SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
COMTREX SYSTEMS CORPORATION
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(Name of Registrant as Specified in Its Charter)
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paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
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COMTREX SYSTEMS CORPORATION
102 EXECUTIVE DRIVE
MOORESTOWN, NEW JERSEY 08057
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 14, 2001
--------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders (the "Annual Meeting") of Comtrex Systems
Corporation, a Delaware corporation (the "Company"), will be held at the
Radisson Hotel, Route 73, Mount Laurel, New Jersey, at 2:00 P.M., local time,
on Tuesday, August 14, 2001, for the following purposes:
(1) To elect 5 directors of the Company to hold office until the next
Annual Meeting of Shareholders or until their respective successors are
duly elected and shall qualify; and
(2) To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The Proxy Statement accompanying this Notice provides detailed information
concerning matters to be considered and acted upon at the Annual Meeting.
Please read it carefully.
The Board of Directors of the Company unanimously recommends that the
Shareholders vote in favor of the proposal for the election of directors.
The Board of Directors has fixed the close of business on July 25, 2001 as
the record date for determining those shareholders who will be entitled to
notice of and to vote at the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend the meeting, please complete, date and sign the enclosed proxy
card and return it promptly in the enclosed envelope. Your proxy may be
revoked at any time prior to the time it is voted.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended March 31, 2001 is enclosed with this Notice.
By Order of the Board of
Directors,
CHARLES A. HARDIN
Secretary
Moorestown, New Jersey
July 26, 2001
COMTREX SYSTEMS CORPORATION
102 Executive Drive
Moorestown, New Jersey 08057-4224
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 14, 2001
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors of Comtrex Systems Corporation, a Delaware
corporation ("Comtrex" or the "Company"), for the Annual Meeting of
Shareholders of Comtrex (the "Annual Meeting") to be held at 2:00 P.M. on
Tuesday, August 14, 2001, at the Radisson Hotel, Route 73, Mount Laurel, New
Jersey, and any adjournments or postponements of such meeting. These proxy
materials were first mailed to shareholders on or about July 26, 2001. The
address of the principal executive office of Comtrex is 102 Executive Drive,
Moorestown, New Jersey 08057-4224.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized below:
(1) To elect five (5) directors to serve until the next Annual Meeting of
Shareholders or until their respective successors are duly elected and shall
qualify; and
(2) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
COMMON STOCK AND PRINCIPAL HOLDERS THEREOF
Shares of the common stock, par value $.003 per share (the "Common Stock"),
of Comtrex, represented by proxies in the accompanying form which are properly
executed and returned to Comtrex before the Annual Meeting, will be voted at
the meeting in accordance with the shareholders' instructions contained in
such proxies. In the absence of contrary instructions, shares represented by
such proxies will be voted for the election of the nominees listed herein to
serve as directors of the Company; and in the discretion of the proxy holders
on such other matters as may properly come before the Annual Meeting.
Any shareholder has the power to revoke his proxy at any time before it is
voted. A proxy may be revoked by a shareholder, if it has not been exercised,
by filing with the Secretary of the Company a written notice of such
revocation, by a later dated proxy delivered to the Secretary of the Company
at any time prior to the voting of the shares represented by such proxy, by
oral revocation given by a shareholder in person at the Annual Meeting or any
adjournment thereof prior to the exercise of such proxy, or by the shareholder
voting the shares represented by the proxy by written ballot at the Annual
Meeting or any adjournment thereof.
The close of business on July 25, 2001 was the record date (the "Record
Date") for shareholders entitled to notice of and to vote at the Annual
Meeting. Shares of Common Stock outstanding on the Record Date are entitled to
vote at the Annual Meeting, and the holders of record thereof will have one
vote for each share so held on the matters to be voted upon at the Annual
Meeting. The presence in person or by proxy of the holders of a majority of
the outstanding shares of Common Stock of the Company entitled to vote at the
Annual Meeting will constitute a quorum. Abstentions and broker non-votes are
counted for the purpose of determining the presence or absence of a quorum for
the transaction of business at the meeting. Abstentions are counted in the
tabulations of the votes cast on proposals presented to stockholders and have
the same effect as negative votes. Broker non-votes are not counted for
purposes of determining the election of directors or whether a proposal has
been approved.
1
As of the close of business on July 17, 2001, there were 1,416,453
outstanding shares of Common Stock. The following table lists the shareholders
known to the Company to be beneficial owners of more than five percent (5%) of
the Common Stock as of July 17, 2001:
Name and Number of Approximate
Address Shares Owned(1)(2) Percentage Owned
------- ------------------ -----------------
Irene Maladra, ...................... 181,149(3) 12.8%
individually and as Trustee of the
Anthony Maladra Residuary Trust
c/o Comtrex Systems Corporation
102 Executive Drive
Moorestown, NJ 08057
Jeffrey C. Rice ...................... 139,402(4)(5) 9.8%
c/o Comtrex Systems Corporation
102 Executive Drive
Moorestown, NJ 08057
Steven D. Roberts .................... 135,335(4) 9.5%
c/o Comtrex Systems
Corporation LTD
2 Gatwick Metro Centre
Balcombe Road
Horley, Surrey RH6 9GA
Alan G. Schwartz ..................... 90,875(6)(7) 6.4%
c/o Comtrex Systems Corporation
102 Executive Drive
Moorestown, NJ 08057
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(1) Each person has sole voting and investment power with respect to the shares
unless otherwise indicated.
(2) Cede & Co., nominee for The Depository Trust Company, has informed the
Company that as of the close of business on June 30, 2001 it held 872,082
shares (61.6%) of the Common Stock of the Company. The Depository Trust
Company acts as central depository or "clearing house" for certificates of
the shares of numerous corporations held for the account of banks and
brokerage houses. The amount of shares held by Cede & Co. changes daily.
(3) Anthony Maladra, an individual owning in excess of five percent (5%) of the
capital stock of the Company, died on May 6, 1990. Pursuant to the terms
and provisions of Anthony Maladra's Last Will and Testament, the shares of
the capital stock of the Company owned by the deceased have been
distributed to the Anthony Maladra Residuary Trust (the "Trust"). Irene
Maladra is a co-trustee and the lifetime beneficiary of the Trust, and in
such capacity she is deemed to be the beneficial owner of the shares of the
capital stock of the Company held by the Trust.
(4) Includes a total of 2,001 shares subject to stock options granted pursuant
to stock option plans; 667 shares granted pursuant to the 1992 Non-
Qualified Stock Option Plan, which became exercisable on August 1, 1998,
667 shares granted pursuant to the 1992 Non-Qualified Stock Option Plan,
which became exercisable on August 1, 1999, and 667 shares granted pursuant
to the 1999 Stock Option Plan, which became exercisable on August 1, 2000.
(5) Includes 2,334 shares subject to stock options granted pursuant to the 1995
Incentive Stock Option Plan, which became exercisable on July 28, 1997.
(6) Includes a total of 2,668 shares subject to stock options granted pursuant
to stock option plans; 667 shares granted pursuant to the 1992 Non-
Qualified Stock Option Plan, which became exercisable on July 1, 1997, 667
shares granted pursuant to the 1992 Non-Qualified Stock Option Plan, which
became exercisable on August 1, 1998, 667 shares granted pursuant to the
1992 Non-Qualified Stock Option Plan, which became
2
exercisable on August 1, 1999, and 667 shares granted pursuant to the 1999
Stock Option Plan, which became exercisable on August 1, 2000.
(7) Includes a total of 85,447 shares over which Mr. Schwartz has shared voting
or investment interest; 18,000 shares owned by Leader Investment, Co.,
5,000 shares owned by F&S Partnership, 3,187 shares owned by TCA, and
59,260 shares acquired by Mr. Schwartz in December of 2000 which shares
were transferred by Mr. Schwartz into a trust for the benefit of his
descendants, of which Mr. Schwartz is a co-trustee.
CERTAIN INFORMATION WITH RESPECT TO DIRECTORS
AND EXECUTIVE OFFICERS
Election of Directors.
The Board of Directors currently consists of five (5) directors. The
Company's by-laws provide that its Board of Directors shall have between three
(3) and fifteen (15) members, the exact number to be fixed by the Board of
Directors. Management has nominated five (5) persons to the Board of
Directors.
Management's nominees for election as directors are Nathan I. Lipson,
Jeffrey C. Rice, Steven D. Roberts, Howard E. Sachs, and Alan G. Schwartz. The
nominees are to be elected at the 2001 Annual Meeting to serve until the 2002
Annual Meeting.
The proxy holders intend to vote all proxies received by them in the
accompanying form for such nominees unless otherwise directed. In the
unanticipated event that any nominee is unable or unwilling to accept the
nomination or to serve as a director at the time of the 2001 Annual Meeting,
the proxies will be voted for the remaining nominees and for a substitute
nominee who shall be designated by the present Board of Directors to fill the
vacancy. As of the date of this Proxy Statement, management is not aware of
any nominee who is unable or unwilling to serve as a director.
The following is a list of the current directors of the Company, and all
persons nominated to become such, their ages, and their term of office as a
director of the Company:
Director of
Comtrex
Name Since Age
---- ----- ---
Nathan I. Lipson .......................................... 1996 74
Jeffrey C. Rice ........................................... 1989 51
Steven D. Roberts ......................................... 1997 39
Howard E. Sachs ........................................... 2001 57
Alan G. Schwartz .......................................... 1982 69
Biographies of Directors and Nominees.
NATHAN I. LIPSON is Chairman of the Board of Directors of the Company and a
private investor in various other companies. He has had ownership and
management interests in companies in the food service industry, including
Squirrel Companies, Inc., prior to its acquisition in March of 1992 by Sulcus
Hospitality Technologies Corp., and in the carpet industry.
JEFFREY C. RICE has been President, Chief Executive Officer and a Director
of the Company since February 1, 1989. From May of 1985 through January 1989
he was a Director of American Business Computers Corporation, and served as
its President and Chief Executive Officer from May 1, 1985 through April 30,
1986 and as President of a wholly owned subsidiary, ABC/SEBRN TechCorp, from
November 1986 through January 1989. From 1977 through January 1985, Mr. Rice
served as Director, President and Chief Executive Officer of MICROS Systems,
Inc.
STEVEN D. ROBERTS has been Managing Director of Comtrex Systems Corporation
LTD. (formerly known as Data Systems Terminals Limited ("DSTL")), the
Company's wholly-owned U.K. subsidiary, since its acquisition in October of
1997, and has served on the Company's Board of Directors since November of
1997. He had served as Managing Director of DSTL since 1990, and has been an
employee of DSTL since 1984. From 1985 to 1987, Mr. Roberts served as
President of Electronic Cash Registers, Inc. ("ECR") in Cincinnati, Ohio.
3
ECR was a wholly-owned subsidiary of DSTL, engaged in the distribution of
point-of-sale systems for dry cleaning establishments in the United States.
HOWARD E. SACHS is currently a private investor in several quick service
restaurant concepts. He has had ownership and management interests in various
quick service restaurant concepts, including franchisees of Wendy's and
Popeye's. Mr. Sachs currently serves on the Board of Directors of a number of
private companies, including Legacy Securities, Corp., Lighting Products, Inc.
and Killer Concepts, LLC, all of which are located in Atlanta, Georgia. He is
also President and a member of the Board of Directors of Nyltec, Inc. in
Atlanta, and Vice President and a member of the Board of Directors of WCG
Foods, Inc. in Gulfport, Mississippi, both of which are private companies. Mr.
Sachs is a certified public accountant in the states of Georgia and New
Jersey.
ALAN G. SCHWARTZ has been Chairman of the Board and CEO of Tennis
Corporation of America, which builds, owns and operates commercial
recreational facilities, and a partner in Gifford Investment Company, a
partnership which invests in real estate, for more than the past five years.
He is currently a Director of Firstar Illinois Bank Corporation.
Cumulative Voting Rights.
The Company's By-laws provide that directors shall be elected by a plurality
of the votes cast. There is no provision for cumulative voting under the
Company's Certificate of Incorporation or By-laws.
Board of Directors' Meetings and Committees.
During the fiscal year ended March 31, 2001, three (3) meetings of the Board
of Directors were held. In such year, all of the incumbent directors attended
at least seventy-five percent (75%) of the aggregate of all meetings of the
Board of Directors and the committees on which they served. Mr. Sachs was
elected to the Board of Directors subsequent to the end of the fiscal year, in
May of 2001, to fill the vacancy caused by the death of the Board's Chairman,
Mr. Sidney Dworkin, in October of 2000.
The following is a brief description of the functions of the committees of
the Board of Directors and the identity of their members:
Executive Committee. The Board of Directors has designated an Executive
Committee of the Board, comprised of three (3) directors. The Executive
Committee's current members are Jeffrey C. Rice, Alan G. Schwartz and Nathan
I. Lipson. The Executive Committee met in separate session seven (7) times
during the fiscal year ended March 31, 2001. Mr. Lipson assumed the role of
Chairman of the Board and became a member of the Executive Committee in
December of 2000. The Executive Committee meets regularly between meetings of
the Company's Board of Directors and reviews the Company's business activities
in relation to the Company's business plan.
Audit Committee. The Board of Directors has also designated an Audit
Committee of the Board, comprised of two (2) directors. The Audit Committee's
current members are Nathan I. Lipson and Howard E. Sachs. The Board of
Directors of the Company has determined that the members of the Audit
Committee are independent (as independence is defined in Rule 4200(a)(15) of
the National Association of Securities Dealers' ("NASD") listing standards, as
the same may be modified or supplemented from time to time).
The Audit Committee is responsible for reviewing the adequacy of the
Company's internal procedures and controls and for reviewing the audit and
implementation of appropriate recommendations made by the Company's
independent auditors. The Board of Directors of the Company has adopted a
written charter for the Company's Audit Committee. A copy of the Audit
Committee's Charter is attached hereto as Appendix A.
The Audit Committee met in separate session one (1) time during the fiscal
year ended March 31, 2001.
The Company does not have a standing nominating committee or compensation
committee of the Board of Directors.
4
Audit Committee Report
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended on March 31, 2001 with the
Company's management. The Audit Committee has discussed with the Company's
independent auditors the matters required to be discussed by SAS 61, as the
same may be modified or supplemented from time to time. The Audit Committee
has received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independence Discussion with Audit
Committees), as the same may be modified or supplemented from time to time,
and has discussed with the independent auditors the independent auditors'
independence. Based on such review and discussions, the Audit Committee
recommended to the Company's Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2001.
Nathan I. Lipson
Howard E. Sachs
Audit Fees
The total fees for professional services incurred by the Company for
services rendered by the Company's independent auditors in connection with the
audit of the Company's financial statements for the fiscal year ended on March
31, 2001 and the reviews of the Company's Forms 10-QSB for such fiscal year
were $46,100. All such services were performed by full-time, permanent
employees of Drucker, Math & Whitman, P.C.
Financial Information Systems Design and Implementation Fees
There were no fees billed to the Company for the professional services
described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X rendered by
the Company's independent auditors for the fiscal year ended on March 31 ,
2001.
All Other Fees
The aggregate fees billed to the Company for professional services rendered
by the Company's independent auditors (other than the fees for services
disclosed under Audit Fees or Financial Information Systems Design and
Implementation Fees) for the fiscal year ended on March 31, 2001 were $5,350.
For purposes of this disclosure, the Company has included all fees, in the
total amount reported of $5,350, billed for matters related to the preparation
of state and federal income tax returns by Drucker & Scaccetti, P.C.
Executive Officers of the Company.
Name Age Position
---- --- --------
Jeffrey C. Rice ................ 51 President and Chief Executive Officer
Charles A. Hardin .............. 46 Secretary, Vice President of Engineering
Steven D. Roberts .............. 39 Managing Director, Comtrex U.K.
Kenneth J. Gertie, CPA ......... 38 Vice President, Treasurer, Chief Financial Officer
Matthew R. Carter .............. 30 Vice President of Sales
JEFFREY C. RICE For Mr. Rice's biographical information, please refer to the
discussion regarding nominees for election as directors in "Election of
Directors" above.
STEVEN D. ROBERTS For biographical information on Mr. Roberts, please refer
to the discussion regarding nominees for election as directors in "Election of
Directors" above.
CHARLES A. HARDIN was elected Corporate Secretary in August of 2000 and
promoted to Vice President of Engineering of the Company at the same time. Mr.
Hardin has been an employee of the Company since its founding in 1981, and
served as Vice President of Engineering from June 1995 through August 1997.
5
From 1979 to 1981, Mr. Hardin was a hardware and software engineer for MKD
Corporation, the predecessor corporation of Comtrex. Prior to 1979, Mr. Hardin
worked as an electrical engineer for the Hazeltine Corporation. Mr. Hardin is
a graduate of Northeastern University, with a Bachelor of Science degree in
Electrical Engineering.
KENNETH J. GERTIE is a certified public accountant in the state of New
Jersey and was appointed Vice President of Finance and Administration and
Chief Financial Officer upon joining the Company in November of 1999. From
1995 through 1999, Mr. Gertie worked as Controller for Charles T. Gamble
Industries, a privately held electronics manufacturer. From 1989 to 1995, he
served as Assistant Controller for a division of Weyerhaueser Co., and from
1985 to 1989 he worked in various positions at a regional CPA firm. Mr. Gertie
is a graduate both of Rutgers University, with a Bachelor of Arts degree in
Accounting, and of Drexel University, with an MBA in Finance.
MATTHEW R. CARTER was promoted to Vice President of Sales of the Company
effective as of July 1, 2000. Mr. Carter joined the Company in June of 1999 as
National Sales Manager. Mr. Carter was one of the four shareholders of Cash
Register Systems (CRS), Inc., and served as its Vice President of Sales from
1995 until its acquisition by the Company in June, 1999. Mr. Carter functioned
as Sales Manager for CRS from 1992 through 1995, and worked in various sales,
service and installation capacities for CRS, beginning as a summer employee in
1986.
Security Ownership of Management.
The following table sets forth the beneficial ownership of Common Stock of
Comtrex as of July 17, 2001 by each director and nominee, the Company's Chief
Executive Officer, and all directors, nominees and the Company's executive
officers as a group.
Number of Approximate
Name Shares Owned(1) Percentage Owned
---- --------------- -----------------
NATHAN I. LIPSON ........................ 65,594(3)(8) 4.6%
JEFFREY C. RICE ......................... 139,402(2)(4) 9.8%
STEVEN D. ROBERTS ....................... 135,335(2) 9.5%
HOWARD SACHS ............................ 11,667(6) 1.0%
ALAN G. SCHWARTZ ........................ 90,875(3)(5) 6.4%
ALL EXECUTIVE OFFICERS,
DIRECTORS AND NOMINEES
AS A GROUP (8 people) .................. 458,709(5)(7) 31.8%
- ---------------
(1) Each person has sole voting and investment power with respect to the shares
unless otherwise indicated.
(2) Includes a total of 2,001 shares subject to stock options granted pursuant
to stock option plans; 667 shares granted pursuant to the 1992 Non-
Qualified Stock Option Plan, which became exercisable on August 1, 1998,
667 shares granted pursuant to the 1992 Non-Qualified Stock Option Plan,
which became exercisable on August 1, 1999 and 667 shares granted pursuant
to the 1999 Stock Option Plan, which became exercisable on August 1, 2000.
(3) Includes a total of 2,668 shares subject to stock options granted pursuant
to stock option plans; 667 shares granted pursuant to the 1992 Non-
Qualified Stock Option Plan, which became exercisable on July 1, 1997, 667
shares granted pursuant to the 1992 Non-Qualified Stock Option Plan, which
became exercisable on August 1, 1998, 667 shares granted pursuant to the
1992 Non-Qualified Stock Option Plan, which became exercisable on August 1,
1999, and 667 shares granted pursuant to the 1999 Stock Option Plan, which
became exercisable on August 1, 2000.
(4) Includes 2,334 shares subject to stock options granted pursuant to the 1995
Incentive Stock Option Plan, which became exercisable on July 28, 1997.
(5) Includes a total of 85,447 shares over which Mr. Schwartz has shared voting
or investment interest; 18,000 shares owned by Leader Investment, Co.,
5,000 shares owned by F&S Partnership, 3,187 shares owned by TCA, and
59,260 shares acquired by Mr. Schwartz in December of 2000 which shares
were transferred by Mr. Schwartz into a trust for the benefit of his
descendants, of which Mr. Schwartz is a co-trustee.
6
(6) Includes 6,667 shares subject to stock options granted pursuant to the 1999
Stock Option Plan, which became exercisable on April 1, 2001.
(7) Includes (a) a total of 16,005 shares subject to stock options granted
pursuant to stock option plans, 6,670 shares granted pursuant to the 1992
Non-Qualified Stock Option Plan and 9,335 shares granted pursuant to the
1999 Stock Option Plan, as detailed in footnotes 2, 3, and 6 above, (b) a
total of 7,502 shares owned by all other executive officers of the Company
who are not directors, (c) a total of 8,334 shares subject to incentive
stock options, granted to all other executive officers of the Company who
are not directors, under the 1995 Incentive Stock Option Plan, which shares
became exercisable between October 4, 1999 and January 10, 2000, and (d) a
total of 2,334 shares subject to options granted under the 1995 Incentive
Stock Option Plan, as detailed in footnote 4 above. None of the options
described in this footnote had been exercised as of the date hereof. The
number of shares indicated as owned by executive officers and directors as
a group does not reflect options which are not exercisable within sixty
(60) days after the date hereof.
(8) Does not include 18,668 of the 59,260 shares acquired by Mr. Lipson in
December of 2000 which were transferred by gift to his grandchildren, as to
which Mr. Lipson disclaims all beneficial ownership and over which Mr.
Lipson exercises no voting or investment authority, shared or otherwise.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten
percent (10%) of the Company's Common Stock, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC") and
the National Association of Securities Dealers Automated Quotation System
("Nasdaq"). Officers, directors and greater than ten percent (10%)
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for those persons, the Company believes that, during the period from
March 31, 2000 through March 31, 2001, all Section 16(a) filing requirements
applicable to its officers, directors, and greater than ten percent (10%)
beneficial owners were complied with in a timely manner.
Executive Compensation.
Cash Remuneration of Executive Officers.
The following table provides certain summary information concerning
compensation paid by the Company to the Company's Chief Executive Officer for
the fiscal years ended March 31, 2001, 2000 and 1999.
SUMMARY COMPENSATION TABLE
Annual Long Term Compensation
Compensation Award
--------------- ------------------------------------
Name and Securities Underlying All Other
Principal Position Year Salary Options Granted Compensation
------------------ ---- ------ --------------- ------------
Jeffrey C. Rice Chief, Executive Officer ............................... 2001 $150,000 667 $2,788(1)
2000 $147,173 667 $2,797(2)
1999 $143,000 667 $2,680(3)
- ---------------
(1) Consists of premium payments made by the Company on term life insurance
policy and $2,250 of Company matching funds, at a rate of 25% of the
employee's contribution, under the Company 401(k) plan.
(2) Consists of premium payments made by the Company on term life insurance
policy and $2,208 of Company matching funds, at a rate of 25% of the
employee's contribution, under the Company 401(k) plan.
(3) Consists of premium payments made by the Company on term life insurance
policy and $2,142 of Company matching funds, at a rate of 25% of the
employee's contribution under the Company 401(k) plan.
7
Stock Options Granted.
The following table provides information concerning stock options granted to
the Company's Chief Executive Officer during the fiscal year of the Company
ended March 31, 2001.
OPTION GRANTS IN LAST FISCAL YEAR
No. of Securities % of Total Options
Underlying Options Granted to Employees Exercise or Base
Name Granted in Fiscal Year Price($/Sh) Expiration Date
---- ------- -------------- ------------ ---------------
Jeffrey C. Rice ................................ 667 50% $3.38 July 31, 2005
Option Exercises and Holdings
The following table sets forth certain information regarding the exercise of
options by the Company's Chief Executive Officer during the fiscal year of the
Company ended March 31, 2001 and stock options held by the Company's Chief
Executive Officer as of March 31, 2001.
AGGREGATED OPTION EXERCISE IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Value of
Number of Unexercised
Unexercised Options In-The-Money Options
at FY-End (#) at FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized ($) Unexercisable Unexercisable
---- -------------- ------------ ------------- -------------
Jeffrey C. Rice ................................... 9,667 $900 4,335 $0
Compensation of Directors.
Outside directors who are not members of the Executive Committee receive
$750 per Board of Directors' meeting attended and are reimbursed for their
out-of-pocket expenses incurred in connection with their performance as
members of the Board of Directors. Members of the Executive Committee receive
a yearly fee of $5,000, in addition to any other fees received as a member of
the Board of Directors. Members of the Board who are executive officers of the
Company receive no additional cash compensation for serving as directors of
the Company. The Chairman of the Board, who is also a member of the Executive
Committee, receives a yearly fee of $5,000, in addition to any other fees he
receives as a member of the Board of Directors.
Pursuant to the Company's 1999 Stock Option Plan (the "1999 Plan"), each
director receives annually (on July 1 of each year) a non-discretionary grant
of options to purchase 667 shares of Common Stock at an exercise price equal
to the lowest reported bid price for a share of the Common Stock during the
four-week period immediately preceding the date of the grant. Such options are
exercisable in full one (1) year after the date of grant and expire on the
earliest to occur of (a) five (5) years following the date of grant, (b) three
(3) months following the individual's ceasing to be a director of the Company,
(c) twelve (12) months following termination of service due to disability or
death, or (d) thirty (30) days following the optionee's receipt of written
notice of the proposed dissolution or liquidation of the Company. The exercise
price may be paid in cash or shares of the Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 15, 2000, the Company sold and issued, at a price of $1.6875
(adjusted for the Company's three-for-one reverse stock split effectuated in
February 2001) per share, an aggregate of 118,520 (adjusted for the Company's
three-for-one reverse stock split effectuated in February 2001) shares of its
Common Stock. These shares were sold to two outside directors of the Company,
Alan G. Schwartz and Nathan I. Lipson, with each individual purchasing 59,260
shares. There were no brokers or underwriters involved in the transaction, and
no commissions or underwriting discounts were paid. The $200,000 in aggregate
proceeds received by the Company from such sales will be used by the Company
for general working capital purposes.
8
INDEPENDENT ACCOUNTANTS
The Board of Directors, by resolution, has selected Drucker, Math & Whitman,
P.C., independent certified public accountants, to audit the books, records
and accounts of the Company for the fiscal year ending March 31, 2002. It is
anticipated that representatives of Drucker, Math & Whitman, P.C. will be
present at the meeting to respond to appropriate questions and, if they
desire, to make a statement.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered at the 2002 Annual Meeting
of Stockholders must be received at the principal executive offices of the
Company no later than March 29, 2002. Such proposals may be included in next
year's proxy statement if they comply with certain rules and regulations
promulgated by the Securities and Exchange Commission.
In accordance with Rule 14a-4(c) promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended, the
holders of proxies solicited by the Board of Directors in connection with the
2002 Annual Meeting of Shareholders may vote such proxies in their discretion
on certain matters as more fully described in such rule, including without
limitation on any matter coming before the meeting as to which the Corporation
does not have notice on or before June 11, 2002.
COSTS OF SOLICITATION
The entire cost of soliciting proxies will be borne by Comtrex. Arrangements
may be made with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy materials to the beneficial owners of
stock, and reimbursement for expenses may be made. Proxies may be solicited in
person or by telephone or telegraph by directors, officers or regular
employees of Comtrex, none of whom will receive additional compensation
therefor.
MANNER IN WHICH PROXIES WILL BE VOTED
All properly executed proxies received by the Board of Directors will be
voted. The Board proposes to vote all such proxies, unless otherwise directed,
for the election of the above nominees to the Board of Directors. The Board
knows of no other matters which may be presented for action at the meeting.
However, if any other matter properly comes before the meeting, the proxy
holders will vote in accordance with their best judgment on such matter.
Stockholders are urged to vote, sign and return the enclosed form of proxy
promptly in the enclosed envelope.
By Order of the Board of Directors,
CHARLES A. HARDIN
Secretary
July 26, 2001
9
APPENDIX A
Comtrex Systems Corporation
Audit Committee Charter
The Audit Committee ("the Committee"), of the Board of Directors ("the
Board") of Company ("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, a majority of whom
must be independent, as determined by the Board. The members of the Committee
will meet the independence, experience and financial literacy requirements of
the Nasdaq Marketplace rules. The members of the Committee will be elected
annually at the organizational meeting of the full Board and will be listed in
the annual report to shareholders.
RESPONSIBILITY
The Committee is a part of the Board. Its 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 internal and external audit process.
In addition, the Committee provides an avenue for communication between
internal audit, 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, as representatives of the
shareholders. As such representatives, the Board and Committee have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace or nominate an outside auditor. The Committee will make
periodic 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 annually and as many additional times as
the Committee deems necessary. Content of the agenda for meetings should be
cleared by the Committee Chair. The Committee is to meet in separate executive
sessions with the chief financial officer, independent accountants, and
internal audit 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 and internal audit be present
at Committee meetings.
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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 Marketplace rules governing Audit
Committee Requirements.
2. Review with the Company's management, internal audit and independent
accountants the adequacy and effectiveness of the Company's accounting
and financial reporting controls. Obtain annually in writing from the
independent accountants their letter as to the adequacy and
effectiveness of such controls.
3. Review with the Company's management, internal audit 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 judgments
about the quality, not just the acceptability, of the Company's
accounting principles 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 the 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, as
may be modified or supplemented.
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 as
required under standards for communication with Audit Committees is to
be made prior to the related press release or, if not practicable, prior
to filing Forms 10-QSB. Also receive 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, internal
audit 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 satisfactory 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, as may be modified or supplemented. Further,
receive a written communication provided by the
independent accountants concerning their judgment about
the quality of the
A-2
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 internal audit and
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 at least once 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, internal audit 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
general 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.
A-3
COMTREX SYSTEMS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JEFFREY C. RICE, with full power of
substitution, the proxy of the undersigned (the "Proxy") to represent the
undersigned at the Annual Meeting of Stockholders of Comtrex Systems Corporation
(the "Company") to be held on Tuesday, August 14, 2001, or any adjournment or
postponement thereof, and to vote the number of shares of the Common Stock of
the Company which the undersigned would be entitled to vote if personally
present:
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, the shares represented
hereby will be voted FOR the election of the nominees listed on the reverse side
hereof, and as the Proxy deems advisable on such other matters as may properly
come before the meeting. This proxy may be revoked at any time prior to the time
it is voted.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[X] Please mark your
votes as in this
example.
FOR the nominees listed to WITHHOLD
the right (except as marked to AUTHORITY
the right) to vote for the (Instruction: To withhold authority to vote for
nominees listed to the right any individual nominee, strike a line through
the nominee's name in the list below.)
1. ELECTION [ ] [ ]
OF DIRECTORS
Nathan I. Lipson
Jeffrey C. Rice
Steven D. Roberts
Howard E. Sachs
Alan G. Schwartz
2. In his discretion, the Proxy is authorized to vote
upon such other business as may properly come
before the meeting.
(MARK HERE FOR ADDRESS CHANGE AND NOTE
AT LEFT /___/
MARK HERE IF YOU PLAN TO ATTEND THE
MEETING /___/
Whether or not you plan to attend the meeting in
person, you are urged to sign and return your proxy
without delay in the return envelope provided for
that purpose which requires no postage if mailed in
the United States.
When signing the proxy, please date it and take care
to have the signature conform to the stockholder's
name as it appears on this side of the proxy. If
shares are registered in the names of two or more
persons, each person should sign. Executors,
administrators, trustees and guardians should so
indicate when signing.
______________________________________________________________ Dated: ________________________________, 2001
Signature(s) of Stockholder(s)