<PAGE>
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-5(d)(2))
[X] Definitive Information Statement
THATLOOK.COM, INC.
------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
1) Title of each class of securities to which transaction applies: N/A.
2) Aggregate number of securities to which transaction applies: N/A.
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): N/A.
4) Proposed maximum aggregate value of transaction: N/A.
5) Total fee paid: N/A.
[ ] 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 number, or the Form
or Schedule and the date of its filing.
1) Amount Previously Paid: $0.
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
THATLOOK.COM, INC.
5003 Route 611
Stroudsburg, Pennsylvania 18360
(570) 420-0318
INFORMATION STATEMENT
Annual Meeting of Stockholders
to be held June 27, 2000
Purpose.
--------
This Information Statement is furnished in connection with the annual
meeting of stockholders of thatlook.com, Inc., a Nevada corporation (the
"Company"), which will be held on Tuesday, June 27, 2000, at 11:00 a.m.,
Eastern Daylight Time, at the offices of the Company: 5003 Route 611,
Stroudsburg, Pennsylvania 18360 (the "Meeting"). Certain directors and
executive officers of the Company, who collectively own approximately 73.1% of
the issued and outstanding shares of the Company's common stock (the "majority
holders") have indicated their intention to vote in favor of the matters to be
submitted to a vote of stockholders at the Meeting.
The accompanying Notice of Annual Meeting of Stockholders and this
Information Statement are first being mailed to stockholders on or about June
7, 2000.
The names of each of the Company's current directors (Gerard A. Powell,
Lawrence T. Simon, Richard H. Gwinn and Saul S. Epstein) will be submitted to
the stockholders at the Meeting for the purpose of a vote to retain each
director to serve until his successor is elected at the next annual meeting of
stockholders or until his prior death, resignation or termination and the
qualification of his successor. In addition, the following resolutions will
be submitted to the Company's stockholders at the Meeting:
(1) To approve the Company's 1999 Stock Incentive Plan;
(2) To amend the Company's Articles of Incorporation to authorize a class
of 30,000,000 shares of preferred stock having a par value of one mill
($0.001) per share, to be issued in such series and with such dividend, voting
and other rights and preferences as the Board of Directors shall determine;
and
(3) To amend the Company's Articles of Incorporation to provide that the
Board of Directors shall consist of no less than three members and no more
than nine members and that, to the extent permitted by the laws of the State
of Nevada, the Board of Directors shall have the authority to appoint
directors to fill all open positions on the Board.
Procedure for Approval.
-----------------------
The Nevada Revised Statutes (the "Nevada Law") requires the approval of a
majority of the voting power present at a meeting at which a quorum is present
to approve the Company's 1999 Stock Incentive Plan and to amend the Company's
Articles of Incorporation. The Nevada Law requires the approval of a
plurality of the voting power in attendance at a meeting at which a quorum is
present for the election of directors. See the caption "Voting Procedures,"
herein.
The majority holders, who collectively own approximately 73.1% of the
issued and outstanding voting securities of the Company, have consented to
vote in favor or each of the matters discussed above. WE ARE NOT ASKING YOU
FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. See the caption
"Voting Securities and Principal Holders Thereof," herein.
Dissenters' Rights of Appraisal.
--------------------------------
The Nevada Law does not provide any dissenters' rights with respect to
the election of directors, the adoption of the Company's 1999 Stock Incentive
Plan or the amendments to the Company's Articles of Incorporation as set forth
above. Therefore, no dissenter's rights of appraisal will be given in
connection with these matters.
THE MAJORITY HOLDERS OWN SUFFICIENT VOTING SECURITIES TO ELECT ALL NOMINEES TO
THE BOARD OF DIRECTORS, AND TO ADOPT, RATIFY AND APPROVE THE COMPANY'S 1999
STOCK INCENTIVE PLAN AND THE AMENDMENTS OF THE COMPANY'S ARTICLES OF
INCORPORATION AS SET FORTH ABOVE. NO FURTHER CONSENTS, VOTES OR PROXIES ARE
NEEDED, AND NONE ARE REQUESTED.
Voting Securities and Principal Holders Thereof.
------------------------------------------------
As of May 3, 2000, a total of 16,290,872 shares of common stock were
outstanding; such shares are entitled to a total of 16,290,872 votes on the
above-referenced matters.
The following table sets forth the shareholdings of the Company's
directors and executive officers and those persons who owned more than 5% of
the Company's common stock as of May 3, 2000:
Positions Number and Percentage
Name and Address Held of Shares Beneficially Owned *
---------------- ---- ----------------------------
Gerard A. Powell CEO 4,388,413 - 26.9%
5003 Route 611 President
Stroudsburg, Pennsylvania Director
18360
Lawrence T. Simon Chairman 2,781,667 - 17.1%
P. O. Box 160 Director
Shawnee-on-the-Delaware,
Pennsylvania
18356
Vincent J. Trapasso Vice President 1,532,894 - 9.4%
5003 Route 611
Stroudsburg, Pennsylvania
18360
Charlie Lynn Trapasso Secretary/ 1,505,356 - 9.2%
5003 Route 611 Treasurer
Stroudsburg, Pennsylvania
18360
Richard H. Gwinn Director 1,011,875 - 6.2%
The Abbotts Organization
5 Radnor Corporate Center
100 Matson Ford Center
Suite 520
Radnor, Pennsylvania
19087
Saul S. Epstein Director 556,531 - 3.4%
21 East Dartmouth Road
Bala Cynwyd, Pennsylvania
19004
Marvin P. Metzger CFO 90,154 - 0.6%
5003 Route 611
Stroudsburg, Pennsylvania
18360
Totals 11,866,890 - 72.8%
* These figures do not include shares underlying options. See the
caption "Options Granted to Directors and Executive Officers."
Changes in Control.
-------------------
On April 29, 1999, the Company and thatlook.com, Inc., a New Jersey
corporation ("thatlook.com"), executed an Agreement and Plan of Reorganization
(the "Agreement"), whereby the Company acquired 100% of the outstanding
securities of thatlook.com as set forth on Exhibit A to the Agreement.
The source of the consideration used by the thatlook.com stockholders to
acquire their respective interests in the Registrant was the exchange of all
of the issued and outstanding securities of thatlook.com in accordance with
the Agreement.
The basis of the "control" by the thatlook.com stockholders is
stock ownership.
The Agreement provided for:
1. The acquisition of 100% of the outstanding securities of
thatlook.com;
2. The issuance of 9,990,000 "restricted securities" of
the Company's common stock for the outstanding securities of thatlook.com;
3. The resignation of the directors and executive officers of the
Company;
4. The election of the directors and executive officers of thatlook.com
and two persons designated by the pre-Agreement Board of Directors of the
Company as directors and executive officers of the Company;
5. The calling of a meeting of the Company's stockholders for the
purpose of amending its Articles of Incorporation to change its name to
"thatlook.com, Inc.";
6. The issuance of 100,000 shares of the Company's common stock to
certain persons for services rendered for or on behalf of the Company and/or
in connection with the negotiation, review and completion of the Agreement
pursuant to a written compensation agreement and registered under an S-8
Registration Statement; and
7. The issuance of 641,667 "unregistered" and "restricted" shares of
the Company's common stock to certain persons for additional services
rendered for or on behalf of the Company and/or in connection with the
negotiation, review and completion of the Agreement.
Prior to the completion of the Agreement, 368,333 shares of the Company's
common stock were outstanding. Following the issuance of the shares outlined
above, there were approximately 11,100,000 outstanding securities of the
Company. Under the Agreement, the Company's current directors and executive
officers acquired a majority of outstanding shares of the Company's common
stock.
Details of the Agreement were disclosed in the Company's Current Report
on Form 8-K, dated April 29, 1999, which was filed with the Securities and
Exchange Commission on May 12, 1999, and which was amended on May 24, 1999,
and July 14, 1999.
Election of Directors.
----------------------
The current Board of Directors of the Company will consist of four
directors, each of whom will be elected at the Meeting to serve until his
successor is elected at the next annual meeting of stockholders or until his
prior death, resignation or termination and the qualification of his
successor.
The following table sets forth the names and the nature of all positions
and offices held by all directors and executive officers of the Company for
the calendar year ended December 31, 1999, and to the date hereof, and the
period or periods during which each such director or executive officer has
served in his position(s).
Date of Date of
Election or Resignation
Name Position(s) Designation or Termination
---- ----------- ----------- --------------
Gerard A. Powell President, Director, 4/29/99 *
Chief Executive Officer
Lawrence T. Simon Director 9/17/99 *
Chairman of the Board 12/24/99 *
Richard H. Gwinn Director 4/29/99 *
Saul S. Epstein Director 4/29/99 *
Vincent J. Trapasso Vice President 4/29/99 *
Charlie Lynn Trapasso Secretary/Treasurer 4/29/99 *
Marvin P. Metzger Chief Financial Officer 4/29/99 *
J. Peter Gaskins Director 5/25/99 12/24/99
Chairman of the Board 8/26/99 12/24/99
Terry Hardman Director 4/29/99 9/17/99
Harold T. Jenson Director 4/29/99 5/25/99
Charles Johnson Director 5/11/95 4/29/99
William R. White Chief Operations Officer 12/10/99 12/15/99
* These persons presently serve in the capacities indicated.
Business Experience of Current Directors and Executive Officers.
----------------------------------------------------------------
Gerard A. Powell, President, Director, Chief Executive Officer. Mr.
Powell, age 36, has been the President and Chief Executive Officer of
thatlook.com. Inc.(a New Jersey Corporation) since its inception in December
1994. Immediately following the reverse merger on April 29, 1999, he was
elected as President and Chief Executive Officer and Director of thatlook.com,
Inc. (formerly known as First Target Acquisition, Inc. - a Nevada
corporation). From 1989 to 1996, Mr. Powell helped found and build the Chapel
Creek group of companies (Land, Homes, and Mortgage) that developed, marketed
and financed homes in the eastern Pennsylvania area. Mr. Powell's principal
responsibility with this group was to develop and execute the marketing
program that produced in excess of 100 house and land contracts yearly.
Operations were substantially profitable prior to his selling his interests in
this group of companies. Mr. Powell is Mr. and Mrs. Trapasso's brother-in-
law.
Lawrence T. Simon, Director, Chairman of the Board. Mr. Simon, age 53,
has served as a director of the Company since September of 1999. He attended
Brown University in the Behavioral Sciences area and the transferred to Temple
University and graduated with a Bachelors of Science in communications in the
area of advertising/marketing and film production. After graduation he moved
to Manhattan and joined Elektra Films where he became a film advertising art
directing producer. He received several Clio Awards presented to Elektra Films
for such successful campaigns as Alka Seltzer and Armour Products as well as
for Proctor and Gamble. In 1975, Mr. Simon opened LTS Builders. LTS is now
one of the largest residential building companies in the northeast. Mr. Simon
is Chief Executive Officer and the only shareholder in LTS.
Richard H. Gwinn, Director. Mr. Gwinn, age 60, has been a Director of
thatlook.com. Inc.(a New Jersey Corporation) since May 1997. Immediately
following the reverse merger on April 29, 1999, he was elected as a Director
of thatlook.com, Inc. (formerly known as First Target Acquisition, Inc. - a
Nevada corporation). He is a 1960 graduate of Yale University, and attended
the Wharton Graduate Division of the University of Pennsylvania from 1963 to
1964. Mr. Gwinn served in the U.S. Navy from 1956 to 1971. Since 1989, he
has been employed by the Abbotts Organization of Radnor, Pennsylvania. Mr.
Gwinn is also a principal of Crossway Ventures, Inc.
Saul S. Epstein, Director. Mr. Epstein, age 51, has been a Director of
thatlook.com. Inc.(a New Jersey Corporation) since May 1997. Immediately
following the reverse merger on April 29, 1999, he was elected as a Director
of thatlook.com, Inc. (formerly known as First Target Acquisition, Inc. - a
Nevada corporation). He is a 1969 graduate of Lehigh University. He received
his law degree from the University of Pennsylvania in 1973, and a Master of
Laws degree in taxation from New York University in 1976. Since 1994, he has
been Senior Vice President and Director of Corporate Development for Opinion
Research Corporation located in Princeton, New Jersey, responsible for such
company's strategic planning and for various financial and legal matters.
From 1995 to 1996, he also served as President of Robinson Alarm Company, a
Philadelphia based burglar and fire alarm enterprise. Mr. Epstein is also a
principal of Crossway Ventures, Inc.
Vincent J. Trapasso, Vice President. Mr. Trapasso, age 47, has been the
Vice President of thatlook.com. Inc.(a New Jersey Corporation) since its
inception in December 1994, with responsibility for directing that part of the
Company's marketing and servicing program focused on the physicians.
Immediately following the reverse merger on April 29, 1999, he was elected as
Vice President of thatlook.com, Inc. (formerly known as First Target
Acquisition, Inc. - a Nevada corporation). From 1992 to 1994, Mr. Trapasso
was a General Manager of Byran Holdings of Palm Beach County, Florida, where
he developed the concept and design for a 36,000 square foot, upscale
restaurant and entertainment complex. Mr. Trapasso is the husband of Ms.
Trapasso and brother-in-law to Mr. Gerard A. Powell.
Charlie Lynn Trapasso, Secretary/Treasurer. Mrs. Trapasso, age 40, has
served as a Secretary/Treasurer of thatlook.com. Inc.(a New Jersey
Corporation) since its inception in December 1994, with responsibility of
serving as the public spokesperson with the media and in its advertising for
the Company. Immediately following the reverse merger on April 29, 1999, she
was elected as Secretary/Treasurer of thatlook.com, Inc. (formerly known as
First Target Acquisition, Inc. - a Nevada corporation). Mrs. Trapasso is Mr.
Trapasso's wife and Mr. Powell's sister-in-law.
Marvin Metzger, C.P.A, Chief Financial Officer. Mr. Metzger, age 35, has
served as Chief Financial Officer of thatlook.com. Inc.(a New Jersey
Corporation) since January 1998. Immediately following the reverse merger on
April 29, 1999, he was appointed Chief Financial Officer of thatlook.com, Inc.
(formerly known as First Target Acquisition, Inc. - a Nevada corporation). He
graduated from Bloomsburg University in 1986 with a Bachelor of Science degree
in Business Administration, and Lehigh University in 1996 with a Masters of
Business Administration degree, with a concentration in Finance. Prior to
joining thatlook.com, Inc. he worked from 1996 to 1998 at Wise Foods, Inc. in
Berwick, PA as the Manager of Reporting and Analysis. From 1989 to 1996 he
was employed by Tenenbaum's Travel Service, Inc., where he served as
Controller prior to his promotion to Vice President of Finance. The travel
company had seven divisions, which included two national wholesale travel
divisions and five retail divisions. From 1986 to 1989 he was employed
by Laventhol & Horwath, Certified Public Accountants in Wilkes-Barre, PA.
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
The following table indicates which forms the Company's directors and
executive officers filed with the Securities and Exchange Commission during
the calendar year ended December 31, 1999, and to the date hereof:
Reporting Person Form Date Due Date Filed
---------------- ---- -------- ----------
Gerard A. Powell 4 10/10/99 01/13/00
Vincent J. Trapasso 4 10/10/99 01/13/00
Charlie Lynn Trapasso 4 10/10/99 01/13/00
Gerard A. Powell 4 02/10/00 01/20/00
J. Peter Gaskins 5 01/31/00 01/28/00
Gerard A. Powell 4 03/10/00 03/10/00
Vincent J. Trapasso 3 03/10/00 03/10/00
Lawrence T. Simon 3 10/02/99 03/10/00
Saul S. Epstein 4 07/10/99 03/30/00
Richard H. Gwinn 4 07/10/99 03/30/00
Lawrence T. Simon 4 04/10/00 03/30/00
Involvement in Certain Legal Proceedings.
-----------------------------------------
Mr. Powell was a 30% shareholder of two private sister companies, Y-Rent,
Inc. and Homes by Vintage, as well as the President of one and the Secretary
of the other. Both companies filed for bankruptcy on September 6, 1995 in the
state of Virginia pursuant to Chapter 7 of the United States Bankruptcy Code
in the United States Bankruptcy Court for the Eastern district of Virginia,
Richmond.
Except as indicated above, during the past five years, no present of
former director, person nominated to become a director, executive officer,
promoter or control person of the Company:
(1) was a general partner or executive officer of any business by or
against which any bankruptcy petition was filed, whether at the time of such
filing or two years prior thereto;
(2) was convicted in a criminal proceeding or named the subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses):
(3) was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his or her involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction in a civil action, the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated any federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
No director, executive officer, affiliate, or any owner of record or
beneficially of more than 5% of any class of voting securities of the Company
is a party adverse to the Company or has a material interest adverse to the
Company.
Certain Relationships and Related Transactions.
-----------------------------------------------
The Company incurred management fees and other related costs to Gerard A.
Powell, Vincent J. Trapasso, Charlie Lynn Trapasso, and a company of which
Richard H. Gwinn and Saul S. Epstein are principal shareholders. Mr. Powell
provided consulting services', however, the management contract was terminated
November 30, 1999. Mr. Powell also earned guarantee fees of $61,764 and
$103,182 during 1999 and 1998, respectively, related to his personal guarantee
of the Company's lines-of-credit.
Mr. Gwinn's and Mr. Epstein's company earned management fees of $46,025
and $72,000 for 1999 and 1998, respectively for assisting with special
projects and management decisions.
J. Peter Gaskins is the Managing Director of Clarion Associates, Inc. a
strategic and consulting firm. The Company incurred consulting fees and
expenses of $52,008 during 1999. The Company remains a client of his firm.
Vincent J. Trapasso is indebted to the Company for a demand note of
$14,000, which bears interest at 13% per annum.
Parents.
--------
The Company has no parents except to the extent that its directors and
executive officers may be deemed to be parents by virtue of their ownership of
a majority of its issued and outstanding voting securities.
Committees.
-----------
The Company has an audit committee consisting of Richard H. Gwinn and
Saul S. Epstein. The Committee met once in 1999, with the Company's auditor.
It has had one telephonic meeting in 2000, without the presence of the
Company's auditor.
Executive Compensation.
-----------------------
The following table sets forth information regarding compensation paid
for all services rendered to the Company in all capacities during the last two
completed fiscal years by the Company's Chief Executive Officer. No other
officers of the Company received compensation in excess of $100,000 during the
fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) ( c) (d) (e) (f) (g) (h) (i)
Name and Years or Other All
Principal Periods Annual Restricted Option/ LTIP Other
Position Ended $ $ Compen- Stock SAR's Payouts Compen-
Salary Bonus sation Awards$ # sation$
------------------------------------------------------------------------------
Gerard A.
Powell 1998 $0 $0 $0 $0 0 $0 $0
1999 $34,231 $0 $0 $0 75,000 $0 $169,148(1)
(1) Consist entirely of reimbursement of consulting fees, automobile
allowances health insurance benefits and other expenses. The consulting fee
agreement terminated November 30, 1999. The consulting agreement is attached
as an Exhibit. In addition, and the automobile allowance and other expenses
also ceased November 30, 1999. Health insurance benefits continue.
Options Granted to Directors and Executive Officers (*)
--------------------------------------------------------
Granted Forfeited Held
------- --------- ----
Gerard A. Powell, President, Director, CEO(O) 75,000 0 75,000
Lawrence T. Simon, Director (D1) 121,000 0 121,000
Richard H. Gwinn, Director(D) 21,000 0 21,000
Saul S. Epstein, Director (D) 21,000 0 21,000
J. Peter Gaskins, Director (D2) 96,000 21,000 75,000
Terry Hardman, Director (R) 0 0 0
Harold T. Jenson (R) 0 0 0
Vincent J. Trapasso, Vice President (O) 25,000 0 25,000
Charlie Lynn Trapasso, Secretary/Treasurer 10,000 0 10,000
Marvin P. Metzger, Chief Financial Officer (O) 50,000 0 50,000
William R. White, Chief Operations Officer(R) 25,000 25,000 0
* These options were granted pursuant to the 1999 Incentive Stock Option
Plan filed on Form S-8 on November 11, 1999 with the Commission, which is
incorporated herein by reference.
(D) Non-officer Director options granted on August 16, 1999. These
options vest ratably over three years, after each six-month period of service
after the options were granted. As of the date of this filing, 3,500 options
have vested for each director.
(D1) A total of 21,000 of these options are non-officer/director options
that were granted on September 17, 1999. These options vest ratably over
three years, after each six-month period of service after the grant date. The
remaining 100,000 options were granted on May 3, 2000 and do not contain any
vesting requirements. As of the date of this filing, 3,500 options have
vested for each director.
(D2) These options were granted May 3, 2000. One-half of these options
vested on the date that they were granted and the remainder vest after one
year, subject to Mr. Gaskins' continued service as a consultant through the
end of that period.
(O) Officers' options granted September 30, 1999 (April 26, 2000, with
respect to 25,000 of Mr. Metzger's options).
(R) Resigned during 1999.
In addition to the foregoing options, the Company has granted options to
acquire 392,500 shares of common stock to certain non-director, non-officer
employees and certain consultants. Options to acquire an additional 122,875
shares of the Company's common stock were previously granted and subsequently
forfeited.
Compensation of Directors.
--------------------------
Except in connection with the 1999 Stock Incentive Plan, there are no
standard arrangements pursuant to which the Company's directors are
compensated for any services provided as director. No additional amounts are
payable to the Company's directors for committee participation or special
assignments as directors.
Termination of Employment and Change of Control Arrangements.
-------------------------------------------------------------
Except for accelerated vesting provisions of the above stock options,
there are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Company, with respect to any
director or executive officer of the Company which would in any way result in
payments to any such person because of his or her resignation, retirement or
other termination of employment with the Company or its subsidiaries, any
change in control of the Company, or a change in the person's responsibilities
following a change in control of the Company.
In the event of any corporate transaction that leads to a change in
control, each outstanding option shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the corporate
transaction, become fully exercisable for the total number of shares of common
stock at the time subject to such option and may be exercised for any or all
of those shares as fully vested shares of common stock. If any change is made
to the common stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding common stock as a class without the Company's
receipt of consideration, appropriate adjustments shall be made by the Plan
Administrator to protect the interests of the option holders.
Independent Public Accountants.
-------------------------------
Lazar Levine & Felix LLP, Certified Public Accountants, of New York, New
York, audited the Company's financial statements for the calendar years ended
December 31, 1999, and 1998. No principal accountant has been selected or is
being recommended for election, approval or ratification at the Meeting, as
the Company's Board of Directors voted to retain Lazar Levine & Felix in May
25, 1999, and the Company's Articles of Incorporation and Bylaws do not
require the stockholders to approve or ratify such retention.
Jones, Jensen & Company, LLC, Certified Public Accountants, of Salt Lake
City, Utah, audited the financial statements of the Registrant for the fiscal
years ended June 30, 1998 and 1997. As stated above, Lazar Levine & Felix
LLP, of New York, New York, were engaged on May 25, 1999, by the Company's
Board of Directors to audit the Company's consolidated financial statements
for the calendar year ended December 31, 1999.
There were no disagreements between the Company and Jones, Jensen &
Company, whether resolved or not resolved, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved, would have caused them to make reference to
the subject matter of the disagreement in connection with their reports.
With the exception of an expression of substantial doubt about the
Company's ability to continue as a going concern, the reports of Jones, Jensen
& Company do not contain any adverse opinion or disclaimer of opinion, and are
not qualified or modified as to uncertainty, audit scope or accounting
principles.
During the Company's two most recent fiscal years, and since then,
neither Jones, Jensen & Company, nor Lazar Levine & Felix LLP has advised the
Company that any of the following exist or are applicable:
(1) That the internal controls necessary for the Company to develop
reliable financial statements do not exist, that information has come to their
attention that has led them to no longer be able to rely on management's
representations, or that has made them unwilling to be associated with the
financial statements prepared by management;
(2) That the Company needs to expand significantly the scope of its
audit, or that information has come to their attention that if further
investigated may materially impact the fairness or reliability of a previously
issued audit report or the underlying financial statements or any other
financial presentation, or cause them to be unwilling to rely on management's
representations or be associated with the Company's financial statements for
the foregoing reasons or any other reason; or
(3) That they have advised the Company that information has come to
their attention that they have concluded materially impacts the fairness or
reliability of either a previously issued audit report or the underlying
financial statements for the foregoing reasons or any other reason.
During the Company's two most recent fiscal years and since then, the
Company has not consulted Lazar Levine & Felix LLP regarding the application
of accounting principles to a specified transaction, either completed or
proposed; or the type of audit opinion that might be rendered on the Company's
financial statements or any other financial presentation whatsoever.
On May 28, 1999, the Company filed with the Securities and Exchange
Commission a Current Report on Form 8-K disclosing this change in independent
accountants. This Current Report was amended on June 21, 1999.
A representative of Lazar Levine & Felix LLP is expected to be present at
the Meeting and to have the opportunity to make a statement if he desires.
The representative is expected to be available to respond to appropriate
questions at the Meeting.
Adoption of 1999 Stock Incentive Plan.
--------------------------------------
The Company's 1999 Stock Incentive Plan provides for the issuance of up
to 1,250,000 shares of the Company's one mill ($0.001) par value common stock
to certain qualifying employees, directors and consultants who render non-
capital raising services for the Company. The number of shares subject to the
Plan will automatically increase on the first trading day of each calendar
year during the term of the Plan, beginning with calendar year 2000, by an
amount equal to 4% of the total number of outstanding shares of common stock
on the last trading day of the immediately preceding year, but in no event
shall any annual increase exceed 900,000 shares.
The Plan is to be administered by a Primary Committee, which shall have
sole discretion to determine to whom securities are to be issued under the
Plan. However, in no event shall any one person receive options, stock
appreciation rights and/or share issuances in excess of 250,000 shares in any
calendar year. All decisions relating to the issuance of options or shares of
the Company's common stock to Primary Committee members shall be made by a
disinterested majority of the Company's Board of Directors.
The Plan is divided into five separate programs:
The Discretionary Option Grant Program, under which eligible
persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of the Company's common stock;
The Salary Investment Option Grant Program, under which eligible
employees may elect to have a portion of their base salary
invested each year in special option grants;
The Stock Issuance Program, under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of
common stock directly, either through the immediate purchase of
such shares or as a bonus for services rendered to the Company or
any parent or subsidiary;
The Automatic Option Grant Program, under which eligible non-
employee Board members shall automatically receive option grants
at designated intervals over their period of continued Board
service; and
The Director Fee Option Grant Program, under which non-employee
Board members may elect to have all or any portion of their annual
retainer fee otherwise payable in cash applied to a special stock
option grant.
Discretionary Option Grant Program.
-----------------------------------
The Plan Administrator has the discretion to fix the exercise price of
the options under the Discretionary Option Grant Program, but the price may
not be less than 100% of the fair market value per share of the Company's
common stock on the option grant date. The Plan Administrator also has the
authority to set the term of such options, but such term may not exceed 10
years. For 10% stockholders, the exercise price per share shall not be less
than 110% of the fair market value of the common stock on the option grant
date, and the option term shall be only five years. The aggregate fair market
value of shares for which any option holder may exercise options in any one
calendar year may not exceed $100,000.
Under the Discretionary Option Grant Program, the Plan Administrator also
has the power to grant to selected optionees tandem stock appreciation rights
and/or limited stock appreciation rights. The tandem stock appreciation
rights provision permits such optionees to elect between the exercise of an
option and the surrender of that option in exchange for a corporate
distribution in an amount equal to the excess of: (i) the fair market value on
the option surrender date of the number of shares for which options have
vested option; over (ii) the aggregate exercise price payable for such shares.
Any such option surrender must be approved by the Plan Administrator.
The limited stock appreciation rights are available only for Company
insiders. Upon the occurrence of a hostile take-over of the Company, each
holder of an option with such rights shall be able to surrender such option,
for 30 days, to the Company in exchange for a cash distribution equal to the
excess of: (i) the take-over price of the shares of common stock subject to
such option; over (ii) the aggregate purchase price payable for such shares.
Salary Investment Option Grant Program.
---------------------------------------
The Primary Committee has the sole authority to determine which Company
insiders and other highly compensated employees shall be eligible to
participate in the Salary Investment Option Grant Program in any given
calendar year. Any such person may then irrevocably authorize the Company to
reduce his or her base salary for the calendar year by an amount from $10,000
to $50,000, and to receive options to purchase a number of shares that is
equal to the dollar amount of such salary reduction divided by the amount that
is two-thirds of the fair market value of the Company's common stock on the
date of the option grant. The exercise price of each such option shall be
one-third of the fair market value of the Company's common stock on the option
grant date. Each such option will be exercisable in a series of 12 equal
monthly installments, for a maximum term of 10 years.
Stock Issuance Program.
-----------------------
Under the Stock Issuance Program, the Plan Administrator may directly
issue shares of the Company's common stock at a purchase price not less than
100% of the fair market value per share of the Company's common stock on the
issuance date. The shares may be issued for cash or for services rendered.
Automatic Option Grant Program.
-------------------------------
The Automatic Option Grant Program provides for the automatic granting to
each non-employee Board member of a non-statutory option to purchase 21,000
shares of the Company's common stock on the Plan effective date. On the date
of each annual stockholders' meeting thereafter, each eligible director will
automatically be granted a non-statutory option to purchase 6,000 shares of
common stock, provided that he or she has served in that capacity for at least
six months. The exercise price of all such options shall be 100% of the fair
market value per share of the Company's common stock on the option grant date,
and each option shall have a term of 10 years.
Director Fee Option Grant Program.
-----------------------------------
The Primary Committee shall have the sole discretion to determine the
calendar years for which the Director Fee Option Grant Program shall be in
effect. For each such year, each non-employee Board member may elect to apply
all or any portion of his or her annual retainer fee to the acquisition of a
non-statutory special option grant. The exercise price of each such option
shall be one-third of the fair market value of the Company's common stock on
the option grant date. The number of option shares for which the director is
eligible shall be determined in the same manner as under the Salary Investment
Option Grant Program. Each such option shall be exercisable in 12 equal
monthly installments and shall be for a maximum term of 10 years.
The foregoing Plans are subject to certain provisions relating to
termination of service, vesting, changes in corporate control and
transferability. The foregoing discussion is merely a summary of the terms of
the Company's 1999 Stock Incentive Plan. Copies of the entire Plan are
available for review at the Company's offices, and will be mailed to
stockholders upon request.
Amendment of Articles of Incorporation.
---------------------------------------
The Company's Board of Directors and majority stockholders have consented
to amend its Articles of Incorporation to clarify certain matters relating to
the governance of the Company. These matters may be summarized as follows:
Matters Relating to Preferred Stock.
------------------------------------
The Company has arranged with an investment banker to engage in a private
placement or a series of private placements wherein up to $10 million of
additional capital will be raised on behalf of the Company. The purpose of
this additional capital is to fund the Company's expansion plans. These plans
include expanding the base of physicians participating in the Company's
marketing programs, as well as to increase the advertising and promotion
campaigns used to increase the patient traffic being directed to physicians in
the marketing programs. It is contemplated by both management and the
Company's investment banker that it may be necessary to issue preferred stock
in order to raise the capital desired. It is for this reason that management
proposes that the Company's Articles of Incorporation be amended to allow that
to happen.
The Board of Directors and majority stockholders have consented to the
amendment of the Company's Articles of Incorporation: (i) to authorize a class
of 30,000,000 shares of preferred stock having a par value of one mill
($0.001) per share; and (ii) to vest in the Board of Directors the authority
to issue and designate the rights and preferences of the Company's class of
preferred stock and any series thereof.
The proposed amendment to the Company's Articles of Amendment in this
regard consists of a new second paragraph to be added to Article IV as
follows:
In addition to its authorized class of common stock,
the Company shall be authorized to issue a class of
30,000,000 shares of one mill ($0.001) par value
preferred stock, in such series and with such voting,
dividend and other rights as the Board of Directors may
determine.
Section 78.195 of the Nevada Law requires that a corporations's Articles
of Incorporation prescribe, or vest authority in the Board of Directors to
prescribe, the number, series, rights and preferences of multiple classes or
series of stock. This amendment to the Company's Articles of Incorporation is
designed to comply with Section 78.195.
Matters Relating to the Board of Directors.
-------------------------------------------
As they currently exist, the Company's Articles of Incorporation provide
that:
The governing board of this Corporation shall be known
as Directors, and the number of Directors may from time
to time be increased or decreased in such manner [sic]
provided that the number of Directors shall not be
reduced to less than three (3), except that in cases
where all the shares of the corporation are unissued or
owned beneficially and of record by either one or two
stockholders, the number of Directors may be less than
three (3), but not less than the number of stockholders.
The Board of Directors and majority stockholders have consented to amend
Article V of the Company's Articles of Incorporation to read as follows:
The Board of Directors of this Corporation shall
consist of at least three members and no more than
nine members and, to the extent permitted under the
laws of the State of Nevada, the directors shall
have the authority to fill all vacancies on the
Board of Directors and to appoint directors to fill
all unfilled positions thereon.
This amendment is intended to clarify the ambiguous language of the
existing Articles of Incorporation and to limit the maximum number of
directors in order to avoid the possibility of an overly large Board of
Directors. The Board of Directors and majority stockholders believe that a
Board consisting of more than nine members would create logistical problems in
calling and conducting meetings.
Voting Procedures.
------------------
Under the Nevada Law, the presence of a majority of the shares of the
Company's voting stock entitled to vote at a meeting of the Company's
stockholders is required to constitute a quorum for the transaction of
business. If a quorum exists, matters submitted to a vote of stockholders will
be approved if the votes cast in favor of the action exceed the votes cast
against the action.
If a quorum is present at the Meeting, the four nominees for election to
the Board of Directors who receive the plurality of votes cast for the
election of directors by the shares present will be elected directors. Each
stockholder will be entitled to one vote for each share of common stock held
and will not be entitled to cumulate votes in the election of directors.
Interest of Certain Persons in Matters to be Acted Upon.
--------------------------------------------------------
Except as indicated below, no director, executive officer, nominee to
become such, or any associate of any of the foregoing persons, has any
substantial interest, direct or indirect, by security holdings or otherwise,
in the matters to be submitted to a vote of stockholders at the Meeting, which
is not shared by all other stockholders, pro rata, and in accordance with
their respective interests in the Company.
The Plan provides for the Primary Committee and/or the Plan Administrator
to identify which Company employees will be eligible for the granting of Plan
options. In addition, non-employee directors will be eligible for the
issuance of stock options under the Automatic Option Grant Program and the
Director Fee Option Grant Program, and only Company insiders will be eligible
for limited stock appreciation rights.
As of the date hereof, securities have been allocated under the Plan as
discussed under the caption "Options Granted to Directors and Executive
Officers." In addition, because of their significant day-to-day involvement
in Company affairs, each of the Company's executive officers (i.e., Gerard A.
Powell; Vincent J. Trapasso; Charlie Lynn Trapasso; and Marvin Metzger) is
likely to be eligible for the issuance of additional securities under the
Plan. In addition, each of the Company's non-employee directors (i.e.,
Lawrence T. Simon; Richard H. Gwinn; and Saul S. Epstein) will likely be
eligible for the granting of additional stock options under the Plan. Each of
these persons is also likely to be eligible for limited stock appreciation
rights, and each has a substantial direct interest in the adoption of the
Plan. In order to minimize the effects of any conflict that this interest may
create, all option grants and stock issuances to members of the Primary
Committee must be made by a disinterested majority of the Company's Board of
Directors.
Proposals of Security Holders.
------------------------------
No security holder who is entitled to vote at the Meeting has submitted
to the Company any proposal for action at the Meeting.
THE MAJORITY HOLDERS OWN SUFFICIENT VOTING SECURITIES OF THE COMPANY TO ELECT
THE NOMINEES TO THE BOARD OF DIRECTORS AND APPROVE THE 1999 STOCK INCENTIVE
PLAN AND THE ABOVE AMENDMENTS TO ITS ARTICLES OF INCORPORATION. NO FURTHER
CONSENTS, VOTES OR PROXIES ARE NEEDED, AND NONE ARE REQUESTED.
