. The Board of Directors
recommends a vote FOR approval of the 2001 Plan.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any other matter to be presented at the Meeting other than as set
forth herein. However, if any other matters are properly brought before the
Meeting, the shares represented by valid proxies will be voted with respect to
such matters in accordance with the judgment of the persons voting them. A
majority vote of the shares represented at the meeting is necessary to approve
any such matters.
ANNUAL REPORT
The Company's Annual Report on Form 10-KSB for the fiscal year ending
March 31, 2001, accompanies this Proxy Statement. The Annual Report is not
incorporated into this Proxy Statement and is not to be considered part of the
solicitation material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN JULY 2002
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in July 2002 must be received at the
offices of the Company, 211 West 14th Street, Chanute, Kansas 66720, no later
than February 19, 2002, in order to be included in the Company's proxy
statement and proxy relating to that meeting.
STANTON E. ROSS, PRESIDENT
Chanute, Kansas
June 20, 2001
EXHIBIT A
INFINITY, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee ("the Committee"), of the Board of Directors ("the Board")
of Infinity, Inc. ("the Company"), will have the oversight responsibility,
authority and specific duties as described below.
COMPOSITION
The Committee will be comprised of two or more directors as determined by the
Board. The members of the Committee will meet the independence and experience
requirements of the Nasdaq Stock Market (Nasdaq) then in effect. The members
of the Committee will be elected annually at the annual meeting of the full
Board and will be listed in the annual report to shareholders. One of the
members of the Committee will be elected Committee Chair by the Board.
RESPONSIBILITY
The Committee is a part of the Board. It's primary function is to assist the
Board in fulfilling its oversight responsibilities with respect to (i) the
annual financial information to be provided to shareholders and the Securities
and Exchange Commission (SEC); (ii) the system of internal controls that
management has established; and (iii) the audit process. In addition, the
Committee provides an avenue for communication between the independent
accountants, financial management and the Board. The Committee should have a
clear understanding with the independent accountants that they must maintain
an open and transparent relationship with the Committee, and that the ultimate
accountability of the independent accountants is to the Board and the
Committee. The Committee will make regular reports to the Board concerning
its activities.
While the Audit Committee has the responsibilities and powers set forth in
this 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 are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations,
to resolve disagreements, if any, between management and the independent
auditor or to assure compliance with laws and regulations and the Company's
business conduct guidelines.
AUTHORITY
Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.
MEETINGS
The Committee is to meet at least once annually and as many additional times
as the Committee deems necessary. Content of the agenda for each meeting
should be cleared by the Committee Chair. The Committee is to meet in
separate executive sessions with the chief financial officer, and independent
accountants at least once each year and at other times when considered
appropriate.
ATTENDANCE
Committee members will strive to be present at all meetings. As necessary or
desirable, the Committee Chair may request that members of management and
representatives of the independent accountants be present at Committee
meetings.
SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this charter annually and recommend
any proposed changes to the Board for approval. This should be done in
compliance with applicable Nasdaq Audit Committee Requirements.
2. Review with the Company's management and independent accountants the
Company's accounting and financial reporting controls.
3. Review with the Company's management, and independent accountants
significant accounting and reporting principles, practices and procedures
applied by the Company in preparing its financial statements. Discuss with
the independent accountants their judgements about the quality, not just the
acceptability, of the Company's accounting principles used in financial
reporting.
4. Review the scope and general extent of the independent accountants'
annual audit. The Committee's review should include an explanation from the
independent accountants of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The independent
accountants should confirm to the Committee that no limitations have been
placed on the scope or nature of their audit procedures. The Committee will
review annually with management the fee arrangement with the independent
accountants.
5. Inquire as to the independence of the independent accountants and obtain
from the independent accountants, at least annually, a formal written
statement delineating all relationships between the independent accountants
and the Company as contemplated by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees.
6. Have a predetermined arrangement with the independent accountants that
they will advise the Committee through its Chair and management of the Company
of any matters identified through procedures followed for interim quarterly
financial statements, and that such notification is to be made prior to the
related press release or, if not practicable, prior to filing Forms 10-QSB.
Also receive a written confirmation provided by the independent accountants at
the end of each of the first three quarters of the year that they have nothing
to report to the Committee, if that is the case, or the written enumeration of
required reporting issues.
7. At the completion of the annual audit, review with management and the
independent accountants the following:
The annual financial statements and related footnotes and financial
information to be included in the Company's annual report to shareholders and
on Form 10-KSB.
Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the year in
accounting principles and their application.
Significant changes to the audit plan, if any, and any serious
disputes or difficulties with management encountered during the audit.
Inquire about the cooperation received by the independent accountants during
their audit, including access to all requested records, data and information.
Inquire of the independent accountants whether there have been any
disagreements with management which, if not satisfactorily resolved, would
have caused them to issue a nonstandard report on the Company's financial
statements.
Other communications as required to be communicated by the
independent accountants by Statement of Auditing Standards (SAS) 61 as amended
by SAS 90 relating to the conduct of the audit. Further, receive a written
communication provided by the independent accountants concerning their
judgment about the quality of the Company's accounting principles, as outlined
in SAS 61 as amended by SAS 90, and that they concur with management's
representation concerning audit adjustments.
If deemed appropriate after such review and discussion, recommend to the
Board that the financial statements be included in the Company's annual report
on Form 10-KSB.
8. After preparation by management and review by independent accountants,
approve the report required under SEC rules to be included in the Company's
annual proxy statement. The charter is to be published as an appendix to the
proxy statement every three years.
9. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel. Also, elicit the comments of management
regarding the responsiveness of the independent accountants to the Company's
needs.
10. Meet with management and the independent accountants to discuss any
relevant significant recommendations that the independent accountants may
have, particularly those characterized as 'material' or 'serious'. Typically,
such recommendations will be presented by the independent accountants in the
form of a Letter of Comments and Recommendations to the Committee. The
Committee should review responses of management to the Letter of Comments and
Recommendations from the independent accountants and receive follow-up reports
on action taken concerning the aforementioned recommendations.
11. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.
12. Review with management and the independent accountants the methods used
to establish and monitor the Company's policies with respect to unethical or
illegal activities by Company employees that may have a material impact on the
financial statements.
13. Generally as part of the review of the annual financial statements,
receive an oral report(s), at least annually, from the Company's counsel
concerning legal and regulatory matters that may have a material impact on the
financial statements.
14. As the Committee may deem appropriate, obtain, weigh and consider expert
advice as to Audit Committee related rules of Nasdaq, Statements on Auditing
Standards and other accounting, legal and regulatory provisions.
INFINITY, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stanton E. Ross with the power to appoint
a substitute, and hereby authorizes him to represent and to vote as designated
below, all the shares of common stock of Infinity, Inc. held of record by the
undersigned on June 20, 2001, at the Annual Meeting of Shareholders to be held
on July 19, 2001, or any adjournment thereof.
1. Election of Directors:
[ ] FOR all nominees listed below (except as marked to the contrary)
[ ] WITHHOLD authority to vote for all the nominees listed below:
Stanton E. Ross Leroy C. Richie
George R. Jones O. Lee Tawes
[INSTRUCTION: To withhold authority to vote for any individual nominee, cross
out that nominee's name above.]
2. The ratification of the appointment of Sartain Fischbein & Co., as
the Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The approval of the Company's 2001 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, Proxy Statement and Annual Report.
Dated: _____________, 2001.
________________________________________
________________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INFINITY, INC.
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-ADDRESSED ENVELOPE. THE
GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND
THE MEETING.