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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
E-DENTIST.COM, INC.
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(Name of Registrant as Specified In Its Charter)
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(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 table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number 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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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] 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 filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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E-DENTIST.COM, INC.
2999 NORTH 44TH STREET, SUITE, 650
PHOENIX, ARIZONA
July 10, 2001
TO THE STOCKHOLDERS OF E-DENTIST.COM, INC.
You are cordially invited to attend the 2001 Annual Meeting of Stockholders (the
"Meeting") of e-dentist.com, Inc. (the "Company"), to be held on August 2, 2001,
at 9:00 a.m., local time, at the Company's offices, 2999 North 44th Street,
Suite 650, Phoenix, Arizona 85018.
Please read the enclosed 2001 Annual Report to Stockholders and Proxy Statement
for the Meeting. Whether or not you plan to attend the Meeting, please sign,
date and return the proxy card in the enclosed envelope to Continental Stock
Transfer & Trust Company as soon as possible so that your vote will be recorded.
If you attend the Meeting having already returned the proxy card, you may
withdraw your proxy and vote your shares in person.
Very truly yours,
By: /s/ James M. Powers, Jr.
-----------------------------------
Name: James M. Powers Jr.
Title: Chairman of the Board and
Chief Executive Officer
E-DENTIST.COM, INC.
2999 NORTH 44TH STREET, SUITE 650
PHOENIX, ARIZONA
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD AUGUST 2, 2001
TO OUR STOCKHOLDERS:
The 2001 Annual Meeting of Stockholders (the "Meeting") of e-dentist.com, Inc.,
a Delaware corporation ("e-dentist.com" or the "Company"), will be held on
August 2, 2001 at 9:00 a.m., local time, at the Company's offices, 2999 North
44th Street, Suite 650, Phoenix, Arizona 85018, for the following purposes:
(1) to elect one Class C director to serve for a term of three years or until
his successor is duly elected and qualified;
(2) to approve the amendment to the Company's 1997 Stock Compensation Plan to
increase the number of authorized shares under that plan to 3,500,000;
(3) to consider and vote upon a proposal to approve and ratify a certificate of
amendment to the Company's restated certificate of incorporation of the
Company that would change the Company's name to "EDT Learning, Inc.";
(4) to consider and vote for a proposal to approve and ratify the appointment
of PricewaterhouseCoopers LLP, as Company's Independent auditors for the
fiscal year ending March 31, 2002.
(5) to consider such other matters as may properly come before the Meeting and
at any and all adjournments thereof.
Only stockholders of record at the close of business on June 4, 2001 are
entitled to notice of and to vote at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James M. Powers, Jr.
-----------------------------------
Name: James M. Powers Jr.
Title: Chairman of the Board and
Chief Executive Officer
Phoenix, Arizona
July 10, 2001
A PROXY CARD IS ENCLOSED. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU
OWN. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE
PREPAID, ADDRESSED ENVELOPE TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY. NO
ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. RETURNING YOUR A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
E-DENTIST.COM, INC.
2999 NORTH 44TH STREET, SUITE 650
PHOENIX, ARIZONA
PROXY STATEMENT
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors of
e-dentist.com, Inc., ("e-dentist.com" or the "Company"), for use at the
Company's 2001 Annual Meeting of Stockholders (the "Meeting") to be held at 9:00
a.m., local time, on August 2, 2001, at 2999 North 44th Street, Suite 650,
Phoenix, Arizona 85018, and at any and all adjournments thereof. This Proxy
Statement and the accompanying form of proxy are first being mailed or given to
the stockholders of the Company on or about July 10, 2001.
The Company is mailing its 2001 Annual Report to Stockholders, including
consolidated financial statements, simultaneously with this Proxy Statement to
all stockholders of record as of the close of business on June 4, 2001. That
report does not constitute a part of this proxy solicitation material.
INFORMATION CONCERNING SOLICITATION AND VOTING
All voting rights are vested exclusively in the holders of the Company's common
stock, par value $0.001 per share. Each share of the Company's common stock is
entitled to one vote. Cumulative voting in the election of directors is not
permitted. Holders of a majority of shares entitled to vote at the Meeting, when
present in person or by proxy constitute a quorum. On June 4, 2001, the record
date for stockholders entitled to vote at the Meeting, 10,572,548 shares of the
Company's common stock were issued and outstanding.
Proxies in the enclosed form will be effective if properly executed and returned
prior to the Meeting in the enclosed envelope either to Continental Stock
Transfer & Trust Company, Proxy Department, 2 Broadway, New York, New York
10275-0491 or the Company at 2999 N. 44th Street, Suite 650, Phoenix, AZ 85018.
The Company's common stock represented by each effective proxy will be voted at
the Meeting in accordance with the instruction on the proxy. If no instructions
are indicated on a proxy, all common stock represented by such proxy will be
voted (1) FOR election of the nominee named in the proxy as Class C director;
(2) FOR approval of the amendment to the Company's 1997 Stock Compensation Plan
to increase the number of authorized shares under that plan to 3,500,000; (3)
FOR approval of the certificate of amendment of the Company's Restated
Certificate of Incorporation changing the Company's name to EDT Learning, Inc.;
(4) FOR approval and ratification of the appointment of PricewaterhouseCoopers
LLP as the Company's independent auditors for fiscal 2002; and (5) as to any
other matters of business which properly come before the Meeting, by the named
proxies at their discretion.
Any stockholder signing and mailing the enclosed proxy may revoke it at any time
before it is voted by giving written notice of the revocation to the Company, by
voting in person at the Meeting or by filing at the Meeting a later executed
proxy.
When a quorum is present, in the election of directors, the nominees having the
highest number of votes cast in favor of their election will be elected to the
Company's Board of Directors. With respect to the proposal to approve the
amendment to the Company's 1997 Stock Compensation Plan to increase the number
of authorized shares under that plan to 3,500,000, the affirmative vote of a
majority of the shares present or represented by proxy at the meeting and voting
on the proposal is required. With respect to the approval of the certificate of
amendment to the Company's Restated Certificate of Incorporation changing the
Company's name to EDT Learning, Inc. the affirmative vote of a majority of the
outstanding shares is required. With respect to the proposal to ratify the
appointment of PricewaterhouseCoopers LLP as the Company's independent auditors
for fiscal 2002, the affirmative vote of a majority of the shares present or
represented by proxy at the meeting is required. With respect to any other
matter which may properly come before the Meeting, unless a greater number of
votes is required by law or by the Company's restated certificate of
incorporation, a matter will be approved by the stockholders if the votes cast
in favor of the matter exceed the votes cast in opposition.
Abstentions, broker non-votes (i.e., shares held by brokers or nominees as to
which the broker or nominee indicates on a proxy that it does not have
discretionary authority to vote) and any other shares not voted will be treated
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum. Broker non-votes and abstentions, which may be specified
on the proposal to amend the restated certificate of incorporation to change the
name of the Company to EDT Learning, Inc. and the proposal to ratify the
appointment of PricewaterhouseCoopers LLP as the Company's independent auditors
for fiscal 2002, will have the same effect as a vote against that proposal.
However, for purposes of determining the outcome of the election of the
directors, or of any other matter which properly may come before the Meeting,
abstentions, broker non-votes will not be considered as votes cast for the
matter. Thus, abstentions and broker non-votes will have no impact in the
election of the Class C director, or any other matter which properly may come
before the Meeting so long as a quorum is present.
The Company will pay the cost of soliciting proxies in the accompanying form.
The Company has retained the services of Continental Stock Transfer & Trust
Company to assist in distributing proxy materials to brokerage houses, banks,
custodians and other nominee holders. The estimated cost of such services is
approximately $1,000 plus out-of-pocket expenses. Although there are no formal
agreements to do so, proxies may be solicited by officers and other regular
employees of the Company by telephone, telegraph or by personal interview for
which employees will not receive additional compensation. Arrangements also may
be made with brokerage houses and other custodians, nominees and fiduciaries to
forward solicitation materials to beneficial owners of the shares held of record
by such persons, and the Company may reimburse such persons for reasonable
out-of-pocket expenses incurred by them in so doing.
PROPOSAL ONE: ELECTION OF DIRECTORS
GENERAL
The Company's restated certificate of incorporation provides for the
classification of the Company's Board of Directors into three classes. The term
of office of the Class C directors expires at this Annual Meeting; the term of
office of the Class A directors expires at the Company's 2002 Annual Meeting of
Stockholders and the term of office of the Class B directors expires at the
Company's 2003 Annual Meeting of Stockholders. One Class C nominee is proposed
to be elected at this Annual Meeting to serve for a three-year term to last
until the 2004 Annual Meeting of Stockholders or until his successor is duly
elected and has been qualified. The director whose term will expire at this
Annual Meeting has been nominated for re-election as a Class C director. Nominee
for Class C director will be elected by a plurality of the votes cast.
Accordingly, abstentions and broker non-votes will have no effect on the
election of Directors.
Proxies cannot be voted for a greater number of persons than the number of
nominees named therein. Unless authority to vote is withheld, the persons named
in the enclosed form of proxy will vote the shares represented by such proxy for
the election of the nominees for director named below. If, at the time of the
Meeting, any of the nominees shall have become unavailable for any reason for
election as a director, the persons entitled to vote the proxy will vote for
such substitute nominee, if any, as they determine in their discretion.
Management is currently unaware of any circumstances likely to render any of the
nominees unavailable for election or unable to serve.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
The Board of Directors unanimously recommends that the stockholders vote FOR
election of the following nominee as a Class C director of the Company.
DIRECTOR
NAME AGE POSITION SINCE
- ---- --- -------- -----
George M. Siegel 63 Director 1998
CONTINUING DIRECTORS
The persons named below will continue to serve as directors of the Company until
the annual meeting of stockholders in the year indicated below and until their
successors are elected and take office. Stockholders are not voting on the
election of the Class A and Class B directors. The following table shows the
names, ages and positions of each continuing director.
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CLASS A - TERM EXPIRES AT THE COMPANY'S ANNUAL MEETING IN 2002
DIRECTOR
NAME AGE POSITION SINCE
- ---- --- -------- -----
James M. Powers, Jr. 45 Chairman of the Board, President 1998
and Chief Executive Officer
CLASS B - TERM EXPIRES AT THE COMPANY'S ANNUAL MEETING IN 2003
DIRECTOR
NAME AGE POSITION SINCE
- ---- --- -------- -----
James H. Collins 54 Director 2000
David A. Little, D.D.S. 43 Director 1999
Daniel T. Robinson, Jr. 40 Director 2000
The following table sets forth certain information concerning e-dentist.com's
directors and nominees to become a director (ages are as of March 31, 2001):
NAME AGE POSITION
- ---- --- --------
James M. Powers, Jr. 45 Chairman of the Board, President and
Chief Executive Officer
James H. Collins 54 Director
David A. Little, D.D.S. 43 Director
Daniel T. Robinson, Jr. 40 Director
George M. Siegel 63 Current Director and Director Nominee
JAMES M. POWERS, JR., has served as e-dentist.com's Chairman of the Board and
Chief Executive Officer since November 1998. Dr. Powers served as Chairman of
the Board and President of Liberty Dental Alliance, Inc. ("Liberty") from
September 1997, until November 1998, when e-dentist.com agreed to acquire
Liberty, a Nashville, Tennessee-based dental practice management company in its
formative stages. Dr. Powers also has served as the Chairman of the Board of
Directors of Clearidge, Inc., a Nashville-based bottled water company from May
1993 until its sale in 1999. Dr. Powers is a co-founder and member of the Board
of Directors of Barnhill's Country Buffet, Inc., a Memphis, Tennessee-based,
34-unit restaurant chain. Since his graduation from the University of Tennessee
College of Dentistry in 1979 until November 1998, Dr. Powers practiced dentistry
in a private practice in Waverly, Tennessee. He also received his M.B.A. from
Vanderbilt University in 1984.
JAMES H. COLLINS has served as a corporate executive for over 25 years, an
investment banker in public and private capital markets and financial
operational management, successfully completing six corporate turnarounds. From
1998 until 2000, Mr. Collins served as President, COO and a member of the Board
of Directors of Scripps Clinic in San Diego, California. Continuing since 1997,
Mr. Collins has served as Chairman and CEO of All Post, Inc., a video production
company and Cinetech, Inc., a film restoration and preservation company, both
providing services to the entertainment industry. Prior to 1997, Mr. Collins
formed and managed a real estate asset management company. Additional industry
experience includes financial services, consumer electronics, food products,
construction, entertainment and gaming. He serves as a Director of The John
Tracy Clinic. Mr. Collins is a Certified Public Accountant and a NASD General
Securities Principal. Mr. Collins received his B.S. and M.B.A. from the
University of Southern California.
DAVID A. LITTLE, D.D.S. has been engaged in the private practice of dentistry in
San Antonio, Texas since 1984 and is president of David A. Little, D.D.S., P.C.,
one of e-dentist.com's affiliated practices. Dr. Little is a member of the
American Dental Association, the Texas Dental Association, the Academy of
General Dentistry, and the American Academy of Cosmetic Dentistry. Dr. Little is
a Fellow in both the American College of Dentists and the International College
of Dentists. He frequently lectures to dentists and their staffs on various
aspects of dental practice management as well as cosmetic, restorative and
implant dentistry. Dr. Little received his B.A. degree from St. Mary's
University and his Doctor of Dental Surgery from the University of Texas Health
Science Center Dental School in 1984.
3
DANIEL T. ROBINSON, JR., is an attorney with The Bogatin Law Firm, PLC in
Memphis, Tennessee, and has been engaged as an investor and principal advisor in
private ventures since 1995. He currently is an owner, officer and director in
several closely held businesses. Mr. Robinson also serves as the Chief Manager
of several limited liability companies that are principal investors and advisors
in private equity projects. In addition to his work as an attorney focusing on
mergers and acquisitions, Mr. Robinson has been engaged in merchant banking,
software development and the foodservice industries. Mr. Robinson holds a B.B.A.
in finance, and an M.B.A. and J.D. from the University of Memphis. He is a
member of the Tennessee Bar Association.
GEORGE M. SIEGEL is the former Chairman of the Board of Director of BrightStar
Information Technology Group, Inc., and was since its inception. BrightStar is a
public company (NASDAQ:BTSR) of which he was a co-founder. He also served as
Chairman of the Board of BrightStar's Singapore Joint Venture. Mr. Siegel is a
co-founder and Director of e-dentist.com. In 1995, Mr. Siegel co-founded
MindWorks Professional Education Group, Inc. In 1990 he founded Parcelway
Courier Systems, Inc., publicly traded under Dynamex (AMEX:DDN) and served as
its President and Chief Executive Officer until 1995. Mr. Siegel received his
B.S. in Business Administration and Marketing from Roosevelt University,
Chicago, Illinois.
PROPOSAL TWO: AMENDMENT TO STOCK OPTION PLAN
The Board of Directors has adopted and recommends the approval of an amendment
to increase the number of authorized shares under the Company's 1997 Stock
Compensation Plan to 3,500,000 (the "Amendment"). As of March 31, 2001, the
Company had granted incentive and nonstatutory stock options to purchase
1,643,173 shares, none of which have been exercised, and has not made any
restricted stock awards. There are currently 2,000,000 shares authorized for
issuance under the 1997 Stock Compensation Plan. The closing price of the
Company's common stock on the American Stock Exchange was $0.45 on March 31,
2001.
THE 1997 STOCK COMPENSATION PLAN
Subject to stockholder approval, the Board of Directors has adopted the
Amendment to the 1997 Stock Compensation Plan. The purpose of the 1997 Stock
Compensation Plan is to strengthen the ability of the Company to attract and
retain well-qualified executive and managerial personnel, to furnish additional
incentive to those persons responsible for the successful management and
operation of the Company, and thereby to enhance stockholder value. The
Company's plan includes the utilization of options in its acquisition strategy
and the issuance of options to all full-time employees.
The 1997 Stock Compensation Plan requires that the exercise price for each
incentive and nonstatutory stock option must not be less than 100% of the fair
market value per share of the common stock at the time the option is granted. No
incentive stock option, however, may be granted to an employee who owns more
than 10% of the total combined voting power of all classes of outstanding stock
of the company unless the option price is at least 110% of the fair market value
of the common stock at the date of grant and the option period is not more than
five years from the date of grant. No employee may be granted incentive stock
options that first become exercisable during a calendar year to purchase common
stock, or stock of any affiliate (or a predecessor of the company or an
affiliate), with an aggregate fair market value (determined as of the date of
grant of each option) in excess of $100,000. An incentive stock option counts
against the annual limitation only in the year it first becomes exercisable.
Incentive stock options may be granted only to employees of the company.
The time period during which an option may be exercised by the holder may not be
more than ten years from the date the option is granted. Options may be
exercised as provided in the option agreement and as specified by the
Compensation Committee. All vested portions that become exercisable are
cumulative and may be exercised at any time after they become exercisable until
the option expires. Options are not assignable or transferable other than by
will or the laws of descent and distribution or between spouses or incident to
divorce.
Full payment for shares purchased upon exercise of an option must be made at the
time of exercise. No shares may be issued until full payment is made. The 1997
Stock Compensation Plan provides that an option agreement may permit an optionee
to pay by means of cash, check or cashless exercise involving the sale of shares
by, or a loan from, a broker. Unless sooner terminated by action of the Board of
Directors, the 1997 Stock Compensation Plan will terminate on July 1, 2007.
4
The Board of Directors has retained the right to amend or terminate the Stock
Option Plan, as it deems advisable. However, no amendment shall be made to
materially increase the number of shares of stock which may be optioned under
the 1997 Stock Compensation Plan or the number of options that may be granted to
any individual optionee, materially modify the requirements as to eligibility
for participation in the 1997 Stock Compensation Plan or materially increase the
benefits which may accrue to participants under the 1997 Stock Compensation Plan
without submitting such amendments to the stockholders for approval. In
addition, no amendment to, or termination of the 1997 Stock Compensation Plan
shall impair the rights of any individual under options previously granted
without such individual's consent.
FEDERAL INCOME TAX CONSEQUENCES
No tax obligation will arise for the optionee or the Company upon the granting
of either incentive stock options or non-qualified stock options under the 1997
Stock Compensation Plan. Upon exercise of a non-qualified stock option, an
optionee will recognize ordinary income in an amount equal to the excess, if
any, of the fair market value, on the date of exercise, of the stock acquired
over the exercise price of the option. Thereupon, the Company will be entitled
to a tax deduction in an amount equal to the ordinary income recognized by the
optionee. Any additional gain or loss realized by an optionee on disposition of
the shares generally will be capital gain or loss to the optionee and will not
result in any additional tax deduction to the Company. The taxable event arising
from exercise of non-qualified stock options by officers of the Company subject
to Section 16(b) of the Securities Exchange Act of 1934 occurs on the later of
the date on which the option is exercised or the date six months after the date
the option was granted unless the optionee elects, within 30 days of the date of
exercise, to recognize ordinary income as of the date of exercise. The income
recognized at the end of any deferred period will include any appreciation in
the value of the stock during the period and the capital gain holding period
will not begin to run until the completion of such period.
Upon the exercise of an incentive stock option, an optionee recognizes no
immediate taxable income. The tax cost is deferred until the optionee ultimately
sells the shares of stock. If the optionee does not dispose of the option shares
within two years from the date the option was granted and within one year after
the exercise of the option, and the option is exercised no later than three
months after the termination of the optionee's employment, the gain on the sale
will be treated as long term capital gain. Subject to the limitations in the
1997 Stock Compensation Plan, certain of these holding periods and employment
requirements are liberalized in the event of the optionee's death or disability
while employed by the Company. The Company is not entitled to any tax deduction,
except that if the stock is not held for the full term of the holding period
outlined above, the gain on the sale of such stock, being the lesser of (i) the
fair market value of the stock on the date of exercise minus the option price,
and (ii) the amount realized on disposition minus the option price, will be
taxed to the optionee as ordinary income and the Company will be entitled to a
deduction in the same amount. Any additional gain or loss realized by an
optionee upon disposition of shares prior to the expiration of the full term of
the holding period outlined above generally will be capital gain or loss to the
optionee and will not result in any additional tax deduction to the Company. The
"spread" upon exercise of an incentive stock option constitutes a tax preference
item within the computation of the "alternative minimum tax" under the Internal
Revenue Code. The tax benefits, which might otherwise accrue to an optionee, may
be affected by the imposition of such tax if applicable to the optionee's
individual circumstances.
Other than the options to acquire 1,643,173 shares that have been issued under
the 1997 Stock Compensation Plan as of March 31, 2001 no additional options have
been conditionally granted by the Company. If the Amendment is approved, there
will be 1,856,827 shares available for future option grants by the Company.
VOTE REQUIRED AND BOARD RECOMMENDATION
THE AMENDMENT TO THE STOCK OPTION PLAN MUST BE APPROVED BY THE HOLDERS OF A
MAJORITY OF SHARES PRESENT OR REPRESENTED BY PROXY AT THE MEETING AND VOTING ON
THE PROPOSAL. THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE AMENDMENT
TO INCREASE THE NUMBER OF AUTHORIZED SHARES UNDER THE 1997 STOCK COMPENSATION
PLAN TO 3,500,000, AND PROXIES SOLICITED AND GATHERED BY THE BOARD WILL BE VOTED
IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
5
PROPOSAL THREE: APPROVAL AND RATIFICATION OF
CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
The Company is proposing to change its name from e-dentist.com, Inc. to "EDT
Learning, Inc." to more accurately reflect its current business model and the
expansion of the scope of its business offering which focuses on providing
e-Learning tools and systems to corporate clients inside and outside of the
dental industry. The certificate of amendment to the restated certificate of
incorporation of the Company is only intended to effect this proposed name
change, and accordingly no other changes are being made to the Company's
restated certificate of incorporation. The Board of Directors approved the
adoption of the certificate of amendment to the restated certificate of
incorporation by unanimous written consent on June 8, 2001. The Company will not
be changing its ticker symbol and it will therefore remain "EDT".
The affirmative vote of the holders of a majority of the shares outstanding is
needed to approve and ratify the certificate of amendment to the Company's
restated certificate of incorporation.
THE CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION MUST
BE APPROVED BY THE HOLDERS OF A MAJORITY OF OUTSTANDING SHARES OF COMMON STOCK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE CERTIFICATE OF AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION AND PROXIES SOLICITED AND GATHERED
WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE.
PROPOSAL FOUR: APPROVAL AND RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected the firm of
PricewaterhouseCoopers LLP as independent auditors of the Company for the fiscal
year ended March 31, 2002, subject to the approval and ratification of
stockholders. The Board of Directors unanimously recommends that stockholders
vote to approve and ratify the appointment of PricewaterhouseCoopers LLP as the
Company's Independent Auditors for fiscal 2002. PricewaterhouseCoopers LLP has
served as the independent auditors of the Company since the Company's formation
in February 1997. Representatives of PricewaterhouseCoopers LLP are expected to
be present at the Meeting, will have an opportunity to make a statement if they
desire, and will be available to respond to appropriate questions.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES PRESENT OR
REPRESENTED AT THE MEETING AND ENTITLED TO VOTE IS NEEDED TO RATIFY THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS OF THE COMPANY
FOR FISCAL 2002. IF THE APPOINTMENT IS NOT APPROVED, THE MATTER WILL BE REFERRED
TO THE AUDIT COMMITTEE FOR FURTHER REVIEW. THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR FISCAL
2002.
PricewaterhouseCoopers LLP are the principal accountants of the Company.
PricewaterhouseCoopers LLP provides tax advice to the Company. The Audit
Committee of the Board of Directors has considered whether the provision of
non-audit services is compatible with maintaining PricewaterhouseCoopers LLP's
independence.
AUDIT FEES
PricewaterhouseCoopers LLP billed the Company and its subsidiaries approximately
$130,000 for the following professional services: audit of the annual financial
statements of the Company for the fiscal year ended March 31, 2001, and review
of the interim financial statements included in quarterly reports on Form 10-Q
for the periods ended June 30, September 30, and December 31, 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage PricewaterhouseCoopers LLP to provide services to the
Company regarding financial information systems design and implementation during
the fiscal year ended March 31, 2001.
6
ALL OTHER FEES
PricewaterhouseCoopers LLP billed the Company and its subsidiaries approximately
$17,000 for other services for the fiscal year ended March 31, 2001.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table shows, as of May 31, 2001, the "beneficial ownership" of the
e-dentist.com common stock of (i) each director and nominee to become a
director, (ii) each executive officer, (iii) all executive officers and
directors of e-dentist.com as a group and (iv) each person who owns more than 5%
of the outstanding common stock. The address of each person in the table is c/o
e-dentist.com, Inc., 2999 N. 44th Street, Suite 650, Phoenix, Arizona 85018.
PERCENT NUMBER
------- ------
James M. Powers, Jr. 6.9% 842,088(1)
Charles Sanders 3.0% 370,000(2)
James L. Dunn, Jr. 1.7% 206,358(3)
Omer K. Reed 1.3% 157,800(4)
Glenn J. Bonagura 1.1% 130,000(5)
George Siegel 1.0% 126,180(4)
David Little * 54,807(6)
James H. Collins * 20,000(4)
Daniel T. Robinson, Jr. * 16,171(7)
ALL EXECUTIVE OFFICERS, NOMINEES AND DIRECTORS
AS A GROUP (NINE PERSONS) 15.7% 1,923,404
- ----------
* less than 1%
(1) Includes 583,573 shares that may be acquired upon the exercise of stock
options and 10,858 shares that may be acquired upon the conversion of a
convertible promissory note.
(2) Includes 170,000 shares that may be acquired upon the exercise of stock
options
(3) Includes 153,333 shares that may be acquired upon the exercise of stock
options
(4) Includes 10,000 shares that may be acquired upon the exercise of stock
options
(5) Includes 120,000 shares that may be acquired upon the exercise of stock
options
(6) Includes 5,000 shares that may be acquired upon the exercise of stock
options
(7) Includes 11,171 shares that may be acquired upon the exercise of stock
options
There has been no change in control of the Company since the beginning of its
last fiscal year, and there are no arrangements known to the Company, including
any pledge of securities of the Company, the operation of which may at a
subsequent date result in a change in control of the Company.
BOARD ORGANIZATION AND MEETINGS
During fiscal 2001, the Board of Directors of the Company (the "Board") held
four (4) regular meetings and three (3) special called meetings and acted by
unanimous written consent on two (2) occasions.
The Board has an Audit Committee, a Compensation Committee and a Nominating
Committee each of which was initially constituted on March 30, 1998. During
fiscal 2001, each director attended at least seventy-five percent (75%) of the
aggregate of the total number of Board meetings and of meetings of committees of
the Board on which he served, except for Walter Anderson who attended at least
50% of the aggregate of the total number of board meetings. The members of the
Audit and Compensation Committees are not employees of the Company.
7
AUDIT COMMITTEE
The Audit Committee recommends the independent public accountants to be selected
by the Board for stockholder approval each year and acts on behalf of the Board
in reviewing with the independent public accountants, the chief financial and
chief accounting officer and other corporate officers, various matters relating
to the adequacy of the Company's accounting policies and procedures and
financial controls and the scope of the annual audits by the independent public
accountants. The Audit Committee consists of Mr. Maris (Deceased), Mr. Robinson
and Mr. Collins (Chairman). During fiscal 2001, the Audit Committee held three
(3) meetings. The Audit Committee operates under a written charter adopted by
the Board of Directors, which is included in this Proxy Statement as Exhibit A.
COMPENSATION COMMITTEE
The Compensation Committee is authorized to establish the general compensation
policy for the officers and directors of the Company and annually reviews and
establishes officers' salaries and participation in benefit plans, prepares
reports required by the Securities and Exchange Commission (the "SEC") and
approves the directors' compensation. The Compensation Committee consists of Mr.
Maris (Deceased), Mr. Siegel (Chairman), and Mr. Collins. During fiscal 2001,
the Compensation Committee held one (1) meeting.
NOMINATING COMMITTEE
The Nominating Committee is authorized to develop policies on the size and
composition of the Board and criteria relating to candidate selection, propose
to the Board a slate of director nominees for election at annual meetings of
stockholders, propose candidates to fill vacancies on the Board; and, recommend
board members to serve on the various committees of the Board. The members of
the Nominating Committee are Dr. Powers (Chairman), Mr. Robinson and Dr. Little.
During fiscal 2001, the Nominating Committee held one (1) meeting.
DIRECTOR COMPENSATION
Directors who are employees of e-dentist.com or an affiliated practice do not
receive additional compensation for serving as directors. Each director who is
not an employee of e-dentist.com or an affiliated practice receives a fee of
$1,500 for attendance at each Board of Directors meeting and $750 for each
committee meeting (unless held on the same day as a Board of Directors meeting).
All directors of e-dentist.com are reimbursed for out-of-pocket expenses
incurred in attending meetings of the Board of Directors or committees thereof,
and for other expenses incurred in their capacity as directors of e-dentist.com.
In addition, under the Company's 1997 Stock Compensation Plan (the "Stock
Plan"), each such director has been granted nonqualified options to purchase
10,000 shares of e-dentist.com common stock. In addition, each newly elected
nonemployee director automatically will be granted nonqualified options to
purchase 10,000 shares of e-dentist.com common stock on the date that the person
first becomes a nonemployee director of the Company. Thereafter, each
nonemployee director automatically will be granted nonqualified options to
purchase 5,000 shares of e-dentist.com common stock on the date of the Company's
annual meeting of stockholders. Each option will have an exercise price per
share equal to the fair market value of the Company's common stock on the date
of grant. All the options granted to the nonemployee directors have a term of
ten years, and become exercisable as to follows: one half on the first
anniversary of the date of grant and one half on the second anniversary of the
date of grant.
8
EXECUTIVE COMPENSATION
The following table sets forth each component of compensation paid or awarded
to, or earned by, each person who served as Chief Executive Officer of
e-dentist.com during the fiscal year ended March 31, 2001, the four other most
highly compensated executive officers serving as of March 31, 2001 whose
aggregate cash compensation exceeded $100,000 during fiscal 2001 and up to two
former executive officers of the Company who would have been one of the four
most highly compensated executive officers had such officers been serving as
such at the end of the Company's last fiscal year (collectively, the "Named
Executive Officers") for the fiscal years indicated.
SECURITIES
NAME AND PRINCIPAL FISCAL OTHER UNDERLYING ALL OTHER
POSITION YEAR SALARY $ BONUS $ COMPENSATION (NUMBER) COMPENSATION ($)
- ------------------ ---- -------- ------- ------------ -------- ----------------
James M. Powers, Jr. (1),(2) 2001 205,776 -- 23,742 180,156 9,000
Chairman of the Board 2000 199,999 -- 52,773 105,000 6,000
President and Chief 1999 53,974 -- 14,256 300,000 --
Executive Officer
Charles Sanders 2001 175,000 -- -- 45,000 --
Sr.Vice President,
Chief Financial Officer
and Chief Operating
Officer
James L. Dunn, Jr. (2) 2001 147,780 -- -- 85,000
Sr. Vice President, 2000 125,624 -- 1,557 35,000
General Counsel and 1999 125,000 -- 23,292 -- --
Chief Development
Officer
Sam H. Carr (2),(3) 2001 78,301 -- 64,000 -- --
Former Sr. Vice 2000 175,000 -- 16,277 70,000 --
President, Chief 1999 175,000 -- 38,326 -- --
Financial Officer and
Director
Omer K. Reed, D.D.S. (4) 2001 131,250 -- 120,000 15,000
Former Clinical 2000 175,000 -- 190,000 5,000 --
Officer and Director 1999 87,500 -- 310,000 -- --
Glenn J. Bonagura (5) 2001 145,032 -- -- 120,000 5,100
Sr. Vice President of
Marketing
- ----------
(1) Dr. Powers commenced his employment with e-dentist.com on November 13,
1998.
(2) The amount set forth as Other Compensation represents the expenses paid by
e-dentist.com in connections with the Named Executive Officer's relocation
to Phoenix, Arizona.
(3) Mr. Carr entered into a severance agreement with the Company effective
October 24, 2000 pursuant to which he resigned as Sr. Vice President and
Chief Financial Officer of e-dentist.com. Mr. Carr was paid $64,000 by
e-dentist.com pursuant to the agreement and forfeited all options to
acquire shares of e-dentist.com common stock previously issued to him.
(4) Dr. Reed's employment agreement previously provided for bonus payments
aggregating $1,250,000 payable by e-dentist.com in installments of $10,000
on closing of each future dental practice affiliation subsequent to March
30, 1998 until the bonus was paid in full. During the fiscal year ended
March 31, 2001, Dr. Reed was paid $120,000 of this bonus. Dr. Reed's
employment agreement expired on March 31, 2001, and the remainder of the
bonus payment in the amount of $248,000 is in dispute.
(5) Mr. Bonagura's employment agreement expires on July 16, 2001 and is not
expected to be renewed.
9
OPTION GRANTS
The following table provides information on stock option grants to the Named
Executive Officers in the fiscal year ended March 31, 2001 under the Stock Plan.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS OPTIONS GRANTED GRANT PRESENT
GRANTED TO EMPLOYEES IN EXERCISE PRICE EXPIRATION VALUE
FISCAL YEAR FISCAL YEAR ($/SH.) DATE ($) (7)
----------- --------------- -------------- ---------- -------
James M. Powers, Jr. 7,500(1) 0.9% .50 9/28/10 2,584
22,500(2) 2.8% .50 9/28/10 7,751
150,000(3) 18.6% .50 9/29/10 35,655
156(4) 0.0% .50 1/12/06 40
Charles Sanders 5,000(1) 0.6% .50 9/28/10 1,723
15,000(2) 1.9% .50 9/28/10 5,168
25,000(3) 3.1% .50 9/29/10 5,943
James L. Dunn, Jr. 5,000(1) 0.6% .50 9/28/10 1,723
15,000(2) 1.9% .50 9/28/10 5,168
65,000(3) 8.1% .50 9/29/10 15,451
Omer K. Reed, DDS 2,500(1) 0.3% .50 9/28/10 861
7,500(2) 0.9% .50 9/28/10 2,584
5,000(5) 0.6% .56 8/28/10 1,937
Glenn J. Bonagura 50,000(6) 6.2% 1.00 9/30/10 9,280
5,000(1) 0.6% .50 9/28/10 1,723
15,000(2) 1.9% .50 9/28/10 5,168
50,000(6) 6.2% 1.00 9/29/10 11,885
- ----------
(1) Vest 100% on April 1, 2001.
(2) Vest monthly over 3 years in 1/36 increments beginning May 1, 2001.
(3) Vest monthly over 4 years in 1/48 increments beginning October 1, 2000.
(4) 100% vested on March 31, 2001.
(5) Vest annually over 2 years in 50% increments beginning on the first
anniversary of the date of grant.
(6) Vest semi-annually over 5 years in 10% increments beginning six months
after the date of grant.
(7) Calculated using the following weighted-average assumptions: dividend yield
of 0%, expected volatility of 65%, risk-free interest rate of 5.87% to
6.04% and expected life of seven years.
10
The following table sets forth certain information with respect to unexercised
options to purchase e-dentist.com common stock held by the Named Executive
Officers at March 31, 2001. (None of the Named Executive Officers exercised
options in 2001.)
YEAR-END 2001 OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY
OPTIONS HELD AT OPTIONS HELD AT
MARCH 31, 2001 MARCH 31, 2001
--------------------------------- -----------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE (1) UNEXERCISABLE (1)
----------- ------------- --------------- -----------------
James M. Powers, Jr. 221,823 363,750 -- --
Charles Sanders 28,125 141,875 -- --
James L. Dunn, Jr. 35,125 118,208 -- --
Omer K. Reed, DDS 2,500 17,500 -- --
Glenn J. Bonagura 10,000 110,000 -- --
- ----------
(1) Value of unexercised in-the-money options is calculated based upon the
difference, if any, between the option exercise price and the closing price
of the common stock at year-end, multiplied by the number of shares
underlying the options. The closing price per share of e-dentist.com common
stock as reported on the AMEX on March 31, 2001 was $0.45. The exercise
prices for the options previously granted to the Named Executive Officers
range from $0.50 to $8.50 per share.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Dr. Powers, Mr. Sanders,
Mr. Dunn, Dr. Reed and Mr. Bonagura. Each of these agreements provides for an
annual base salary in an amount not less than the initial specified amount and
entitles the employee to participate in all e-dentist.com's compensation plans
in which other executive officers of e-dentist.com participate. Dr. Powers'
original employment agreement provided that he serve as the Chairman, President
and Chief Executive Officer of e-dentist.com for a term of two years commencing
on November 13, 1998. Dr. Powers' subsequent employment agreement, executed on
February 16, 2001, provides an annual base salary of $225,000 per annum, has a
continuous two-year term and is subject to the right of e-dentist.com to
terminate his employment at any time. Dr. Reed's employment agreement provides
that he will serve as e-dentist.com's clinical officer and has a three-year term
commencing on March 30, 1998. Dr. Reed's base salary during fiscal 2001 under
the employment agreement was $87,500 per year, or as may be increased from time
to time by the Board of Directors. Dr. Reed's employment agreement expired on
March 31, 2001 and was not renewed. Mr. Sanders' current agreement, executed on
February 16, 2001, has a continuous two-year term with an annual base salary of
$175,000 and is subject to the right of e-dentist.com to terminate his
employment at any time. Mr. Bonagura's employment agreement has a base salary of
$175,000 and a term of one year, which expires on July 16, 2001. Mr. Bonagura's
agreement is not expected to be renewed. Mr. Dunn's current agreement, executed
on February 16, 2001, has a continuous two-year term with an annual base salary
of $150,000 and is subject to the right of e-dentist.com to terminate his
employment at any time. Dr. Powers, Mr. Sanders and Mr. Dunn are eligible to
receive an annual cash bonus in accordance with the Company's Bonus Plan, which
provides for a bonus of up to 35%, 25% and 25% respectively of Base Salary. For
purposes of determining the applicable year's earnings per share change, the
cash bonuses payable under all other employment agreements between e-dentist.com
and its officers will be taken into account.
If e-dentist.com terminates the employee's employment without cause (as therein
defined), Dr. Powers, Mr. Sanders and Mr. Dunn will be entitled to a payment
equal to 12 months' salary. Dr. Powers, Mr. Sanders and Mr. Dunn's current
employment agreement provide for a severance payment equal to one (1) year's
compensation in the event of termination of the agreement and a change in
control of the Company (as defined therein). Each of the foregoing agreements
also contains a covenant limiting competition with e-dentist.com for one year
following termination of employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company currently serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Board of Directors or as an executive
officer of the Company. See "Director and Executive Compensation" and "Certain
Transactions" for a description of any transactions between the Company and
members of the Board of Directors.
11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") is responsible for establishing a general compensation
policy for officers and employees of the Company, preparing any reports that may
be required relating to officer compensation and approving any increases in
director's fees. The Compensation Committee consists of Mr. Siegel, Mr. Maris
(Deceased), and Mr. Collins. In fiscal 2001, the Compensation Committee
approved, or in some cases recommended to the Board for the Board's approval,
remuneration arrangements and compensation plans involving the Company's
directors, executive officers and certain other employees whose compensation
exceeds specified levels. The Compensation Committee also acts on the granting
of stock options to executive officers under the Company's Stock Plan.
The Company's executive compensation program has been designed to assist the
Company in attracting, motivating and retaining the executive talent necessary
for the Company to maximize its return to stockholders. To this end, this
program provides competitive compensation levels and incentive pay levels that
vary based on corporate and individual performance.
The Company's compensation program for executives consists of three key
elements: a base salary; a performance-based annual bonus; and periodic grants
of stock options.
The Compensation Committee believes that this three-part approach best serves
the interests of the Company and its stockholders. It enables the Company to
meet the requirements of the highly competitive environment in which the Company
operates while ensuring that executive officers are compensated in a way that
advances both the short-term and long-term interests of its stockholders. Under
this approach, compensation for these officers involves a high proportion of pay
that is dependent on maximizing long-term returns to stockholders. The annual
bonus payable for fiscal 2001 will depend on the Company's operational
performance in fiscal 2001.
BASE SALARY
Base Pay is designed to be competitive with salary levels for comparable
executive positions at other companies and the Compensation Committee reviews
such comparable salary information as one factor to be considered in determining
the base pay for the Company's executive officers. Other factors the
Compensation Committee considers in determining base pay for each of the
executive officers are that officer's responsibilities, experience, leadership,
potential future contribution and demonstrated individual performance. The
Company has employment agreements with its Chief Executive Officer, the four
other executive officers named in the Summary Compensation Table and certain of
its other officers. These agreements provide for minimum base annual salaries
the Company may increase, but cannot decrease. Any increases in these base
salaries, the base salaries of the Company's other executive officers and any
changes in those salaries will be based on recommendations by the Company's
Chief Executive Officer, taking into account such factors as competitive
industry salaries, a subjective assessment of the nature of the position and the
contribution and experience of the officer. Performance for base salary purposes
will be assessed on a qualitative, rather than a quantitative, basis. No
specific performance formula or weighting of factors will be used in determining
base salary levels.
ANNUAL BONUS
For fiscal 2001, the Company determined that it was their preference to
compensate the executive officers primarily in the form of long-term,
equity-based compensation, and accordingly, made awards of stock options rather
than cash bonuses. The Compensation Committee expects to base future annual
bonuses on the Company's financial performance and the individual performance of
the awardees, and intends to use qualitative, rather than quantitative, factors
for this purpose.
STOCK PLAN
The objectives of the Stock Plan are to (i) attract and retain superior
personnel for positions of substantial responsibility and (ii) provide
employees, nonemployee directors and advisors with an additional incentive to
contribute to the success of the Company.
Stock options align the interests of employees and stockholders by providing
value to option holders through stock price appreciation only. The Compensation
Committee expects that it will make future stock option or other long-term
equity-based incentive awards periodically at its discretion based on
recommendations of the Chief Executive Officer. Stock option grant sizes, in
general, will be evaluated by regularly assessing competitive market practices,
the overall performance of the Company the, size of previous grants and the
12
number of options held. In addition, the Compensation Committee may consider
factors including that executive's current ownership stake in the Company, the
degree to which increasing that ownership stake would provide the executive with
additional incentives for future performance, the likelihood that the grant of
those options would encourage the executive to remain with the Company and the
value of the executive's service to the Company. This posture with regard to
stock options is intended to focus management's efforts on maximizing
stockholder returns. The number of options granted to a particular participant
will also be based on the Company's historical financial success, its future
business plans and the individual's position and level of responsibility within
the Company, but these factors will be assessed subjectively and not weighted.
FISCAL 2001 CHIEF EXECUTIVE OFFICER PAY
As described above, the Compensation Committee will consider several factors in
developing an executive compensation package. For the Chief Executive Officer,
these factors will include competitive market pay practices, performance level,
experience, contributions toward achievement of strategic goals and the overall
financial and operations success of the Company.
The Company entered into an initial employment agreement with Dr. Powers, the
Company's Chief Executive Officer, in November 1998. The Company entered into a
subsequent employment with Dr. Powers in November 2000 upon expiration of the
initial agreement. That agreement has a continuous two-year term at an initial
base compensation rate of $225,000 per annum plus a monthly car allowance of
$750. Dr. Powers is eligible to receive an annual cash bonus in an amount up to
35% of his base salary upon achievement of certain performance targets. The
Compensation Committee believes the terms of this agreement and the foregoing
option award were appropriate. Executive compensation is an evolving field. The
Compensation Committee monitors trends in this area, as well as changes in law,
regulation and accounting practices, that may affect either its compensation
practices or its philosophy. Accordingly, the Committee reserves the right to
alter its approach in response to changing conditions. This report will not be
deemed incorporated by reference by any general statement incorporating this
Proxy Statement by reference into any filing under the Securities Act or under
the Exchange Act and will not be deemed filed under either of such statutes
except to the extent that the Company specifically incorporates this information
by reference.
The Compensation Committee:
George M. Siegel, Chairman
James H. Collins
Anthony P. Maris (Deceased)
13
PERFORMANCE GRAPH
The following line graph compares the percentage change from date of public
offering (March 30, 1998) through March 31, 2001 for (i) the e-dentist.com
common stock, (ii) a peer group (the "Peer Group") of companies selected by the
Company that are predominantly dental management companies located in the United
States, and (iii) the AMEX Composite Index. The companies in the Peer Group are
Interdent, Inc., Castle Dental Centers, Inc., Coast Dental Services Inc. and
Monarch Dental Corp.
THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL
Comparison of Total Returns*
March 30, March 31, March 31, March 31, March 31,
Description 1998 1998 1999 2000 2001
----------- ---- ---- ---- ---- ----
e-dentist.com, Inc. $100 $103 $ 20 $ 18 $ 5
AMEX Composite Index $100 $101 $ 97 $137 $123
Peer Group $100 $ 97 $ 38 $ 23 $ 3
- ----------
* Total return based on $100 initial investment. The graph is presented in
accordance with SEC requirements. Stockholders are cautioned against
drawing any conclusions from the data contained therein, as past results
are not necessarily indicative of future financial performance. The total
return on investment for the period shown for the Company, the AMEX
Composite Index and the Peer Group is based on the stock price or composite
index at March 30, 1998. The performance graph appearing above will not be
deemed incorporated by reference by any general statement incorporating
this Proxy Statement by reference into any filing under the Securities Act
of 1933, as amended (the "Securities Act"), or under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and will not be
deemed filed under either of those Acts except to the extent that the
Company specifically incorporates this information by reference.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management.
2. The Audit Committee has discussed with PricewaterhouseCoopers LLP, the
Company's independent accountants, the matters required to be
discussed by SAS 61 (Communication with Audit Committees).
3. The Audit Committee has received the written disclosures and the
letter from PricewaterhouseCoopers LLP required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and has discussed with PricewaterhouseCoopers LLP their
independence.
4. Based on the review and discussion referred to in paragraphs (1)
through (3) above, the Audit Committee recommended to the Board of
Directors, and the Board of Directors has approved, that the audited
financial statements be included in the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 2001, for filing with
the Securities and Exchange Commission.
James H. Collins
Daniel T. Robinson, Jr.
Anthony P. Maris (Deceased)
14
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and beneficial owners of more than 10% of the
outstanding shares of the Company to file with the Securities and Exchange
Commission reports regarding changes in their beneficial ownership of shares in
the Company. There were no beneficial owners of e-dentist.com, Inc. at March 31,
2001 with more than 10% ownership.
Based solely on a review of the copies of such reports furnished to the Company
and written representations that no other reports were required, the Company
believes that all its directors and executive officers during fiscal 2001
complied on a timely basis with all applicable filing requirements under Section
16(a) of the Exchange Act.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the Company's proxy materials relating to
the next annual meeting of stockholders must be received by the Company on or
before April 15, 2002.
2001 ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2001 WAS
FILED ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION. STOCKHOLDERS
WHO WISH TO OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT
(WITHOUT EXHIBITS) ON FORM 10-K SHOULD ADDRESS A WRITTEN REQUEST TO CHARLES
SANDERS, SR. VICE PRESIDENT - CHIEF FINANCIAL OFFICER, E-DENTIST.COM, INC., 2999
N. 44TH STREET, SUITE 650, PHOENIX, ARIZONA, 85018. THE COMPANY WILL PROVIDE
COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A REASONABLE FEE.
OTHER BUSINESS
As of the date of this Proxy Statement, management was not aware of any business
not described above would be presented for consideration at the Meeting. If any
other business properly comes before the Meeting, it is intended that the shares
represented by proxies will be voted in respect thereto in accordance with the
judgment of the persons voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
/s/ Charles Sanders
- ----------------------------------------------
Charles Sanders
Sr. Vice President - Chief Financial Officer
Phoenix, Arizona
15
EXHIBIT A
AUDIT COMMITTEE CHARTER
The Board of Directors (the "Board") of e-dentist.com, Inc., a Delaware
corporation (the "Company"), approved and adopted the following Audit Committee
Charter on June 7, 2000 to specify the composition, roles and responsibilities
of the Audit Committee. As used in this Charter, (i) "Company" includes the
Company and its subsidiaries unless the context otherwise requires, (ii)
"Nasdaq/AMEX" means the Nasdaq National Market and the American Stock Exchange,
and (iii) "SEC" means the Securities and Exchange Commission.
PURPOSE
The function of the Audit Committee is to assist the Board in fulfilling its
oversight responsibilities with respect to the accounting, financial reporting
and related matters described below.
COMPOSITION
The Audit Committee shall consist of not less than three members, comprised
solely of independent directors, each of whom shall not have: o been employed by
the Company or its affiliates in the current or past three years;
* accepted any compensation from the Company or its affiliates in excess
of $60,000 during the previous fiscal year, except for board service,
retirement plan benefits or non-discretionary compensation;
* an immediate family member who is, or has been in the past three
years, employed by the Company or its affiliates as an executive
officer;
* been a partner, controlling stockholder or an executive officer of any
for-profit business to which the Company made, or from which it
received, payments, other than those which arise solely from
investments in the Company's securities, that exceed five percent of
the Company's consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years; or
* been employed as an executive of another entity where any of the
Company's executives serve on such entity's compensation committee.
[Nasdaq/AMEX 4200(a)(14)]
In addition, each member of the Audit Committee shall be able to read and
understand fundamental financial statements, including the Company's balance
sheet, income statement and cash flow statement, or will become able to do so
within a reasonable period of time after his or her appointment to the Audit
Committee. Moreover, at least one member of the Audit Committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting or any comparable experience or background which
results in financial sophistication, including being or having been a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities. [Nasdaq/AMEX 4310(c)(26)(B)(i)] The
qualifications required of Audit Committee members shall be interpreted in
conformity with Rules 4200(a)(14) and 4310(c)(26)(B) of the Nasdaq/AMEX
Marketplace Rules.
The Chairman of the Audit Committee shall be designated by the Board; provided
that if a Chairman is not designated by the Board or present at a meeting, the
Audit Committee may designate a Chairman by majority vote of the Audit Committee
members then in office.
ROLES AND RESPONSIBILITIES
RELATIONSHIP WITH THE OUTSIDE AUDITORS
The Company's outside auditors are ultimately responsible to the Board and the
Audit Committee, as representatives of the Company's stockholders. [Nasdaq/AMEX
4310(c)(26)(A)(iii)]
The Board and the Audit Committee, as the Company's stockholders
representatives, have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the outside auditors (or to nominate
the outside auditors to be proposed for stockholder approval in any proxy
statement). [Nasdaq/AMEX 4310(c)(26)(A)(ii) and (iii)] The Audit Committee also
has the authority and responsibility to evaluate and make recommendations to the
16
Board regarding the selection and replacement of outside auditors (or the
nomination of the outside auditors to be proposed for stockholder approval in
any proxy statement). [Nasdaq/AMEX 4310(c)(26)(A)(ii) and (iii)]
The Audit Committee has the further authority and responsibility to review the
fees charged by the outside auditors, the scope of their engagement and proposed
audit approach and to recommend such review or auditing steps as the Audit
Committee may consider desirable.
The Audit Committee shall review and confirm the independence of the outside
auditors by requiring that the outside auditors submit to the Audit Committee on
a periodic basis a formal written statement delineating all relationships
between the outside auditors and its related entities and the Company and its
related entities, engaging in a dialogue with the outside auditors with respect
to any disclosed relationships or services that may impact their objectivity and
independence and taking, or recommending, that the Board take appropriate action
to oversee the independence of the outside auditors. [Nasdaq/AMEX
4310(c)(26)(A)(ii)] In addition to disclosing all relationships between the
outside auditors and its affiliates and the Company and its affiliates, the
outside auditors' formal written statement shall also contain a confirmation
that, in the outside auditors' professional judgment, it is independent of the
Company within the meaning of the federal securities laws. [Nasdaq/AMEX
4310(c)(26)(A)(ii) and Independence Standards Board Standard No. 1]
Management is responsible for preparing the Company's financial statements. The
Company's outside auditors are responsible for auditing the financial
statements. The activities of the Audit Committee are in no way designed to
supersede or alter these traditional responsibilities.
INTERNAL CONTROLS
The Audit Committee shall evaluate whether management is setting the appropriate
tone at the top by communicating the importance of internal controls.
In consultation with management, the outside auditors and the internal auditors,
the Audit Committee shall consider the Company's significant financial risk
exposures and the steps management has taken to monitor, control and report such
exposures.
The Audit Committee shall focus on the extent to which internal auditors and
outside auditors review computer systems and applications, the security of such
systems and applications, and the contingency plan for processing financial
information in the event of a systems breakdown.
The Audit Committee shall consider the extent to which internal control
recommendations made by outside auditors have been implemented by management.
The Audit Committee shall request that the internal auditors and outside
auditors keep the Audit Committee informed about fraud, illegal acts and
deficiencies in internal controls that come to their attention and such other
matters as either the internal auditors or the outside auditors conclude should
be brought to the attention of the Audit Committee.
FINANCIAL REPORTING
GENERAL
The Audit Committee shall review with management, the outside auditors and the
internal auditors significant accounting and reporting issues applicable to the
Company, including recent professional and regulatory pronouncements, and their
impact on the financial statements.
ANNUAL FINANCIAL STATEMENTS
The Audit Committee shall meet with management and the outside auditors to
review the annual financial statements and the results of the annual audit prior
to the release to the public of the results of operations for each fiscal year.
[SEC SK ss. 306(a)(1)]
The Audit Committee shall review the annual financial statements prior to
release to the public or filing with the SEC. [SEC SK ss. 306(a)(1)]
17
The Audit Committee shall obtain explanations from management or from the
outside auditors on whether:
* Actual financial results for the year varied significantly from
budgeted or projected results.
* Changes in financial ratios and relationships in the annual financial
statements are consistent with changes in the Company's operations and
financing practices.
* Generally accepted accounting principles have been consistently
applied in the annual financial statements.
* There are any actual or proposed changes in accounting or financial
reporting practices.
* There are any significant or unusual events or transactions.
* The Company's financial and operating controls are functioning
effectively.
* The Company has complied with the terms of loan agreements.
* The annual financial statements contain adequate and appropriate
disclosures.
The Audit Committee shall discuss with management and the outside auditors any
significant changes to the Company's accounting principles, the degree of
aggressiveness or conservatism of the accounting principles and underlying
estimates used in the preparation of the Company's financial statements, and any
items required to be communicated by the outside auditors in accordance with
Statement of Auditing Standards ("SAS") No. 61. [SEC SK ss. 306(a)(2) and note
29 to SEC Release 34-42266]
Based on the review and discussions with management and outside auditors
contemplated by this Charter, the Audit Committee shall recommend to the Board
whether the audited annual financial statements be included in the Company's
Form 10-K Annual Report. [SEC SK ss. 306(b)(4)]
The Audit Committee shall review the Management's Discussion and Analysis and
other sections of the Company's Form 10-K Annual Report before its release and
consider whether the information is adequate and consistent with members'
knowledge about the Company and its operations.
INTERIM FINANCIAL STATEMENTS
The Audit Committee shall meet with management and the outside auditors to
review the interim financial statements and the results of the auditors' review
thereof prior to the release to the public of the results for each quarter.
The Audit Committee shall review the quarterly financial statements prior to
release to the public or filing with the SEC.
Obtain explanations from management or from the outside auditors on whether:
* Actual financial results for the quarter or interim period varied
significantly from budgeted or projected results.
* Changes in financial ratios and relationships in the interim financial
statements are consistent with changes in the Company's operations and
financing practices.
* Generally accepted accounting principles have been consistently
applied in the quarterly financial statements.
* There are any actual or proposed changes in accounting or financial
reporting practices.
* There are any significant or unusual events or transactions.
* The Company's financial and operating controls are functioning
effectively.
* The Company has complied with the terms of loan agreements.
* The interim financial statements contain adequate and appropriate
disclosures.
18
COMPLIANCE WITH LAWS AND REGULATIONS
The Audit Committee shall review the effectiveness of the system for monitoring
compliance with laws and regulations and the results of management's
investigation of and follow-up (including disciplinary action) on any fraudulent
acts or accounting irregularities.
The Audit Committee shall periodically obtain updates from management regarding
compliance.
The Audit Committee shall be satisfied that regulatory compliance matters have
been considered in the preparation of the financial statements.
The Audit Committee shall review the findings of any examinations of the Company
by regulatory agencies which have authority over the Company.
COMPLIANCE WITH CODES OF CONDUCT
The Audit Committee shall evaluate whether management is setting the appropriate
tone at the top by communicating the importance of the Company's codes of
conduct and the guidelines for acceptable business practices.
The Audit Committee shall review the program for monitoring compliance with the
codes of conduct.
OTHER RESPONSIBILITIES
The Audit Committee may meet with the outside auditors, the senior internal
audit executive, management and any employee seeking to meet with the Audit
Committee about any matter within its purview in separate executive sessions to
discuss any matters that the Committee or these persons believe should be
discussed privately.
The Audit Committee shall request that significant findings and recommendations
made by the internal and outside auditors be received and discussed on a timely
basis.
The Audit Committee shall review, with the Company's counsel, any legal matters
that could have a significant impact on the Company's financial statements.
The Audit Committee shall review the policies and procedures in effect for
considering officers' expenses and perquisites.
The Audit Committee shall perform other oversight functions as requested by the
Board.
CHARTER SCOPE
The Audit Committee shall review and reassess the adequacy of this Charter at
least annually. [Nasdaq/AMEX 4310(c)(26)(A)]
The Audit Committee shall submit this Charter to the Board for approval, and
have the Charter published at least every three years in accordance with the
rules of the SEC from time to time in effect. [SEC Schedule 14A Item
7(e)(iv)(A)]
REPORTING RESPONSIBILITIES
The Audit Committee shall regularly update the Board about Audit Committee
activities and make appropriate recommendations.
The Audit Committee shall annually prepare a report to stockholders as required
by SEC rules for inclusion in the Company's proxy statement. [SEC SK ss. 306;
SEC Schedule 14A Item 7(e)(3)]
19
MEETINGS
The Audit Committee shall meet at least four times annually and may meet more
frequently as circumstances dictate.
Meetings of the Audit Committee may be in person or by conference call in
accordance with the Bylaws of the Company.
Meetings of the Audit Committee shall be held at such time and place, and upon
such notice, as the Chairman of the Audit Committee may from time to time
determine.
The Chairman of the Audit Committee shall develop the agenda for each meeting
and in doing so may consult with management, the internal auditors and the
outside auditors.
Except as specifically provided in this Charter, the provisions of the Bylaws of
the Company with respect to committees of the Board shall apply to the Audit
Committee.
AUTHORITY
The Audit Committee shall have the authority to conduct any investigation
appropriate to fulfilling its responsibilities and shall have direct access to
the outside auditors and the internal auditors as well as anyone in the Company.
The Audit Committee shall have the ability to retain, at the Company's expense,
such special legal, accounting or other consultants or experts it deems
necessary in the performance of its duties.
The Audit Committee may from time to time delegate to its Chairman or any of its
members the responsibility for any particular matters.
20
E-DENTIST.COM, INC.
2999 NORTH 44TH STREET, SUITE 650
PHOENIX, ARIZONA
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 2, 2001
The undersigned hereby appoints James M. Powers, Jr. and James L. Dunn, Jr., or
either of them, proxies for the undersigned, each with full power of
substitution, to vote all shares of Common Stock of e-dentist.com, Inc. which
the undersigned is entitled to vote, at the Annual Meeting of Stockholders (the
"Meeting") to be held on August 2, 2001, at 9:00 a.m., local time, at the
Company's offices, 2999 N. 44th Street, Suite 650, Phoenix, Arizona 85018 and at
any and all adjournments thereof for the following purposes:
(1) Election of Class C Director:
[ ] FOR the nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for the nominee listed below
Nominee: George M. Siegel.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME ON THE LINE IMMEDIATELY BELOW.)
- --------------------------------------------------------------------------------
(2) Approval of the amendment of the Company's 1997 Stock Compensation Plan to
increase the number of authorized shares under that plan to 3,500,000.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
(3) Approval of the Amendment to the Company's Restated Certificate of
Incorporation to change the name of the Company to EDT Learning, Inc.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
(4) Approval and Ratification of the Appointment of PricewaterhouseCoopers LLP
as the Company's Independent Auditors for Fiscal 2002.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
(5) In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Meeting.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
Dated
_________________, 2001
PLEASE DATE AND SIGN ON REVERSE SIDE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE
NOMINEE FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS, "FOR" APPROVAL OF
THE AMENDMENT TO THE STOCK OPTION PLAN TO INCREASE THE NUMBER OF AUTHORIZED
SHARES, "FOR" APPROVAL OF THE AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO CHANGE THE NAME TO EDT LEARNING, INC. AND "FOR" APPROVAL AND
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, AS THE COMPANY'S
INDEPENDENT AUDITORS.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith. The undersigned hereby
revokes any proxies given prior to the date reflected below.
_______________________________
Date
_____________________________________________________________
Signature(s) of stockholders(s)
Please complete, date and sign exactly as your name appears herein. If
shares are held jointly, each holder should sign. When signing as attorney,
executor, administrator, trustee, guardian or corporate official, please
add your title.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE TO CONTINENTAL STOCK
TRANSFER & TRUST COMPANY AS AGENT FOR THE COMPANY. THE GIVING OF A PROXY WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.