<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 Only (as permitted by Rule
14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional
Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FINANTRA CAPITAL, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
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(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN 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 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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<PAGE>
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
FINANTRA CAPITAL, INC.
1100 PONCE DE LEON BOULEVARD
CORAL GABLES, FLORIDA 33134
-------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 18, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of FINANTRA CAPITAL, INC., a Delaware corporation ("Company"), will
be held at the Hyatt Regency Hotel, 50 Alhambra Plaza, Coral Gables, Florida
33134 on Friday, September 18, 1998, at 8:00 A.M., local time, for the
following purposes:
1. To elect four directors to hold office until the next Annual Meeting of
Stockholders and until their respective successors have been duly elected and
qualified;
2. To ratify the selection of Daszkal, Bolton & Manela as the Company's
independent accountants for the year ending December 31, 1998; and
3. To transact such other business as may properly come before the Meeting and
at all adjournments thereof.
The transfer books of the Company will not be closed for the Meeting.
Only stockholders of record, however, at the close of business on July 24, 1998
will be entitled to notice of, and to vote at, the Meeting and at all
adjournments thereof.
YOU ARE URGED TO READ THE ATTACHED PROXY STATEMENT WHICH CONTAINS
INFORMATION RELEVANT TO THE ACTIONS TO BE TAKEN AT THE MEETING. IN ORDER TO
ASSURE THE PRESENCE OF A QUORUM, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING IN PERSON, PLEASE SIGN AND DATE THE ACCOMPANYING PROXY CARD AND MAIL IT
PROMPTLY IN THE ENCLOSED ADDRESSED, POSTAGE PREPAID ENVELOPE. YOU MAY REVOKE
YOUR PROXY IF YOU SO DESIRE AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors
/s/ Alyce Schreiber
-----------------------------
Alyce Schreiber, Secretary
August 21, 1998
<PAGE>
FINANTRA CAPITAL, INC.
-----------------------------
PROXY STATEMENT
-----------------------------
GENERAL INFORMATION
ANNUAL MEETING
This Proxy Statement and the enclosed form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
Finantra Capital, Inc., a Delaware corporation (the "Company"), to be used at
the Annual Meeting of Stockholders of the Company to be held at 8:00 A.M.,
local time, on Friday, September 18, 1998, at the Hyatt Regency Hotel, 50
Alhambra Plaza, Coral Gables, Florida 33134, and at all adjournments thereof
(the "Meeting"). The matters to be considered at the Meeting are set forth in
the attached Notice of Meeting.
The Company's executive offices are located at 1100 Ponce de Leon
Boulevard, Coral Gables, Florida 33134. On or about August 24, 1998, this Proxy
Statement, the enclosed form of proxy, the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997 ("Fiscal 1997"), which
contains Fiscal 1997 audited financial statements, and Quarterly Report on Form
10-QSB for the quarter ended June 30, 1998 were mailed to stockholders of
record of the Company as of the close of business on July 24, 1998. The Company
will furnish to any stockholder copies of any exhibits listed in the Annual
Report on Form 10-KSB upon such stockholder's request and payment of a fee not
exceeding the reasonable expenses of furnishing such copies.
SOLICITATION AND REVOCATION
Proxies in the form enclosed are solicited by and on behalf of the
Board of Directors. The persons named in the proxy have been designated as
proxies by the Board of Directors. Any proxy given pursuant to such
solicitation and received in time for the Meeting will be voted as specified in
such proxy. If no instructions are given, proxies will be voted FOR the
election of the nominees listed below under the caption "Election Of
Directors", FOR the ratification of Daszkal, Bolton & Manela as the Company's
independent accountants for the year ending December 31, 1998 and in the
discretion of the proxies named on the proxy card with respect to any other
matters properly brought before the Meeting and any adjournments thereof. In
the unanticipated event that any other matters are properly presented at the
Meeting for action, the persons named in the proxy will vote the proxies in
accordance with their best judgment. Any proxy given pursuant to this
solicitation may be revoked by the stockholder at any time before it is
exercised by written notification delivered to the Secretary of the Company, by
voting in person at the Meeting or by delivering another proxy bearing a later
date. Attendance by a stockholder at the Meeting does not alone serve to revoke
his or her proxy.
QUORUM
The presence of the holders of a majority of the outstanding shares of
common stock, $.01 par value per share, of the Company (the "Common Stock")
represented in person or by proxy at the Meeting, will constitute a quorum.
Shares represented by proxies that are marked "abstain" and proxies relating to
"street name" shares that are returned to the Company but marked by brokers as
"not voted" ("broker non-votes") will be treated as shares present for purposes
of determining the presence of a quorum on all matters unless authority to vote
is completely withheld on the proxy.
<PAGE>
RECORD DATE; OUTSTANDING SHARES
The Board of Directors has fixed the close of business on July 24,
1998 as the record date for the determination of stockholders of the Company
entitled to receive notice of, and to vote at, the Meeting. At the close of
business on July 24, 1998, an aggregate of 3,591,527 shares of Common Stock
were issued and outstanding, each of which is entitled to one vote on each
matter to be voted upon at the Meeting. The Company's stockholders do not have
cumulative voting rights. The Company has no other class of voting securities
entitled to vote at the Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 20,
1998 with respect to the stock ownership of (i) each person or group to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii) each
director of the Company, (iii) each executive officer of the Company and (iv)
all directors and executive officers of the Company as a group. As of August
20, 1998, there were issued and outstanding 4,133,027 shares of Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS AMOUNT AND NATURE OF OUTSTANDING
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) SHARES OWNED
- ------------------- ------------------------ -------------
<S> <C> <C>
Medley Group, Inc.
1100 Ponce de Leon Blvd.
Coral Gables, FL 33134 1,154,700(2) 27.93%
Robert D. Press
1100 Ponce de Leon Blvd.
Coral Gables, FL 33134 1,538,777(2)(3) 35.09%
Arthur J. Press
1268 Hemlock Farms
Hawley, PA 18428 37,336(4) *
Maynard Hellman
1100 Ponce de Leon Blvd.
Coral Gables, FL 33134 160,000(5) 3.87%
Evaldo F. Dupuy
3911 Riviera Drive
Coral Gables, FL 33134 10,000 *
Carol Edelson
421 West 54th Street
New York, NY 10019 555,876(2)(6) 12.08%
Steven L. Edelson
421 West 54th Street
New York, NY 10019 1,384,000(2)(7) 33.49%
All directors and officers
as a group (four persons) 1,746,113(2)(3)(4)(5) 39.44%
</TABLE>
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* Represents less than 1%
-2-
<PAGE>
(1) A person is deemed to be the beneficial owner of securities that can
be acquired by such person within 60 days from the date of this Proxy
Statement upon the exercise or conversion of options, warrants or
other convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants or other
convertible securities that are held by such person (but not those
held by any other person) and that are exercisable or convertible
within 60 days from the date of this Proxy Statement have been
exercised or converted. Unless otherwise noted, the Company believes
that all persons named in the table have sole voting and investment
power with respect to all shares of Common Stock beneficially owned by
them.
(2) Mr. Press, the President, Chairman of the Board and Chief Executive
Officer of the Company, and Steven L. Edelson, a principal
stockholder, and the former Chairman of the Board, of the Company,
respectively, may be deemed to be the control persons of Group. As
such, each of Messrs. Press and Edelson may be deemed to own
beneficially all Common Stock of the Company beneficially owned by
Group. Mr. Edelson has granted Mr. Press an option to purchase,
exercisable until December 31, 2002, all of Mr. Edelson's right, title
and interest in and to Mr. Edelson's shares of capital stock of Group
for $750,000. In connection with Mr. Edelson's grant of this option,
Mr. Press has received an irrevocable proxy to vote all shares of
capital stock of Group beneficially owned by Mr.
Edelson on all matters submitted to Group's stockholders for a vote.
(3) Includes 129,351shares of Common Stock issuable upon the conversion of
604,717 shares of Series A 10% Convertible Preferred Stock of the
Company (the "Preferred Stock") owned by Mr. Press. Also includes
142,500 shares of Common Stock issuable upon the exercise of certain
warrants; these warrants are exercisable at any time on or prior to
September 30, 2000 at an exercise price of $1.50 per share.
(4) These shares are owned by an affiliate of Mr. Press. Includes 21,925
shares of Common Stock issuable upon the conversion of 102,500 shares
of Preferred Stock owned by an affiliate of Mr. Press. Peggy Press,
the wife of Arthur J. Press and the mother of Robert D. Press,
beneficially owns 29,168 shares of Common Stock. Each of Mr. Arthur J.
Press and Robert D. Press disclaims beneficial ownership over all
shares of Common Stock of the Company owned by Mrs. Press. Arthur J.
Press is the father of Robert D. Press. Mr. Press disclaims beneficial
ownership over all shares of Common Stock beneficially owned by Robert
D. Press.
(5) Includes 10,000 shares of Common Stock beneficially owned by an
affiliate of Mr. Hellman. Does not include 1,000,000 shares of Common
Stock issuable upon the exercise of certain warrants owned by Mr.
Hellman. These warrants are exercisable until July 22, 2002 at $5.00
per share.
(6) Includes 327,728 shares of Common Stock issuable upon the conversion
of 1,532,127 shares of Preferred Stock owned by Ms. Edelson. Also
includes 142,500 shares of Common Stock issuable upon the exercise of
certain warrants; these warrants are exercisable at any time on or
prior to September 30, 2000 at an exercise price of $1.50 per share.
Ms. Edelson is the wife of Steven L. Edelson, a principal stockholder,
and the former Chairman of the Board, of the Company. Ms. Edelson
disclaims beneficial ownership over all shares of Common Stock of the
Company beneficially owned by Mr. Edelson.
(7) Mr. Edelson is the husband of Carol Edelson, a principal stockholder
of the Company. Mr. Edelson disclaims beneficial ownership over all
shares of Common Stock of the Company beneficially owned by Ms.
Edelson.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers and persons who beneficially own
greater than 10% of the Company's Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock in the Company. Officers, directors and greater than
10% stockholders are also required to furnish the Company with copies of all
Section 16(a) reports they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company and written
representations that no other reports were required during the fiscal year
ended December 31, 1997, all Section 16(a) filing requirements were complied
with.
-3-
<PAGE>
PROPOSAL ONE: ELECTION OF DIRECTORS
The By-laws of the Company provide that the Board of Directors shall
determine the number of Directors. The Board has determined that the number of
Directors to be elected at the Meeting shall be four. The persons listed below
have been designated by the Board as candidates for election as Directors to
serve until the next Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified. Such persons include all of
the executive officers of the Company. Unless otherwise specified in the form
of proxy, the proxies solicited by management will be voted FOR the election of
these candidates. The nominees receiving the highest vote totals will be
elected as Directors of the Company. Accordingly, abstentions and broker
non-votes will not affect the outcome of the election for Directors of the
Company. In case any of these nominees become unavailable for election to the
Board of Directors, an event which is not anticipated, the persons named as
proxies, or their substitutes, shall have full discretion and authority to vote
or refrain from voting for any other nominee in accordance with their judgment.
The election of Directors requires a plurality of those shares voted at the
Meeting with respect to the election of Directors.
INFORMATION ABOUT THE NOMINEES
Robert D. Press has served as Chairman of the Board of the Company
since August 1997 and as President, Chief Executive Officer and a Director of
the Company since its inception in September 1993. Mr. Press devotes all of his
business time and efforts to the affairs of the Company. From June 1990 to
August 1993, Mr. Press served as President of Premier Lease Concepts, Inc., the
Company's predecessor. In addition, from 1989 to 1997, Mr. Press served as
President of Performance Capital Management, Inc., a holding company controlled
by Messrs. Press and Steven L. Edelson, a principal stockholder, and the former
Chairman of the Board, of the Company, which had interests in brokerage and
investment management, and as President of Group since October 1992. Mr. Press
also served, from 1991 to July 1997, as a licensed registered representative of
PCM Securities Limited, L.P., an NASD registered broker-dealer. Mr. Press holds
a B.A. degree in Economics from Brandeis University. From 1984 to 1986, Mr.
Press worked as a full-time trading systems consultant to several major Wall
Street firms, including The Longview Group. In 1986, Mr. Press joined Chemical
Bank, N.A. ("Chemical Bank") as an internal consultant in trading and capital
markets, and later in 1986, Mr. Press joined in the formation of Chemical
Bank's Interest Rate Arbitrage trading group, of which Mr. Press became the
principal trader responsible for the global trading and investment decisions of
a multi-billion dollar portfolio. Mr. Press holds Series 7 and 63 professional
securities licenses. Mr. Press is the son of Arthur J. Press, a director of the
Company.
Maynard J. Hellman has served as a Director of the Company since
January 1997. Since January 1988, Mr. Hellman has served as managing partner of
the Coral Gables, Florida based law firm of Hellman & Mass. From 1983 until
1988, Mr. Hellman was engaged in the private practice of law and prior thereto,
Mr. Hellman served as a partner in the Miami, Florida law firm of Gilbert,
Silverstein and Hellman. Mr. Hellman holds a J.D. degree from the University of
Miami School of Law and a B.B.A degree in Accounting from the University of
Miami School of Business Administration.
Arthur J. Press has served as a Director of the Company since January
1998. Prior to his retirement in 1987, Mr. Press served as the Vice President
of Commercial Lending for Chemical Bank. Mr. Press is the father of Robert D.
Press, the Chairman of the Board, President and Chief Executive Officer of the
Company.
Evaldo F. Dupuy has served as a Director of the Company since July
1998. Since 1989, Mr. Dupuy has served as a principal of Coast Partners
Securities, Inc., a boutique investment banking firm specializing in asset
backed and debt related facilities for its clients. Mr. Dupuy is a member of
the Florida Premium Finance Association, Florida Automobile Dealers
Association, Florida Mortgage Brokers Association and the Asset Based Lender
Association.
-4-
<PAGE>
OTHER KEY EMPLOYEES
Ronald Epstein serves as one of the principals of the Company's
Ameri-Cap Leasing Corp. subsidiary ("Ameri-Cap"). Ameri-Cap owns 80% of the
outstanding capital stock of MFC Financial Corp., an entity engaged principally
in the financing and leasing of medical equipment ("MFC"). Mr. Epstein founded
MFC in 1994 and served as one of its principals until MFC's acquisition by
Ameri-Cap. In addition, for more than the last ten years, Mr. Epstein has
served as President of Clearlake Financial Corp., an entity specializing in
commercial equipment leasing.
Irwin Gross serves as the principal of the Company's Americal
Investment Management subsidiary ("AIM"). AIM is a marketer and manager of a
variety of financial and insurance related services. Mr. Gross served as the
President of AIM for more than five years preceding AIM's acquisition by the
Company.
Frederick Horwin serves as one of the principals of the Company's
American Factors Group, Inc. subsidiary ("AFG"). AFG is engaged, generally, in
accounts receivable financing. Mr. Horwin served as Executive Vice President
and Executive Director of First Capital Services, Inc., an entity engaged,
generally, in accounts receivable financing ("First Capital"), for more than
five years preceding his affiliation with AFG.
Elliiot Kalus serves as one of the principals of Ameri-Cap. Mr. Kalus
served as one of the principals of MFC for more than five years prior to MFC's
acquisition by Ameri-Cap.
Henry Koche serves a one of the principals of Ameri-Cap. Mr. Koche
served as one of the principals of MFC from February 1997 until its acquisition
by Ameri-Cap. From May 1996 to January 1997, Mr. Koche served as President of
Carolina Capital, Inc., an independent brokerage firm specializing in medical
equipment leasing. From January 1995 to April 1996, Mr. Koche served as an
independent broker. Prior thereto, Mr. Koche served as Northeastern Regional
Manager of DVI Financial Services, an equipment leasing concern.
Jennifer Makula serves as one of the principals of the Company's
Medical Billing Service Systems, Inc. subsidiary ("Medical Billing"). Medical
Billing is engaged, generally, in providing back office auditing and other
financial administrative services principally to the medical industry. Ms.
Makula was one of the founders of Medical Billing in 1994 and served as one of
its principals until the Company's acquisition of Medical Billing. Prior to
1994, Ms. Makula served as a supervisor for Wing City Management Co., a
restaurant management company ("Wing City").
W. Dennis Prouty serves as one of the principals of the Company's
Premier Provider Services, Inc. subsidiary ("Premier"). Premier is engaged,
generally, in providing back office auditing and other financial administrative
services principally to the medical industry. From 1996 until its acquisition
by the Company, Mr. Prouty served as President of Premier. Prior thereto, Mr.
Prouty served as Controller for Rx for Fleas, Inc., an entity engaged in the
sale of distributorships and the operation of flea elimination services.
Jamie Silva serves as one of the principals of Medical Billing. Ms.
Silva was one of the founders of Medical Billing in 1994 and served as one of
its principals until the Company's acquisition of Medical Billing. Prior to
1994, Ms. Silva served as Administrative Manager for Wing City.
Laura Sotera serves as one of the principals of Premier. From 1996
until its acquisition by the Company, Ms. Sotera served as Vice President of
Premier. Prior thereto, Ms. Sotera served as Accounting Manager for
NeuroRestorations, Inc., an entity engaged in providing bookkeeping services to
the medical community.
Joanne Telmosse serves as one of the principals of Medical Billing.
Ms. Telmosse was one of the founders of Medical Billing in 1994 and served as
one of its principals until the Company's acquisition of Medical Billing. Prior
to 1994, Ms. Telmosse served as Director of Finance for Recovery Management,
Inc., a bookkeeping concern.
-5-
<PAGE>
Tom Wheatley serves as one of the principals of AFG. From March 1995
until the commencement of Mr. Wheatley's affiliation with AFG, Mr. Wheatley
served as Vice President of Marketing of First Capital. Prior thereto, Mr.
Wheatley owned and operated Connect Communications, Inc., a telecommunications
company.
DIRECTORS' FEES, BOARD MEETINGS AND COMMITTEES
The Company's Board currently does not have a nominating committee,
audit committee, compensation committee or any other committees performing
similar functions. It is anticipated, however, that immediately following the
election of Directors at the Meeting, such Directors will create audit and
compensation committees of the Board of Directors. The Audit Committee will
meet with management to consider the adequacy of the internal controls of the
Company and the objectivity of the Company's financial reporting. The Audit
Committee will also meet with the Company's independent accountants and with
appropriate Company financial personnel about these matters. It is anticipated
that the Audit Committee will be comprised of Messrs. Hellman and Dupuy. The
Compensation Committee will administers the Company's 1997 Stock Option Plan
and make recommendations to the Board of Directors with respect to the
compensation of management. It is anticipated that the Compensation Committee
will be comprised of Messrs. Hellman and Dupuy.
The Board of Directors met or took written action by unanimous written
consent four times during Fiscal 1997. None of the Directors attended (or
executed written consents at) less than 75% of such meetings. Each non-employee
Director receives a fee of $500 for each meeting attended, together with
reimbursement of reasonable expenses incurred in attending such meetings.
EXECUTIVE COMPENSATION
During Fiscal 1997, the Company paid to Robert D. Press, the Company's
Chairman of the Board, President and Chief Executive Officer, cash remuneration
of $45,711. Mr. Press is the sole executive officer of the Company. In
addition, the Company paid Mr. Press, during the first quarter of the fiscal
year ending December 31, 1998, a cash bonus of $60,000 relating to Fiscal 1997.
No other form of remuneration was paid by the Company to Mr. Press during, or
on account of, Fiscal 1997. The Company is party to an employment contract with
Mr. Press. The following table summarizes the aggregate annual compensation
payable by the Company to Mr. Press effective March 1, 1998:
<TABLE>
<CAPTION>
Name of Individual Capacity in which Served Aggregate Compensation
- ------------------ ------------------------ ----------------------
<S> <C> <C>
Robert D. Press President, Chairman of the $225,000
Board and Chief Executive Officer
</TABLE>
Pursuant to Mr. Press' employment agreement with the Company, Mr.Press
has agreed to serve as President, Chairman of the Board and Chief Executive
Officer of the Company. This employment agreement expires on February 28, 2001
(subject to earlier termination for cause). Mr. Press' employment agreement
further provides for Mr. Press's salary to increase to $275,000 and $350,000
per annum, respectively, during the second and third years of the agreement and
for Mr. Press to receive minimum cash bonuses of $45,000, $60,000 and $75,000,
respectively, for the first, second and third years of the agreement. In
addition, Mr. Press is entitled to receive 30,000 shares of Common Stock of the
Company following the close of each calendar quarter of the Company during the
first year of the agreement, 40,000 shares of Common Stock following the close
of each calendar quarter during the second year of the agreement and 50,000
shares of Common Stock following the close of each calendar quarter during the
third year of the agreement. Mr. Press is also entitled to the grant of
incentive stock options pursuant to the Company's 1997 Stock Option Plan based
upon the future financial performance of the Company. Mr. Press is entitled to
participate in all medical, stock option, pension and other benefit plans that
the Company may establish from time to time for the benefit of its senior
management generally.
-6-
<PAGE>
Mr. Press' employment agreement is terminable by the Company for cause
(i.e., conviction of a felony, willful misconduct, dishonesty or material
breach of the agreement) at any time or in the event that Mr. Press becomes
disabled and, as a result, is unable to perform his duties under his employment
agreement for more than 60 consecutive days or for more than 90 days during any
12-month period.
In connection with the formation of AFG , the Company, through AFG,
entered into three-year employment agreements (which automatically renew for
additional one-year periods unless AFG provides 30 days' prior notice of
cancellation) with each of Frederick Horwin and Tom Wheatley. Pursuant to these
agreements, Messrs. Horwin and Wheatley agreed to serve as the operating
officers of AFG in consideration for initial base salaries of $105,000 and
$87,000 per annum, respectively. Messrs. Horwin's and Wheatley's base salaries
increased to $120,000 and $96,000 per annum, respectively, commencing July 1,
1998. Messrs. Horwin and Wheatley have agreed not to compete with the Company
or AFG during the term of their employment with AFG and for the two-year period
immediately thereafter.
In connection with the Company's acquisition of AIM, the Company,
through AIM, entered into a three year employment agreement (which
automatically renews for additional one year periods unless AIM provides 30
days' prior notice of cancellation) with Irwin Gross. Pursuant to this
agreement, Mr. Gross agreed to serve as the operating officer of AIM in
consideration for a draw against commissions of $125,000 per annum, increasing
over the term of the agreement to $150,000 per annum, a base salary during the
second and third year of the agreement in the amount of $50,000 per annum and
commissions equal to 70% of all net commission income generated and paid to AIM
from accounts developed by Mr. Gross and 50% of all net commission income
generated and paid to AIM from accounts referred to AIM from sources other than
Mr. Gross. Mr. Gross has agreed not to compete with the Company or AIM during
the term of his employment with AIM.
In connection with the Company's acquisition of Medical Billing, the
Company, through Medical Billing, entered into three year employment agreements
with each of Joanne Telmosse, Jennifer Makula and Jamie Silva. Pursuant to
these agreements, Mss. Telmosse, Makula and Silva agreed to serve as the
operating officers of Medical Billing in consideration for base salaries of
$125,000, $75,000 and $75,000, respectively. Mss. Telmosse, Makula and Silva
have each agreed not to compete with the Company or Medical Billing during the
term of her employment with Medical Billing.
In connection with the Company's acquisition of Premier, the Company,
through Premier, entered into three year employment agreements with each of W.
Dennis Prouty and Laura C. Sotera. Pursuant to these agreements, Mr. Prouty and
Ms. Sotera agreed to serve as the operating officers of Premier in
consideration for base salaries of $110,000 and $72,000, respectively. Mr.
Prouty and Ms. Sotera have each agreed not to compete with the Company or
Premier during the term of his or her employment, as the case may be, with
Premier.
In connection with the Company's acquisition of MFC, the Company,
through Ameri-Cap, entered into three year employment agreements with each of
Messrs. Ronald Epstein, Elliot Kalus and Henry Koche. Pursuant thereto, Messrs.
Epstein, Kalus and Koche agreed to serve as the operating officers of Ameri-Cap
in consideration for annual base salaries of $100,000, respectively. These
agreements also entitle Messrs. Epstein, Kalus and Koche to be granted
incentive stock options pursuant to the Company's 1997 Stock Option Plan based
upon Ameri-Cap's annual financial performance and to participate in a
discretionary cash bonus pool for Ameri- Cap's employees if Ameri-Cap's
financial performance justifies the same. These employment agreements are
terminable by the Company for cause, however, if, among other things, after the
six month period immediately following the Company's initial purchase of its
controlling interest in MFC, Ameri-Cap's net monthly sales volume (defined as
the total amount of all leases written in any calendar month) is less than
$500,000 per month in any consecutive three month period or in a three month
aggregate in any 12 month period.
-7-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Prior to December 1996, the Company, generally, provided equipment
lease financing to customers of Medley Refrigeration ("Refrigeration").
Refrigeration was a conglomerate of affiliates of Medley Group, Inc., a
principal stockholder of the Company ("Group"). Robert D. Press, Chairman of
the Board and President of the Company, is the control person of Group.
Essentially, the Company would lend Refrigeration the capital necessary for
Refrigeration to lease equipment owned by it to its customers. These customers,
in turn, would make lease payments to Refrigeration. These advances were
historically recorded on the Company's financial statements as an intercompany
receivable due from Refrigeration. As an accommodation to the Company,
Refrigeration would cause its customers to grant the Company a security
interest in the equipment leased to them to secure lease payments from
customers.
During December 1996, Refrigeration assigned to the Company all of
Refrigeration's rights to receive from, and rights of collection with respect
to, a majority of Refrigeration's equipment leases with its customers.
During January 1997, the Refrigeration intercompany receivable was
reduced by $237,000 as a result of Refrigeration paying the Company $200,000 in
cash and transferring to the Company $37,000 of refrigeration equipment. The
Company used this refrigeration equipment to directly enter into new
refrigeration equipment leases with customers of Refrigeration. This direct
lease financing was essentially accomplished by the Company purchasing the
equipment to be leased from Refrigeration. The Company, in turn, then leased
this equipment to creditworthy Refrigeration customers who were required to
make lease payments with respect to such equipment directly to the Company.
In connection with the closing of the Company's Initial Public
Offering in December 1997 (the "IPO"), Group remitted to the Company, on behalf
of Refrigeration, the $1,100,000 in proceeds generated from Group's sale of
200,000 shares of Common Stock in the IPO to satisfy, in their entirety, all
intercompany receivables then outstanding from Refrigeration to the Company.
On July 31, 1997, Steven L. Edelson, a principal stockholder of the
Company, resigned as Chairman of the Board of the Company. Simultaneously
therewith, Mr. Edelson transferred to his wife, Carol Edelson, all of Mr.
Edelson's right, title, and interest in and to all securities of the Company
then owned by Mr. Edelson. Mr. Edelson's resignation was not the result of any
disagreement between Mr. Edelson and the Company on any matter relating to the
Company's operations, policies or practices.
During June 1996, the Company offered Robert Press, the President and
Chairman of the Board of the Company, and Steven L. Edelson, the then Chairman
of the Board of the Company, the opportunity to exchange their shares of 131/2%
preferred stock of the Company then owned by them, having an aggregate
liquidation value of $1,643,726, into shares of Preferred Stock. Messrs. Press
and Edelson exchanged all of their shares of 131/2% preferred stock for an
aggregate of 2,136,844 shares of Preferred Stock (604,717 shares to Mr. Press
and 1,532,127 shares to Mr. Edelson). Mr. Edelson subsequently transferred
these shares to Carol Edelson.
From June 1, 1996 through December 20, 1997, Messrs. Press and Edelson
loaned the Company $131,738 and $48,745, respectively, in order to permit the
Company to satisfy its operating expenses in connection with, and in
anticipation of, the IPO. Interest accrued on these loans at the rate of 12%
per annum and required balloon payments of principal and accrued interest by
August 2, 1999. (Mr. Edelson transferred his right to receive payment under his
loan to Carol Edelson.) The Company repaid these loans as part of the IPO by
issuing Mr. Press and Ms. Edelson approximately 23,952 and 8,863 shares of
Common Stock, respectively. These shares were valued at the IPO price of $5.50
per share. In connection with these loans, the Company issued to each of
Messrs. Press and Edelson warrants to purchase up to 142,500 shares of Common
Stock (Mr. Edelson transferred these warrants to Carol Edelson). These warrants
are exercisable at any time on or prior to September 30, 2000 at an exercise
price of $1.50 per share.
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<PAGE>
In December 1996, the Company sold Maynard Hellman, a director of the
Company, in consideration for $100,000, warrants to purchase up to 1,000,000
shares of Common Stock of the Company. These warrants are exercisable at any
time until July 22, 2002 at an exercise price of $5.00 per share.
In connection with the IPO, the Company issued 15,000 shares of Common
Stock to each of Mr. Press and Ms. Edelson in satisfaction of certain
redemption obligations of the Company owing to them with respect to 15,000
other shares of Common Stock owned by each of them. These shares of Common
Stock were originally transferred and assigned by Group to Messrs. Press and
Edelson (who subsequently transferred them to Carol Edelson) in January 1996 in
consideration for services performed by Messrs. Press and Edelson on behalf of
the Company. Also, in connection with the IPO, the Company issued Mr. Robert D.
Press, Ms. Carol Edelson and an affiliate of Mr. Arthur J. Press approximately
13,740, 41,785 and 2,880 shares of Common Stock, respectively, in satisfaction
of approximately $75,590, $230,000 and $15,860 of declared but unpaid Preferred
Stock dividends owing them.
In late December 1997, following the consummation of the IPO, the
Company provided a financial accommodation to Group for a fee equal to
$150,000. Specifically, the Company posted a $1.7 million standby letter of
credit on behalf of Group. This letter of credit was posted for the purpose of
securing the performance of certain equipment leases sold by Group to an
unrelated party. The Company's financial exposure under this letter of credit
was collateralized by the pledge by Group to the Company of 750,00 shares of
the Company's Common Stock owned by Group, which Common Stock, for purposes of
the pledge, had an agreed upon value of $2.50 per share. This financial
accommodation was terminated during the second quarter of fiscal 1998.
During the second quarter of 1998, the Company provided Group a
financial accommodation in consideration for $150,000 per annum. This fee is
payable each year the Company continues to extend such financial accommodation.
Specifically, the Company posted a $1.475 million standby letter of credit on
behalf of Group. This letter of credit was posted for the purpose of securing
the performance of certain equipment leases sold by Group to an unrelated
party. The Company's financial exposure under this letter of credit has been
collateralized by the pledge by Group to the Company of 750,000 shares of the
Company's Common Stock owned by Group, which Common Stock, for purposes of the
pledge, has an agreed upon value of $2.50 per share.
PROPOSAL TWO:
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Daszkal, Bolton &
Manela to serve as the Company's independent accountants for the fiscal year
ending December 31, 1998, subject to ratification by the stockholders. Daszkal,
Bolton & Manela served as the Company's independent accountants for the year
ended December 31, 1997. The Board of Directors recommends a vote FOR
ratification of this selection. A representative of Daszkal, Bolton & Manela is
expected to be present at the Meeting with an opportunity to make a statement
if such representative desires to do so and is expected to be available to
respond to appropriate questions.
SOLICITATION OF PROXIES
The solicitation of proxies in the enclosed form is made on behalf of
the Company and the cost of this solicitation is being paid by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or telegraph using the services of directors, officers and regular
employees of the Company at nominal cost. Banks, brokerage firms and other
custodians, nominees and fiduciaries will be reimbursed by the Company for
expenses incurred in sending proxy material to beneficial owners of the
Company's Common Stock.
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<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the annual
meeting for the 1998 fiscal year must be received at the Company's offices by
April 25, 1999 for inclusion in the proxy materials relating to such meeting.
Action may be taken on the business to be transacted at the Meeting on
the date provided in the Notice of Meeting and on any date or dates to which an
original or later adjournment of such Meeting may be adjourned. As of the date
of this Proxy Statement, management does to know of any other matters to be
presented at the Meeting. If, however, other matters properly come before the
Meeting, whether on the original date provided in the Notice of Meeting or any
dates to which any original or later adjournment of such Meeting may be
adjourned, it is intended that the holders of the proxy will vote in accordance
with their best judgment. Any such matter properly coming before the Meeting
will be decided by a majority of the votes cast with respect to such matter.
Abstentions and broker non-votes are not considered as cast and, accordingly,
will have no effect on the vote with respect to such matter.
By Order of the Board of Directors
Dated: August 21, 1998
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<PAGE>
FINANTRA CAPITAL, INC.
Solicited by The Board of Directors for the Annual Meeting of Stockholders to
be held on September 18, 1998
PROXY
The undersigned Stockholder(s) of FINANTRA CAPITAL, INC., a Delaware
corporation (the "Company"), hereby appoint(s) Robert D. Press and Maynard J.
Hellman, with full power of substitution and to act without the other, as the
agents, attorneys and proxies of the undersigned, to vote the shares of Common
Stock, $.01 par value per share, of the Company standing in the name of the
undersigned at the Annual Meeting of Stockholders of the Company to be held on
Friday, September 18, 1998 and at all adjournments thereof. This proxy will be
voted in accordance with the instructions give below. If no instructions are
given, this proxy will be voted FOR all of the following proposals :
1. To elect the following Directors: Robert D. Press, Maynard J. Hellman,
Evaldo (Fred) Dupuy and Arthur D. Press.
FOR ( ) WITHHELD ( )
(INSTRUCTION: To withhold authority to vote for any individual nominee write
the nominee's name in the space provided)
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2. To ratify the selection of Daszkal, Bolton & Manela as the Company's
independent accountants for the year ending December 31, 1998.
FOR ( ) AGAINST ( ) ABSTAIN ( )
3. In their discretion, the proxies are authorized to vote upon such other
business as may come before the meeting and at all adjournments thereof.
Dated:
--------------------------------
Signature:
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Signature if held jointly:
-------------------------------
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full time 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.
