SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the Appropriate Box:
/ / Preliminary Information Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14c-5(d)(2))
/X/ Definitive Information Statement
EPIXTAR CORPORATION
------------------------
(Name of Registrant as Specified In Its Charter)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on
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(4) Proposed maximum aggregate value of transaction: $ ____________
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EPIXTAR CORPORATION
11900 Biscayne Blvd.
Miami, Florida 33181
February 1, 2005
To Our Shareholders:
A Special Meeting in Lieu of an Annual Meeting of Shareholders of Epixtar Corp.,
a Florida corporation, will be held at 2:00 p.m. on February 15, 2005, at
offices of the Company at 11900 Biscayne Boulevard, Suite 700, Miami, Florida.
Enclosed is our Notice of the Special Meeting in Lieu of an Annual Meeting of
Shareholders, and Information Statement. The enclosed Information Statement
contain details concerning the business to come before the meeting, including
election of the named nominees to our Board of Directors for the terms indicated
and an increase in the shares of our common stock subject to our stock option
plan.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement is being mailed on or shortly after February 2, 2005,
to all Shareholders entitled to vote at the meeting.
We look forward to reviewing our activities with you at the meeting. We hope you
can be with us.
Sincerely,
/s/ Ilene Kaminsky
------------------------------
Ilene Kaminsky
Chief Executive Officer
2
EPIXTAR CORPORATION
11900 Biscayne Blvd.
Miami, Florida 33181
NOTICE OF SPECIAL MEETING IN LIEU OF AN ANNUAL MEETING OF SHAREHOLDERS
To Be Held February 15, 2005
To the Shareholders of Epixtar Corporation:
NOTICE IS HEREBY GIVEN that a Special Meeting in Lieu of an Annual
Meeting of Shareholders of Epixtar Corp., a Florida corporation, will be held at
2:00 p.m. local time, on February 15, 2005, at the offices of the Company at
11900 Biscayne Boulevard, Suite 700, Miami, Florida to consider and to vote on
the following matters as more fully described in the accompanying Information
Statement:
1- To elect the named nominees to our Board of Directors and for
the terms indicated;
2- The ratification of an amendment to our stock option plan to
increase the number of shares of our Common Stock subject to the
plan to 6,000,000 shares; and
To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on January 25,
2005 as the record date for the determination of Shareholders entitled to notice
of, and to vote at, the Meeting and any adjourned meetings thereof.
All Shareholders are cordially invited to attend the Meeting in person.
Your vote is important.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
By Order of the Board of Directors
/s/ Ilene Kaminsky
Ilene Kaminsky
Chief Executive Officer
EPIXTAR CORPORATION
11900 Biscayne Blvd.
Miami, Florida 33181
INFORMATION STATEMENT
SPECIAL MEETING IN LIEU OF AN ANNUAL MEETING OF SHAREHOLDERS
To Be Held February 15, 2005
GENERAL INFORMATION
Management of Epixtar Corporation ("Epixtar") is providing this
Information Statement to inform you about items to be voted on at the Special
Meeting in Lieu of an Annual Meeting of Shareholders to be held at 2:00 p.m.
local time, on February 15, 2005, at 11900 Biscayne Boulevard Suite 700 Miami,
Florida 33181. This Information Statement is being mailed on or shortly after
February 2, 2005, to all Shareholders entitled to vote at the meeting.
We are not soliciting proxies as parties holding voting control of, in
the aggregate, over 50% of the votes entitled to be cast at the meeting have
indicated that they will vote in favor of the above proposals.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
COSTS OF INFORMATION STATEMENT
We will pay the cost preparing and sending out this information
statement.
VOTING
At the close of business on January 25, 2005, the record date for
determining Shareholders entitled to notice of and to vote at the meeting, the
total number of shares or share equivalents entitled to vote at our meeting is
12,369,119 consisting of 11,544,119shares of common stock outstanding and
825,000 votes by holders of 16,500 shares of preferred stock outstanding. The
preferred stock is entitled to vote on an as-converted basis with our common
stock, with each share of preferred being entitled to fifty non-cumulative
votes. Each share of our common stock is entitled to one non-cumulative vote.
The total votes represented by the shares of common stock and the votes to which
the preferred stock are entitled shall be referred to as the "Votes."
Vote Required
Provided a quorum is present at the meeting (in person or by proxy):
A plurality of the Votes cast shall be sufficient to elect each nominee on the
Company's slate of directors (Proposal 1) and a favorable Vote of a majority of
the outstanding shares is necessary to approve Proposal 2.
PROPOSAL NO. 1
TO ELECT EIGHT DIRECTORS OF THE COMPANY
INFORMATION CONCERNING NOMINEES
All of the nominees are presently directors of the Company. The following table
sets forth the positions and offices presently held with us by each nominee, his
or her age, his or her principal occupation and his tenure as a director:
Principal Occupation or Employed Director
Name Age Position By since
- ---------------- --- -------------------------- ------------ -----------
Ilene Kaminsky 39 Chief Executive Officer Epixtar Corp.
David Srour 43 President, Epixtar Corp. 2003
Chief Operating Officer
Irving Greenman 69 Chief Financial Officer Epixtar Corp. 2000
David Berman 58 Attorney Berman & Berman 2002
Kenneth Elan 52 Attorney Law Office of 2003
Kenneth Elan
John W. Cooney 68 Vice President Lionstone Group 2003
Robert Palmer 78 Attorney The Aviation Legal
Group, P.A.
Sheldon Goldstein 64 Consultant Independent
Consultant
Ilene Kaminsky has served as Chief Executive Officer of Epixtar since November
2004. Prior to joining Epixtar Ms. Kaminsky spent four years with Cisco Systems
driving business strategy both within Cisco and to its customers in the
telecommunications service provider market. Preceding her tenure at Cisco, she
spent 10 years focused on business development, corporate strategy, marketing,
business planning, and raising capital in the public and private markets. Prior
to Cisco, she served as Vice President of Marketing for HTE8 from 1999 to 2000,
a fixed wireless broadband service provider. Ms. Kaminsky consulted for a number
of service provider start-up companies where, in addition to developing
corporate strategies and raising capital with venture capital firms and other
investors, she also served as Chief Marketing Officer at yourorg.com, an
affinity portal company, and as Senior Vice President of Marketing and Founder
at The Intelesis Group/ FreeCaller Communications, a long distance and telephony
provider. She served as Vice President of Marketing at Equalnet Communications
in Houston, a facilities-based voice local and long distance provider marketing
voice solutions to SMBs and Enterprises. There she played a primary role in
diligence and acquisition of several ISPs and IT integration companies. Ms.
Kaminsky holds a dual BA from University of Florida in English and Philosophy.
David Srour has served as our President since June 2003 and is our Chief
Operating Officer since 2001. On April 16, 2004, he became our Chairman of the
Board of Directors. He previously served as our Vice President from November
2001 through to June 2003. Prior to joining us, Mr. Srour was Senior Director of
Information Service of Carr America Realty, a former client of his at KPMG
Consulting in McLean, Virginia, where he was a Senior Manager from 2000 to 2001.
At KPMG, Mr. Srour specialized in eCommerce, project management and process
improvement consulting services. Beginning in 1997, he spent four years at Ernst
and Young LLP, providing information systems and process improvement consulting
services including back office and eCommerce implementations for such clients as
General Motors, Lehman Brothers and Simon Property Group. Mr. Srour also has
significant telecommunications experience, including roles as COO of Interactive
Telecard Services, Inc. and SmarTel Communications. Mr. Srour holds a dual BS in
Information Systems and Marketing from the Syracuse University School of
Management.
Irving Greenman has, since June 2000, served in various executive positions for
us, including our Chief Financial Officer and Chief Executive Officer. From 1998
through 1999, he was Chief Financial Officer for Kaleidoscope Media Group, Inc.,
an entertainment company. Prior to that, he was the Chief Financial Officer for
Medica Media and Healthcare International, both of which were engaged in the
healthcare industry. Mr. Greenman is a Certified Public Accountant licensed in
New York and in Florida. Mr. Greenman graduated with a BBA from City College of
New York, which is now the Bernard Baruch School of Business. He holds a CPA in
both New York and Florida.
David Berman is a practicing attorney in Miami, Florida and one of the Company's
outside directors. Since 1983, Mr. Berman has been a partner in Berman & Berman,
a partnership in Miami, Florida specializing in tax law and business planning.
Prior to this he was a member of the firm of Bedzow & Korn of Miami.
Kenneth Elan has been a practicing attorney in New York City for over
twenty-five years. For the last five years he has been a sole practitioner
specializing in litigation concentrating in corporate and commercial litigation.
John W. Cooney has been a Vice President for Lionstone Group, Inc., owner of the
Seville and the Ritz-Carlton Hotels on Miami Beach, DuPont Plaza in Miami,
Sheraton Curacao Resort, Princess Beach Resort Curacao, and Holiday Inn Aruba,
since 2000. From 1997 through 2000, he was President of Westbourne, Inc., an
import-export company. He retired in 1997 from Coopers & Lybrand's Miami office
where he served as Senior Tax Partner. While with Coopers & Lybrand, he served
on several committees in the firm, having responsibility for review of all real
estate tax oriented investments in which the firm was involved. Mr. Cooney
provides tax and financial consulting services specializing in taxation,
including foreign taxation, real estate and partnerships. Mr. Cooney has
provided expert witness testimony in many proceedings involving real estate,
condominium conversions and other related matters.
Sheldon Goldstein has been self-employed for more then the past fifteen years as
a consultant for clients in the business of document transportation. His prior
business experience included employment by the city of Philadelphia,
Pennsylvania as a tax examiner or reviewing returns of firms doing business in
that city. He received a B.S. in Business Administration from Temple University
in 1982.
Robert M. Palmer has since 2002 been associated with Aviation Legal Group, P.A.
in Fort Lauderdale, Florida. From 2000 to 2002, he was engaged in the private
practice of law in Boca Raton, Florida. Mr. Palmer has been practicing law in
the state of Florida for over forty years with and emphasis on aviation and
international law. He graduated from St. John's Law School in 1951.
INFORMATION CONCERNING THE BOARD
The Board of Directors held two meetings during the year ended December 31,
2003. During the year all other actions were taken through unanimous written
consents.
Audit Committee
Prior to August 14, 2003, the Board of Directors acted as the Audit Committee as
permitted by the rules of the Securities and Exchange Commission. Effective
August 14, 2003, however, we established an Audit Committee consisting of three
independent directors. John Cooney is chairman of the audit committee and our
financial expert under the rules of the Securities And Exchange Commission. Mr.
Cooney has over thirty years experience as a partner of a leading public
accounting firm. He does not have nor does any other director member of the
committee, have a prior relationship with us and each is independent under the
rules of the American Stock Exchange. During 2003 the audit committee met once.
Other Committees
Prior to 2004, the Company had no committees other than the Audit Committee. In
2004, it established a committee of independent directors to consider
transactions with affiliates and compensation. The Company does not have a
nominating committee for members of the Board and does not believe one was
necessary at this time.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid or
accrued by us or any of our subsidiaries for services rendered during the fiscal
year ended December 31, 2003 by all persons who acted as a Chief Executive
Officer and for the four highest paid officers earning in excess of $100,000
during 2003.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
--------------------------- -------------------------
NAME AND SECURITIES
PRINCIPAL UNDERLYING
POSITION YEAR SALARY ($) AWARDS OPTIONS
- --------- ---- ---------- ------ -------
Martin Miller, Chief 2003 None
Executive Officer
2002 None
---- ----
David Srour, Chief 2003 $222,500 300,000
Operating Officer
2002 $186,969 $50,000
---- -------- -------
2001 $28,000 40,000
---- ------- ------
Irving Greenman, 2003 $285,000 300,000
Chief Financial
Officer
2002 $300,000 75,000
---- -------- ------
2001 200,000 200,000
---- ------- -------
Gerald Dunne Jr., 2003 $193,750 300,000
Vice President
2002 $146,315 50,000
---- -------- ------
2001 $50,000
---- -------
Richard Sablon, Vice 2003 $176,750 200,000
President
2002 $141,219 25,000
---- -------- ------
2001 $75,414 150,000
---- ------- -------
(1) Mr. Greenman was Chief Executive Officer until October, 2002 when Mr. Martin
Miller assumed that position.
Set forth below is the compensation accrued for each of the nominees
for director who are employees of the Company:
Ilene Kaminsky $ 25,000
Irving Greenman $310,000
David Srour $319,125
Options
Set forth below with respect to the Officers named above is further information
concerning options to purchase common stock under our stock option plan.
OPTION GRANTED IN 2003
Number of Percent of total
Securities options/granted
Underlying to employees Exercise or Expiration
Name options granted in fiscal year base price date
- ---- --------------- -------------- ---------- ----------
David Srour...................... 300,000 7.7% 3.50 2008
Irving Greenman.................. 200,000 5.1% 3.50 2008
Gerald Dunne..................... 300,000 7.7% 3.50 2008
Ricardo Sablon................... 200,000 5.1% 3.50 2008
All of the options have a term of five years and have the same vesting terms.
One third of the shares subject to the option vest on the first anniversary of
grant with an additional third vesting on the next two anniversary dates.
Options Exercised and Fiscal Year End Options Retained
No options were exercised by any above named officer in 2003. The market price
our common stock on December 31, 2003 was above the exercise price of all
outstanding options and consequently all these options were in the money.
Set forth below is certain information relating to options retained by the above
named officers at December 31, 2003:
Value of unexercised
Number of securities underlying in-the-money
unexercised options at year end options at year end
-------------------------------- --------------------------
Name Vested Not Vested Vested Not Vested
- ---- ------ ---------- ------ ----------
David Srour............................... 26,667 313,333 $60,000 $705,000
Irving Greenman........................... 133,333 266,667 300,000 600,000
Gerald Dunne.............................. 33,333 313,667 75,000 705,750
Ricardo Sablon............................ 100,000 250,000 225,000 562,500
Director Compensation
In 2003, we issued options to purchase 50,000 shares to each of John Cooney and
Kenneth Elan at exercise prices of $4.50 and $3.50 respectively. All of the
foregoing options subsequent to 2003 we are substantially similar to the options
granted executive officers described above. We recently initiated a new
independent director compensation package. Each will independent director will
receive $10,000 per annum and $5,000 for participation on the audit committee.
PRINCIPAL SHAREHOLDERS AND STOCKHOLDINGS OF DIRECTORS
The following table sets forth certain information regarding beneficial
ownership of the common stock as of December 31, 2004 by:
o each stockholder known by us to be the beneficial owner of more than
5% of the outstanding common stock,
o each director of ours and nominee for election as a director of
ours,
o each named officer,
o and all directors and executive officers as a group.
Except as otherwise indicated, we believe that the beneficial owners of the
common stock listed below, based on information furnished by such owners, have
sole investment and voting power with respect to such shares, subject to
community property laws where applicable. The addresses of all the persons
listed is c/o Epixtar Corp., 11900 Biscayne Blvd., Miami, Florida, 33191.
Name of Number of Shares Approximate
Beneficial Owner Beneficially Owned Percentage
- -------------------- ------------------ --------------
Martin Miller (1)(2)........................................ 2,873,921 24.9%
Stanley Myatt (1)........................................... 2,778,000 24.1%
Sheldon Goldstein........................................... 900,000 7.8%
David Srour (3)............................................. 140,000 1.2%
Irving Greenman (3)......................................... 266,667 2.3%
David Berman (3)............................................ 51,466 0.4%
Ricardo Sablon (3).......................................... 216,666 1.8%
Gerald Dunne (3)............................................ 150,000 1.3%
John Cooney (3)............................................. 16,667 0.01%
Kenneth Elan (3)............................................ 16,667 0.01%
Ilene Kaminsky.............................................. none
Robert Palmer............................................... none
Directors (including nominees)& Officers as a group(1)(3)... 2,071,465 15.2%
- ------------
(1) Including shares registered in the name of Trans Voice L.L.C.. Each of
Messrs. Miller and Myatt is deemed to beneficially own this percentage of
shares of common stock owned by Trans Voice by virtue of their or their
affiliate's 50% ownership of Trans Voice Investments Inc. which owns 98% of
Trans Voice L.L.C. with the balance of the shares of Trans Voice
Investments owned these individuals.
(2) Includes 95,921 shares owned by Mr. Miller and his spouse. It does not
include 122,500 shares owned by his spouse as to which Mr. Miller denies
any beneficial ownership.
(3) Represents shares underlying options exercisable within 60 days. In
addition to these options, additional shares are subject to options not
exercisable within 60 days as follows:
Irving Greenman..................................... 133,334
David Berman........................................ 33,334
Kenneth Elan........................................ 33,333
David Srour......................................... 200,000
John Cooney......................................... 33,333
Ricardo Sablon...................................... 133,334
Gerald Dunne........................................ 200,000
All officers and directors as a group............... 1,193,336
Non Beneficial Holders
Brookfield Investments Ltd. is the record owner of more than five percent of our
common stock. Brookfield owns of record 770,000 shares and has warrants to
purchase 3,550,000 shares of our common stock. We have been advised by
Brookfield that all of our securities held by it are held as nominee for
unrelated third parties none of whom have an interest equal to a five percent.
Laurus owns a $5,000,000 principal amount Secured Convertible Term Note which is
convertible into 2,380,952 shares of our common stock. It also owns warrants to
purchase 993,827 shares of our common stock. Both the note and warrant contain a
provision that prohibits conversion or exercise, if upon such conversion or
exercise Laurus would own 4.99% or more of the outstanding shares of our common
stock. This provision does not apply to defaults and may be waived upon 75 days
prior notice by Laurus. Because of this prohibition, Laurus does not
beneficially own more than 5% of our shares of common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 14, 2000 we acquired the entire interest of Trans Voice Investment
Ltd. in SavOn, a Florida limited liability company. Trans Voice Investment,
Ltd.'s was an 80% interest in SavOn. The consideration for Trans Voice
Investment Ltd.'s entire interest in SavOn was 2,000,000 shares of our common
stock. The original agreement provided for the issuance of additional shares if
during the six-month period from January 1, 2001 to June 30, 2002, the
accumulated net after tax income of SavOn was greater than $1,200,000. For each
$1.00 of any such excess of net after tax income, Trans Voice Investments Ltd.
was to receive additional shares having a market value of $10.00. Due to the
cancellation of SavOn's agreement with Global Crossing, SavOn discontinued its
telecommunications business. Trans Voice Ltd. claimed that it was deprived of
its right to additional shares as SavOn would have no earnings. In lieu of all
claims of Trans Voice Investment, Ltd. against us, we paid an additional
$225,000 that was treated as part of the purchase price.
On March 31, 2001, we acquired all the shares of NOL Group in exchange for
2,000,000 of our shares. At the time Trans Voice Investment Ltd. owned 80% of
NOL Group, and was a principal stockholder (with the balance owned by Sheldon
Goldstein.) Prior to the transaction, Trans Voice Ltd. also held 2,000,000
shares or thirty three and one third percent of our stock. As part of the
transaction, we agreed to pay additional contingent consideration to the former
shareholders of National Online. If, during the eighteen month period between
April 1, 2001 and September 30, 2002, the accumulated net after tax income of
NOL Group was $1,200,000 or greater. In that event, we were required to issue a
number of our additional shares equal to any excess divided by ten. During 2001
the former owners of NOL Group claimed that we failed to commence National
Online's operations timely and adequately fund it. As of November 30, 2001, the
shareholders and we agreed to eliminate the contingent right and settle all
claims in consideration for an additional 2,500,000 shares of our common stock.
The value of the stock was $5,750,000 based on the market price at the time.
In April 2001 NOL Group, Inc. entered into an oral agreement to pay Trans Voice
Investments, Inc. a monthly fee of $4.00 for each of its customers. On October
1, 2001, the agreement was modified because the parties agreed that the payments
would become excessive and burdensome. (Trans Voice Inc. is unaffiliated with
Trans Voice Ltd.) Pursuant to the Payment Agreement NOL Group and other
subsidiaries are obligated to pay Trans Voice Inc $150,000 per month as long as
NOL Group and affiliates operates their ISP programs. In addition, Trans Voice
Investments, Inc. is to receive $1.00 for each additional customer in excess of
100,000 customers in any given month. NOL Group is also obligated to provide
office space and services to Trans Voice Investments, Inc. The agreement
constitutes consideration for services including services as a finder provided
in connection with the organization of NOL Group. Messrs. Stanley Myatt and
Martin Miller, or their affiliates, are the sole stockholders of Trans Voice
Investments, Inc. This corporation, together with Messrs. Miller and Myatt,
individually own the entire interest of Trans Voice L.L.C., which has been our
principal shareholder since June 2002. Mr. Miller was our chief executive
officer prior to the execution of the Payment Agreement and again thereafter
from September 2002 to April 2004. The parties to the Payment Agreement agreed
to limit the payment obligation to $4,200,000 in monthly installments of
$300,000 per month from November 2004 through December 2005. Trans Voice L.L.C.
has also entered into an agreement pursuant to which it will be compensated for
any clients and acquisition candidates it introduces to us with whom we
consummate a transaction.
As of April 2003 we determined to outsource many aspects of the development of
our new business plan. We have entered into an agreement with Trans Voice
L.L.C., our principal stockholder, to find, contract with, pay and supervise an
entity to assist in the development of our new business, including assisting us
in:
o Managing existing vendor relationships for sales campaigns and growth
to meet and liven up new business needs.
o Managing site selection, lease negotiations, design, and build-out of
Epixtar's offshore call centers.
o Negotiating incentive and financial assistance packages with
government ministries and agencies on behalf of Epixtar.
o Identifying commercial opportunities for Epixtar to sell new services
and developing new products for Epixtar to market.
o Identifying and negotiating merger and acquisition situations for
Epixtar.
The above described arrangement involving three parties was structured to enable
Transvoice to supervise the subcontractor. As it turned out the amount of time
required for supervision was negligible. As the amount of time necessary for the
supervision was minimal we determined the value of Trans Voice's services was de
minimus.
Mr. Todd Fisch, who is now one of our executive officers, owns the entire equity
interest, in this subcontractor consulting firm. For Mr. Fisch's recent
employment history reference is made to the section "Management, Officers, and
Directors".
In the third quarter of 2002, we repaid loans aggregating $175,000 to Trans
Voice Inc. and Stanley Myatt. The loans bore interest at seven percent per
annum.
Commencing in 2004, Messrs. Miller and Myatt each received salaries of $300,000
as consultants to the Company. The salary to each of them has been reduced to
$150,000 per annum beginning January 2005.
Based upon agreements in principle reached on November 20, 2002, we entered into
an agreement on December 6, 2002 relating to the note to Brookfield Investments
Ltd. The note is in the amount of approximately $2,454,000 and is due on demand.
We obtained an agreement to defer demand for payment for over two years, and for
Brookfield to subordinate its security interest in our and our subsidiaries'
accounts receivable to certain types of lenders. We agreed to issue 3,000,000
shares of our restricted common stock and agreed to repay accrued interest by
July 2003. We retained the right to prepay the loan without any penalty at any
time. The stock was never issued pending negotiations that began in December
2002. After these negotiations, the agreement was amended to provide for
issuance of warrants to Brookfield to purchase 4,000,000 shares of our common
stock at an exercise price of $.50 per share in lieu of issuing the 3,000,000
shares to Brookfield. The warrants are exercisable during the period from May
31, 2003 until May 31, 2006. Subsequent to March 2003 Brookfield voluntarily
agreed to surrender its security interest.
While we believe the transactions referred to were fair, they were not
negotiated at arms length. Transactions with any of our principal stockholders,
officers or directors must now be approved by the majority of our independent
directors.
From time to time during 2003 and 2004, Messrs. Myatt and Miller or their
affiliates and other officers and directors, have advanced amounts on our behalf
or deferred amounts owed to them or their affiliates.
PROPOSAL NO. 2
RATIFICATION OF THE INCREASE IN THE NUMBER OF SHARES SUBJECT TO THE 2001 STOCK
OPTION PLAN FROM 4,000,000 SHARES TO 6,000,000 SHARES.
We have adopted an option plan entitled the Global Asset Holdings 2001 Stock
Option Plan (the "Option Plan"). The purpose of the Option Plan is to provide us
with a vehicle to attract, compensate and motivate selected eligible persons,
and to appropriately compensate them for their efforts, by creating a
broad-based stock plan which will enable us, in our sole discretion and from
time to time, to offer to or provide such eligible persons with incentives or
inducements in the form of awards as such term is defined below, thereby
affording such persons an opportunity to share in potential capital appreciation
of our common stock.
An Amendment to the Option Plan was approved by the board of directors and is
subject to approval by the shareholders. A total of 6,000,000 shares of common
stock are available for issuance under the plan pending approval.
Under the Option Plan, an eligible person is any person who, at the applicable
time of the grant or award under the Option Plan, is an employee, a director
and/or a consultant or advisor of our notes have limited the amount of
additional options we may issue up to 250,000 additional options. As of December
31, 2004 there were options outstanding to purchase 4,434,000 shares of common
stock under the Option Plan. The Company has granted options to purchase 434,000
shares of the Company's common stock in excess of 4,000,000 shares.
The above description of the Option Plan is qualified in its entirety by
reference to the full text of the Option Plan, as well as the terms and
conditions of any award agreement governing the grant of an award under the
Option Plan.
On May 28, 2004, we granted additional options to purchase 150,000 shares of our
common stock at $3.55 per share to our employees and service providers including
options to an officer to purchase 60,000 shares of our common stock.
Under the Option Plan, an eligible person is any person who, at the applicable
time of the grant under the Option Plan, is an employee, a director and/or a
consultant or advisor of ours, or of any parent or subsidiary or other entity
for which the person is performing services at our request. The Option Plan
provides for its administration by the board of directors or a committee chosen
by the board of directors, which has discretionary authority, subject to certain
restrictions, to determine the number of shares issued pursuant to incentive
stock options and non-statutory stock options and the individuals to whom, the
times at which and the exercise price for which options will be granted.
Nature of Options
Options granted may be either incentive stock option ("ISO") under the Internal
Revenue Code of 1986, as amended (the "Code"), or options not intended to
qualify as ISOs ("Non-ISOs"). The Committee may determine the exercise price,
provided that, in the case of ISOs, such price may not be less than 100% (110%
in the case of ISOs granted to holders of 10% or more of the voting power of the
Company's stock) of the fair market value (as defined in the Option Plan) of a
share of Common Stock at the date of grant. The aggregate fair market value
(determined at time of option grant) of stock with respect to which ISOs become
exercisable for the first time in any year cannot exceed $100,000.
Options issued under the Option Plan will be non-transferable (except by will or
the laws of descent and distribution in the event of death), shall have a term
of up to ten (10) years without the permission of the Board of Directors and
shall vest in accordance with the terms established for such options by the
Board, provided the optionee remains an officer, employee or director of the
Company for at least one year after the date of the grant. Upon the termination
of an optionee's service as a director, officer or employee of the Company for
reasons other than retirement, death or permanent or total disability, the
option and optionee's rights thereunder will terminate in accordance with the
time established for such termination by the Board.
Purpose
The Board adopted the Option Plan in the belief that it is in the best interests
of the Company to encourage its directors, officers and key employees and other
providing services to have an ownership interest in the Company in order to
align their interests more closely with those of the other shareholders and that
the grant of options under the Option Plan can be appropriately employed to
attract and retain qualified persons as directors, officers and employees of the
Company.
Federal Income Tax Consequences
The following discussion of the federal income tax consequences of the Option
Plan is intended to be a summary of applicable federal income tax law. State and
local tax consequences may differ. Because the federal income tax rules
governing options are complex and subject to frequent change, participants are
advised to consult their tax advisors prior to exercise of options or
dispositions of stock acquired pursuant to an option exercise.
The Option Plan provides for the granting of options which are intended to
qualify either as incentive stock options within the meaning of Section 422 of
the Internal Revenue Code of 1986 or as options which are not intended to meet
the requirements of such section (non-statutory stock options"). The exercise
price of all incentive stock options must be at least equal to the fair market
value of such shares on the date of the grant or, in the case of incentive stock
options granted to the holder of more than 10% of our common stock, at least
110% of the fair market value of such shares on the date of the grant. The
maximum exercise period for which incentive stock options may be granted is ten
years from the date of grant (five years in the case of an individual owning
more than 10% of our common stock). The aggregate fair market value (determined
at the date of the option grant) of shares with respect to which incentive stock
options are exercisable for the first time by the holder of the option during
any calendar year shall not exceed $100,000. All our options have been
non-qualified.
Options that are granted under the Option Plan may qualify as ISOs and as such
must comply with the requirements of Section 422 of the Code. An optionee is not
taxed upon the grant or exercise of an ISO; however, the difference between the
fair market value of the shares on the exercise date will be an item of
adjustment for purposes of the alternative minimum tax. If an optionee holds the
shares acquired upon the exercise of an ISO for at least two (2) years following
the date of the grant of the option and at least one year following the exercise
of the option, the optionee's gain, if any, by a subsequent disposition of such
shares will be treated as long-term capital gain for federal income tax
purposes. The measure of the gain is the difference between the proceeds
received on disposition and the optionee's basis in the shares (which generally
would equal the exercise price). If the optionee disposes of shares acquired
pursuant to exercise of an ISO before satisfying the one- and two-year holding
periods described above, the optionee will recognize both ordinary income and
capital gain in the year of disposition. The amount of the ordinary income will
be the lesser of (i) the amount realized on disposition less the optionee's
adjusted basis in the shares (usually the option exercise price) or (ii) the
difference between the fair market value of the shares on the exercise date and
the option price. The balance of the consideration received on such disposition
will be long-term capital gain if the shares had been held for at least one year
following exercise of the incentive stock option. The Company is not entitled to
an income tax deduction on the grant or the exercise of an ISO or on the
optionee's disposition of the shares after satisfying the holding period
requirement described above. If the holding periods are not satisfied, the
Company will be entitled to an income tax deduction in the year the optionee
disposes of the shares, in an amount equal to the ordinary income recognized by
the optionee.
In the case of a non-qualified option, an optionee is not taxed on the grant of
such option. Upon exercise, however, the participant recognizes ordinary income
equal to the difference between the option price and the fair market value of
the shares on the date of the exercise. The Company is entitled to an income tax
deduction in the year of exercise in the amount of the ordinary income
recognized by the optionee. Any gain on subsequent disposition of the shares is
long-term capital gain if the shares are held for at least one year following
the exercise. The Company does not receive an income tax deduction for this
gain.
Stockholder Vote Required.
The ratification of the amendment to Company's 2001 Stock Option Plan will
require the affirmative vote of a majority of the shares of Common Stock at the
meeting.
TRANSACTION OF OTHER BUSINESS
As of the date of this Information Statement, the Board of Directors of the
Company is not aware of any matters other than those set forth herein and in the
Notice of Meeting of Shareholders that will come before the meeting. Should any
other matters arise requiring the vote of Shareholders, it is intended that
proxies will be voted with respect thereto in accordance with the best judgment
of the person or persons voting the proxies.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the Company's 2005 Annual
Meeting of Shareholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission, promulgated under the Exchange Act, must be
received by the Company's offices in Miami, Florida by April 16, 2005 for
inclusion in the Company's proxy statement and form of proxy relating to such
meeting.
FORM 10-KSB
A COPY OF OUR FORM 10-KSB FOR 2003 IS AVAILABLE AT NO CHARGE UPON WRITTEN
REQUEST TO ITS INVESTOR RELATIONS DEPARTMENT AT 11900 BISCAYNE BOULEVARD SUITE
700, MIAMI, FLORIDA 33181.