INFINITY, INC.
211 West 14th Street
Chanute, Kansas 66720
(316) 431-6200
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 2003
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,
June 5, 2002, 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 Ehrhardt Keefe Steiner &
Hottman, P.C. as the Company's independent auditors;
3. The approval of the Company's 2003 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 April 21, 2003, 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
April 21, 2003
INFINITY, INC.
211 West 14th Street
Chanute, Kansas 66720
(316) 431-6200
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 2003
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, June 5,
2003, 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 April 30, 2003.
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 year ended December
31, 2002, 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 April 21, 2003, are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
On April 21, 2003, the Company had 7,987,914 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 April 21,
2003, 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 1,040,338 (1) 12.7%
211 West 14th Street
Chanute, KS 66720
Jon D. Klugh 73,500 (2) 0.9%
211 West 14th Street
Chanute, KS 66720
George R. Jones 180,500 (3) 2.2%
Suite 100
200 East 1st Street
Wichita, KS 67202
Leroy C. Richie 137,500 (4) 1.7%
585 Shirley Road
Birmingham, MI 48009
O. Lee Tawes 411,900 (5) 5.1%
350 Madison Avenue
New York, NY 10017
All Directors, Nominees 1,843,738 21.6%
for Director, and Executive
Officers as a group
(5 persons)
____________________
(1) Includes 230,000 shares which may be purchased within 60 days under
stock options held by Mr. Ross.
(2) Includes 73,500 shares which may be purchased within 60 days under
stock options held by Mr. Klugh.
(3) Includes 83,500 shares which may be purchased within 60 days under
stock options held by Mr. Jones.
(4) Includes 97,500 shares which may be purchased within 60 days under stock
options held by Mr. Richie.
(5) Includes 323,400 shares held directly by Mr. Tawes, 35,000 shares held
by his wife, and 53,500 shares which may be purchased within 60 days
under stock options held by Mr. Tawes.
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. 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 41 President, Treasurer and Director since
March 1992
George R. Jones 79 Director since June 1999
Leroy C. Richie 61 Director since June 1999
O. Lee Tawes 55 Director since July 2001
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 O. Lee Tawes. During the year ended
December 31, 2002, the audit committee held four (4) meetings and the
compensation committee held no meetings.
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. From January
1998 to September 1998, Mr. Richie reviewed business opportunities and served
as Chairman of H.P. Devco and Vice Chairman of Detroit Economic Growth Corp.
and Detroit Medical Center. 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 has been a Director of the Company since
July 16, 2001. He 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 40 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 year ended December 31, 2002, the Company's Board of Directors
held four (4) 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 seven 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 June
5, 2003. 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 the year ended
December 31, 2002, 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 O. Lee Tawes filed a Form 4 reporting three transactions late.
COMPENSATION
The following tables set forth information regarding executive
compensation for the Company's President and Chief Executive Officer and each
other executive officer who received compensation in excess of $100,000 during
the year ended December 31, 2002, the nine month transition period ended
December 31, 2001, and for the fiscal years ended March 31, 2001 and 2000.
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, 2002 $110,000 $41,234 $91,186(1) -0- 50,000 -0- $1,005(2)
President and 2001(3) $ 75,384 $30,000 $ -0- -0- 50,000 -0- $1,005(2)
Chief Executive 2001 $ 80,000 $40,000 $ -0- -0- 50,000 -0- $1,083(2)
Officer 2000 $ 80,000 $ -0- $ 6,000(4) -0- 80,000 -0- $ -0-
Jon D. Klugh, 2002 $70,123 $21,000 $ 9,962(4) -0- 13,500 -0- $ 915(5)
Chief Financial
Officer and
Secretary
- -----------------
(1) Includes $72,662 paid for reimbursement of taxes paid on exercise of non-qualified stock
options.
(2) Represents premium paid on life insurance policy for Mr. Ross' benefit.
(3) Transition period ended December 31, 2001.
(4) Represents an automobile allowance.
(5) Represents premium paid on life insurance policy for Mr. Klugh's benefit.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base Expiration
Name Granted(#) in Fiscal Year Price($/Sh) Date
---- ------------ -------------- ----------- ------------
Stanton E. Ross 50,000 14.5% $8.70 June 6, 2007
Jon D. Klugh 13,500 3.9% $8.70 June 6, 2007
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 37,500 $196,875 155,000/75,000 $844,550/$81,500
Jon D. Klugh 10,000 $ 73,075 45,000/28,500 $205,400/$48,900
Except as described below, the Company has no employment agreements with
any of its executive officers.
Effective August 1, 2002, the Company entered into an Executive Severance
Agreement with Stanton E. Ross, President and Chief Executive Officer of the
Company. Pursuant to this agreement, in the event that a change in control
occurs prior to January 1, 2004, and the employment of Mr. Ross is terminated
without cause, or Mr. Ross resigns for good reason, within 18 months of such
change in control, he will be entitled to compensation as follows:
1. An amount equal to two times his annual base salary;
2. An amount equal to the bonus received for the annual period
immediately before the change in control;
3. All accrued but unpaid salary and benefits earned prior to
termination;
4. A continuation of all insurance benefits for two years following
termination; and
5. Outplacement assistance and other benefits.
For the purposes of the Executive Severance Agreement a "change in
control" is defined to include the acquisition by a person or group of 35% or
more of the outstanding common stock or voting power to elect directors; there
is a change in the majority of the directors of the Company; or the approval
by the shareholders of the Company or a reorganization, merger or
consolidation.
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 416,666 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 December 31, 2002, options to purchase 4,400 shares of Common Stock
were outstanding under the 1992 Plan with an exercise price of $3.00 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 280,000, 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 December 31, 2002, options to purchase 73,000 shares of Common
Stock were outstanding under the 1999 Plan with exercise prices ranging from
$1.50 to $3.00 per share.
2000 STOCK OPTION PLAN
On September 22, 1999, the Board of Directors adopted a Stock Option Plan
(the "2000 Plan") which was approved by the Company's shareholders in July
2000. 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 280,000 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 December 31, 2002, options to purchase 124,000 shares of Common
Stock were outstanding under the 2000 Plan with exercise prices ranging from
$1.50 to $3.00 per share.
2001 STOCK OPTION PLAN
On July 20, 2000, the Board of Directors adopted a Stock Option Plan (the
"2001 Plan") which was approved by the Company's shareholders in July 2001.
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 320,000 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.
As of December 31, 2002, options to purchase 277,500 shares of Common
Stock were outstanding under the 2001 Plan with exercise prices ranging from
$3.815 to $7.00 per share.
2002 STOCK OPTION PLAN
On August 16, 2001, the Board of Directors adopted a Stock Option Plan
(the "2002 Plan") which was approved by the Company's shareholders on June 6,
2002. The 2002 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 2002 Plan may not exceed 320,000 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 2002 Plan at any time, provided that the Board may not amend the 2002 Plan
to materially increase the benefits accruing to participants under the 2002
Plan, or materially change the eligible classes of participants without
shareholder approval.
As of December 31, 2002, options to purchase 318,000 shares of Common
Stock were outstanding under the 2002 Plan with an exercise price of $5.00 per
share.
2003 STOCK OPTION PLAN
On June 6, 2002, the Board of Directors adopted a Stock Option Plan (the
"2003 Plan") which has not been approved by the Company's shareholders. The
2003 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 2003 Plan may not exceed 375,000 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 2003 Plan at any time, provided that the Board may not amend the 2003 Plan
to materially increase the benefits accruing to participants under the 2003
Plan, or materially change the eligible classes of participants without
shareholder approval.
On June 6, 2002, the Board of Directors granted options to purchase an
aggregate of 344,000 shares of Common Stock at $8.70 per share under this
Plan. Included in these options are options to purchase 50,000 shares granted
to Stanton E. Ross, Infinity's President; 13,500 shares granted to Jon D.
Klugh, Infinity's Secretary and CFO; and 13,500 shares each granted to Leroy
C. Richie, George Jones and O. Lee Tawes, Directors of the Company. These
options will become fully vested on approval of the 2003 Plan by the Company's
Shareholders prior to June 6, 2003.
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 was secured by substantially all oilfield service
equipment and other assets of Consolidated. Further security was provided by
the personal guaranty of Stanton E. Ross, The Company's President, of up to
$1,000,000, which guaranty was secured by the pledge of 100,000 shares of the
Company's Common Stock held by Mr. Ross. On January 14, 2002, this credit
facility was replaced by a new facility with a new lender. The new facility
is for $5,902,500 and is secured by substantially all of the oilfield assets
of Consolidated. Mr. Ross has continued to provide a $1,000,000 personal
guaranty, but it is no longer secured by his 100,000 shares of common stock.
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, who was a Director of The Company until July 19, 2001, is
Partner and Operations Manager of Verde. The Company paid Verde $150,000 for
the acquisition of the rights under the lease. Verde served 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. No
development costs were incurred after March 31, 2001. Verde had also given
The Company three options to participate in the development of leases adjacent
to the Manson Lease on similar terms. However these options expired
unexercised. Infinity sold its interests in the property to West Central Oil,
LLC, a company that has common ownership with Verde on May 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, Leroy C. Richie, and O. Lee Tawes, who are independent (as defined in
Rule 4200(a)(14) of the National Association of Securities Dealers' listing
standards). The Audit Committee operates pursuant to a charter (the "Audit
Committee Charter") approved and adopted by the Board. 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 consolidated financial statements and the
footnotes thereto in the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2002, 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 consolidated
financial statements. The Audit Committee held four (4) meetings during the
year ended December 31, 2002.
The Company's outside independent public accountants, Ehrhardt Keefe
Steiner & Hottman, P.C., are responsible for expressing an opinion on the
conformity of the Company's audited consolidated 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 consolidated 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 consolidated financial
statements be included in the Report on Form 10-KSB for the year ended
December 31, 2002, for filing with the Securities and Exchange Commission.
The Audit Committee also recommended to the Board of Directors the selection
of Ehrhardt Keefe Steiner & Hottman, P.C. to serve as the Company's
independent public accountants for the fiscal year ending December 31, 2003.
MEMBERS OF THE AUDIT COMMITTEE
George R. Jones
Leroy C. Richie
O. Lee Tawes
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The independent accounting firm of Ehrhardt Keefe Steiner & Hottman, P.C.
audited the consolidated financial statements of the Company for the year
ended December 31, 2002, 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 Ehrhardt Keefe Steiner & Hottman, P.C., the
appointment of auditors will be reconsidered by the Board of Directors.
It is expected that representatives of Ehrhardt Keefe Steiner & Hottman,
P.C., 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 December 31, 2002, and for the reviews of the financial
statements included in the Company's Form 10-QSB's during the last fiscal year
amounted to $74,402.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
independent auditors did not provide professional services during the year
ended December 31, 2002, relating to financial information systems design and
implementation.
ALL OTHER FEES. The fees billed by the independent auditors during the
year ended December 31, 2002, for non-audit services rendered amounted to
$10,999. These services consisted of tax return review and preparation, the
review of other filings made with the SEC, and contract evaluation services
related to the sale of oil and gas properties and accounting rule
interpretations relating to gas hedging contracts. The Audit Committee has
considered the other fees paid to Ehrhardt Keefe Steiner & Hottman, P.C. and
concluded that they do not impair the independence of Ehrhardt Keefe Steiner &
Hottman, P.C.
On January 24, 2002, the Company engaged Ehrhardt Keefe Steiner &
Hottman, P.C. as its independent accountants. Also on January 24, 2002,
Sartain Fischbein & Co. was dismissed as the Company's independent
accountants.
Sartain Fischbein & Co.'s reports on the Company's financial statements
for the fiscal years ended March 31, 2001 and 2000, contained no adverse
opinion or disclaimer of opinion nor were they qualified as to audit scope or
accounting principles. The Company's Audit Committee did not separately
consider the decision to engage Ehrhardt Keefe Steiner & Hottman, P.C., but
each member of the Audit Committee approved the decision.
In connection with the prior audits for the fiscal years ended March 31,
2001 and 2000, and from March 31, 2001 to January 25, 2002, there were no
disagreements with Sartain Fischbein & Co. on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure. The Company did not consult with Ehrhardt Keefe Steiner & Hottman,
P.C. with regard to any matter concerning the application of accounting
principles to any specific transactions, either completed or proposed, or the
type of audit opinion that might be rendered with respect to the Company's
consolidated financial statements.
APPROVAL OF 2003 STOCK OPTION PLAN
DESCRIPTION OF THE PLAN
On June 6, 2002, the Company's Board of Directors approved the
establishment of a Stock Option Plan (the "2003 Plan"). The Board of
Directors believes that the 2003 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 2003 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 2003 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 2003 Plan
may not exceed 375,000, 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 2003 Plan at any time, provided that
the Board of Directors may not amend the 2003 Plan to materially increase the
number of shares available under the 2003 Plan, materially increase the
benefits accruing to participants under the 2003 Plan, or materially change
the eligible class of employees without shareholder approval.
On June 6, 2002, the Board of Directors granted options to purchase an
aggregate of 344,000 shares of Common Stock at $8.70 per share, contingent on
shareholder approval of the 2003 Plan.
NEW PLAN BENEFITS
The following table sets forth information as to the benefits or amounts
that will be received by each of the following persons or groups with respect
to options which have been granted under the 2003 Plan:
2003 Stock Option Plan
Number of Shares
Underlying
Name and Position Dollar Value ($)(1) Options Granted
----------------- ------------------- ----------------
Stanton E. Ross, President and $ -0- 50,000
Chief Executive Officer
Jon D. Klugh, Chief Financial $ -0- 13,500
Officer and Secretary
All current Executive Officers $ -0- 63,500
as a Group (2 persons)
All non-Executive Officer $ -0- 40,500
Directors as a Group (3
persons)
All non-Executive Officer $ -0- 240,000
Employees as a Group (86
persons hold options
in this group)
________________
(1) The dollar value of the options granted was determined by comparing
the fair market value of the Company's Common Stock on April 21, 2003
of $8.03 per share with the exercise price of $8.70 per share.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002, with
respect to shares of the Company's Common Stock that may be issued under
equity compensation plans:
Number of
securities
remaining
Number of available
securities Weighted- for future
to be issued average issuance under
upon exer- exercise equity compen-
cise of out- price of sation plans
standing outstanding (excluding
options, options, securities
warrants warrants reflected in
and rights and rights column (a))
Plan category (a) (b) (c)
- ------------- ---------- ---------- -------------
Equity compensation 796,900 $3.71 6,200
plans approved by
security holders
Equity compensation 344,000 $8.70 31,000
plans not approved
by security holders
Total 1,140,900 $5.34 37,200
VOTE REQUIRED; BOARD OF DIRECTORS RECOMMENDATIONS
Approval of the 2003 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 2003 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 year ended December
31, 2002, 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 JUNE 2004
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in June 2004 must be received at the
offices of the Company, 211 West 14th Street, Chanute, Kansas 66720, no later
than December 23, 2003, in order to be included in the Company's proxy
statement and proxy relating to that meeting.
STANTON E. ROSS, PRESIDENT
Chanute, Kansas
April 21, 2003
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 April 21, 2003, at the Annual Meeting of Shareholders to be
held on June 5, 2003, 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 Ehrhardt Keefe Steiner &
Hottman, P.C., as the Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The approval of the Company's 2003 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: _____________, 2003.
________________________________________
________________________________________
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.