SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
NuTECH DIGITAL, INC.
--------------------
Name of the Registrant as Specified In Its Charter
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Not
applicable
(2) Aggregate number of securities to which transaction applies: Not
applicable
(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): Not
applicable
(4) Proposed maximum aggregate value of transaction: Not applicable
(5) Total fee paid: Not applicable
[ ] 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.
Amount Previously Paid: Not applicable
Form, Schedule or Registration Statement No.: Not applicable
Filing Party: Not applicable
Date Filed: Not applicable
NUTECH DIGITAL, INC.
7900 Gloria Avenue
Van Nuys, California 91406
June 3, 2003
To Our Stockholders
You are cordially invited to attend the Annual Meeting of Stockholders of
NuTech Digital, Inc. (the "Company"). The Annual Meeting will be held on July
11, 2003 at 11:00 a.m. at the Company's executive offices, located at 7900
Gloria Avenue, Van Nuys, California 91406.
The actions we expect to take at the Annual Meeting are described in detail
in the attached Proxy Statement and Notice of Annual Meeting of Stockholders.
Also included with this letter is the Company's Annual Report.
Please use this opportunity to take part in the affairs of the Company by
voting on the business to come before this meeting. If you are a record holder
of the Company's Common Stock on May 30, 2003, you are eligible to vote with
respect to these matters, either personally at the meeting or by proxy. It is
important that your shares be voted, whether or not you plan to attend the
meeting, to ensure the presence of a quorum. Therefore, please complete, sign,
date and return the accompanying proxy in the enclosed postage-paid envelope.
Returning the proxy does NOT deprive you of your right to attend the meeting and
vote your shares in person for the matters acted upon at the meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Lee Kasper
Lee Kasper
President and Chairman of the Board
NUTECH DIGITAL, INC.
7900 Gloria Avenue
Van Nuys, California 91406
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
The Annual Meeting of Stockholders of NuTech Digital, Inc. will be held on
Friday, July 11, 2003, at 11:00 a.m., at 7900 Gloria Avenue, Van Nuys,
California 91406 for the following purposes:
(1) To elect the following directors:
Lee Kasper
Joseph Giarmo
Yegia Eli Aramyan
Jay S. Hergott
(2) To ratify the appointment of Farber & Hass LLP as the independent
auditors for 2003; and
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Stockholders of record at the close of business on May 30, 2003 will be
entitled to notice of and to vote at the Annual Meeting and at any continuation
or adjournment thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Your vote is important. Please fill in, date, sign and return the
enclosed proxy in the return envelope as promptly as possible, whether or not
you plan to attend the Annual Meeting. Your promptness in returning the proxy
will assist in the expeditious and orderly processing of the proxies and will
assist in ensuring that a quorum is present or represented. If you return your
proxy, you may nevertheless attend the Annual Meeting and vote your shares in
person if you wish. If you want to revoke your proxy at a later time for any
reason, you may do so in the manner described in the attached Proxy Statement.
By Order of the Board of Directors
/s/ Joseph Giarmo
Joseph Giarmo
Secretary
Van Nuys, California
June 3, 2003
NUTECH DIGITAL, INC.
7900 Gloria Avenue
Van Nuys, California 91406
--------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 11, 2003
--------------------------
VOTING AND PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of NuTech Digital, Inc., a California
corporation (referred to as the "Company", "we", "our" or "us") for use at our
Annual Meeting of Stockholders to be held at 7900 Gloria Avenue, Van Nuys,
California 91406 on Friday, July 11, 2003, at 11:00 a.m. local time, and at any
meeting following adjournment thereof. The Notice of Annual Meeting, this Proxy
Statement and the accompanying proxy card are being mailed to stockholders on or
about June 13, 2003.
REVOCABILITY OF PROXY AND VOTING OF SHARES
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised. The proxy may be revoked by filing an instrument of
revocation or a duly executed proxy bearing a later date with the Company's
Secretary at our principal executive offices located at 7900 Gloria Avenue, Van
Nuys, California 91406. The proxy may also be revoked by attending the meeting
and voting in person. If it is not revoked, the proxy will be voted at the
meeting in accordance with the stockholder's instructions indicated on the proxy
card. IF NO INSTRUCTIONS ARE INDICATED, THE PROXY WILL BE VOTED FOR THE APPROVAL
OF THE TWO PROPOSALS, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXY HOLDERS
AS TO ANY OTHER MATTER THAT MAY BE PROPERLY BROUGHT BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF.
RECORD DATE, VOTING RIGHTS AND OUTSTANDING SHARES
The Board of Directors has fixed May 30, 2003 as the record date (the
"Record Date") for determining holders of our Common Stock, no par value per
share, who are entitled to vote at the meeting. As of the Record Date, we had
10,380,169 shares of Common Stock outstanding and entitled to vote. Each share
of Common Stock entitles the record holder to one vote on each matter to be
voted upon at the meeting. A majority of the shares of Common Stock issued and
outstanding and entitled to vote at the meeting will constitute a quorum at the
meeting. Votes
1
withheld, abstentions and broker non-votes shall be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the meeting.
When the proxy is properly executed, dated and returned, the shares it
represents will be voted in accordance with any directions noted on it. Votes
cast by proxy or in person at the Annual Meeting will be tabulated by the
Inspector of Election, in conjunction with information received from our
transfer agent. The Inspector of Election will also determine whether or not a
quorum is present.
Directors are elected by a plurality of the votes cast in the election. In
electing directors, each stockholder has cumulative voting rights and is
entitled to cast a number of votes equal to the number of shares held multiplied
by the number of directors to be elected. The stockholder may cast these votes
all for a single candidate or may distribute the votes among some or all of the
candidates. No stockholder will be entitled to cumulate votes for a candidate,
however, unless that candidate's name has been placed in nomination prior to the
voting and the stockholder, or any other stockholder, has given notice at the
Annual Meeting prior to the voting of an intention to cumulate votes. Because
all stockholders may cumulate their votes for candidates in nomination if any
one stockholder has given such notice, the proxy holder may allocate the votes
represented by proxies among the Board of Directors' nominees in the proxy
holder's sole discretion. Pursuant to California law, abstentions and negative
votes will have no legal effect, but will be counted as present for purposes of
determining the existence of a quorum. IF NO SPECIFICATION IS INDICATED, THE
SHARES WILL BE VOTED "FOR" THE ELECTION OF THE DIRECTOR-NOMINEES NAMED ON THE
PROXY. PROXIES CANNOT BE VOTED FOR A GREATER NUMBER OF PERSONS THAN THE NUMBER
OF NOMINEES NAMED.
The affirmative vote of the holders of a majority of the shares of Common
Stock present at the meeting in person or by proxy is required to approve all
other proposals brought before the meeting. Shares which abstain from voting as
to these matters, and shares held in "street name" by brokers or nominees who
indicate on their proxies that they do not have discretionary authority to vote
such shares as to these matters ("broker non-votes"), will not be counted as
votes in favor of such matters. For purposes of determining whether the
affirmative vote of a majority of the shares present at the meeting and entitled
to vote on a proposal has been obtained, abstentions and broker non-votes will
be included in the number of shares present and entitled to vote.
SOLICITATION
The cost of solicitation of proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. Copies
of solicitation materials will be furnished to brokerage houses, nominees,
fiduciaries and custodians to forward to beneficial owners of Common Stock held
in their names. We will reimburse brokerage firms and other persons representing
beneficial owners of Common Stock for their reasonable expenses in forwarding
solicitation materials to the owners. In addition to original solicitation of
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proxies by mail, our directors, officers and other employees may, without
additional compensation, solicit proxies by telephone, facsimile and personal
interviews.
OVERVIEW OF PROPOSALS
This Proxy Statement includes two proposals requiring stockholder action.
The proposals relate to:
o the election of four directors, and
o the ratification of Farber & Hass LLP as our auditors for the fiscal
year ending December 31, 2003.
The proposals are discussed in more detail below.
PROPOSALS
PROPOSAL #1 - ELECTION OF DIRECTORS
Four directors are to be elected to our Board of Directors at the Annual
Meeting. The directors will hold office for a term of one-year term. The Board
of Directors has nominated Mr. Lee Kasper, Mr. Joseph Giarmo, Mr. Yegia Eli
Aramyan and Mr. Jay S. Hergott. We expect that these nominees will be available
for election, but if they are not, your proxy will be voted for the election of
other nominees to be designated by the Board of Directors to fill any such
vacancies.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
NOMINEES.
PROPOSAL #2 - RATIFICATION OF FARBER & HASS LLP AS OUR INDEPENDENT AUDITORS FOR
2003
The Board of Directors requests that the stockholders ratify its selection
of Farber & Hass LLP as our independent auditors for the current fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF FARBER & HASS
LLP AS OUR INDEPENDENT AUDITORS FOR 2003.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Other than Lee Kasper, our Chief Executive Officer and President, as of
May 30, 2003 there were no individuals that owned more than 5% of our Common
Stock. Mr. Kasper's stockholdings are set forth below.
The following table sets forth, as of May 30, 2003, information with
respect to the shares of Common Stock beneficially owned by (i) each director
and director nominee; (ii) each person (other than a person who is also a
director and/or a director nominee) who is an executive officer named in the
Summary Compensation Table below; and (iii) all executive officers and directors
as a group. The term "executive officer" is defined as the Chief Executive
Officer/President, Vice-President or any other person who performs similar
policy making functions for the Company.
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
TITLE OF CLASS NAME(1) OWNERSHIP(2)(3) CLASS
- -------------- ---------------------------------------------------- -------------------- -----------
Common Stock Lee Kasper, Executive Officer and Director(4) 8,765,000 75.69%
Shares/Direct
Ownership
Common Stock Joseph Giarmo, Executive Officer and Director(5) 845,250 Shares/Direct 8.03%
Ownership
Common Stock Yegia Eli Aramyan(6) 146,667 Shares/Direct 1.39%
Ownership
Common Stock Jay S. Hergott (7) 25,000 Shares/Direct *
Ownership
All Current Directors
and Executive Officers
as a Group 9,781,917 85.11%
* Less than 1%.
(1) The business address of each person named is c/o NuTech Digital, Inc., 7900
Gloria Avenue, Van Nuys, CA 91406.
(2) Based on 10,380,169 shares of Common Stock outstanding on the transfer
records as of May 30, 2003.
(3) Calculated pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of
1934. Under Rule 13d-3(d)(1), shares not outstanding which are subject to
options, warrants, rights or conversion privileges exercisable within 60
days are deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but not deemed outstanding for the purpose
of calculating the percentage owned by each other person listed. The
Company believes that each individual or entity named has sole investment
and voting power with respect to shares of Common Stock indicated as
beneficially owned by them, subject to community property laws, where
applicable, except where otherwise noted.
(4) Includes 500,000 shares issuable upon exercise of an option granted to Mr.
Kasper on April 15, 2002 for the purchase of 500,000 shares of Common Stock
and 700,000 shares issuable upon exercise of an option for the purchase of
700,000 shares of Common Stock granted to Mr. Kasper on May 30, 2003. As of
May 30, 2003, Mr. Kasper was entitled to purchase 1,200,000 shares.
(5) Includes 300,000 shares issuable upon exercise of an option granted to Mr.
Giarmo on April 15, 2002 for the purchase of 300,000 shares of Common Stock
and 150,000 shares issuable upon exercise of an option for the purchase of
300,000 shares of Common Stock granted to Mr. Giarmo on May 30, 2003. As of
May 30, 2003, Mr. Giarmo was entitled to purchase 450,000 shares.
(6) Includes 46,667 shares issuable upon exercise of an option granted to Mr.
Aramyan on April 15, 2002 for the purchase of 75,000 shares of Common Stock
and 100,000 shares issuable upon exercise of an option for the purchase of
100,000 shares of Common Stock granted to Mr. Aramyan on May 30, 2003. As
of May 30, 2003, Mr. Aramyan was entitled to purchase 146,667 shares.
(7) Includes 25,000 shares issuable upon exercise of an option granted to Mr.
Hergott on May 30, 2003 for the purchase of 25,000 shares of Common Stock.
As of May 30, 2003, Mr. Hergott was entitled to purchase 25,000 shares.
4
IDENTIFICATION OF THE BOARD OF DIRECTORS
Our Bylaws permit the Board of Directors to fix the number of its
members so long as there are no less than three directors and no more than five
directors. At present, the Board of Directors consists of four members.
Information regarding the business experience of each nominee and director is
provided below. There are no family relationships among our executive officers
and directors. Our directors serve until the next annual meeting of our
stockholders. Our Board of Directors does not have an audit committee, a
nominating committee or a compensation committee or committees performing
similar functions.
LEE KASPER, DIRECTOR NOMINEE
Director since June 1997
Age 56
Mr. Kasper began his career in the entertainment industry in 1982 by
co-founding Image Entertainment, a publicly traded company. Image Entertainment
distributes video programming on laserdisc and DVD. During his years with Image
Entertainment, Mr. Kasper was a director as well as the Executive Vice
President. He was responsible for business development as well as for licensing,
manufacturing, and product fulfillment. His major accomplishments while he was
at Image Entertainment included building a team of international manufacturers,
acting as primary negotiator of licensing agreements with over one hundred
studios, developing sales relationships with major retailers and raising over
$6,000,000 from Mitsubishi and Mitsui. When Mr. Kasper left Image Entertainment
in 1993, its annual sales had grown to $60,000,000. Mr. Kasper left Image
Entertainment to found NuTech Entertainment, Inc., a producer of karaoke music
software, which is now included in the Company's operations. In 1997 Mr. Kasper
formed the Company for the purpose of licensing, manufacturing and distributing
DVD products worldwide. Mr. Kasper has been a director since June 1997.
JOSEPH GIARMO, DIRECTOR NOMINEE
Director since May 2001
Age 34
Mr. Giarmo joined us as Vice President on December 1, 1998. Since that
time, he has developed numerous DVD product lines, award nominated productions
and e-commerce Web sites. Mr. Giarmo is in charge of production of our products,
and has been personally responsible for the production of our anime products. We
received the AVN 2002 Award for best DVD menus primarily as a result of Mr.
Giarmo's efforts. Prior to joining NuTech, Mr. Giarmo was employed by Metro
Global Media, Inc. ("Metro"). Mr. Giarmo joined Metro in September 1995 as a
CD-Rom Specialist, creating interactive games and developing products based on
Mac/PC formats. In 1996 Mr. Giarmo was promoted to Managing Director after
launching and marketing various award winning product lines. In 1997 Mr. Giarmo
was promoted to Vice President, Product Development. During his last year with
Metro, Mr.
5
Giarmo created the first true perspective multi-angle DVD. From 1988 until he
joined Metro, Mr. Giarmo was employed by the company he founded, Compu-Doc, a
computer service company that provided services primarily to military and
educational facilities. Working closely with state educational facilities,
Compu-Doc became a licensed authorized service center for IBM, HP, Digital and
Zenith data systems, among others. After becoming one of the largest service
centers for Zenith data systems, and earning Factory Service Status, Compu-Doc
eventually became the sole provider of all service for the tri-state military
installations. Compu-Doc opened a retail division in 1992, the focus of which
was custom-built, high performance computer systems. Mr. Giarmo has been a
director of NuTech since May 2001.
YEGIA ELI ARAMYAN, DIRECTOR NOMINEE
Director since June 2002
Age 49
Mr. Aramyan joined NuTech in 2001 as an accountant, responsible for
maintaining our general ledger, preparing financial statements, undertaking
internal auditing and working with our independent auditors on our financial
statement preparation. Prior to joining NuTech, Mr. Aramyan worked for 20 years
as Group Controller and Accounting Manager for various companies in an
investment group, including Morfi International and Sobleski USA. His
responsibilities included budgeting, control, tax, audit, consolidations and
general ledger and supporting work. On a consulting basis, Mr. Aramyan has
worked for a number of high technology firms, performing accounting and
implementing information systems. Mr. Aramyan earned his Bachelor of Arts and
Masters of Arts degrees in Economics and Finance from the University of Armenia.
Mr. Aramyan became a director in June 2002.
JAY S. HERGOTT, DIRECTOR NOMINEE
Director since March 2003
Age 56
Mr. Hergott was appointed to the Company's Board of Directors in March
2003. Mr. Hergott is a practicing attorney and has been a member of the Illinois
Bar Association since 1973 and a member of the California Bar Association since
1976. In 1988 he founded, and is the President of, Castlewood Development
Company, a real estate development and residential construction firm which is
located in Northbrook, Illinois. From 1977 to 1981 Mr. Hergott was a member of
the Midwest Stock Exchange and since 1976 he has been a member of the Chicago
Board Options Exchange. Mr. Hergott received his B.A. degree in Government from
Southern Illinois University in 1969 and his Juris Doctor from the Illinois
Institute of Technology in 1972.
COMPENSATION OF DIRECTORS
Our bylaws permit us to compensate our directors upon resolution by the
Board of Directors. The Board of Directors has agreed to pay to Mr. Jay S.
Hergott, for his services as a director, the sum of $5,000 per year and has
granted to Mr. Hergott an option to purchase 25,000 shares of our Common
Stock at a price of $0.16 per share, the fair market value of the Common Stock
on the date of the grant. During the fiscal year ended December 31, 2002, the
6
Company paid Mr. Hergott the sum of $4,200 for consulting services. Our
remaining three directors have not received compensation for their services as
directors.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors took action 11 times by written consent during
the 2002 fiscal year. There were no formally called meetings of the Board of
Directors during the 2002 fiscal year.
COMPLIANCE WITH SECTION 16(a) OF EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires our directors,
executive officers and persons who own more than 10% of our Common Stock to file
reports of ownership and changes in ownership of our Common Stock with the
Securities and Exchange Commission. Directors, executive officers and persons
who own more than 10% of our Common Stock are required by Securities and
Exchange Commission regulations to furnish to us copies of all Section 16(a)
forms they file.
To our knowledge, based solely upon review of the copies of such
reports received or written representations from the reporting persons, we
believe that during our 2002 fiscal year our directors, executive officers and
persons who own more than 10% of our Common Stock complied with all Section
16(a) filing requirements with the exception of the following: Form 3s for Lee
Kasper, Joseph Giarmo and Yegia Eli Aramyan were filed in February 2003 rather
than in October 2002.
IDENTIFICATION OF EXECUTIVE OFFICERS
LEE KASPER, PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
See discussion of business experience above.
JOSEPH GIARMO, VICE PRESIDENT AND SECRETARY
See discussion of business experience above.
SUMMARY COMPENSATION
During the 2002 fiscal year, Mr. Lee Kasper, our Chief Executive
Officer and President, and Mr. Joseph Giarmo, our Vice President, were the only
executive officers receiving compensation of at least $100,000 per year. The
following table sets forth information as to the compensation paid or accrued to
Mr. Kasper and Mr. Giarmo for the three years ended December 31, 2002, December
31, 2001 and December 31, 2000:
7
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------------------------------------------
Other Restricted
Annual Stock Securities All Other
Compen Awards Underlying LTIP Compen-
Name and Principal Salary -sation Options/ Payout sation
Position Year ($) ($) ($) ($) SARs(1) ($) ($)
-------------------- ---- ---------- ----- ------- -------- --------- ------ -----------
Lee Kasper, 2002 $369,231 --- --- --- --- --- $39,600(2)
Director, CEO, 2001 $542,673(1) --- --- --- --- --- $39,600(2)
President, CFO 2000 $222,389(1) --- --- --- --- --- $15,048(2)
Joseph Giarmo, 2002 $159,228(3) --- --- --- --- --- ---
Director 2001 $131,553 --- --- --- --- --- ---
Vice President 2000 $135,872 --- --- --- --- --- ---
Secretary
(1) Of the amount shown as compensation paid to Mr. Kasper in 2001, $362,673
was paid to him as a dividend and $180,000 was paid as salary. The amount
shown as compensation paid to Mr. Kasper in 2000 was paid as a dividend.
(2) These amounts represent expenses paid in connection with Mr. Kasper's
automobile.
(3) This amount includes payments made to Mr. Giarmo pursuant to a joint
venture agreement he entered into with the Company whereby he advanced
funds in the amount of $60,000 for the acquisition of licensing rights to
certain anime products. Mr. Giarmo is repaid at the rate of $0.25 for each
unit of the product sold. This agreement will terminate once Mr. Giarmo is
paid a total of $120,000.
We do not have a long term incentive plan or arrangement of compensation
with any individual in the group of officers and directors.
EMPLOYMENT AGREEMENTS
We have no employment agreements with our named executive officers, who
provide services to us on an at-will basis. Absent employment agreements,
officers hold their positions at the pleasure of the Board of Directors.
EQUITY INCENTIVE PLAN
Our Board of Directors and our stockholders have approved the NuTech
Digital, Inc. 2001 Equity Incentive Plan which permits us to grant, for a ten
year period, awards of stock, stock purchase rights and stock options. We have
currently reserved 3,500,000 shares of our common stock for issuance to our
directors, employees and consultants under the Plan. In January of each year we
are permitted to increase the number of shares of common stock reserved for
awards to an amount that does not exceed 30% of all of our issued and
outstanding shares. The Plan is administered by the Board of Directors. As the
administrator of the Plan, the Board of Directors has the authority and
discretion, subject to the provisions of the Plan, to select persons to whom
stock purchase rights or options will be granted, to designate the number of
shares to be covered by each option or stock
8
purchase right, to specify the type of consideration to be paid, and to
establish all other terms and conditions of each option or stock purchase right.
Options granted under the Plan will not have a term that exceeds ten years from
date of grant.
The following tables set forth certain information concerning the
granting and exercise of incentive stock options during the last completed
fiscal year by each of the named executive officers and the fiscal year-end
value of unexercised options on an aggregated basis:
- -----------------------------------------------------------------------------------------------------------------
Option/SAR Grants for Last
Fiscal Year-Individual Grants(1)
- -----------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs Granted
Underlying to Employees in
Options/SARs Fiscal Year Exercise Price ($/sh)
Name Granted (#) Expiration Date
- -----------------------------------------------------------------------------------------------------------------
Lee Kasper 500,000 29.33% $1.65/share April 15, 2007
Joseph Giarmo 300,000 17.60% $1.50/share April 15, 2012
Yegia Eli Aramyan 70,000 4.11% $1.50/share April 15,2012
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Aggregated Option/SAR Exercises in Last Fiscal Year
And FY-End Option/SAR Values(1)
- -----------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)(2)
Shares Acquired Value Realized(1) Unexercisable/ Unexercisable/
Name on Exercise (#) ($) Exercisable Exercisable
- -----------------------------------------------------------------------------------------------------------------
Lee Kasper -0- -0- 500,000/0 $0/$0
Joseph Giarmo -0- -0- 300,000/0 $0/$0
Yegia Eli Aramyan -0- -0- 46,666/23,334 $0/$0
- -------------------------- -------------------- ---------------------- ---------------------- ----------------------
(1) Value realized is determined by calculating the difference between the
aggregate exercise price of the options and the aggregate fair market value
of the common stock on the date the options are exercised.
(2) The value of unexercised options is determined by calculating the
difference between the fair market value of the securities underlying the
options at fiscal year end and the exercise price of the options.
9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time-to-time we enter into arrangements with or borrow money from
persons who are executive officers, directors and/or beneficial holders of 5% or
more of our common stock, or their affiliates. Descriptions of these
transactions are set forth below.
In March 2001, we entered into an arrangement with our Vice-President, Mr.
Joseph Giarmo, whereby Mr. Giarmo advanced funds in the amount of $60,000 for
the acquisition of licensing rights to certain films. Mr. Giarmo receives $0.25
for each VHS or DVD unit of the films that are sold. Our obligation under this
agreement will terminate once we have paid to Mr. Giarmo a total of $120,000. To
date, Mr. Giarmo has been paid $10,000 in accordance with this arrangement.
In May 2001, we obtained a loan from Brandon Kasper in the amount of
$7,418, which accrues interest at the rate of 7% and is due to be paid on
demand. Brandon Kasper is Mr. Lee Kasper's son.
In May 2001, we obtained a loan from Ryan Kasper in the amount of $7,467,
which accrues interest at the rate of 7% and is due to be paid on demand. Ryan
Kasper is Mr. Lee Kasper's son.
In May 2001, we obtained a loan from Jordan Kasper in the amount of $3,555,
which accrues interest at the rate of 7% and is due to be paid on demand. Jordan
Kasper is Mr. Lee Kasper's son.
In October 2000, we received an unsecured loan in the amount of $100,000
from Mrs. Elynor Kasper, Mr. Lee Kasper's mother. Simple interest accrues on
this loan at the rate of 10% per year. The unpaid principal balance of this loan
is $60,000. We are current on all interest payments. This loan is payable on
demand. To date, no demand for payment has been made.
In July 2000 our President and Chief Executive Officer, Mr. Lee Kasper,
provided both his personal residence and his personal guaranty as security for a
loan in the amount of $900,000 that we borrowed through the Small Business
Administration. Interest is adjusted at least once per year. The interest rate
is 2% above the prime rate. The loan has a 10-year term. We make monthly
payments of principal and interest in the amount of $12,398.
In March 2002, Mr. Kasper also agreed to personally guarantee our bank line
of credit in the amount of $650,000. We breached certain covenants of the loan
agreement and our lender, U.S. Bank, N.A. wanted us to repay the loan. On
November 7, 2002, U.S. Bank, N.A. agreed to make a loan in the amount of
$640,000 to Mr. Lee Kasper, who used the proceeds to pay-off our line of credit.
The loan to Mr. Kasper requires 30 monthly payments of $21,000 plus interest at
3% over prime. We pledged all of our assets as collateral for repayment of the
loan and we have guaranteed repayment of the loan.
10
In February 2003, Mr. Kasper received a personal loan of $500,000. The
interest rate of the loan is 3% and the term is 36 months. Mr. Kasper loaned
these funds to us on terms identical to the terms he received.
INDEPENDENT PUBLIC ACCOUNTANTS
Moffitt & Company, P.C., the independent accountants whom we had engaged as
the principal accountants to audit our consolidated financial statements for the
periods ended December 31, 2001 and December 31, 2000, resigned effective
October 11, 2002. On November 11, 2002, we engaged Farber & Hass LLP as our new
principal independent accountants to audit our consolidated financial statements
for the year ending December 31, 2002.
The report of Moffitt & Company, P.C. on our financial statements as of and
for the years ended December 31, 2000 and December 31, 2001 did not contain an
adverse opinion, or a disclaimer of opinion. During the one-year period ended
December 31, 2001, and the interim period from January 1, 2002 through the date
of resignation by Moffitt & Company, P.C., we did not have any disagreements
with Moffitt & Company, P.C. on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Moffitt & Company, P.C.,
would have caused it to make a reference to the subject matter of the
disagreements in connection with its reports.
Prior to engaging Farber & Hass LLP, we did not consult Farber & Hass LLP
regarding the application of accounting principles to a specified transaction,
completed or proposed, or the type of audit opinion that might be rendered on
our financial statements.
Representatives of Farber & Hass LLP, independent public auditors for the
Company for the 2002 fiscal year, will be present at the Annual Meeting, will
have an opportunity to make a statement, and will be available to respond to
appropriate questions.
The following table sets forth fees billed to us by our auditors during the
fiscal years ended December 31, 2001 and December 31, 2002 for: (i) services
rendered for the audit of our annual financial statements and the review of our
quarterly financial statements, (ii) services by our auditor and former auditor
that are reasonably related to the performance of the audit or review of our
financial statements and that are not reported as Audit Fees, (iii) services
rendered in connection with tax compliance, tax advice and tax planning, and
(iv) all other fees for services rendered.
11
December 31, 2002 December 31, 2001
----------------- -----------------
(i) Audit Fees $ 31,288 $ 30,000
(ii) Audit Related Fees $ 3,175 $ 10,700
(iii) Tax Fees $ 0 $ 0
(iv) All Other Fees $ 0 $ 0
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
To be considered for inclusion in next year's Proxy Statement,
stockholder proposals must be received at our principal executive offices no
later than the close of business on December 1, 2003.
Notice of intention to present a proposal at the 2003 Annual Meeting
should be addressed to Corporate Secretary, NuTech Digital, Inc., 7900 Gloria
Avenue, Van Nuys, California 91406. We reserve the right to reject, rule out of
order, or take other appropriate action with respect to any proposal that does
not comply with these and other applicable requirements. Any stockholder
proposal for next year's Annual Meeting submitted after December 1, 2003 will
not be considered filed on a timely basis. For proposals that are not timely
filed, the Company retains discretion to vote proxies it receives. For proposals
that are timely filed, the Company retains discretion to vote proxies it
receives, provided that (i) the Company includes in its Proxy Statement advice
on the nature of the proposal and how it intends to exercise its voting
discretion and (ii) the proponent does not issue a Proxy Statement.
TRANSACTION OF OTHER BUSINESS
Management does not know of any matters to be brought before the
meeting other than those referred to in this Proxy Statement. If any matters
which are not specifically set forth in the form of proxy and this Proxy
Statement properly come before the meeting, the persons designated as proxies
will vote thereon in accordance with their best judgment.
12
NUTECH DIGITAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON JULY 11, 2003
This proxy will be voted as specified by the stockholder. If no
specification is made, all shares will be voted "FOR" the approval of the two
proposals set forth in the proxy statement.
The stockholder(s) represented herein appoint(s) Lee Kasper and/or Joseph
Giarmo proxy with the power of substitution to vote all shares of Common Stock
entitled to be voted by said stockholder(s) at the Annual Meeting of the
Stockholders of NuTech Digital, Inc. to be held at the Company's offices located
at 7900 Gloria Avenue, Van Nuys, California 91406, on July 11, 2003 at 11:00
a.m., and in any adjournment or postponement thereof as specified in this proxy.
PROPOSAL #1-ELECTION OF DIRECTORS
Lee Kasper FOR [_] AGAINST [_] ABSTAIN [_]
Joseph Giarmo FOR [_] AGAINST [_] ABSTAIN [_]
Yegia Eli Aramyan FOR [_] AGAINST [_] ABSTAIN [_]
Jay S. Hergott FOR [_] AGAINST [_] ABSTAIN [_]
PROPOSAL #2-RATIFICATION OF FARBER & HASS LLP AS OUR INDEPENDENT AUDITORS FOR
2003
FOR [_] AGAINST [_] ABSTAIN [_]
PLEASE MARK, DATE AND SIGN YOUR PROXY CARD AND MAIL IT IN THE ENCLOSED
ENVELOPE AS SOON AS POSSIBLE.
IN THEIR DISCRETION, PROXIES ARE ENTITLED TO VOTE UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT THEREOF.
Signature_______________________ Date_______
Signature_______________________ Date_______