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 under ss. 240.14a-12
GTC Telecom Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3
Costa Mesa, California 92626
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 22, 2006
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 2006 Annual Meeting of Stockholders of
GTC Telecom Corp., to be held at the Costa Mesa Hilton, 3050 Bristol Street,
Costa Mesa, California 92626 on March 22, 2006, at 9:30 a.m. PST, to consider
and act upon the following proposals, as described in the accompanying Proxy
Statement:
1. To elect three (3) directors to serve until the next Annual Meeting
of Stockholders and thereafter until their successors are elected
and qualified;
2. To amend our Articles of Incorporation to change the name of the
company to GTC Wireless, Inc.;
3. To authorize our Board of Directors to amend our Articles of
Incorporation to effectuate a reverse split of our common stock in
an amount to be determined by our Board of Directors between 1-for-2
and 1-for-10;
4. To ratify the appointment of Squar, Milner, Reehl & Williamson LLP
as our independent auditors for the fiscal year ending June 30,
2006; and
5. To transact such other business, including consideration of
shareholder proposals, as may properly come before the meeting or
any adjournments thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. The Board of Directors has fixed the close of business
on January 31, 2006, as the record date for Stockholders entitled to notice of
and to vote at this meeting and any adjournments thereof.
By Order of the Board of Directors
/s/ Eric A. Clemons
Eric A. Clemons, Secretary
February 14, 2006
Costa Mesa, California
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE,
SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
ALTERNATIVELY, YOU MAY VOTE BY INTERNET AT WWW.TRANSFERONLINE.COM. YOUR PROXY
WILL NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE
YOUR SHARES PERSONALLY AT THAT TIME.
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3
Costa Mesa, California 92626
-----------------------------
PROXY STATEMENT
-----------------------------
GENERAL INFORMATION
Solicitation, Voting and Revocability of Proxies
The enclosed Proxy is solicited by the Board of Directors of GTC Telecom Corp.
(the "Company" or "GTC") for use in connection with the Annual Meeting of
Stockholders to be held at the Costa Mesa Hilton, 3050 Bristol Street, Costa
Mesa, California 92626, on March 22, 2006, at 9:30 a.m. PST, and at any and all
adjournments thereof for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. This Proxy Statement and the
accompanying Proxy are first being mailed to stockholders on or about
February 21, 2006.
The persons named as proxies were designated by the Board of Directors (the
"Board") and are officers or directors of the Company. Any Proxy may be revoked
or superseded by executing a later Proxy or by giving notice of revocation in
writing prior to, or at, the Annual Meeting, or by attending the Annual Meeting
and voting in person. Attendance at the meeting will not in and of itself
constitute revocation of the Proxy. All Proxies that are properly completed,
signed and returned to us prior to the meeting, and not revoked, will be voted
in accordance with the instructions given in the Proxy. If a choice is not
specified in the Proxy, the Proxy will be voted:
1. FOR election of the director nominees listed below (Proposal 1);
2. FOR the amendment of our Articles of Incorporation of GTC Telecom
Corp. to change the Company's name from GTC Telecom Corp. to GTC
Wireless, Inc. (Proposal 2);
3. FOR the authorization of our Board of Directors to amend our
Articles of Incorporation to effectuate a reverse split of our
common stock in an amount to be determined by our Board of Directors
between 1-for-2 and 1-for-10 (Proposal 3);
4. FOR the ratification of the appointment of Squar, Milner, Reehl &
Williamson LLP as our independent auditor for the fiscal year ending
June 30, 2006 (Proposal 4).
Our officers or their designees will tabulate votes cast at the Annual Meeting.
A majority of shares entitled to vote, represented in person or by proxy, will
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are
each included in the determination of the number of shares present and voting
for the purpose of determining whether a quorum is present, and each is
tabulated separately. "Broker non-votes" are shares of voting stock held in
record name by brokers and nominees concerning which (i) instructions have not
been received from the beneficial owners or persons entitled to vote; (ii) the
broker or nominee does not have discretionary voting power under applicable
rules or the instrument under which it serves in such capacity; or (iii) the
record holder has indicated on the proxy or has executed a proxy and otherwise
notified us that it does not have authority to vote such shares on that matter.
Although abstentions and broker non-votes are not counted either "FOR" or
"AGAINST" any proposals, if the number of abstentions or broker non-votes
results in the votes "FOR" a proposal not equaling at least a majority of the
quorum required for the proposal, the proposal will not be approved. This will
be the case even though the number of votes "FOR" the proposal exceeds the
number of votes "AGAINST" the proposal.
Section 2115 of the California General Corporation Law provides that
corporations such as GTC Telecom Corp. that are incorporated in jurisdictions
other than California and that meet various tests are subject to several
provisions of the California General Corporation Law, to the exclusion of the
law of the jurisdiction in which the corporation is incorporated. As of June 30,
2005, we met the tests contained in Section 2115. Consequently, as of that date
we were subject to, among other provisions of the California General Corporation
Law, Section 708 which governs cumulative voting.
Each share of common stock entitles the holder of record to one vote on any
matter coming before the 2006 Annual Meeting. In voting for directors, however,
shares may be voted cumulatively for persons whose names have been placed in
nomination prior to the voting for the election of directors, but only if a
stockholder present at the 2006 Annual Meeting gives notice at the 2006 Annual
Meeting, prior to the voting for the election of directors, of his or her
intention to vote cumulatively. Notice of intention to vote cumulatively may not
be given by simply marking and returning a proxy.
If any stockholder gives proper notice of his or her intention to vote
cumulatively, then each stockholder eligible to vote will be entitled to
cumulate his or her votes and to give any one or more of the nominees whose
names have been placed in nomination prior to the voting a number of votes equal
to the total number of directors to be elected multiplied by the number of
shares that the stockholder is entitled to vote. In addition, the person or
persons holding the proxies solicited by our Board of Directors will exercise
their cumulative voting rights, at their discretion, to vote the shares they
hold in such a way as to ensure the election of as many of the nominees of the
Board of Directors as they deem possible. This discretion and authority of the
proxy holders may be withheld by checking the box on the proxy card marked
"withhold authority to vote for all nominees." However, such an instruction will
also deny the proxy holders the authority to vote for any or all of the nominees
of the Board of Directors, even if cumulative voting is not called for at the
2006 Annual Meeting.
A stockholder may choose to withhold from the proxy holder the authority to vote
for any of the individual candidates nominated by our Board of Directors by
marking the appropriate box on the proxy card and striking out the names of the
disfavored candidates as they appear on the proxy card. In that event, the proxy
holder will not cast any of the stockholder's votes for candidates whose names
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have been crossed out, whether or not cumulative voting is called for at the
2006 Annual Meeting. However, the proxy holder will retain the authority to vote
for the candidates nominated by the Board of Directors whose names have not been
struck out and for any candidates who may be properly nominated at the 2006
Annual Meeting. If a stockholder wishes to specify the manner in which his or
her votes are allocated in the event of cumulative voting, he or she must appear
and vote in person at the 2006 Annual Meeting. Ballots will be available at the
2006 Annual Meeting for stockholders who desire to vote in person.
In any election of directors, the candidates receiving the highest number of
affirmative votes of the shares entitled to be voted for them, up to the number
of directors to be elected by such shares, are elected. Votes against a
candidate and votes withheld have no legal effect.
If any other matters are properly presented at the Annual Meeting for action,
the persons named in the enclosed form of proxy will have discretion to vote on
such matters in accordance with their best judgment. We do not know of any
matters other than those set forth above that will be presented at the Annual
Meeting.
Dissenter's Rights
Under the Nevada Revised Statutes, our stockholders are not entitled to
dissenters' rights with respect to any matter to be acted upon, and the Company
will not independently provide stockholders with any such right.
Outstanding Shares and Voting Rights
The only class of our equity securities currently outstanding is our common
stock. Stockholders of record at the close of business on January 31, 2006 are
entitled to one vote for each share of common stock held by them. As of the
Record Date, there were 29,834,446 shares of Common Stock outstanding. A
majority of our common stock present or represented and entitled to vote at the
meeting is required to approve each proposal (other then the for the election of
directors) presented at the meeting.
Proxies
The entire cost of the solicitation of Proxies will be borne by us. It is
contemplated that this solicitation will be primarily by mail. In addition, some
of our officers, directors and employees may solicit Proxies personally or by
telephone or fax. Officers and employees soliciting proxies will not receive any
additional compensation for their services. We will reimburse brokers and other
nominees for their reasonable out-of-pocket expenses incurred in forwarding
solicitation material to beneficial owners of shares held of record by such
brokers or nominees.
PROPOSAL ONE
ELECTION OF DIRECTORS
Directors are elected by the stockholders at each annual meeting to hold office
until their respective successors are elected and qualified. Pursuant to our
Bylaws, the Board of Directors consists of not less than one (1) nor more than
five (5) directors, and the number is presently fixed at three (3) members.
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Although our management expects that each of the following nominees will be
available to serve as a director, in the event that any of them should become
unavailable prior to the Annual Meeting, management's proxies will be voted for
a nominee or nominees designated by management or will be voted for a lesser
number of directors. If there are other nominees, management's proxies will be
voted so as to elect the greatest number of the following nominees. Management
has no reason to believe that any of our nominees, if elected, will be
unavailable to serve.
The nominees for election to the Board of Directors as selected by our Board of
Directors are set forth below:
S. Paul Sandhu
Eric Clemons
Gerald A. DeCiccio
The biographies of nominees, including certain additional information, are set
forth below:
S. Paul Sandhu, 44, has been a director of the Company since August 28, 1998.
Mr. Sandhu is currently the Company's Chief Executive Officer and the Chairman
of the Company's Board of Directors. Mr. Sandhu has been with GTC since its
inception. Mr. Sandhu has over fourteen (14) years experience with start-up and
emerging growth companies. Mr. Sandhu was Co-Founder, President and Co-Owner of
Maximum Security, a security and surveillance company he started in 1992. While
at Maximum, Mr. Sandhu actively managed a staff of over 200 employees. In 1997
Mr. Sandhu sold the business to his partner. Mr. Sandhu graduated from the
University of Punjab in India with a degree in Engineering.
Eric Clemons, 34, has been a director of the Company since August 28, 1998 and
is currently the Company's President and a director of the Company. Mr. Clemons
has been with GTC since its inception. Mr. Clemons has over twelve (12) years
experience with sales and marketing organizations. Mr. Clemons most recent
position prior to joining the Company was as Vice President of Marketing for
Intelligent Electronic Communications managing a staff of 50 employees.
Gerald A. DeCiccio, 48, has been a director of the Company since November 3,
2000. Mr. DeCiccio first joined the Company in January 1999 as Chief Financial
Officer. Mr. DeCiccio has over twenty (20) years experience in the financial and
accounting field. Prior to joining GTC, Mr. DeCiccio was the Vice President of
Finance and Administration for National Telephone & Communications, Inc., a $150
million inter-exchange carrier and provider of communications products and
services. While at NT&C, Mr. DeCiccio managed NT&C's finance, accounting, human
resources and legal departments. Between 1995 and 1997, Mr. DeCiccio was the
Corporate Controller for Newport Corporation, a $140 million multi-national
manufacturer / distributor of laser and optics products. Prior to that, Mr.
DeCiccio was the Director of Audit and Quality Systems for Sunrise Medical,
Inc., a $750 million multi-national manufacturer / distributor of health care
products. From 1980 to 1984, Mr. DeCiccio was a Supervising Senior Accountant
for Ernst and Young. Mr. DeCiccio received his Bachelor of Science in Accounting
from Loma Linda University, and his Masters of Science in Finance and Systems
Technology from the University of Southern California. Mr. DeCiccio is a
Certified Public Accountant in the State of California.
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None of the nominees listed currently serve on the boards of any other public
corporation or entity.
Vote Required For Election of Directors
Directors are elected by a plurality vote of shares present in person or
represented by proxy at the meeting. This means that the director nominee with
the most votes for a particular slot on the board is elected for that slot. In
an uncontested election for directors, the plurality requirement is not a
factor.
Recommendation of the Board
The Board of Directors recommends a vote "FOR" the election of all nominees
named above.
PROPOSAL TWO
AMENDMENT TO ARTICLES OF INCORPORATION
TO CHANGE OUR NAME TO GTC WIRELESS, INC.
On January 27, 2005, the Board of Directors approved, subject to stockholder
approval, an Amendment to our Articles of Incorporation to change our name from
GTC Telecom Corp. to GTC Wireless, Inc. We propose to amend Article I of our
Articles of Incorporation to read as follows:
------------
ARTICLE I
The Name of the Corporation shall be GTC Wireless, Inc.
------------
Management and the Board believes that the future of the telecommunications
industry and that of the Company's lies in the wireless sector. As a result, we
have been focusing our efforts on becoming a Mobile Virtual Network Provider
("MVNO"). MVNO's are non-facilities based wireless providers. We have launched
our wireless services and intend to initially market it to our existing
long-distance customer base. Subsequently, we will market it on a nationwide
basis utilizing our Perfexa subsidiary's telemarketing facilities. To better
reflect our new direction, the Board believes it in our best interests to change
our name from GTC Telecom Corp. to GTC Wireless, Inc. The Board believes that
our new name will better reflect the future of the Company.
Vote Required for the Amendment of the Articles Proposal
Approval of the Amendment of the Articles Proposal will require the affirmative
vote of a majority of the shares of our common stock present or represented and
entitled to vote at the meeting. Votes that are cast against the proposal will
be counted for purposes of determining (a) the presence or absence of a quorum
and (b) the total number of negative votes cast with respect to the proposal.
Abstentions and shares held by brokers that are present but not voted, because
the brokers were prohibited from exercising discretionary authority ("broker
non-votes"), will be counted as present for purposes of determining the presence
or absence of a quorum.
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Recommendation of the Board
The Board of Directors recommends a vote "FOR" the proposed amendment to the
Company's Articles of Incorporation be approved.
PROPOSAL THREE
PROPOSAL TO AUTHORIZE OUR BOARD
OF DIRECTORS TO EFFECTUATE
A REVERSE STOCK SPLIT
IN AN AMOUNT TO BE DETERMINED BY
THE BOARD OF DIRECTORS BETWEEN 1-FOR-2 AND 1-FOR-10
General
As of December 31, 2005, 29,684,446 shares of our common stock were outstanding
and the per share closing price of our common stock on that date was $0.11. In
order to reduce the number of shares of common stock outstanding, the Board of
Directors has unanimously adopted a resolution seeking stockholder approval to
grant the Board of Directors authority to amend and restate our Articles of
Incorporation to effect a reverse stock split of our common stock in an amount
to be determined by the Board of Directors, but between a 1-for-2 and a 1-for-10
reverse split. Approval of this reverse stock split proposal would give the
Board of Directors authority to implement the reverse stock split at any time it
determined prior to September 30, 2006. In addition, approval of this reverse
stock split proposal would also give the Board of Directors authority to decline
to implement a reverse stock split prior to such date or at all.
If our stockholders approve the reverse stock split proposal and the Board of
Directors decides to implement the reverse stock split, we will file the Amended
Articles of Incorporation ("Amended Articles") with the Secretary of State of
the State of Nevada through which a to-be-determined number of shares of common
stock issued and outstanding will be converted into one fully paid and
nonassessable share of common stock, with any fractional shares that result from
such reverse stock split to be rounded up to the nearest whole share of common
stock. The reverse stock split, if implemented, would not change the number of
authorized shares of common stock or preferred stock or the par value of our
common stock or preferred stock. Except for any changes as a result of the
treatment of fractional shares, each stockholder will hold the same percentage
of common stock outstanding after the reverse stock split as such stockholder
did immediately prior to the split.
Purpose
Over the past few years, the market price of our common stock has declined. In
order to reduce the number of shares of our common stock outstanding and thereby
attempt to proportionally raise the per share price of our common stock, the
Board of Directors determined that a reverse stock split was desirable in order
to: (i) encourage greater investor interest in our common stock by making the
stock price more attractive to the many investors, particularly institutional
investors, who refrain from investing in lower priced stocks; and (ii) reduce
trading fees and commissions incurred by stockholders, since these costs are
based to a significant extent on the number of shares traded.
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The Board of Directors believes that the reverse stock split may help encourage
greater interest in our common stock. The Board of Directors believes that the
current market price of our common stock may impair its acceptability to
institutional investors, professional investors and other members of the
investing public. Many institutional and other investors look upon stock trading
at low prices as unduly speculative in nature and, as a matter of policy, avoid
investing in such stocks. Various brokerage house policies and practices also
tend to discourage individual brokers from dealing in low-priced stocks.
Moreover, the analysts at many brokerage firms do not monitor the trading
activity or otherwise provide research coverage of lower priced stocks. If
effected, the reverse stock split would reduce the number of outstanding shares
of our common stock and increase the trading price of our common stock. The
Board of Directors believes that raising the trading price of our common stock
will increase the attractiveness of our common stock to the investment community
and possibly promote greater liquidity for our existing stockholders.
Because broker commissions on low-priced stocks generally represent a higher
percentage of the stock price than commissions on higher priced stocks, the
current share price of our common stock, in the absence of the reverse stock
split, may continue to result in individual stockholders paying transaction
costs (commissions, markups or markdowns) which are a higher percentage of their
total share value than would be the case if the share price was substantially
higher. For this reason, individual and institutional investors may be unwilling
to purchase our common stock at its current market price.
If the stockholders approve the reverse stock split proposal, the reverse stock
split will be effected, if at all, only upon a determination by the Board of
Directors that the reverse stock split is in the best interests of the Company
at that time. This determination will be made by the Board of Directors to
create the greatest marketability of our common stock based on prevailing market
conditions at that time. No further action on the part of stockholders will be
required to either implement or abandon the reverse stock split. If the Board of
Directors does not implement a reverse stock split prior to September 30, 2006,
the authority granted in this proposal to implement a reverse stock split on
these terms will terminate. The Board of Directors reserves its right to elect
not to proceed with the reverse stock split if it determines, in its sole
discretion, that the split is no longer in the best interests of the Company or
our stockholders.
Risks Associated With the Reverse Stock Split
There can be no assurance that the total market capitalization of our common
stock after the proposed reverse stock split will be equal to or greater than
the total market capitalization before the proposed reverse stock split or that
the per share market price of our common stock following the reverse stock split
will either exceed or remain higher than the current per share market price.
There can be no assurance that the market price per new share of our common
stock (the "New Shares") after the reverse stock split will rise or remain
constant in proportion to the reduction in the number of old shares of our
common stock (the "Old Shares") outstanding before the reverse stock split. For
example, based on the closing market price of our common stock on December 31,
2005 of $0.11 per share, if the Board of Directors decided to implement a
1-for-10 reverse stock split, there can be no assurance that the post-split
market price of our common stock would be $1.10 per share or greater.
Accordingly, the total market capitalization of our common stock after the
proposed reverse stock split may be lower than the total market capitalization
before the proposed reverse stock split and, in the future, the market price of
our common stock following the reverse stock split may not exceed or remain
higher than the market price prior to the proposed reverse stock split. In many
cases, the total market capitalization of a company following a reverse stock
split is lower than the total market capitalization before the reverse stock
split.
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There can be no assurance that the reverse stock split will result in a per
share price that will attract institutional investors and brokers. While the
Board of Directors believes that a higher stock price may help generate investor
interest, there can be no assurance that the reverse stock split will result in
a per share price that will attract institutional investors and brokers.
A decline in the market price for our common stock after the reverse stock split
may result in a greater percentage decline than would occur in the absence of a
reverse stock split, and the liquidity of our common stock could be adversely
affected following a reverse stock split. The market price of our common stock
will also be based on our and other factors, some of which are unrelated to the
number of shares outstanding. If the reverse stock split is effected and the
market price of our common stock declines, the percentage decline as an absolute
number and as a percentage of our overall market capitalization may be greater
than would occur in the absence of a reverse stock split. In many cases, both
the total market capitalization of a company and the market price of a share of
such company's common stock following a reverse stock split are lower than they
were before the reverse stock split. Furthermore, the liquidity of our common
stock could be adversely affected by the reduced number of shares that would be
outstanding after the reverse stock split.
Principal Effects Of The Reverse Stock Split
Corporate Matters
If approved and effected, the reverse stock split would have the following
effects:
o A to-be-determined number of Old Shares owned by a stockholder would
be exchanged for one New Share;
o The number of shares of our common stock issued and outstanding will
be proportionately reduced;
o proportionate adjustments will be made to the per share exercise
price and the number of shares issuable upon the exercise of all
outstanding options and warrants entitling the holders thereof to
purchase shares of our common stock, which will result in
approximately the same aggregate price being required to be paid for
such options or warrants upon exercise of such options or warrants
immediately preceding the reverse stock split; and
o the number of shares reserved for issuance under our existing stock
option plans and employee stock purchase plans will be reduced
proportionately.
Fractional Shares
No scrip or fractional certificates will be issued in connection with the
reverse stock split. Instead, any fractional share that results from the reverse
stock split will be rounded up to the next whole share of our common stock. If
approved and effected, the reverse stock split will result in some stockholders
owning "odd lots" of less than 100 shares of our common stock. Brokerage
commissions and other costs of transactions in odd lots are generally somewhat
higher than the costs of transactions in "round lots" of even multiples of 100
shares.
9
Authorized Shares
Upon the effectiveness of the reverse stock split, the number of authorized
shares of common stock that are not issued or outstanding would increase due to
the reduction in the number of shares of our common stock issued and
outstanding. As of December 31, 2005, we had 100,000,000 shares of common stock
and 10,000,000 shares of preferred stock authorized. As of December 31, 2005,
there were issued and outstanding, 29,684,446 shares of common stock, and no
shares of preferred stock issued and outstanding. Authorized but unissued shares
will be available for issuance, and we may issue such shares in financings or
otherwise. If we issue additional shares, the ownership interest of holders of
our common stock may also be diluted. Also, the issued shares may have rights,
preferences or privileges senior to those of our common stock.
Accounting Matters
The reverse stock split will not affect the par value of our common stock. As a
result, as of the effective time of the reverse stock split, the stated capital
on our balance sheet attributable to our common stock will be reduced
proportionately, and the additional paid-in capital account will be credited
with the amount by which the stated capital is reduced. The per share net income
or loss and net book value of our common stock will be restated because there
will be fewer shares of our common stock outstanding.
Procedure For Effecting Reverse Stock Split And Exchange Of Stock Certificates
If the stockholders approve the proposal to authorize the Board of Directors to
implement the reverse stock split and the Board of Directors decides to
implement the reverse stock split on or prior to September 30, 2006, we will
file the Amended Articles with the Secretary of State of the State of Nevada to
amend our existing Articles of Incorporation. The reverse stock split will
become effective at the time specified in the Amended Articles, which is
referred to below as the "effective time." Beginning at the effective time, each
certificate representing Old Shares will be deemed for all corporate purposes to
evidence ownership of New Shares. The text of the Amended Articles to effect the
reverse stock split, if implemented by the Board of Directors, would be in
substantially the form attached hereto as APPENDIX A. The text of the form of
Amended Articles attached to this proxy statement includes certain revisions to
our current articles of incorporation which are described in Proposal 2. In
addition, the text of the form of Amended Articles attached to this proxy
statement is subject to modification to include such changes as may be required
by the Office of the Secretary of State of the State of Nevada and as the Board
of Directors deems necessary and advisable to effect the reverse stock split,
including the insertion of the effective time determined by the Board of
Directors.
As soon as practicable after the effective time, stockholders will be notified
that the reverse stock split has been effected. We expect that our transfer
agent, Transfer Online, will act as exchange agent for purposes of implementing
the exchange of stock certificates. Stockholders may, but are not required to,
exchange their certificates evidencing the Old Shares for certificates
evidencing the New Shares. Current stock certificates shall remain valid but are
deemed to represent New Shares at the appropriate reverse split proportion. In
the event that Stockholders wish to submit their certificates to Transfer Online
for exchange, they will be responsible for any transfer fees (currently
estimated at $25.00 per certificate). Any Old Shares submitted for transfer,
whether pursuant to a sale, other disposition or otherwise, will automatically
be exchanged for New Shares, subject to normal transfer agent fees. STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY
CERTIFICATE(S) UNLESS REQUESTED TO DO SO.
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No Dissenters' Rights
Under the Nevada Revised Statutes, our stockholders are not entitled to
dissenters' rights with respect to the reverse stock split, and the Company will
not independently provide stockholders with any such right.
Federal Income Tax Consequences Of The Reverse Stock Split
The following is a summary of certain material federal income tax consequences
of the reverse stock split, does not purport to be a complete discussion of all
of the possible federal income tax consequences of the reverse stock split and
is included for general information only. Further, it does not address any
state, local or foreign income or other tax consequences. Also, it does not
address the tax consequences to holders that are subject to special tax rules,
such as banks, insurance companies, regulated investment companies, personal
holding companies, foreign entities, nonresident alien individuals,
broker-dealers and tax-exempt entities. The discussion is based on the
provisions of the United States federal income tax law as of the date hereof,
which is subject to change retroactively as well as prospectively. This summary
also assumes that the Old Shares were, and the New Shares will be, held as a
"capital asset," as defined in the Internal Revenue Code of 1986, as amended
(i.e., generally, property held for investment). The tax treatment of a
stockholder may vary depending upon the particular facts and circumstances of
such stockholder. Each stockholder is urged to consult with such stockholder's
own tax advisor with respect to the tax consequences of the reverse stock split.
No gain or loss should be recognized by a stockholder upon such stockholder's
exchange of Old Shares for New Shares pursuant to the reverse stock split. The
aggregate tax basis of the New Shares received in the reverse stock split
(including any fraction of a New Share deemed to have been received) will be the
same as the stockholder's aggregate tax basis in the Old Shares exchanged
therefor. The stockholder's holding period for the New Shares will include the
period during which the stockholder held the Old Shares surrendered in the
reverse stock split.
Our view regarding the tax consequences of the reverse stock split is not
binding on the Internal Revenue Service or the courts. ACCORDINGLY, EACH
STOCKHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL
OF THE POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE STOCK SPLIT.
Vote Required for the Amendment of the Articles Proposal
Approval of the Reverse Split will require the affirmative vote of a majority of
the shares of our common stock present or represented and entitled to vote at
the meeting. Votes that are cast against the proposal will be counted for
purposes of determining (a) the presence or absence of a quorum and (b) the
total number of negative votes cast with respect to the proposal. Abstentions
and shares held by brokers that are present but not voted, because the brokers
were prohibited from exercising discretionary authority ("broker non-votes"),
will be counted as present for purposes of determining the presence or absence
of a quorum.
11
Recommendation of the Board
The Board of Directors recommends a vote "FOR" the proposed authorization of our
Board of Directors to effect a reverse split of the Company's Common Stock in an
amount to be determined by the Board of Directors between 1-for-2 and 1-for-10.
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Squar, Milner, Reehl & Williamson LLP
("Squar Milner"), independent auditors, to audit our consolidated financial
statements for the fiscal year ending June 30, 2006 and seeks ratification of
such appointment. In the event of a negative vote on such ratification, the
Board will reconsider its appointment. Squar Milner was our independent auditor
for the prior fiscal year ending June 30, 2005.
Representatives of Squar Milner are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
The reports of Squar Milner on our financial statements for the fiscal years
ended June 30, 2005 and 2004, and the related statements of operations,
stockholder's equity and cash flows for the two years then ended did not contain
an adverse opinion or a disclaimer of opinion and was not qualified or modified
as to uncertainty, audit scope, or accounting principles, except as relating to
our ability to continue as a going concern.
Since the date of Squar Milner's engagement and during the two most recent
fiscal years and any subsequent interim period, there were no disagreements with
Squar Milner on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if not resolved to
the satisfaction of Squar Milner would have caused Squar Milner to make
reference to the matter in their report.
There have been no disagreements between either Squar Milner and our management
of the type required to be reported since the date of their engagement.
For the fiscal year ended June 30, 2005, our fees for professional services
rendered by our Independent Auditors were as follows:
(a) Audit Fees: Aggregate fees billed for professional services rendered
for the audit of our fiscal year 2005, annual financial statements, and review
of the financial statements in our reports on Form 10-QSB: $67,000.
(b) Financial Information Systems Design and Implementation Fees: $630.
(c) All Other Fees: The aggregate fees billed for all other professional
services provided to us (other than the services described above under "Audit
Fees") for the fiscal year ended June 30, 2005 were $31,328 (primarily for tax).
12
The Board has considered and determined that the services rendered by the
independent certified public accountants with respect to the foregoing fees are
compatible with maintaining their independence.
Recommendation of the Board
The Board of Directors recommends a vote "FOR" the appointment of Squar, Milner,
Reehl & Williamson LLP as the Company's independent auditors for the fiscal year
ending June 30, 2006.
13
OTHER INFORMATION
Directors and Executive Officers
Our directors and executive officers are set forth below, along with their
biographies. See "ELECTION OF DIRECTORS" for the biographies of our directors.
Name Positions
- ---- ---------
S. Paul Sandhu Chief Executive Officer, and Director
Eric Clemons President and Director
Gerald A. DeCiccio Chief Financial Officer and Director
Compensation of Board of Directors
Our current directors do not receive compensation for their services as our
directors.
Board Meetings and Committees
Our Board of Directors held no meetings during the year ended June 30, 2005. All
actions were taken by unanimous written consent. The Board does not meet on any
pre-determined schedule but meets on an as needed basis.
On May 13, 2004, due to the departure of our independent outside directors, the
Board dissolved the Audit Committee and the Compensation & Nominating Committee.
As we are not listed on a national exchange, we are not required to maintain
either an Audit or a Compensation & Nominating Committee. However, it is
currently anticipated that following the recruitment of additional independent
directors, we will reinstate both committees.
Following the dissolution of the Compensation & Nominating Committee, selection
of Director nominees is determined by the full Board of Directors. At the time
of this proxy statement, the Board has not established formal guidelines for the
nomination of director candidates. Presently, the Board has also not established
a policy with regard to the consideration of director candidates recommended by
security holders. Following the establishment of a Nominating Committee as
contemplated above, the Board intends to re-examine the creation of a
shareholder nomination policy.
[Remainder of Page Intentionally Left Blank]
14
FULL REPORT OF THE BOARD OF DIRECTORS
IN LIEU OF AUDIT COMMITTEE REPORT
We have reviewed and discussed GTC Telecom Corp.'s audited consolidated
financial statements as of and for the fiscal year ended June 30, 2005 with the
Company's management and Squar, Milner, Reehl & Williamson LLP ("Squar Milner"),
the Company's independent certified public accountants.
We have received and reviewed the written disclosures and the letter from Squar
Milner required by Independence Standard No. 1, Independence Discussions with
Audit Committees, as amended, by the Independence Standards Board, and have
discussed with Squar Milner their objectivity and independence.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standard No. 61, Communications with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
Based on the reviews and discussions referred to above, we recommend to
management that the audited consolidated financial statements referred to above
be included in the Company's Annual Report on Form 10-KSB/A for the fiscal year
ended June 30, 2005 to be filed with the Securities and Exchange Commission.
By /s/ S. Paul Sandhu
- -------------------------
S. Paul Sandhu
By /s/ Eric A. Clemons
- -------------------------
Eric A. Clemons
By /s/ Gerald A. DeCiccio
- -------------------------
Gerald A. DeCiccio
15
The Summary Compensation Table below shows certain compensation information for
services rendered in all capacities for the fiscal years ended June 30, 2005,
2004, and 2003. Other than as set forth herein, no executive officer's salary
and bonus exceeded $100,000 in any of the applicable years. The following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term
------------------- Compensation
Awards Payouts
------------------------------
Other Restricted Securities All
Name and Annual Stock Underlying LTIP Other
Principal Salary Bonus Compensation Awards Options Payouts Compensation
Position Year ($) ($) ($) ($) SARs (#) ($) ($)
- -------------------- -------- ---------- ---------- ---------------- ------------- ------------ ---------- ----------------
Paul Sandhu 2005 169,400 -0- -0- -0- 925,000 -0- -0-
(CEO) (6/30)
2004 184,800 -0- 5,000(1) -0- -0- -0- 7,108(2)
(6/30)
2003 184,800 -0- 40,000(1) -0- -0- -0- -0-
(6/30)
- -------------------- -------- ---------- ---------- ---------------- ------------- ------------ ---------- ----------------
Eric Clemons 2005 160,233 -0- -0- -0- 600,000 -0- -0-
(President) (6/30)
2004 167,200 -0- -0- -0- -0- -0- -0-
(6/30)
2003 160,233 -0- -0- -0- -0- -0- -0-
(6/30)
- -------------------- -------- ---------- ---------- ---------------- ------------- ------------ ---------- ----------------
Gerald DeCiccio 2005 145,200 -0- -0- -0- 400,000 -0- -0-
(CFO) (6/30)
2004 158,400 -0- -0- -0- -0- -0- -0-
(6/30)
2003 158,400 -0- -0- -0- -0- -0- 6,092(2)
(6/30)
- -------------------- -------- ---------- ---------- ---------------- ------------- ------------ ---------- ----------------
(1) Amounts paid on deferred salary from prior years
(2) Amounts paid for vacation
Stock Options Granted To Executive Officers By The Company
The following table summarizes stock option grants during the fiscal year ended
June 30, 2005, to each of the executive officers identified in the Summary
Compensation Table above. These stock options relate to the options to purchase
the common stock of GTC Telecom Corp.
16
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
Number of
Securities
Underlying Percent of Total Options/SAR's Exercise of
Name Options/SAR's Granted to Employees In Fiscal Base Price Expiration
Granted (#) Year ($/Sh) Date
- ------------------ ------------------- ----------------------------------- -------------- -------------
Paul Sandhu 925,000 40% $0.11 12/21/2014
- ------------------ ------------------- ----------------------------------- -------------- -------------
Eric Clemons 600,000 26% $0.10 12/21/2014
- ------------------ ------------------- ----------------------------------- -------------- -------------
Gerald DeCiccio 400,000 17% $0.10 12/21/2014
- ------------------ ------------------- ----------------------------------- -------------- -------------
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
The following table summarizes exercises of stock options during the fiscal year
ended June 30, 2005 by each of the executive officers and the fiscal year-end
value of unexercised options for such executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Unexercised Value of Unexercised In
Shares Acquired Securities Underlying The-Money Option/SARs
On Value Options/SARs At FY-End (#) At FY-End ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------- ------------------ -------------- --------------------------- -------------------------
Paul Sandhu 0 n/a 693,000 / 837,000 9,250 / 37,000
Eric Clemons 0 n/a 572,000 / 573,000 7,200 / 28,800
Gerald DeCiccio 0 n/a 391,000 / 394,000 4,800 / 19,200
Equity Compensation Plans
The following table summarizes equity compensation plans at June 30, 2005.
EQUITY COMPENSATION PLANS AS OF JUNE 30, 2005
(a) (b) (c)
- ---------------------------- ------------------------ --------------------- -----------------------------------
Number of Securities Weighted-average Number of Securities Remaining
to be Issued upon Exercise Price of Available for Future Issuance
Exercise of Outstanding Under Equity Compensation Plans
outstanding Options, Options, Warrants (excluding Securities reflected
Plan category Warrants and Rights and Rights in Column (a))
(#) ($) (#)
- ---------------------------- ------------------------ --------------------- -----------------------------------
Equity compensation plans 4,171,200(1) $0.27 1,552,000(2)
approved by security
holders
- ---------------------------- ------------------------ --------------------- -----------------------------------
Equity compensation plans 13,100,585 $0.21 0
not approved by security
holders
- ---------------------------- ------------------------ --------------------- -----------------------------------
Total 17,271,785 $0.23 1,552,000
(1) consists of 723,200 options issued under the 1999 Stock Option Plan and
3,448,000 options issued under the 2001 Stock Incentive Plan
(2) does not include any ungranted options under the 1999 Omnibus Stock Option
Plan as this plan was terminated.
17
1999 Stock Option Plan
On September 20, 1999, our Board of Directors approved the GTC Telecom Corp.
Omnibus Stock Option Plan (the "1999 Plan"), effective October 1, 1999. The 1999
Plan was approved and ratified by the shareholders on December 13, 1999, at our
1999 annual shareholder's meeting. Under the terms of the 1999 Plan, the Board
has the sole authority to determine which of the eligible persons shall receive
options, the number of shares which may be issued upon exercise of an option,
and other terms and conditions of the options granted under the 1999 Plan to the
extent they don't conflict with the terms of the 1999 Plan.
Upon implementation of our 2001 Stock Incentive Plan (as described below), we
closed the 1999 Plan. As of the date of this report, a total of 661,400 options,
previously issued to employees, exercisable at a weighted average of $0.92 per
share remain outstanding.
2001 Stock Incentive Plan
On October 17, 2001, our Board approved the GTC Telecom Corp. 2001 Stock
Incentive Plan (the "SIP Plan"), effective January 1, 2002. The SIP Plan was
approved and ratified by the shareholders on December 13, 2001 at our 2001
annual shareholder's meeting. The SIP Plan provides for the grant of various
types of equity-based incentives including stock options, stock appreciation
rights ("SARs"), restricted stock, and cash and stock bonuses, on a current or
deferred basis, collectively "Awards." We may settle Awards in cash or shares of
our Common Stock ("Shares").
The maximum number of Shares that may be issued under the SIP Plan is 5,000,000
shares of our Common Stock. The Internal Revenue Code requires a fixed limit on
the number of Shares that may be covered by options and SARs granted to any one
individual in any one calendar year and a fixed limit on the number of Shares
that may be covered by all Awards granted to any one individual in any one
calendar year. These limits are each 1,000,000 shares.
The SIP Plan may be administered by the Board or by a committee appointed by the
Board. Currently the SIP Plan is administered by the full Board of Directors.
Subject to the express terms of the SIP Plan, the SIP Plan administrator will
have broad power to administer, construe, and interpret the SIP Plan.
Awards may be issued for services rendered or to be rendered. Shares also may be
issued for any lawful consideration, including cash, other securities or rights.
The administrator may authorize loans from us to participants (except to our
executive officers) in the amount necessary for participants to pay the
withholding taxes due in connection with the exercise or vesting of Awards. All
of our directors, officers, consultants, and employees and our subsidiaries are
eligible for Award grants. Only persons actually selected by the administrator
will be granted Awards.
On December 21, 2004, our Board granted, pursuant to the SIP Plan, Incentive
Stock Options (as defined by the SIP Plan), to purchase an aggregate of
1,375,000 shares of our common stock at an exercise price of $0.10 per share
(the fair market value of our common stock on the day of grant), to certain of
our employees. In addition, on December 21, 2004, our Board granted to our CEO,
pursuant to the SIP Plan, options to purchase 925,000 shares of our common stock
at an exercise price equal to 110% of the fair market value on the date of grant
($0.11 per share). The options vest equally over a period of five years from the
date of grant and are exercisable through December 2013.
18
Non-Plan Issuances
On April 12, 2004, we entered into an agreement with an outside consultant for
investor relations services. Pursuant to the agreement, we agreed, in addition
to certain cash consideration, to issue to the investor relations company,
warrants to purchase up to 500,000 shares of our common stock. The warrants have
an exercise price of $0.13 per share. The warrants are valued at approximately
$65,000 (based on the Black Scholes pricing model) which we recorded to
consulting expense in April 2004. The warrants vest immediately and are
exercisable for a period of three years from the date of issuance.
Employment Agreements
On December 1, 1998, we entered into an Employment Agreement with Paul Sandhu,
our Chief Executive Officer. The Agreement was approved by our Board of
Directors. On September 6, 2001, the Compensation Committee of the Board agreed
to revise the Agreement increasing Mr. Sandhu's salary to $184,800. The
Agreement continues for an indefinite term but may be canceled at any time by
either us or Mr. Sandhu. However, if we terminate the Agreement without cause,
as defined in the Agreement, we shall be obligated to pay Mr. Sandhu 25% of his
then annual salary as severance.
On December 1, 1998, we entered into an Employment Agreement with Eric Clemons,
our President. The Agreement was approved by our Board of Directors. On
September 6, 2001, the Compensation Committee of the Board agreed to revise the
Agreement increasing Mr. Clemon's salary to $167,200. The Agreement continues
for an indefinite term but may be canceled at any time by either us or Mr.
Clemons. However, if we terminate the Agreement without cause, as defined in the
Agreement, we shall be obligated to pay Mr. Clemons 25% of his then annual
salary as severance.
On December 1, 1998, we entered into an Employment Agreement with Gerald
DeCiccio, our Chief Financial Officer. The Agreement was approved by our Board
of Directors. On September 6, 2001, the Compensation Committee of the Board
agreed to revise the Agreement increasing Mr. DeCiccio's salary to $158,400. The
Agreement continues for an indefinite term but may be canceled at any time by
either us or Mr. DeCiccio. However, if we terminate the Agreement without cause,
as defined in the Agreement, we shall be obligated to pay Mr. DeCiccio 25% of
his annual salary as severance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 2004, our Chief Financial Officer exercised options (previously
granted pursuant to his director compensation agreement) to purchase a total of
2,500 shares of our common stock for $25.
As of June 30, 2005, we have net advances to Eric Clemons, our President, of
$60,306. The advances accrue interest at 10% (no interest income has been
recorded as of June 30, 2005) and are due on demand. We have classified the note
receivable as an increase to stockholders' deficit in the accompanying
consolidated balance sheet at June 30, 2005. There have been no additional
advances since June 2001.
19
In February, 2003, Perfexa-U.S. entered into a Master Services Agreement with us
whereby Perfexa-U.S. agreed to provide call center outsourcing and Information
Technology systems development for us. Pursuant to the terms of the Agreement,
we have agreed to reimburse Perfexa-U.S. for such services on a cost plus 5%
basis. Work on this agreement commenced May 1, 2003 upon completion of the
Perfexa call center.
Since inception, Perfexa-U.S., and their Indian subsidiary Perfexa-India, has
relied upon us for funding and for administrative services required in the
development of their business plan. Perfexa is obligated to reimburse us for
such advances and their share of such expenses. As of June 30, 2005, we have
advanced Perfexa-U.S. $5,259,851 in cash and equipment, of which $661,504 was
for the purchase of equipment and $4,598,347 for operating expenses. In
addition, we have allocated $2,080,503 of shared administrative expenses to
Perfexa-U.S. Cash and equipment advances accrue interest of 10% per annum and
are due upon demand. Shared administrative expenses accrue no interest and are
also due upon demand. See Part II, Item 6 Management's Discussion and Analysis,
Financing further details.
Pursuant to a Master Services Agreement between Perfexa-US and us, Perfexa
provides call center and IT development services to us on a cost plus 5% basis.
As of June 30, 2005, Perfexa-U.S. has billed us $2,733,004 for such services.
As of June 30, 2005, Perfexa-U.S. owes GTC $4,445,450 net of $161,900 repaid by
Perfexa-U.S. from funds raised and $2,733,004 in amounts billed for services
rendered.
See above for transactions relating to issuances of options to Officers and
Directors from our stock option plans.
20
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of January 31, 2006, certain
information with respect to the equity securities owned of record or
beneficially by:
o each of our Officers and Directors;
o each person who owns beneficially more than 5% of each class
of our equity securities; and
o all Directors and Executive Officers as a group.
Common Stock Percent of(1)
Title of Class Name and Address of Beneficial Owner Outstanding Outstanding
- -------------------------- -------------------------------------------------- ----------------- ----------------
Common Stock Paul Sandhu(2)
3151 Airway Avenue, Suite P-3
Costa Mesa, CA 92626. 3,787,715 12.41%
Common Stock Eric Clemons(3)
3151 Airway Avenue, Suite P-3 882,522 2.90%
Costa Mesa, CA 92626.
Common Stock Gerald A. DeCiccio(4)
3151 Airway Avenue, Suite P-3 413,500 1.37%
Costa Mesa, CA 92626.
Common Stock Reet Trust(5)
21520 Yorba Linda, Suite 6227 2,000,000 6.70%
Yorba Linda, CA 92887
Common Stock Rapaport Family Trust
584 Via Almar 3,595,000 12.05%
Palos Verde Peninsula, CA 90275
Common Stock All Directors and Officers as a Group 5,083,737 16.141%
(3 Persons in total)(2)(,)(3)(,)(4)
- --------------------------
(1) Percentage of outstanding shares is based on 29,834,446 shares of common
stock outstanding as of the date of this information statement plus shares
underlying options exercisable within 60 days for that particular holder.
(2) Includes 693,000 options to acquire shares of our common stock in accordance
with Mr. Sandhu's director compensation agreement and our employee benefit plan.
Does not include an aggregate of 837,000 unvested options to acquire shares of
our common stock granted in accordance with our employee benefit plan.
(3) Includes 572,000 options to acquire shares of our common stock in accordance
with Mr. Clemons' director compensation agreement and our employee benefit plan.
Does not include an aggregate of 573,000 unvested options to acquire shares of
our common stock in accordance with our employee benefit plan.
(4) Includes an aggregate of 391,000 options to acquire shares of our common
stock in accordance with Mr. DeCiccio's employment and director compensation
agreements and our employee benefit plan. Does not include an aggregate of
394,000 unvested options to acquire shares of our common stock in accordance
with our employee benefit plan.
(5) The trustee of the Reet Trust is Teg Sandhu, father of S. Paul Sandhu.
However, S. Paul Sandhu disclaims any beneficial ownership to the shares held by
the Reet Trust.
We believe that the beneficial owners of securities listed above, 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.
Beneficial ownership is determined in accordance with the rules of the
21
Commission and generally includes voting or investment power with respect to
securities. Shares of stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for purposes
of computing the percentage of the person holding such options or warrants, but
are not deemed outstanding for purposes of computing the percentage of any other
person.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who own more than ten percent of a registered
class of our equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of our Common Stock and other equity
securities. Officers, directors and greater than ten percent Stockholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. To the our knowledge, based solely on the review of copies of such
reports furnished to us and representations that no other reports were required
and to the best of our knowledge, during the year ended June 30, 2005, except
for the failure of the Rapaport Family Trust to file a Form 3 and subsequent
Form 4s, all Section 16(a) filing requirements applicable to the our officers,
directors and other greater than ten percent stockholders were complied with.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be included in our proxy statement for the
2007 Annual Meeting of Stockholders must be received by GTC Telecom Corp., Attn:
Secretary, at 3151 Airway Ave., Suite P-3, Costa Mesa, CA 92626 no later than
November 30, 2006. Matters pertaining to such proposals, including the number
and length thereof, eligibility of persons entitled to have such proposals
included and other aspects are regulated by the Securities Exchange Act of 1934,
Rules and Regulations of the Securities and Exchange Commission and other laws
and regulations to which interested persons should refer. We anticipate that our
next annual meeting will be held in January 2007.
We have not been notified by any stockholder of his intent to present a
stockholder proposal from the floor at the 2006 Annual Meeting. Accordingly, no
stockholder motions from the floor will be considered at the meeting. The
enclosed proxy card grants the proxy holders discretionary authority to vote on
any matter properly brought before the 2006 Annual Meeting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act
of 1934. In accordance with that act, we file reports, proxy statements and
other information with the Securities and Exchange Commission. These materials
can be inspected and copied at the Public Reference Room maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. Copies of these materials can also be obtained from the
Securities and Exchange Commission at prescribed rates by writing to the Public
Reference Section of the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Our common stock trades on the OTC Bulletin Board
under the symbol "GTCC."
22
OTHER MATTERS
We have enclosed with this Proxy Statement a copy of our Annual Report on Form
10-KSB/A to Stockholders for the year ended June 30, 2005. The annual report is
not incorporated by reference into this proxy statement and is not deemed to be
a part of this proxy solicitation material.
Management knows of no other matters to come before the meeting. If, however,
any other matter properly comes before the meeting, the persons named in the
enclosed Proxy form will vote in accordance with their judgment upon such
matter. Stockholders who do not expect to attend in person are urged to promptly
execute and return the enclosed Proxy.
By order of the Board of Directors
/s/ Eric A. Clemons
-------------------
Eric A. Clemons
Secretary
Costa Mesa, California
February 14, 2006
23
PROXY
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3, Costa Mesa, California 92626
Proxy for Annual Meeting of Stockholders - March 22, 2006
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoint S. PAUL SANDHU and ERIC CLEMONS, and each of
them, as proxy or proxies for the undersigned, with full power of substitution,
who may act by unanimous vote of said proxies or their substitutes as shall be
present at the meeting, or, if only one be present, then the one shall have all
the powers hereunder, to represent and to vote, as designated herein (If no
direction is made, this Proxy will be voted FOR Proposals 1, 2, 3, and 4), all
of the shares of GTC Telecom Corp. (the "Company") standing in the name of the
undersigned, at the Annual Meeting of Stockholders of the Company to be held at
the Costa Mesa Hilton, 3050 Bristol Street, Costa Mesa, California 92626 on
March 22, 2006, at 9:30 a.m. PST, and any adjournment thereof. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
Please mark your votes as indicated in this proxy
ITEM 1 - ELECTION OF DIRECTORS
NOMINEES:
The Board of Directors recommends a vote FOR the following Nominees:
S. PAUL SANDHU [ ] For All Nominees
ERIC A. CLEMONS [ ] Withhold All Nominees
GERALD A. DECICCIO [ ] Withhold Authority to Vote For
Any Individual Nominee. Write Name(s)
of Nominee(s) Below.
WITHHELD AUTHORITY FOR: (Write that nominee's name in the space provided
below)._________________________________________
FOR AGAINST ABSTAIN
--- ------- -------
ITEM 2 - TO AMEND THE ARTICLES OF
INCORPORATION OF GTC TELECOM CORP. TO
CHANGE THE NAME OF THE CORPORATION TO
GTC WIRELESS, INC. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
--- ------- -------
ITEM 3 - TO AUTHORIZE THE BOARD OF DIRECTORS
TO AMEND THE ARTICLES OF INCORPORATION
OF GTC TELECOM CORP. TO EFFECTUATE A
REVERSE SPLIT OF THE COMPANY'S COMMON
STOCK IN AN AMOUNT AS DETERMINED BY THE
BOARD OF DIRECTORS BETWEEN 1-FOR-2 AND
1-FOR-10 [ ] [ ] [ ]
FOR AGAINST ABSTAIN
--- ------- -------
ITEM 4 - TO RATIFY THE SELECTION OF SQUAR,
MILNER, REEHL & WILLIAMSON LLP AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS [ ] [ ] [ ]
Signature(s) ________________________________________ Date _____________
________________________________________
(Print Name)
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
APPENDIX A
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
GTC TELECOM CORP.
(Pursuant to NRS 78.385 and 78.390 - after issuance of stock)
The undersigned being the President and Secretary of GTC Telecom Corp., a
Nevada Corporation, hereby certifies that pursuant to Unanimous Written Consent
of the Board of Directors of said Corporation on January 27, 2006 and approved
by the shareholders at the annual meeting held on March 22, 2006, it was voted
that this Certificate of Amendment of Articles of Incorporation changing the
name of the Corporation and authorizing a reverse stock split of the
Corporation's stock at a ratio of [1-for-insert number], be filed. The effective
date for this reverse stock split will be [__________], 2006.
The undersigned further certifies that ARTICLES I and IV of the Articles
of Incorporation, originally filed on May 17, 1994, and as amended, are amended
to read as follows:
ARTICLE I
The name of the corporation is GTC Wireless, Inc.
ARTICLE IV
The capital stock of the Corporation shall consist of 100,000,000 shares
of Common Stock, $0.001 par value and 10,000,000 shares of preferred stock,
$0.001 par value.
Effective on [_________], 2006, each [insert number] outstanding shares of
the company's common stock will be combined, automatically and without further
action, into one (1) share of common stock, with any fractional shares resulting
from such combination being rounded up to the nearest whole share.
The shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors of the Corporation (the "Board of
Directors") is expressly authorized to provide for the issue of all or any of
the shares of the Preferred Stock in one or more series, and to fix the number
of shares and to determine or alter for each such series, such voting powers,
full or limited, or no voting powers, and such designations, preferences, and
relative, participating, optional, or other rights and such qualifications,
limitations, or restrictions thereof, as shall be stated and expressed in the
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resolution or resolutions adopted by the Board of Directors providing for the
issue of such shares (a "Preferred Stock Designation") and as may be permitted
by the General Corporation Law of the State of Nevada. The Board of Directors is
also expressly authorized to increase or decrease (but not below the number of
shares of such series then outstanding) the number of shares of any series
subsequent to the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series."
The undersigned hereby certifies that he has on this [__]th day of
[________], 2006 executed this Certificate amending the Articles of
Incorporation heretofore filed with the Secretary of State of Nevada.
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S. Paul Sandhu Eric A. Clemons
Chief Executive Officer Secretary
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