SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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
ANTS SOFTWARE INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
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[ANTS software inc. GRAPHIC OMITTED]
April 2, 2002
To the Shareholders of ANTs software inc.:
You are cordially invited to the 2002 Annual Meeting of Shareholders,
which will be held on Tuesday, May 14, 2002, at 2:00 p.m. at the Doubletree
Hotel, 835 Airport Blvd, Burlingame, California.
At our meeting, you will be asked to consider and vote upon the following
proposals: (i) to elect one Class 2 director, and (ii) to ratify the
appointment of Burr, Pilger & Mayer, LLP as our independent accountants for the
fiscal year ending December 31, 2002.
Details with respect to the meeting are set forth in the attached Notice
of Annual Meeting and Proxy Statement.
In preparation for the meeting, we are asking that all shareholders who are
planning to attend the meeting in person check the appropriate box on the proxy
card. Without an RSVP, we cannot guarantee the availability of seating for all
meeting attendees. First priority will be given to those individuals that have
RSVPed in advance of the meeting.
Whether or not you plan to attend the meeting, you are urged to complete,
date, sign and return your proxy. Your vote is very important to us and we
encourage you to read the proxy statement and vote your shares as soon as
possible. A return envelope for your proxy card is enclosed for your
convenience. You may also vote by telephone or via the Internet; specific
instructions on how to vote using these methods are included on the proxy card.
I look forward to seeing you at the Annual Meeting.
Sincerely
Francis K. Ruotolo
Chairman of the Board, President,
And Chief Executive Officer
ANTs software inc.
801 Mahler Rd, Suite G
Burlingame, CA 94010
---------------------------------
Notice of Annual Meeting of Shareholders
Of ANTs software inc.
---------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of ANTs
software inc., a Delaware corporation (the "Company") will be held at the
Doubletree Hotel, 835 Airport Blvd, Burlingame, CA, on May 14, 2002, at 2:00
p.m., local time to transact the following business:
1. Elect one Class 2 director of the Company. Homer G. Dunn has been
nominated to serve until the 2005 Annual Meeting, and until his
successor has been elected and qualified.
2. Ratify the selection of Burr, Pilger & Mayer, LLP, as independent
accountants for the Company for the calendar year ending December 31,
2002; and
3. Consider and act upon such other business as may properly come before
the meeting or any adjournment or postponement thereof.
All of these matters to be voted upon are more fully presented and
discussed in the Proxy Statement delivered with this notice. Your Board of
directors recommends that you vote in favor of the 2 proposals outlined in this
proxy statement.
Your Board of directors has fixed the close of business on March 22, 2002
as the record date for determining those shareholders who are entitled to
receive notice of and to vote at this meeting or any adjournment or
postponement thereof. A list of such shareholders will be available at the
meeting and, for a ten-day period preceding the meeting, at the offices of the
Company during ordinary business hours. The stock transfer books will not be
closed between the record date and the date of the meeting.
Your vote is very important, regardless of the number of shares you own.
Whether or not you plan to attend the meeting, please read the attached Proxy
Statement carefully, complete, date and sign the enclosed proxy card as
promptly as possible and return it in the enclosed envelope. You may revoke
your proxy at any time prior to the time it is voted at the meeting or any
adjournment thereof. If you attend the meeting and vote by ballot, your proxy
will be revoked automatically and only your vote at the meeting will be
counted.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth Ruotolo,
Secretary
Burlingame, California
April 2, 2002
ANTs software inc.
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PROXY STATEMENT
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Annual Meeting of Shareholders
May 14, 2002
This Proxy Statement is being mailed to shareholders on or around April 8,
2002, in connection with the solicitation of proxies by the Board of Directors
of ANTs software inc., a Delaware corporation (the "Company") for use at the
Annual Meeting of Shareholders to be held on May 14, 2002, at 2:00 p.m. local
time at the Doubletree Hotel, 835 Airport Blvd., Burlingame, California (the
"Annual Meeting").
ABOUT THE ANNUAL MEETING
What is the purpose of the Annual Meeting?
At the Annual Meeting, you will be asked to:
1. Elect one Class 2 director;
2. Ratify the selection of Burr, Pilger & Mayer, LLP, as independent
accountants for the Company for the year ending December 31, 2002; and
3. Act upon such matters as may properly come before the Annual Meeting
or any adjournments or postponements thereof.
What is the Proxy for, who can vote and how do I vote?
This proxy statement informs the shareholders of the Company about items
that will be voted upon at the Annual Meeting. The Statement also solicits
proxies (a formal way of voting through legal representation) from those
shareholders who are unable to attend the Annual Meeting. The proxy statement
was prepared by the management of the Company for its Board of Directors. The
Company is paying the cost of preparation of this Statement and for its mailing
to and return of executed proxies from Shareholders.
The proxy is for voting shares in connection with the Annual Meeting and
at any adjournment or postponement of that meeting. The Annual Meeting will be
held on May 14, 2001, at 2:00 p.m., local time, at the Doubletree Hotel, 835
Airport Blvd., Burlingame, California.
You may vote at the Annual Meeting if you were a shareholder of record of
Common Stock at the close of business on March 22, 2002. On March 22, 2002,
there were outstanding 17,525,651 shares of Common Stock. The presence at the
Annual Meeting, in person or by proxy, of a majority of the total number of
shares entitled to vote on the record date constitutes a quorum for the
transaction of business by such holders at the Annual Meeting. Each share is
entitled to one vote on each matter that is properly brought before the Annual
Meeting.
A list of Shareholders entitled to vote at the Annual Meeting will be
available at the Doubletree Hotel, 835 Airport Blvd, Burlingame, California on
the date of the Annual Meeting. This list will also be available for 10 days
prior to the Annual Meeting at the offices of the Company at 801 Mahler Road,
Suite G, Burlingame, California during normal business hours
Can I attend the Annual Meeting?
Yes. If you plan to attend the Annual Meeting, we look forward to seeing
you there. We do ask, however, that you let us know that you plan to attend by
checking the appropriate box on your proxy card. If you are unable to attend
the Annual Meeting you may vote by proxy. The enclosed proxy is solicited
1
by the Company's Board of Directors and, when properly completed and returned,
will be voted as you direct on your proxy. In the absence of contrary
instructions, shares represented by such proxies will be voted FOR the
proposals to be considered at the Annual Meeting and FOR the nominee for
director presented by the Board. You may revoke or change your proxy at any
time before it is exercised at the Annual Meeting. To do this, send a written
notice of revocation or another signed proxy with a later date to the Secretary
of the Company at the Company's address referenced above. You may also revoke
your proxy by giving notice and voting in person at the Annual Meeting.
How will votes be counted?
The presence, in person or by proxy, of holders of a majority of the
outstanding shares of common stock entitled to vote will constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes will be counted as present for the purpose of determining the
presence of a quorum. If your shares are held in the name of a nominee, and you
do not tell the nominee how to vote your shares (so-called "broker non-votes"),
the nominee can vote them as it sees fit only on matters that are determined to
be routine, and not on any other proposal. Even though broker non-votes will be
counted as present to determine if a quorum exists, they will not be counted as
present and entitled to vote on any non-routine proposal.
The director nominee who receives the greatest number of votes cast in
person or by proxy at the Annual Meeting will be elected Class 2 director of
the Company. The affirmative vote of the holders of the majority of the shares
present or represented by proxy at the Annual Meeting is required for the
approval of the other matter to be voted upon. Abstentions for such matter will
be treated as votes cast against the particular matter being voted upon.
In what ways can I vote?
You have several options available to vote your shares without attending
the Annual Meeting. You can vote by (i) completing, signing and returning the
enclosed proxy, (ii) calling in your votes by telephone, or (iii) using the
Internet.
You can vote by telephone using the telephone number shown on your proxy
card. The telephone voting procedure is designed to authenticate your identity
and allow you to vote your shares. It will also confirm that your instructions
have been properly recorded. If your shares are held in the name of a bank or
broker, the availability of telephone voting will depend on the voting process
of the bank or broker. Please follow whatever telephone voting instructions are
on the form you receive from your bank or broker.
You can vote on the Internet at the web address shown on the enclosed
proxy card. The Internet voting procedure is designed to authenticate your
identity and allow you to vote your shares. It will also confirm that your
instructions have been properly received. If your shares are held in the name
of a bank or broker, the availability of Internet voting will depend on the
voting process of the bank or broker. Please follow whatever Internet voting
instructions are on the form you receive from your bank or broker.
If you elect to vote using the Internet you may incur telecommunications
and Internet access charges for which you are responsible.
PROPOSAL 1 -- ELECTION OF DIRECTOR
Our Board of Directors currently has five directors divided into three
classes. Members of each class serve for a three-year term, with one class of
directors being elected each year. The nominee is the director currently
designated as Class 2 Director, whose term expires at the 2002 Annual Meeting,
and upon his respective successor being elected and qualified to serve. The
enclosed proxy cannot be voted for a greater number of persons than one.
The Board proposes the election of Homer G. Dunn as Class 2 Director for a
term of three years, expiring at the 2005 Annual Meeting, and until his
successor is elected and qualified to serve. The nominee has indicated to the
Company that he will serve if elected.
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Unless otherwise indicated, all proxies that authorize the persons named
therein to vote for the election of directors will be voted for the election of
the nominee listed below. If the nominee is not available for election as a
result of any unforeseen circumstance, it is the intention of the persons named
in the proxy to vote for the election of such substitute nominee, if any, as
our Board of Directors may propose.
Nominee for Class 2 Director
Class 2 directors generally serve a term of 3 years and until their
successors are elected and qualified. It is anticipated that the Class 2
director will serve until the annual meeting following the close of the 2004
fiscal year. The nominee for Class 2 director is as follows:
Homer G. Dunn, Age 61
Homer G. Dunn joined the Company's Board of Directors in January 2001. Mr.
Dunn has almost 35 years of business experience encompassing sales, marketing,
product management, and consulting. At present, he is Chairman and Founder of
Nonstop Solutions Corporation, a leading provider of demand chain optimization
technology, information and services solutions to manufacturers, wholesale
distributors and retailers.
A plurality of the votes cast is necessary for the election of a director.
The Board of Directors recommends a vote FOR the nominee listed above.
Class 1 Directors continuing in office
The term of Class 1 directors expires at the annual meeting following the
close of the 2003 fiscal year. The Class 1 directors and the Class 1 director
positions are not up for re-election at this Annual Meeting.
Thomas Holt, Age 56
Thomas Holt joined the Company's Board of Directors in November 2000. Mr.
Holt is currently Vice President and CIO for Lucent's Services organization.
Mr. Holt was VP of Information Services and Chief Information Officer at
International Network Services ("INS") from May 1997 before its merger with
Lucent. He has also acted as VP of MIS and CIO at Informix and held senior
positions at Motorola after starting his career with IBM.
Papken S. Der Torossian, Age 63
Papken S. Der Torossian joined the Company's Board of Directors in March
2001. Mr. Der Torossian currently serves as Chairman of the Board of Directors
and Chief Executive Officer for Silicon Valley Group, Inc. (SVGI). He joined
SVGI in 1984 as President and became CEO in 1986. In 1991, Mr. Der Torossian
was appointed SVGI's Chairman of the Board. Mr. Der Torossian serves as a
director of Nanometrics Inc. since July 2001. Mr. Der Torossian holds a
B.S.M.E. degree from MIT and a M.S.M.E. degree from Stanford University.
Class 3 Directors continuing in office
The term of Class 3 directors expires at the annual meeting following the
close of the 2002 fiscal year. The Class 3 directors and the Class 3 director
positions are not up for re-election at this Annual Meeting.
Francis K. Ruotolo, Age 64
Frank Ruotolo became Chairman of the Board, Chief Executive Officer and
President in January 2001. Prior to that time, he was a member of the Board of
Advisors. Most recently, he was a
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director in the consulting practice of Deloitte & Touche for a period of three
years. From 1993 to 1998, Mr. Ruotolo served as the President of The Futures
Group. Mr. Ruotolo holds a BA degree in English/Journalism from Northeastern
University, Boston, MA, and is a member of the Northeastern University National
Council.
John R. Gaulding, Age 56
John R. Gaulding joined the Company's Board of Directors in January 2001.
John R. Gaulding is a private investor and consultant in the fields of strategy
and organization. Most recently, he served as a Senior Advisor to Deloitte
Consulting specializing in e-Business strategy with responsibility for advising
such clients as Hewlett Packard, 3Com, Bergen Brunswig, Longs Drugstores, SCE,
and PG&E. Mr. Gaulding is a director of TMP Worldwide, Inc.
Board Committees
The Board of Directors met 11 times during the fiscal year ended December
31, 2001 (the "Last Fiscal Year"). During the Last Fiscal Year, except for
Clive G. Whittenbury, each director attended at least 75% of the total number
of meetings of the Board of Directors and the Board committees of which he or
she was a member while he or she was a member.
The Company has an Audit Committee, which consists of Thomas Holt and John
R. Gaulding. Clive G. Whittenbury resigned from the Board and the Audit
Committee on March 3, 2002. The Audit Committee held one meeting during the
Last Fiscal Year. This committee, among other things, reviews the annual audit
with the Company's independent accountants. A copy of the Charter of the Audit
Committee was attached to the Proxy Statement filed by the Company on March 22,
2001.
The Company also has a Compensation Committee, which was formed in June
2001 and consists of Homer G. Dunn and John R. Gaulding. Mr. Richard Lee
resigned as a Director of the Company and a member of the Compensation
Committee on November 27, 2001. The Compensation Committee held two meetings
during the Last Fiscal Year. This committee, among other things, reviews the
compensation policies applicable to our senior officers.
The Company does not have any committees of the Board of directors other
than the Audit Committee and the Compensation Committee.
Compensation of Directors
Directors who are employees of our Company do not receive any compensation
for service on the Board. We do not currently pay any cash compensation to
non-employee directors. We generally grant options or warrants to purchase up
to 75,000 shares of Common Stock to our non-employee directors, subject to a
two-year vesting schedule. We paid consulting fees in the amount of $1,750 to
Richard Lee for consulting services rendered in 2001.
Indemnification Agreements
We have entered into Indemnification Agreements with each of our executive
officers and directors that provide for indemnification against certain
possible judgments and costs which may be brought against them in the course of
their service. Such agreements do not provide indemnification for acts and
omissions for which indemnification is not permitted under Delaware law.
4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership by Beneficial Owners
The following table sets forth, as of March 11, 2002, information
regarding ownership of our common stock by any person or entity, known by us to
be the beneficial owner of more than five percent of the outstanding shares of
common stock. The percentages are calculated on the basis of the amount of
outstanding shares of Common Stock on March 11, 2002 which is 17,525,651 plus,
for each person, any securities that person has the right to acquire within 60
days following March 11, 2002 pursuant to options or warrants.
Amount
and Nature
of Beneficial Percent
Name and Address of Beneficial Owner Ownership of Class
- ------------------------------------ ------------ --------
Donald R. Hutton
10995 Boas Road
Sidney, B. C. Canada V8L 5J1 ......... 3,602,500(1) 20.55
Alison B. Hicks
10995 Boas Road
Sidney, B. C. Canada V8L 5J1 ......... 3,602,500(2) 20.55
Whistler Design
94 Dowdeswell Street
Box N-75-71, Nassau .................. 2,502,500 14.28
- ----------
(1) Includes 700,000 shares of Common Stock owned by Mr. Hutton, 2,502,500
shares of Common Stock in the name of Whistler Design, controlled by Mr.
Hutton, 400,000 shares of Common Stock in the name of Ms. Alison B.
Hicks, Mr. Hutton's spouse; does not include 90,000 shares of Common
Stock which Mr. Hutton held in joint tenancy with Ms. Josephine C. Hutton
and for which Mr. Hutton has disclaimed any beneficial interest in or
ownership of such shares.
(2) Includes 400,000 shares of Common Stock owned by Ms. Hicks, 2,502,500
shares of Common Stock in the name of Whistler Design, controlled by
Donald R. Hutton, Ms. Hicks' spouse, 700,000 shares of Common Stock in
the name of Mr. Hutton; does not include 90,000 shares of Common Stock
which Mr. Hutton held in joint tenancy with Ms. Josephine C. Hutton and
for which Mr. Hutton has disclaimed any beneficial interest in or
ownership of such shares.
Security Ownership by Directors and Executive Officers
The following table sets forth certain information regarding the
beneficial ownership of the shares of Common Stock as of March 11, 2002, by
each of our directors and executive officers. The table also shows the
beneficial ownership of our stock by all directors and executive officers as a
group. The table includes the number of shares subject to outstanding options
and warrants to purchase shares of Common Stock. The percentages are calculated
on the basis of the amount of outstanding shares of Common Stock on March 11,
2002 which is 17,525,651 plus, for each person, any securities that person has
the right to acquire within 60 days following March 11, 2002 pursuant to
options or warrants.
5
Shares of
Common Stock Percent
Name and Address of Beneficial Owner (1) Beneficially Owned of Class
- ---------------------------------------- ------------------ --------
Directors and Nominees for Director
Francis K. Ruotolo .................................... 1,007,500(2) 5.44
Thomas Holt ........................................... 75,000(3) *
John R. Gaulding ...................................... 75,000(4) *
Homer G. Dunn ......................................... 75,000(5) *
Papken S. Der Torossian ............................... 75,000(6) *
Executive Officers
Clifford Hersh ........................................ 864,000(7) 4.70
Jeffrey Spirn ......................................... 120,000(8) *
Kenneth Ruotolo ....................................... 239,320(9) 1.35
8 directors and executive officers as a group ......... 2,530,820 12.62
- ----------
* means less than 1%
(1) Unless otherwise indicated, the address of each director and officer is
c/o ANTs software inc., 801 Mahler Road, Suite G, Burlingame, CA 94010.
(2) Includes a Warrant to purchase up to 25,000 shares of Common Stock, an
Option to purchase up to 750,000 shares of Common Stock, an Option to
purchase up to 155,000 shares of Common Stock, and an Option to purchase
up to 77,500 shares of Common Stock. Mr. Ruotolo can acquire 25,000
shares from his Warrant and 763,750 shares from his Options in the next
60 days. Mr. Ruotolo may also purchase the remaining shares under his
Option at any time during the next 60 days, however such purchase would
be subject to our right to repurchase unvested shares.
(3) Includes an Option to purchase up to 50,000 shares of Common Stock and a
second Option to purchase up to 25,000 shares of Common Stock. Mr. Holt
can acquire 39,583 shares from his first Option and 17,708 shares from
his second Option in the next 60 days. Mr. Holt may also purchase the
remaining shares under his Options at any time during the next 60 days,
however such purchase would be subject to our right to repurchase
unvested shares. The address of Mr. Holt is 203 Montclair Road, Los
Gatos, CA 95032.
(4) Includes an Option to purchase up to 75,000 shares of Common Stock. Mr.
Gaulding can acquire 53,125 shares from his Option in the next 60 days.
Mr. Gaulding may also purchase the remaining shares under his Option at
any time during the next 60 days, however such purchase would be subject
to our right to repurchase unvested shares. The address of Mr. Gaulding
is 115 Margarita Dr., San Rafael, CA 94901.
(5) Includes an Option to purchase up to 75,000 shares of Common Stock. Mr.
Dunn can acquire 53,125 shares from his Option in the next 60 days. Mr.
Dunn may also purchase the remaining shares under his Option at any time
during the next 60 days, however such purchase would be subject to our
right to repurchase unvested shares. The address of Mr. Dunn is NONSTOP
Solutions, 235 Montgomery Street, 13th Floor, San Francisco, CA 94014.
(6) Includes an Option to purchase up to 75,000 shares of Common Stock. Mr.
Der Torossian can acquire 46,875 shares from his Option in the next 60
days. Mr. Der Torossian may also purchase the remaining shares under his
Option at any time during the next 60 days, however such purchase would
be subject to our right to repurchase unvested shares. The address of Mr.
Der Torossian is Silicon Valley Group, Inc., 101 Metro Drive, Suite 400,
San Jose, CA 95110.
(7) Includes two fully vested Warrants to purchase an aggregate of up to
600,000 shares of Common Stock, an Option to purchase up to 120,000
shares of Common Stock, a second Option to purchase up to 72,000 shares
of Common Stock, and a third Option to purchase up to 72,000 shares of
Common Stock. Mr. Hersh may acquire 600,000 shares of Common Stock under
his Warrants in the next 60 days. Mr. Hersh may also acquire 203,999
shares of Common Stock under his Options in the next 60 days. Mr. Hersh
may also purchase the remaining shares under his Option at any time
during the next 60 days, however such purchase would be subject to our
right to repurchase unvested shares.
(8) Includes a Warrant to purchase up to 50,000 shares of Common Stock, an
Option to purchase up to 10,000 shares of Common Stock, a second Option
to purchase up to 40,000 shares of Common Stock,
6
a third Option to purchase up to 10,000 shares of Common Stock, and a
forth Option to purchase up to 10,000 shares of Common Stock. Mr. Spirn
may acquire 34,722 shares of Common Stock under his Warrant in the next 60
days. Mr. Spirn may also acquire 41,388 shares of Common Stock under his
Option in the next 60 days. Mr. Spirn may also purchase the remaining
shares under his Options at any time during the next 60 days, however such
purchase would be subject to our right to repurchase unvested shares.
(9) Includes an Option to purchase up to 10,000 shares of Common Stock (of
which 660 have been forfeited), a second Option to purchase up to 30,000
shares of Common Stock (of which 10,020 have been forfeited), a third
Option to purchase up to 175,000 shares of Common Stock, a forth Option
to purchase up to 17,500 shares of Common Stock, and a fifth Option to
purchase up to 17,500 shares of Common Stock. Mr. Ruotolo may acquire
117,792 shares of Common Stock under his Options. Mr. Ruotolo may also
purchase the remaining shares under his Options at any time during the
next 60 days, however such purchase would be subject to our right to
repurchase unvested shares.
Section 16(a) Beneficial Ownership Reporting Compliance
To the best of our knowledge, all our officers and directors appointed in
fiscal year 2001 timely filed a Form 3 to report their appointment to our Board
of Directors or as an officer of our Company. Additionally, to the best of our
knowledge all of our officers and directors who were granted options by us
reported such grants on a Form 5 filed for the fiscal year ending December 31,
2001. Such grants were approved by our Board of Directors. To the best of our
knowledge, Mr. Donald Hutton did not file a Form 4 to report the exercise of a
warrant to purchase 500,000 shares of common stock on or about December 9,
2001, but reported such exercise on a Form 5 filed for the fiscal year ending
December 31, 2001.
EXECUTIVE COMPENSATION
Summary Compensation Table
This Table sets forth the annual compensation for the three most recent
completed fiscal years and the transition period from May 1, 2000 to December
31, 2000 (the "Transition Period") of the named officers who were serving as
executive officers during the last completed fiscal year or at the end of the
last completed fiscal year.
Annual compensation
----------------------------------------------------
Other Annual
Name and principal position Year Salary Bonus Compensation
- --------------------------- ------------- ----------- ----------------- --------
Francis K. Ruotolo (2) ......... 2001 $362,473 $ 400,000(7)
Chief Executive Officer 2000(1) -- -- --
President and Chairman 2000 -- -- --
of the Board 1999 -- -- --
John H. Williams (3) ........... 2001 $184,491 $ 10,000 --
Former Chief Executive 2000(1) $ 66,666 -- --
Officer and Executive 2000 -- -- --
Vice President, Quality 1999 -- -- --
Assurance and Operations
Clifford Hersh (5) ............. 2001 $200,000 $ 10,000 --
Executive Vice 2000(1) $133,333 -- --
President and Chief 2000 $200,000 -- --
Scientist 1999 -- -- --
Kenneth Ruotolo (5) ............ 2001 $106,666 -- --
Secretary, Chief 2000(1) -- -- --
Financial Officer and 2000 -- -- --
Executive Vice President 1999 -- -- --
of Finance and
Long term compensation
-------------------------------------------------------
Award Payouts
----------------------------------------- -------------
Securities
Restricted Underlying LTIP All Other
Name and principal position Stock Award(s) Options/SARs Payouts Compensation
- --------------------------- ---------------- -------------- --------- -------------
Francis K. Ruotolo (2) ......... 982,500
Chief Executive Officer -- 25,000 -- --
President and Chairman -- -- -- --
of the Board -- -- -- --
John H. Williams (3) ........... -- 200,000 -- --
Former Chief Executive -- 360,000 -- $ 20,382(4)
Officer and Executive -- -- -- $ 10,400(4)
Vice President, Quality -- -- -- --
Assurance and Operations
Clifford Hersh (5) ............. -- 144,000 -- --
Executive Vice -- 120,000 -- --
President and Chief -- -- -- --
Scientist -- 200,000 -- --
Kenneth Ruotolo (5) ............ -- 239,320 $ 61,600(4)
Secretary, Chief -- -- -- --
Financial Officer and -- -- -- --
Executive Vice President -- -- -- --
of Finance and Operations
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Annual compensation
-------------------------------------------------
Other Annual
Name and principal position Year Salary Bonus Compensation
- ----------------------------- ------------- ----------- --------- -------------
Jeff Spirn (5) .............. 2001 $155,833 $ 2,186 --
Vice President, Research 2000(1) -- -- --
and Development 2000 -- -- --
1999 -- -- --
Joan Cronin (6) ............. 2001 $ 43,976 $10,000 --
Former Executive Vice 2000(1) $133,333 -- --
President, Human Resources 2000 $200,000 -- --
1999 -- -- --
Long term compensation
-------------------------------------------------------
Award Payouts
----------------------------------------- -------------
Securities
Restricted Underlying LTIP All Other
Name and principal position Stock Award(s) Options/SARs Payouts Compensation
- ----------------------------- ---------------- -------------- --------- -------------
Operations
Jeff Spirn (5) .............. -- 60,000 -- --
Vice President, Research -- 60,000 -- --
and Development -- -- -- --
-- -- -- --
Joan Cronin (6) ............. -- 150,000 -- --
Former Executive Vice -- 360,000 -- --
President, Human Resources -- -- -- --
-- -- -- --
- ----------
(1) Represents the Transition Period from May 1, 2000 to December 31, 2000.
(2) Mr. Frank Ruotolo joined the Company on January 8, 2001. On October 1,
2001, he voluntarily took a 30% pay cut. On March 16, 2002, he
voluntarily took a further 70% pay cut, bringing his salary to 21% of its
original amount.
(3) Dr. Williams served as interim Chief Executive Officer from December 12,
2000 to January 8, 2001.
(4) Represents compensation for consulting services rendered by Dr. Williams
and Mr. Kenneth Ruotolo before they became employees of the Company.
(5) On October 1, 2001, Mr. Clifford Hersh, Mr. Jeff Spirn and Mr. Kenneth
Ruotolo each voluntarily took a 20% pay cut. Subsequently, on March 16,
2002: Mr. Clifford Hersh voluntarily took a further 92% pay cut, bringing
his salary to 6% of its original amount, Mr. Jeff Spirn voluntarily took
a further 90% pay cut, bringing his salary to 8% of its original amount
and Mr. Kenneth Ruotolo voluntarily took a further 50% pay cut, bringing
his salary to 40% of its original amount.
(6) Ms. Cronin resigned on March 2, 2001.
(7) Represents a sign-on bonus paid to Mr. Francis K. Ruotolo on or about
January 8, 2001.
Option/SAR grants in the Last Fiscal Year
The following table sets forth certain information concerning grants of
options and warrants to purchase shares of Common Stock of the Company made
during the last completed fiscal year to the executive officers named in the
Summary Compensation Table.
8
Percent of Total
Number of Securities Options/ SARs Granted
Underlying Options/ to Employees in Per Share
Name SARs Granted Fiscal Year (1) Exercise Price (2) Expiration Date
- -------------------------------- ---------------------- ---------------------- -------------------- ----------------
Francis K. Ruotolo ............. 750,000 34.98 $ 2.75 01/08/2011
Francis K. Ruotolo (3) ......... 155,000 7.23 $ 2.00 11/28/2011
Francis K. Ruotolo (3) ......... 77,500 3.61 $ 2.00 10/03/2011
John H. Williams ............... 200,000 9.32 $ 2.75 12/31/2002
Kenneth Ruotolo ................ 175,000 8.16 $ 3.18 06/21/2011
Kenneth Ruotolo (4) ............ 30,000 1.39 $ 2.91 02/06/2011
Kenneth Ruotolo (3) ............ 17,500 0.81 $ 2.00 10/03/2011
Kenneth Ruotolo (3) ............ 17,500 0.81 $ 2.00 11/28/2011
Kenneth Ruotolo (5) ............ 10,000 0.46 $ 2.75 01/08/2011
Clifford Hersh (3) ............. 72,000 3.35 $ 2.00 10/03/2011
Clifford Hersh (3) ............. 72,000 3.35 $ 2.00 11/28/2011
Jeff Spirn ..................... 40,000 1.86 $ 2.91 02/21/2011
Jeff Spirn (3) ................. 10,000 0.46 $ 2.00 10/03/2011
Jeff Spirn (3) ................. 10,000 0.46 $ 2.00 11/28/2011
Joan Cronin .................... 150,000 6.99 $ 2.75 05/28/2002
- ----------
(1) During the fiscal year ended December 31, 2001, the Company granted to
its employees options covering 2,143,690 shares of Common Stock. All
options granted are immediately exercisable, subject to the Company's
right to repurchase the unvested shares.
(2) The exercise price is equal to the closing sale price of the Common Stock
of the Company traded on the Over the Counter Bulletin Board on the grant
date.
(3) These Options were granted in connection with Mr. Francis K. Ruotolo's
30% pay cut and Mr. Clifford Hersh, Mr. Kenneth Ruotolo and Mr. Jeff
Spirn's 20% pay cut. Such Options are fully vested as of the date of
filing of this report.
(4) Represents consideration granted in connection with consulting services
rendered by Mr. Ruotolo before he became an employee of the Company. Mr.
Ruotolo forfeited 10,020 options when he became an employee of the
Company, he retains ownership of 19,980 options.
(5) Represents consideration granted in connection with consulting services
rendered by Mr. Ruotolo before he became an employee of the Company. Mr.
Ruotolo forfeited 660 options when he became an employee of the Company,
he retains ownership of 9,340 options.
Option/SAR Exercises in the Last Fiscal Year
The following table sets forth certain information concerning the exercise
of options and warrants to purchase shares of Common Stock of the Company made
during the last completed fiscal year by the executive officers named in the
Summary Compensation Table.
Value of
Number of Unexercised In-
Securities Underlying The-Money
Unexercised Options/ Options/SARs
Shares Acquired SARs at FY-end (#) at FY-end ($)
Name on Exercise Value Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------- ----------------- ---------------- --------------------------- --------------------------
Joan Cronin (1) ......... 3,000 $8,250 384,500/0 $0.00/$0.00
- ----------
(1) Ms. Cronin resigned on March 2, 2001 and exercised her option on July 25,
2001.
Separation Agreement
On January 8, 2001, we entered into a Separation Agreement with Mr.
Francis K. Ruotolo pursuant to which we agreed to pay Mr. Ruotolo his salary
for a period of six months following the termination of
9
his employment in the event Mr. Ruotolo terminates his employment for Good
Cause or in the event we terminate Mr. Ruotolo's employment without Cause. We
also agreed to continue to pay Mr. Ruotolo his salary for a period of 24 months
in the event of a Corporate Transaction (a merger or acquisition in which we
are not the surviving entity, the sale of all or substantially all of our
assets, or any reverse merger in which we remain the surviving entity) where
the consideration received by us is less than five dollars ($5.00) per share on
a full dilution and full conversion basis and where the successor company does
not offer Mr. Ruotolo a position of similar title, office and responsibilities
and equal salary, to the position held and salary received by Mr. Ruotolo with
us immediately prior to such Corporate Transaction. Under this Agreement Good
Cause is defined as (i) a decrease in Mr. Ruotolo's compensation of greater
than twenty-five percent (25%) of his compensation (x) immediately prior to
such decrease or (y) in the aggregate over a period not exceeding two years
(not including any decrease in compensation that is applied to each of our
executive officers equally), (ii) a material change in Mr. Ruotolo's corporate
position, title or responsibilities, or (iii) the relocation of our principal
offices more than 80 miles from their present location without Mr. Ruotolo's
consent. Termination of Mr. Ruotolo's employment is deemed to be "for Cause" in
the event that Mr. Ruotolo (i) violates any material provisions of the Letter
Agreement by which he was employed, the Separation Agreement or our standard
form of Proprietary Information and Inventions Agreement, (ii) is charged with
or indicted for a felony, any criminal act other than minor traffic violations,
or (iii) commits any act of willful misconduct, gross negligence, or
dereliction of his duties under the Separation Agreement.
Certain Transactions
On January 11, 2001, we entered into an agreement with Mr. Frederick D.
Pettit, our former President and Chief Executive Officer, in connection with
which we agreed to forgive $45,000 (one fifth) plus interest, of a note
receivable by Mr. Pettit on August 4, 2001 and on each 1 year anniversary
thereof, until the entire amount of principal and interest have been
discharged, and we agreed to pay Mr. Pettit the sum of $300,000, payable
$75,000 per year for four (4) years on August 4 of each year.
10
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a chart showing a comparison of the three year
cumulative total return (assuming a $100 investment in the Company's common
stock, the S&P 500 and a selected noted peer group) commencing November 10,
1998 and continuing through December 31, 2001.
COMPARE CUMULATIVE TOTAL RETURN
AMONG ANTS SOFTWARE.COM
S&P 500 INDEX AND SIC CODE INDEX
[GRAPHIC OMITTED]
11/10/98 4/30/99 4/30/00 12/31/00 12/31/01
ANTS SOFTWARE.COM 100.00 125.00 760.00 217.50 144.00
SIC CODE INDEX 100.00 127.05 315.98 178.91 96.75
S&P 500 INDEX 100.00 122.32 134.71 123.42 108.75
- --O---ANTS SOFTWARE.COM --[ ]---SIC CODE INDEX ---/\---S&P 500 INDEX
Assumes $100 Invested on Nov. 10, 1998. Assumes Dividend Reinvested Fiscal
Year Ending December 31 2001.
11
AUDIT COMMITTEE REPORT
Background
The Audit committee of the Board of Director's of ANTs fulfills a
fiduciary role for the Board of Directors, as they represent the Shareholders,
by providing a direct supervisory link to the independent auditors. The Board
of Directors acts upon the recommendations or advice of the Audit Committee,
which has no responsibility to make decisions and take actions separate from
the Board of Directors. In its role, the Audit Committee undertakes the
following advisory or consultative tasks:
o recommend, to the Board, the independent audit firm to be employed
o consult with the independent auditor on their plan of audit for the
company
o review, with the independent auditor, their report of audit and their
letter
o consult, with the independent auditor, on the adequacy of internal
controls
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board and to report the
results of their activities to the Board. The reporting process is the
responsibility of Company Management: they prepare the Company's financial
statements, while the independent auditors are responsible for auditing those
financial statements.
The committee membership must meet the requirements of the audit committee
policy of the NASDAQ Exchange. Accordingly, all of the members are directors
independent of management and free from any relationship that, in the opinion
of the board of directors, would interfere with the exercise of independent
judgment as a committee member. Accordingly, officers or employees of the
company do not serve on the committee.
The audit committee is composed of two non-management members of the Board
who are selected by the Board, based upon their prior experience in audit
committee matters, their availability as required for review of these matters,
and their individual independence and objectivity. At least one member must
have had employment as a senior officer with financial oversight
responsibilities.
Specific Required Items for the Present Report of the ANTs Audit Committee
In support of the Proxy Statement, the audit committee provides this
present report for the company's proxy statement. The following disclosure, as
required, appears over the printed names of each member of the audit committee.
Note that one of the members of the Audit Committee, Clive G. Whittenbury,
resigned from the Board of Directors of ANTs on March 3, 2002 but the other
members of the Audit Committee present at the 2001 meeting have signed the
current disclosure.
Responses to the following requirements follow each requirement as a
bullet:
the audit committee must state whether
(1) the committee has discussed the audited financial statements with
management;
o Yes, at the audit committee meeting of 03/22/02.
(2) the committee has discussed with the independent auditors the matters
required by SAS 61;
o Yes at the audit committee meeting of 03/22/02.
(3) the committee has received from the independent accountants the letter
required by the Independence standard No.1
o Yes, the letter is filed at the ANTs Corporate office
(4) the committee recommends to the Board, based on the three items above,
that the audited financials be included in this Form 10-KSB for filing
with the Commission?
o Yes
12
(5) an Audit Committee Charter governs the Company's audit committee
o Yes: a copy of the Charter is included as an appendix to the proxy
statement filed by the Company on March 22, 2001.
(6) the Company has an audit committee and whether the members of their
audit committee are "independent" as defined in the NASD's, AMEX's or
NYSE's listing standards, and which definition was used
o Yes, the Company has an Audit Committee that meets the strictest of
the standards referred to above: all members of the Audit Committee
are uncompensated members of the Board who are neither members of the
management nor officers of the Company and are, in the view of the
company's board of directors, free of any relationship that would
interfere with the exercise of independent judgment by the members of
Audit Committee.
Meetings
The Audit Committee held one meeting during the fiscal year ended December
31, 2001, on June 22, 2001.
The Committee met with the Company's outside accountants at all meetings,
and reviewed their findings, suggestions and plans for continuing audits. The
Committee discussed strengthening controls as the Company grows into operations
and out of research and development and the need for selecting and supporting
strong financial management in support of anticipated growth. The Audit
Committee believes that the Committee has an excellent and forthright working
relationship with the Company's Audit Firm, Burr, Pilger & Mayer, LLP, and
recommends to the Board of Directors that they are qualified candidates for
appointment for the next year as they have performed well. The committee
recognizes, however, that the Board must consider other factors that may
determine the final choice of auditors for the next fiscal year.
Thomas Holt
John R. Gaulding
13
PROPOSAL 2 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Burr, Pilger & Mayer, LLP have been selected by the Board of Directors to
serve as our independent accountants for the current fiscal year. We are now
asking you to ratify the selection of Burr, Pilger & Mayer, LLP as the
Company's independent accountants. In the event that holders of a majority of
the outstanding shares fail to ratify the selection of Burr, Pilger & Mayer,
LLP the Board of Directors will reconsider such selection, but may still select
Burr, Pilger & Mayer, LLP as independent public accountants for the Company.
Representatives of Burr, Pilger & Mayer, LLP are expected to be present at
the Annual Meeting, will have the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions.
Changes in Registrant's Certifying Accountant
We incorporate by reference the Form 8-K filed with the SEC on January 31,
2000 and Form 8-K/A filed with the SEC on April 3, 2000, disclosing the
resignation of Jaak Olesk, CPA our former auditor.
We incorporate by reference the Form 10-KSB filed with the SEC on March
22, 2001, disclosing our change of independent accountants from Farber & Hass,
LLP to Burr, Pilger & Mayer, LLP.
Audit Fees
The aggregate fees for professional services rendered by Burr, Pilger &
Mayer, LLP in connection with their audit of our consolidated financial
statements and reviews of the consolidated financial statements included in our
Quarterly Reports on Form 10-QSB for the fiscal year ended December 31, 2001
was approximately $28,840.
Financial Information Systems Design and Implementation Fees.
There were no professional services rendered by Farber & Hass, LLP in the
fiscal year ended December 31, 2001 relating to financial information systems
design and implementation.
There were no professional services rendered by Burr, Pilger & Mayer, LLP
in the fiscal year ended December 31, 2001 relating to financial information
systems design and implementation
All Other Fees.
The aggregate fees for all other services rendered by Farber & Hass, LLP
in the fiscal year ended December 31, 2001 was approximately $12,865.
The aggregate fees for all other services rendered by Burr, Pilger &
Mayer, LLP in the fiscal year ended December 31, 2001 was approximately
$14,620.
Our Audit Committee has considered whether the provision of services
rendered by our accountants are compatible with maintaining the accountant's
independence.
The Board of Directors recommends a vote FOR Proposal Number 2.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in our proxy statement and form of
proxy for the fiscal year ending December 31, 2002 must be received by December
31, 2002.
14
OTHER BUSINESS
We know of no other matters to be submitted to Shareholders at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is
the intention of the persons named in the enclosed form of Proxy to vote the
shares they represent in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth Ruotolo,
Secretary
April 2, 2002
- --------------------------------------------------------------------
ALL SHARHEOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
THANK YOU.
- --------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
ANTs software inc.
PROXY PROXY
The undersigned Shareholder of ANTs software inc., a Delaware
corporation (the Company) hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement dated April 2, 2002, and appoints
Francis K. Ruotolo and Kenneth Ruotolo, and each of them, attorney-in-fact and
proxy of the undersigned, each with power of substitution, to attend, vote and
act, from time to time, for the undersigned at the Meeting of Shareholders of
ANTs software inc. to be held at the Doubletree Hotel, 835 Airport Blvd,
Burlingame, California, on May 14, 2002, at 2:00 p.m., or at any other location,
and any adjournments or postponements thereof, according to the number of shares
of Common Stock of the Company which the undersigned may be entitled to vote,
and with all of the powers which the undersigned would possess if personally
present, hereby revoking any proxy to vote such shares heretofore given,and
hereby ratifying and confirming all that such attorneys and proxies, or any of
them, may lawfully do by virtue hereof.
This proxy, when properly executed will be voted in the manner
directed herein by the undersigned shareholder(s). If no direction is made, this
proxy will be voted FOR the nominee to the Board of directors in the manner
described in the Proxy Statement, and FOR proposal 2. If this proxy is executed
in any manner so as not to withhold authority to vote for the election of the
nominee to the Board of directors, it shall be deemed to grant such authority.
IF VOTING BY MAIL, PLEASE VOTE, DATE AND SIGN AND REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. IF VOTING BY TELEPHONE OR INTERNET, PLEASE
USE INSTRUCTIONS ON REVERSE.
--------------------------------------------------------------------------
Address Changes/Comments:________________________________________
_________________________________________________________________
---------------------------------------------------------------------------
(If you noted any address changes/comments above, please mark corresponding box
on other side.)
- --------------------------------------------------------------------------------
ANTs software inc. VOTE BY INTERNET -www.proxyvote.com
801 MAHLER ROAD Use the Internet to transmit your voting
SUITE G instructions and for electronic delivery of
BURLINGAME,CA 94010 information up until 11:59 P.M. Eastern Time the
day before the cut-off date or meeting date. Have
your proxy card in hand when you access the web
site. You will be prompted to enter your 12-digit
Control Number which is located below to obtain
your records and to create an electronic voting
instruction form.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your
voting instructions up until 11:59 P.M. Eastern
Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you
call. You will be prompted to enter your 12-digit
Control Number which is located below and then
follow the simple instructions the Vote Voice
provides you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it
in the postage-paid envelope we have provided or
return it to ANTs software inc., c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
- ---------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
- ---------------------------------------------------------------------------------------------------------------------------
ANTs software inc.
The Board recommends a vote FOR Items 1 and 2.
To withhold authority to vote, mark
For Withhold For All "For All Except" and write the nominee's
1. Elect one Class 2 director. All All Except number on the line below.
Nominee: Homer G. Dunn
[ ] [ ] [ ] -----------------------------------------
Vote On Proposal
For Against Abstain
2. Ratify the selection of Burr, Pilger & Mayer,
LLP, as independent accountants for the Company
for the year ending December 31, 2002. [ ] [ ] [ ]
If this proxy is properly executed and returned, the shares
represented hereby will be voted in the manner set forth herein. This proxy will
be voted as the proxies deem advisable on such proper business as may come
before the meeting of the shareholders or pursuant to consent to act or
otherwise as provided by Delaware law.
Please mark and sign exactly as your name appears on your Share
Certificate. Trustees and other fiduciaries should indicate the capacity in
which they sign, and where more than one name appears, a majority must sign. If
shares are held by joint tenants or as community property, each person should
sign. If a corporation, this signature should be that of an authorized officer
who should state his or her title. If a partnership, this signature should be
that of an authorized person who should state his or her title.
For address changes and/or comments, please check
this box and write them on the back where indicated. [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
_________________________________________ _______________________________
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date