SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
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INTERNATIONAL FUEL TECHNOLOGY, INC.
(Name of Registrant as Specified in its Charter)
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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:
(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 0-11:
(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 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
INTERNATIONAL FUEL TECHNOLOGY, INC.
7777 BONHOMME AVANUE, SUITE 1920
ST. LOUIS, MISSOURI 63105
(314) 727-3333
October 18, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
International Fuel Technology, Inc., to be held at 9:00 a.m., local time, on
Monday, November 18, 2002, at the Radisson Hotel Clayton, located at 7750
Carondelet Avenue, St. Louis, Missouri.
At the meeting you will be asked to vote on the election of seven directors
of the Company and the ratification of the selection of BDO Seidman, LLP as the
Company's independent accountants for the year 2002. In addition, we will be
pleased to report on the affairs of the Company and a discussion period will be
provided for questions and comments of general interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
/s/ Jonathan R. Burst
Jonathan R. Burst
Chairman of the Board of Directors
TABLE OF CONTENTS
Notice of Annual Meeting
Proxy Solicitation ....................................................................... 1
Revocability and Voting Proxy ............................................................ 1
Record Date and Voting Rights ............................................................ 1-2
Stockholder Proposals .................................................................... 2
PROPOSAL NO. 1: ELECTION OF DIRECTORS .................................................... 3-4
PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS ...................... 5
Report of the Audit Committee of the Board of Directors .................................. 6
Beneficial Ownership of Common Stock ..................................................... 7
Certain Relationships and Related Transactions ........................................... 8
Compensation of Directors ................................................................ 9
Compensation of Executive Officers ....................................................... 9
Consultant and Employee Stock Compensation Plan .......................................... 9-10
Employment Agreements .................................................................... 10
Stock Awards ............................................................................. 10
Report of the Compensation Committee of the Board Of Directors on Executive Compensation . 11-12
Performance Measurement Comparison ....................................................... 13
Other Matters ............................................................................ 14
INTERNATIONAL FUEL TECHNOLOGY, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 2002
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To the Stockholders of International Fuel Technology, Inc:
Notice is hereby given that the Annual Meeting of the Stockholders of
International Fuel Technology, Inc. (the "Company") will be held on Monday,
November 18, 2002 at 9:00 a.m., local time, at the Radisson Hotel Clayton,
located at 7750 Carondelet Avenue, St. Louis, Missouri, for the following
purposes:
(1) To elect seven directors to serve until the 2003 Annual Meeting of
Stockholders.
(2) To ratify the appointment of BDO Seidman, LLP as independent auditors
for the year ending December 31, 2002.
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement 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 October 7, 2002,
as the record date for determining the stockholders entitled to notice of and to
vote at this Annual Meeting and at any adjournment or postponement thereof.
Whether or not you expect to attend the annual meeting in person, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope provided to ensure your representation
and the presence of a quorum at the annual meeting. If you send in your proxy
card and then decide to attend the annual meeting to vote your shares in
person, you may still do so. Your proxy is revocable in accordance with the
procedures set forth in the proxy statement.
By Order of the Board of Directors,
Michael F. Obertop
Secretary
St. Louis, Missouri
October 18, 2002
INTERNATIONAL FUEL TECHNOLOGY, INC.
7777 BONHOMME AVENUE, SUITE 1920
ST. LOUIS, MISSOURI 63105
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PROXY STATEMENT
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GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to stockholders of International Fuel
Technology, Inc., a Nevada corporation (the "Company"), in connection with the
solicitation by the Board of Directors (the "Board") of the Company of proxies
in the accompanying form for use in voting at the Annual Meeting of Stockholders
of the Company to be held on Monday, November 18, 2002 at 9:00 a.m., local time,
at the Radisson Hotel Clayton, 7750 Carondelet Avenue, St. Louis, Missouri or at
any adjournment or postponement thereof. The purposes of the meeting and the
matters to be acted upon are set forth in the accompanying Notice of Annual
Meeting of Stockholders. The Board is not currently aware of any other matters
which will come before the meeting.
Proxies for use at the meeting are being solicited by the Board of the
Company. Proxies will be mailed to stockholders on or about October 18, 2002 and
will be solicited principally by mail. The Company will make arrangements with
Automatic Data Processing Investor Communications Services ("ADP") to send
proxies and proxy materials to the stockholders entitled to vote at the meeting,
and we will reimburse them for their expenses in so doing. Should it appear
desirable to do so in order to ensure adequate representation of shares at the
meeting, officers, agents, and employees of the Company may communicate with
stockholders, banks, brokerage houses and others by telephone, facsimile or in
person to request that proxies be furnished. All expenses incurred in connection
with this solicitation will be borne by the Company. The Company has no present
plans to hire special employees or paid solicitors to assist in obtaining
proxies, but reserves the option of doing so if it should appear that a quorum
otherwise might not be obtained.
Revocability and Voting Proxy
A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of proxies at any time before their effective
exercise by filing with ADP a written notice of revocation or a duly executed
proxy bearing a later date, or by voting in person at the meeting. Shares of the
Company's Common Stock represented by executed and unrevoked proxies will be
voted in accordance with the choice or instructions specified thereon. If no
specifications are given, the proxies intend to vote the shares represented
thereby to approve Proposals No. 1 and No. 2 as set forth in the accompanying
Notice of Annual Meeting of Stockholders and in accordance with their best
judgment on any other matters which may properly come before the meeting.
Record Date and Voting Rights
Only stockholders of record at the close of business on October 7, 2002 are
entitled to notice of and to vote at the Annual Meeting or any and all
adjournments or postponements thereof. On October 1, 2002, there were 77,524,687
shares of Common Stock outstanding, each of which is entitled to one vote on
each of the matters to be presented at the Annual Meeting.
A majority of the outstanding shares entitled to vote must be represented
in person or by proxy at the meeting in order to conduct the election of
directors and other matters mentioned in this Proxy Statement. If such a
majority is represented at the meeting, then the seven nominees for director who
receive the highest number of votes cast will be elected. The other matters
require the approving vote of at least a majority of the votes cast. The holders
of a majority of the outstanding shares of Common Stock, present in person or by
proxy and entitled
to vote, will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner.
Stockholder Proposals
All stockholder proposals which are intended to be presented at the 2003
Annual Meeting of Stockholders must be received by the Company no later than
December 1, 2002 for inclusion in the Board of Directors' proxy statement and
form of proxy relating to that meeting.
Shareholders of record who do not submit proposals for inclusion in the
proxy statement but who intend to submit a proposal at the 2003 Annual Meeting,
and shareholders of record who intend to submit nominations for directors at the
meeting, must provide written notice. Such notice should be addressed to the
Corporate Secretary and received at the Company's principal executive offices by
January 19, 2003.
2
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
By resolution of the Board, the number of directors of the Company has been
fixed at seven as of the date of the Annual Meeting. Unless otherwise specified,
the enclosed proxy will be voted in favor of the persons named below to serve
until the next annual meeting of stockholders and until their successors shall
have been duly elected and shall qualify. In the event any of these nominees
shall be unable to serve as a director, the shares represented by the proxy will
be voted for the person, if any, who is designated by the Board to replace the
nominee. All nominees have consented to be named and have indicated their intent
to serve if elected. The Board has no reason to believe that any of the nominees
will be unable to serve or that any vacancy on the Board will occur.
Certain information about the director nominees, is furnished below:
Jonathan R. Burst, 43, Mr. Burst has served as Chief Executive Officer of
the Company since July 1999 and as a Director since February 2000. He also
served as the President of the Company from July 1999 to February 2000. Since
January 2002, he has served as President again. Mr. Burst founded Burcor
International in 1998 and has served as President since its inception. From 1992
to 1998, Mr. Burst served as Executive Vice President and Managing Director of
mergers and acquisitions at Aon Risk Services. Mr. Burst received his Bachelor
of Arts degree in Economics from the University of Missouri in 1981.
David B. Norris, 54, Mr. Norris has served as a Director of the Company
since April 1999. Mr. Norris founded and owns Addicks Services, Inc., a
construction company, and has served as its' President since 1983.
Harry Demetriou, 58, Mr. Demetriou has served as a Director of the Company
since February 2000. Mr. Demetriou is currently the Chairman for Observor
Acceptances, Ltd., an investment company which invests in securities in the
international markets. Mr. Demetriou served as Director and Chairman for United
House Realty until December 1998. Mr. Demetriou was a ship owner of bulk
carriers for over 25 years, however, he has since retired from active management
in the shipping industry.
Ian Williamson, 47, Former Director of Interfacial Technologies Limited,
Mr. Williamson has served as a Director since May 2001. Mr. Williamson commenced
his career studying the design of mechanical services including steam and
combustion, particularly alternatives to oil fired systems. He worked as an
independent design consultant, designing large-scale heating, air conditioning
and waste management systems. Mr. Williamson is the original inventor of a clear
stable "e-diesel" (1996) and author of eight patents and applications related to
cleaner burning and performance enhancing motor fuels utilizing alcohol, water,
bio-diesel and liquids from natural gas. Mr. Williamson is currently employed by
the Company, previously Mr. Williamson was employed by Interfacial Technologies,
Inc. from May 1999 to May 2001.
Rex Carr, 75, Mr. Carr has served as the senior partner of a 36 man law
firm, CarrKoreinTillery, with offices in Missouri and Illinois, for more than
five years. He and his firm specialize in a trial practice representing
plaintiffs in complex litigation, class actions, and injury actions. He is
admitted to practice in the U.S. Supreme Court and the Illinois and Missouri
Supreme Courts. His business ventures include RC Holding Company, which owns and
operates five hotel boats in France; Art Company London, which manufactures and
sells art reproduced on canvas; the Carlyle Limited Partnership, which operates
a marina at Carlye Lake in Illinois; and numerous apartment complexes in
Illinois.
William A. Cross, 54, Mr. Cross is a graduate Chemical Engineer from the
University of Sheffield, UK. He spent 17 years with Exxon Chemical, in
Australia, Belgium and the UK where he was marketing Manager for the Solvents
Business Division. In 1987, he joined the board of Carless Refining & Marketing
Ltd., an independent UK refiner, as Marketing Director. Following its take-over
by Repsol, Spain's leading oil company, he was made Managing Director in 1996
overseeing the subsequent sale of the company as part of Repsol's divestment
program in 2000.
John Stupp, Jr., 52, Mr. Stupp has served as a Director of the Company
since May 2001. From 1992 to 1995, Mr. Stupp served as the President of Stupp
Corporation, and since 1995 as the Chief Executive Officer of Stupp Corporation,
the steel pipe manufacturing division of Stupp Bros. Since 1985, he has been a
director of Atrion Corporation, a publicly traded company involved in the
medical device and component industry, and since has
3
been an Advisory Board member of Midwest BankCentre, a regional bank
institution. Mr. Stupp holds a Bachelor of Science degree in Business and
Economics from Leigh University, and is actively involved in working with a
number of non-profit institutions and charitable organizations throughout the
greater St. Louis region.
All directors hold office until the next annual meeting of the stockholders
of the Company or until their successors are elected and qualified. At present,
the Company's Articles of Incorporation provide for not less than one nor more
than nine directors. Currently there are seven directors of the Company.
Vote Required
The seven nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them,
a quorum being present, shall be elected as directors. Only votes cast for a
nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF EACH NAMED NOMINEE
Board Committees and Meetings
During the fiscal year ended December 31, 2001, the Board held three
meetings and acted by unanimous written consent three times. The Board has an
Audit Committee and a Compensation Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained;
oversees the independence of the independent auditors; evaluates the independent
auditors' performance; consults with the independent auditors and discusses with
senior management the scope and quality of controls; and receives and considers
the cooperation received by the independent auditors during their audit
examination. The Audit Committee is composed of three independent (as
independence is defined in Rule 4200(a)(15) of the NASDAQ listing standards)
non-employee directors: Messrs. Stupp, Norris, and Carr. The Audit Committee met
twice during the last fiscal year. The Audit Committee has adopted a written
charter.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock grants to employees and consultants under
the Company's Consultant and Employee Stock Compensation Plan and otherwise
determines compensation levels and performs such other functions regarding
compensation as the Board may delegate. The Compensation Committee is composed
of two non-employee directors: Messrs. Demetriou and Norris, and one employee
director: Mr. Burst. It met once during the last fiscal year.
During the fiscal year ended December 31, 2001, each Board member attended
75% or more of the aggregate number of meetings of the Board and of the
committees of the Board on which each served in fiscal year 2001.
4
PROPOSAL NO. 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected BDO Seidman, LLP, Chicago, Illinois to
audit the financial statements of the Company for 2002 and recommends that the
stockholders ratify such selection. In the event that a majority of the shares
are not voted in favor of ratification, the Board will reconsider its selection.
Unless otherwise instructed, the proxy holders will vote the proxies they
receive for the ratification of BDO Seidman, LLP as the independent auditors for
2002. A representative of BDO Seidman, LLP will be present at the Annual Meeting
and will have an opportunity to make a statement if he desires to do so, and
will be available to respond to appropriate questions from stockholders.
Services Provided by the Company's Auditors
For the year ended December 31, 2001, the Company incurred professional
fees to its auditors in the amount of $181,250, of which $75,000 related to
auditing services, and $106,250 related to all other services. No fees were paid
to BDO Seidman, LLP during 2001 for financial information design and
implementation services. A substantial portion of the fees in the other services
category relates to services traditionally provided by auditors, including work
performed in connection with registration statements, due diligence procedures
performed in connection with mergers and acquisitions, and income tax services.
The Company's audit committee has considered whether the non-audit services
provided by the Company's auditors in connection with the year ended December
31, 2001 were compatible with the auditors' independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL 2
5
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following is the report of the audit committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2001, which include the balance sheets of the Company as of December 31, 2001
and 2000, and the related statements of operations, stockholders' deficit and
cash flows for the twelve months ended December 31, 2001 and 2000, and nine
months ended December 31, 1999. The information contained in this report shall
not be deemed to be "soliciting material" or to be "filed" with the Securities
and Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933, as amended, or the 1934
Securities Exchange Act, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.
Review With Management
The audit committee has reviewed and discussed the Company's audited
financial statements with management.
Review and Discussion with Independent Auditors
The audit committee has discussed with BDO Seidman, LLP, the Company's
independent auditors, the matters required to be discussed by SAS 61 and SAS 90
(Codification of Statements on Accounting Standards) that includes, among other
items, matters related to the conduct of the audit of the Company's financial
statements.
The audit committee has also received written disclosures and the letter
from BDO Seidman, LLP required by Independence Standards Board No. 1 (that
relates to the accountant's independence from the Company and its related
entities) and has discussed with BDO Seidman, LLP its independence from the
Company.
Conclusion
Based on the review and discussions referred to above, the audit committee
recommended to the Board of Directors that the Company's audited financial
statements be included in the Company's Annual Report of Form 10-K for the
fiscal year ended December 31, 2001.
Audit Committee
John P. Stupp Jr.
David B. Norris
Rex Carr
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
As of March 7, 2000, the Board of Directors unanimously agreed to engage
BDO Seidman, LLP to be the Company's new principal accountant. At no time during
the past two fiscal years or any subsequent period prior to engagement as
principal auditor did the Company consult with BDO Seidman, LLP regarding either
the application of accounting principles to a specific transaction or type of
audit opinion which might be rendered on the Company's financial statements or
any other matter. The former accountant, McGladney & Pullen, LLP declined to
stand for re-election for the December 31, 1999 engagement. The independent
auditors' reports for March 31, 1999 and 1998, were modified as to uncertainties
about the entity's ability to continue as a going concern. The Company and its
former accountants had no disagreements during the fiscal years ended March 31,
1999 and 1998, and through the date they declined to stand for re-election.
6
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of October 1, 2002 by: (i) each person known by
the Company to own beneficially more than five percent of the Company's common
stock; (ii) each director and nominee for director of the Company; (iii) each
executive officer named in the Summary Compensation Table (see "Executive
Compensation"); and (iv) all directors and executive officers of the Company as
a group. Except as otherwise specified, the named beneficial owner has sole
voting and investment power over the shares listed.
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Common Stock(1)
- ---------------- -------------------- ---------------
Jonathan R. Burst(2) .................................... 2,956,000 3.8%
William J. Lindenmayer .................................. 1,901,000 2.5%
David B. Norris ......................................... 1,096,562 1.4%
Harry F. Demetriou(3) ................................... 5,022,778 6.5%
Simon Orange ............................................ 3,795,230 4.9%
Ian Williamson .......................................... 2,550,000 3.3%
Geoff Robinson .......................................... 528,237 0.7%
John P. Stupp Jr. ....................................... 318,233 0.4%
Tony Cross .............................................. 0 0%
Rex Carr ................................................ 13,888,889 17.9%
All directors and executive officers as a group ......... 32,056,929 41.4%
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(1) This table is based upon information supplied by officers, directors and
principal stockholders. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, the Company
believes that each of the stockholders named in this table has sole voting
and investment power with respect to the shares indicated as beneficially
owned. Unless otherwise indicated, the principal address of each of the
stockholders named in this table is: c/o International Fuel Technology,
Inc., 7777 Bonhomme Avenue, Suite 1920, St. Louis, Missouri, 63105.
Applicable percentages are based on 77,524,687 shares outstanding on
October 1, 2002.
(2) Includes 50,000 shares owned by Burcor Capital, LLC of which Mr. Burst is
an executive officer and deemed to be the beneficial owner of such shares.
(3) Includes 4,582,778 shares owned by Observor Acceptances, Ltd. of which Mr.
Demetriou is the sole owner and deemed to be the beneficial owner of such
shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires IFT's executive officers and directors, and persons
who beneficially own more than ten percent of IFT's common stock, to file
initial reports of ownership and reports of changes in ownership with the SEC.
Executive officers, directors and greater than ten percent beneficial owners are
required by SEC regulations to furnish IFT with copies of all Section 16(a)
forms they file. Based upon a review of the copies of such forms furnished to
IFT and written representations from IFT's executive officers and directors, IFT
believes that during fiscal 2001 Forms 3 and 4 were not filed on a timely basis
for IFT's executive officers and directors. All these forms have since been
filed. Jonathan R. Burst failed to make 5 Form 4 filings on a timely basis
during the 2001 year. William J. Lindenmayer failed to make 4 Form 4 filings on
a timely basis during the 2001 year.
7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 31, 2001, the Company issued 33,333 shares in repayment of a
$10,000 note payable to a stockholder. In connection with the issuance of the
shares, the Company recognized $7,041 in interest expense due to the fair value
of the stock on the date of extinguishment exceeding the carrying value of the
debt.
On April 6, 2001, the Company issued 10,000 restricted common shares to
employees of Burcor Capital (Mr. Jonathan Burst, chief executive officer and
director of the Company, is the founder and president of Burcor Capital, LLC),
as payment for $4,375 in consulting services and 10,000 restricted common shares
as a payment on a $3,500 account payable due to Steven Walters, CPA. Steven
Walters was the former Chief Financial Officer of the Company.
On May 25, 2001, the Company entered into consulting agreements with four
Interfacial shareholders. Common stock totaling 960,000 shares were issued and
recorded as a consulting expense. The consulting agreements provide for the
total issuance of 960,000 shares of common stock on May 25, 2002 and 1,180,000
shares of common stock on May 25, 2003, and the Company is recording the value
of these shares ratably over the term of the consulting agreements. On December
6, 2001, the Company issued 300,000 shares which were to be issued May 25, 2002
under the consulting agreements. The Company has recorded $1,024,817 to
consulting expense for the year ended December 31, 2001, relating to these
consulting agreements.
On July 18, 2001, the Company issued 326,087 shares of common stock as
payment to Mr. Simon Orange, a director of the Company in exchange for the
director's rights on a $60,000 note receivable and $99,783 of consulting
services.
The Company obtained general and administrative services and rents office
space and equipment from Burcor Capital, LLC, a company related through common
ownership (Mr. Jonathan Burst, chief executive officer and director of the
Company, is the founder and president of Burcor Capital, LLC), under an
agreement requiring monthly payments of $5,000. Expenses recorded as
professional services paid to Burcor totaled $51,848 during the twelve month
period ended December 31, 2001 and $60,000 during the twelve month period ended
December 31, 2000.
On November 16, 2001, the Company purchased Burcor Capital's equipment for
$12,500.
During January 2002, the Company sold 600,000 restricted shares of common
stock at a price of $.25 per share to a Harry F. Demetriou. The Company recorded
payroll expense of $150,000 relating to the excess of trading price of the
Company's stock over the proceeds.
During January 2002, 500,000 restricted common shares of the Company were
removed from the Interfacial Technologies' escrow account. The shares were
removed because Interfacial failed to pay liabilities it had incurred prior to
being bought by the Company.
During January 2002, the Company issued 125,000 shares of common stock to
Ian Williamson. These shares had been accrued as payroll expense and additional
paid in capital as of December 31, 2001.
During February 2002, the Company sold 250,000 restricted shares of common
stock at a price of $.20 per share to a consultant. The Company recorded
consulting expense of $40,000 relating to the excess of the trading price of the
Company's stock over the proceeds.
During April and May 2002, the Company issued a total of 340,000 shares of
common stock to consultants for services. The Company recorded consulting
expense of $104,900.
During the six months ended June 30, 2002, the Company recorded
compensation expense of $102,816 relating to shares of common stock that were
earned under employment agreements for two officers but unissued as of June 30,
2002.
During the six months ended June 30, 2002, the Company recorded consulting
expense of $4,984 relating to shares of common stock that were earned under
consulting agreements for various consultants but unissued as of June 30, 2002.
8
EXECUTIVE COMPENSATION
Compensation of Directors
Directors do not receive any cash compensation for their services as
members of the Board of Directors, although they are reimbursed for certain
expenses incurred in connection with attendance at Board and committee meetings.
From time to time, certain non-employee directors of the Company have received
grants of restricted common stock. During the last fiscal year, Mr. Norris
received a grant of 200,000 restricted common shares, Mr. Demetriou received a
grant of 200,000 restricted common shares, Senator George Mitchell received a
grant of 400,000 restricted common shares, and Mr. Stupp Jr. received a grant of
200,000 restricted common shares.
On February 23, 2000, the Board of Directors adopted the Director's Stock
Compensation Plan, which provides for an annual award of a minimum of 10,000
shares of the Company's common stock to the Board members as reimbursement for
attendance at Company Board meetings.
Compensation of Executive Officers
The following table sets forth information concerning all cash and non-cash
compensation paid or to be paid by the Company as well as certain other
compensation awarded, earned by and paid, during the fiscal years indicated, to
the Chief Executive Officer and for each of the Company's other executive
officers whose annual salary and bonus exceeds $100,000 for such period in all
capacities in which they served.
Summary Compensation Table
Long Term
Annual Compensation Compensation
----------------------------------------- -------------
Other Restricted
Name and Period Annual Stock
Principal Position Ended Salary Bonus Compensation (1) Awards
- ------------------ -------- -------- ----- ---------------- -------------
Jonathan R. Burst, ............. 12/31/01 $200,000 $0 $0 $555,000
Chief Executive Officer 12/31/00 180,000 0 0 834,067
William J. Lindenmayer ......... 12/31/01 $200,000 0 0 555,000
Chief Operating Officer 12/31/00 $180,000 0 0 716,721
- ------------
(1) Perquisites and other personal benefits are omitted because they do not
exceed either $50,000 or 10% of the total of annual salary and bonus for
the named executive officer.
Consultant and Employee Stock Compensation Plan
The Board of Directors adopted a Consultant and Employee Stock Compensation
Plan that became effective January 14, 2000. The Board of Directors will be
responsible for the administration of this Plan, and will grant stock awards
under this plan. Subject to the express provisions of the Plan, the Board of
Directors shall have full authority and sole and absolute discretion to
interpret and amend this Plan, to prescribe, amend and rescind rules and
regulations relating to it, and to make all other determinations which it
believes to be necessary or advisable in administering this Plan. The
determinations of the Board of Directors on the matters referred to in this
Section shall be conclusive. No member of the Board of Directors shall be liable
for any act or omission in connection with the administration of this Plan
unless it resulted from the member's willful misconduct.
The maximum number of shares of common stock as to which awards may be
granted under this Plan, subject to subsequent amendments, is 5,000,000 shares.
The common stock which is issued on grant of awards may be authorized but
unissued shares or shares which have been issued and reacquired by the Company.
The Board of Directors may increase the maximum number of shares of common stock
as to which awards may be granted at such time as it deems advisable. Awards may
be granted to employees or consultants of the Company in their individual
capacity only.
9
The Board of Directors shall have complete discretion to determine when and
to which employees or consultants awards are to be granted, and the number of
shares of common stock as to which awards granted to each employee or consultant
will relate. No grant will be made if, in the judgment of the Board of
Directors, such a grant would constitute a public distribution within the
meaning of the Securities Act of 1933, as amended (the "Act"), or the rules and
regulations promulgated thereunder. Stock grants totaling 2,000,000 common
shares were made during the last fiscal year.
Employment Agreements
On January 1, 2001, the Company entered into an employment agreement with
Mr. Burst to serve as Chief Executive Officer through December 31, 2003 with an
annual base salary of $200,000, a stock award of 20,834 shares each month and a
bonus award as deemed appropriate by the Board of Directors. In January 2002,
IFT entered into a revised employment agreement with Mr. Burst to serve as Chief
Executive Officer with an annual base salary of $250,000 and a bonus award as
deemed appropriate by our Board of Directors. The agreement will automatically
renew on January 1, 2003 for another one year term.
In January 2002, IFT entered into an employment agreement with Mr.
Williamson to serve as Chief Technology Officer with an annual base salary of
$150,000 and a bonus award as deemed appropriate by our Board of Directors. The
agreement will automatically renew on January 1, 2003 for another one year term.
Stock Awards
The Board of Directors adopted a Long-term Incentive Plan that became
effective October 23, 2001. The Board of Directors will be responsible for the
administration of this Plan, and will grant Awards under this Plan. Subject to
the express provisions of the Plan, the Board of Directors shall have full
authority and sole and absolute discretion to interpret and amend this Plan, to
prescribe, amend and rescind rules and regulations relating to it, and to make
all other determinations which it believes to be necessary or advisable in
administering this Plan. The determinations of the Board of Directors on the
matters referred to in this Section shall be conclusive. No member of the Board
of Directors shall be liable for any act or omission in connection with the
administration of this Plan unless it resulted from the member's willful
misconduct.
The maximum number of shares of common stock as to which awards may be
granted under this Plan, subject to subsequent amendments, is 17,500,000 shares.
The common stock which is issued on grant of awards may be authorized except for
unissued shares or shares which have been issued and reacquired by the Company.
The Board of Directors may increase the maximum number of shares of common stock
as to which awards may be granted at such time as it deems advisable. Awards may
be granted to employees or consultants of the Company in their individual
capacity only.
The Board of Directors shall have complete discretion to determine when and
to which employees or consultants are to be awarded, and the number of shares of
common stock as to which awards granted to each employee or consultant will
relate. No award will be made if, in the judgment of the Board of Directors,
such an award would constitute a public distribution within the meaning of the
Securities Act of 1933, as amended (the "Act"), or the rules and regulations
promulgated thereunder. Stock awards totaling 300,000 common shares were made
during the last fiscal year.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee is composed of two non-employee
directors: Messrs. Demetriou and Norris, and one employee director: Mr. Burst.
One current member of the Compensation Committee is an officer or employee of
the Company and no executive officer of the Company serves as a member of a
compensation committee of any other entity that has one or more executive
officers serving as a member of the Compensation Committee.
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD
OF DIRECTORS ON EXECUTIVE COMPENSATION
Introduction
The Company's executive compensation policies and practices are approved by
the Compensation Committee of the Board of Directors (the "Committee"). The
Committee consists of two directors who are not employees of the Company and one
director who is an employee of the Company. The Committee's determinations on
compensation of the Chief Executive Officer and other executive officers are
reviewed with all of the non-employee directors.
Philosophy
The Committee has implemented compensation policies, plans and programs
that seek to enhance stockholder value by aligning the financial interests of
the executive officers with those of its stockholders. Annual base salaries are
generally set at market-based competitive median levels. The Company relies
heavily on annual incentive compensation and restricted stock grants to attract,
retain, motivate and reward executive officers and other key employees and the
Committee believes that the Chief Executive Officer's equity incentives should
be above the median for Chief Executive Officers of similar companies. Incentive
compensation is variable and tied to corporate performance. The policies are
designed to provide an incentive to management to grow revenues, provide quality
returns on investment, enhance stockholder value and contribute to the long-term
growth of the Company. All incentive compensation policies are reviewed at least
annually to ensure they meet the current strategies and needs of the business.
Compensation Plans
The Company's executive compensation is based on two components, each of
which is intended to support the overall compensation philosophy.
Base Salary
Salaries for executive officers are reviewed by the Committee on an annual
basis and may be changed based on the individual's performance or a change in
competitive pay levels in the marketplace.
The Committee reviews with the Chief Executive Officer an annual salary
plan for the Company's executive officers. The salary plan is modified as deemed
appropriate and approved by the Committee. The annual salary plan is developed
by the Company's Chief Executive Officer based on publicly available information
on organizations with similar characteristics and on performance judgments as to
the past and expected future contributions of the individual executive. The
Committee reviews and establishes the base salary of the Chief Executive Officer
based on similar competitive compensation data and the Committee's assessment of
his past performance and its expectation as to his future contributions in
directing the long-term success of the Company.
Equity Incentives
Long-term equity incentives are provided through the grants of restricted
stock to executive officers and other key employees. The stock component of
compensation is intended to retain and motivate employees to improve long-term
stockholder value. The restricted stock awards are granted at fair market value
and have increased value only if the Company's stock price increases. The
Committee believes this element of the total compensation program directly links
the participant's interests with those of the stockholders and the long-term
performance of the Company.
The Committee believes that the programs described above provide
compensation that is competitive with comparable emerging companies, links
executives and stockholder interests and provides the basis for the Company to
attract and retain qualified executives. The Committee will continue to monitor
the relationship among executive compensation, the Company's performance and
stockholder value.
11
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code denies a deduction for
compensation in excess of $1 million paid to certain executive officers, unless
certain performance, disclosure, and stockholder approval requirements are met.
Restricted stock grants under the Company's Employee and Consultant Stock
Compensation Plan are intended to qualify as "performance-based" compensation
not subject to the Section 162(m) deduction limitation.
Compensation Committee
Jonathan R. Burst, Chairman
Harry Demetriou
David B. Norris
12
Performance Measurement Comparison
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
[THE FOLLOWING INFORMATION WAS REPRESENTED AS A LINE CHART IN THE PRINTED
MATERIAL]
International Fuel Russell 2000 Index S&P Chemical Index
Date Technology, Inc. (hundreds of US$) (hundreds of US$)
3-Dec-01 0.47 4.885 4.1227
0.51 4.0487 3.7275
1-Jun-01 0.45 5.1264 4.2813
0.45 4.5053 3.9078
1-Dec-00 0.34 4.8353 4.3168
0.5 5.2137 3.5026
1-Jun-00 0.52 5.1723 3.8381
2.5 5.3909 4.4479
1-Dec-99 4.38 5.0475 4.8424
4.16 4.273 4.4501
1-Jun-99 2.97 4.5768 5.0142
3.44 3.9763 4.2826
1-Dec-98 7.19 4.2196 4.2236
The above graph compares the performance of the Company from December 1998,
the quarter that the Company's common stock commenced trading on the NASDAQ
Bulletin Board, through December 31, 2001, against the performance of the
Russell 2000 Index and the S&P Chemical Index for the same period. The S&P
Chemical Index is comprised of major international chemical manufacturing
companies engaged in diverse chemical and chemical-related operations.
Historical stock price performance is not necessarily indicative of future stock
price performance.
13
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. However, if other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: INTERNATIONAL FUEL
TECHNOLOGY, INC., ATTENTION: MICHAEL F. OBERTOP, 7777 BONHOMME AVENUE, SUITE
1920, ST. LOUIS, MISSOURI 63105.
By Order of the Board of Directors,
Michael F. Obertop
Secretary
Dated October 18, 2002
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[Logo]
PROXY FOR
INTERNATIONAL FUEL TECHNOLOGY, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 18, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jonathan R. Burst and Michael F. Obertop,
and each or any of them, as Proxies of the undersigned, with full power of
substitution, and hereby authorizes them to represent and to vote, as designated
on the reverse side, all of the shares of Common Stock of International Fuel
Technology, Inc. held of record by the undersigned on October 7, 2002 at the
Annual Meeting of Shareholders of International Fuel Technology, Inc. to be held
November 18, 2002, or at any adjournment or postponement thereof.
[Logo]
INTERNATIONAL FUEL TECHNOLOGY, INC.
C/O PROXY SERVICES
P.O. BOX 9150
FARMINGDALE, NY 11735-9769
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY MAIL -
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return to International Fuel Technology, Inc., c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
IFTPRX KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INTERNATIONAL FUEL TECHNOLOGY, INC.
The Board of Directors recommends a vote FOR Proposal Nos. 1 and 2. This Proxy,
when properly executed, will be voted as specified below. This proxy will be
voted FOR Proposals Nos. 1 and 2 if no specification is made.
For Withhold For All
Vote On Directors All All Except
1. 01) Jonathan R. Burst, 02) Rex Carr, 03) [ ] [ ] [ ]
David B. Norris, 04) Harry Demetriou, 05)
John P. Stupp, Jr., 06) Ian Williamson, 07)
William A. Cross
To withhold authority to vote, mark "For All Except"
and write the nominee's number on the line below.
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Ratification of Accountants For Against Abstain
[ ] [ ] [ ]
2. To ratify the selection of BDO Seidman, LLP
as independent public accountants for the
Company.
3. In their discretion, the Proxies are
authorized to vote upon such other matters as
may properly come before the meeting.
Please sign exactly as your name(s) is (are) shown on the share certificate to
which the the Proxy applies. When shares are held by joint tenants, both should
sign. When signing as an 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.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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Signature Date Signature (Joint Owners) Date
[PLEASE SIGN WITHIN BOX]