<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[x] Filed by the Registrant
[ ] 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
WATTAGE MONITOR INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
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 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
-----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
5) Total fee paid:
-----------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 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 date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------
3) Filing Party:
-----------------------------------------------------------------
4) Date Filed:
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<PAGE>
WATTAGE MONITOR INC.
1100 KIETZKE LANE
RENO, NEVADA 89502
(775) 327-6000
April 25, 2000
Dear Shareholders:
On behalf of the Board of Directors and management of Wattage Monitor Inc.
(the "Company"), I cordially invite you to attend the Annual Meeting of
Shareholders to be held on Tuesday, May 23, 2000, at 9:30 a.m., at the offices
of Camhy Karlinsky & Stein LLP located at 1740 Broadway, Sixteenth Floor, New
York, New York, 10019.
The matters to be acted upon at the meeting are fully described in the
attached Notice of Annual Meeting of Shareholders and Proxy Statement. In
addition, the directors and secretary of the Company will be present to respond
to any questions that you may have. On the following pages, you will find a
Notice of Annual Meeting of Shareholders, a Proxy Statement and the Company's
Form 10-KSB for 1999, and attached is a Proxy Card with return envelope. The
Form 10-KSB describes the financial and operational activities of the Company.
Whether or not you plan to attend the Annual Meeting, please COMPLETE, SIGN
and DATE the enclosed proxy card and RETURN it in the accompanying envelope as
promptly as possible. If you attend the Annual Meeting, and I hope you will, you
may vote your shares in person even if you have previously mailed in a proxy
card.
We look forward to greeting our shareholders at the meeting.
Sincerely,
Gerald R. Alderson
PRESIDENT & CEO
<PAGE>
WATTAGE MONITOR INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS..........................................................................1
INFORMATION CONCERNING VOTE.......................................................................................2
PROPOSAL NO. 1
ELECTION OF THE BOARD OF DIRECTORS...........................................................................4
EXECUTIVE COMPENSATION AND OTHER INFORMATION......................................................................6
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION...........................................................8
SECURITY OWNERSHIP OF MANAGEMENT..................................................................................8
PROPOSAL NO. 2
APPROVAL OF INCREASE IN SHARES AVAILABLE FOR ISSUANCE
UNDER THE COMPANY'S 1999 INCENTIVE COMPENSATION PLAN........................................................10
PROPOSAL NO. 3
APPROVAL OF THE APPOINTMENT OF GRANT THORNTON LLP
AS INDEPENDENT AUDITORS.....................................................................................13
OTHER MATTERS ARISING AT THE ANNUAL MEETING......................................................................13
PRINCIPAL SHAREHOLDERS...........................................................................................13
INTERESTED PARTY TRANSACTIONS....................................................................................14
INDEMNIFICATION OF DIRECTORS AND OFFICERS........................................................................15
SHAREHOLDER PROPOSALS............................................................................................15
COST OF SOLICITATION OF PROXIES..................................................................................15
SECTION 16(a) REPORTING DELINQUENCIES............................................................................15
ANNUAL REPORT ON FORM 10-KSB.....................................................................................16
</TABLE>
<PAGE>
WATTAGE MONITOR INC.
1100 KIETZKE LANE
RENO, NEVADA 89502
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 2000
----------------
TO THE SHAREHOLDERS OF
WATTAGE MONITOR INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Wattage Monitor Inc., a Nevada corporation (hereinafter "Company"),
will be held at the offices of Camhy Karlinsky & Stein LLP, located at 1740
Broadway, Sixteenth Floor, New York, New York, on Tuesday, May 23, 2000, at 9:30
a.m., for the following purposes:
1. To elect five (5) directors of the Company to hold office until the
next Annual Meeting or until their respective successors are duly
elected and qualified;
2. To consider and act upon a proposal to increase the number of shares
authorized and available for issuance pursuant to grants made under
the 1999 Incentive Compensation Plan from 1,500,000 to 2,500,000;
3. To ratify the appointment of Grant Thornton LLP as auditors to the
Company for the fiscal year ending December 31, 2000; and
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on May 3, 2000 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournments thereof. Representation of at
least a majority of all outstanding shares of Common Stock is required to
constitute a quorum. Accordingly, it is important that your stock be represented
at the Annual Meeting. The list of shareholders entitled to vote at the Annual
Meeting will be available for examination by any shareholder at the Company's
offices at 1100 Kietzke Lane, Reno, Nevada, for ten (10) days prior to the date
of the meeting.
Whether or not you plan to attend the Annual Meeting, please complete, date
and sign the enclosed proxy card and mail it promptly in the self-addressed
envelope enclosed for your convenience. You may revoke your proxy at anytime
before it is voted.
By Order of the Board of Directors,
Daniel I. DeWolf
Secretary
Reno, Nevada
April 25, 2000
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT, ACCORDINGLY, WE URGE YOU TO DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD REGARDLESS OF WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
- --------------------------------------------------------------------------------
<PAGE>
WATTAGE MONITOR INC.
1100 KIETZKE LANE
RENO, NEVADA 89502
----------------
PROXY STATEMENT
----------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 2000
----------------
Approximate Mailing Date of Proxy Statement and Form of Proxy:
Monday, May 8, 2000.
INFORMATION CONCERNING VOTE
GENERAL
This Proxy Statement and the enclosed form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of Wattage
Monitor Inc., a Nevada corporation (hereinafter, the "Company"), for use at the
annual meeting of shareholders to be held on Tuesday, May 23, 2000, at 9:30
a.m., and at any and all adjournments thereof (the "Annual Meeting"), with
respect to the matters referred to in the accompanying notice. The Annual
Meeting will be held at the offices of Camhy Karlinsky & Stein LLP located at
1740 Broadway, Sixteenth Floor, New York, New York.
VOTING RIGHTS AND OUTSTANDING SHARES
Only shareholders of record at the close of business on May 3, 2000 are
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on April 14, 2000, 13,421,520 shares of Common Stock, par value $.01
per share (the "Common Stock"), of the Company were issued and outstanding. Each
share of Common Stock entitles the record holder thereof to one (1) vote on all
matters properly brought before the Annual Meeting.
REVOCABILITY OF PROXIES
A shareholder who executes and mails a proxy in the enclosed return
envelope may revoke such proxy at any time prior to its use by notice in writing
to the Secretary of the Company, at the above address, or by revocation in
person at the Annual Meeting. Unless so revoked, the shares represented by duly
executed proxies received by the Company prior to the Annual Meeting will be
presented at the Annual Meeting and voted in accordance with the shareholder's
instructions marked thereon. If no instructions are marked thereon, proxies will
be voted:
1. FOR the election as directors of the nominees named below under the
caption "ELECTION OF THE BOARD OF DIRECTORS,"
2. FOR the proposal to increase the number of authorized shares under the
1999 Incentive Compensation Plan of the Company (the "1999 Incentive
Compensation Plan") to 2,500,000, as discussed under the caption
"APPROVAL OF INCREASE IN SHARES AVAILABLE FOR ISSUANCE UNDER THE
COMPANY'S 1999 INCENTIVE COMPENSATION PLAN," and
3. FOR the ratification of the appointment of Grant Thornton LLP as the
independent auditors of the Company as discussed under the caption
"APPROVAL OF THE APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT
AUDITORS."
2
<PAGE>
In their discretion, the proxies are authorized to consider and vote upon
such matters incident to the conduct of the Annual Meeting and upon such other
business matters or proposals as may properly come before the Annual Meeting
that the Board of Directors of the Company does not know a reasonable time prior
to this solicitation will be presented at the Annual Meeting.
VOTING PROCEDURES
All votes shall be tabulated by our transfer agent, American Securities
Transfer & Trust, who shall separately tabulate affirmative and negative votes,
abstentions and broker non-votes. The presence of a quorum for the Annual
Meeting, defined here as a majority of the votes entitled to be cast at the
Annual Meeting, is required. Votes withheld from director nominees and
abstentions will be counted in determining whether a quorum has been reached.
Broker-dealer non-votes are not counted for quorum purposes.
Assuming a quorum has been reached, a determination must be made as to the
results of the vote on each matter submitted for shareholder approval. Director
nominees must receive a plurality of the votes cast at the Annual Meeting, which
means that a vote withheld from a particular nominee or nominees will not affect
the outcome of the Annual Meeting.
3
<PAGE>
PROPOSAL NO. 1
ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors has nominated five (5) persons to be elected as
Directors at the Annual Meeting and to hold office until the next annual meeting
and until their successors have been duly elected and qualified. It is intended
that each proxy received by the Company will be voted "FOR" the election, as
directors of the Company, of the nominees listed below, unless authority is
withheld by the shareholder executing such proxy. Shares may not be voted
cumulatively. Each of such nominees has consented to being nominated and to
serve as a director of the Company if elected. If any nominee should become
unavailable for election or unable to serve, it is intended that the proxies
will be voted for a substitute nominee designated by the Board of Directors. At
the present time, the Board of Directors knows of no reason why any nominee
might be unavailable for election or unable to serve. The proxies cannot be
voted for a greater number of persons than the number of nominees named herein.
DIRECTOR NOMINEES
The following table sets forth certain information with respect to the
nominees for directors:
<TABLE>
<CAPTION>
NOMINEE
DIRECTOR SINCE
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ------------------------- -------------------------------------------------------------------------------------------
<S> <C>
Stephen D. Klein Mr. Klein is Chairman of the Board and founder of the Company. He is not an employee.
February 26, 1999 Since 1990, he has been a Managing Partner and Director of Media and Interactive Services
Age: 40 of Kirshenbaum Bond & Partners, one of the country's most successful independent
advertising agencies. Mr. Klein is one of the advertising industry's pioneers in the
integration of Internet media into brand-building marketing efforts. Mr. Klein has a
B.A. in English from Columbia University.
Gerald R. Alderson Mr. Alderson is Founder and President of the Company. Between 1982 and the founding of
February 26, 1999 the Company in mid-1997, Mr. Alderson held a variety of positions with Kenetech
Age: 53 Corporation, including as its President and Chief Executive Officer. He received his
B.A. from Occidental College and his M.B.A. from Harvard University Graduate School of
Business Administration.
Joel Dumaresq Mr. Dumaresq is a Director of the Company. He is an experienced business executive and
February 26, 1999 investment banking specialist. Since 1996, Mr. Dumaresq has acted as an independent
Age: 35 investor and currently sits on the Board of Directors of a number of public and private
companies. Since 1996, he has also served as a Vice President of Verus Capital Corp.
From 1994 to 1996, Mr. Dumaresq was President and Chief Executive Officer of Westair
Aviation Inc., a full service, regional airline, and has served in various roles for a
large investment banking firm. From 1987 to 1994, Mr. Dumaresq served as an institutional
equity account representative with RDC Dominion Securities.
Alexander Ellis III Mr. Ellis is Vice President -- Marketing for the Company. From 1990 until the founding of
February 26, 1999 the Company, he held a number of management positions at Kenetech Corporation, including
Age: 49 as its Vice President -- Marketing. Between 1989 and 1990, he was Vice President
Corporate Accounts at Knoll International, Inc. Mr. Ellis received his B.A. from
Colorado College and his Masters in Public and Private Management from Yale School of
Organization and Management.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NOMINEE
DIRECTOR SINCE
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ------------------------- -------------------------------------------------------------------------------------------
<S> <C>
Daniel I. DeWolf Mr. DeWolf is Secretary of the Company. Since January 2000, Mr. DeWolf has served as
First time nominee Director of the Venture Capital Group of Wit Capital Group, Inc. From 1994 to January
Age: 42 2000, Mr. DeWolf was an attorney with Camhy Karlinsky & Stein LLP where he established
and headed the Firm's New Media and E-Law Group. From 1998 to January 2000, Mr. DeWolf
also served as a Managing Director of Dawntreader Fund I LP, a venture capital fund. Mr.
DeWolf is a graduate of the University of Pennsylvania (cum laude) and the University of
Pennsylvania School of Law.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
PROPOSAL NO. 1
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors held four (4) meetings during fiscal year 1999. The
Board of Directors appointed an Audit Committee and a Compensation Committee.
Each director attended at least 75% of the meetings of the Board of Directors
and the committees on which he served.
The Audit Committee is responsible for making recommendations to the Board
of Directors as to the selection of the Company's independent auditors,
authorized to review with the independent auditors the scope of their audit and
non-audit assignments and fees, the accounting principles applied by the Company
in its financial reporting, the scope of internal financial auditing procedures
and the adequacy of the Company's internal controls. The current members of the
Committee are Stephen D. Klein and Joel Dumaresq. The Committee held one (1)
meeting during fiscal year 1999.
The Compensation Committee is responsible for compensating arrangements for
executive officers and certain senior employees and reviews executive
performance. The current members of the Committee are Stephen D. Klein, Ajmal
Khan and Gerald R. Alderson. The Committee held two (2) meetings during fiscal
year 1999.
EXECUTIVE OFFICERS
In addition to the foregoing, the executive officers of the Company are as
follows:
ROBERT E. FORREST, age 31, has served as Vice President - Operations for
the Company since March of 1998. Between May 1993 and his joining the Company,
Mr. Forrest held a variety of finance positions, including cost control and
system development, principally in the food products industry. Since October
1995, in his most recent position, Mr. Forrest was the finance lead for all
United States trade agreement negotiations for Burns Philp, Inc., a global food
company. Mr. Forrest received his B.A. from the University of California at Los
Angeles (magna cum laude).
JOHN D. WESTFIELD, age 37, has served as Vice President - Technology for
the Company since April of 1998. Between December, 1996 and April, 1998, Mr.
Westfield was a Director of Special Programs for Computer Sciences Corporation.
Between April, 1989 and November, 1996, he held a variety of management and
information technology positions with American Airlines including responsibility
for the design of the SABRE reservation system's internet interface. Mr.
Westfield holds both a Bachelor's and Master's degree from The University of
Texas, at Austin.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation awarded to
or earned by all Executive Officers who served in that position during fiscal
year 1999, and the most highly compensated executive officers of the Company who
held such positions at the end of fiscal year 1999 and earned more than $100,000
in annual salary and bonus:
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation Awards
Name and Principal Position Year Salary Securities Underlying Options
-------------------------------------- ---- ------ -----------------------------
<S> <C> <C> <C>
Gerald R. Alderson.................... 1999 $ 150,000 10,000
President, Chief Executive
Officer and Director
Alexander Ellis, III.................. 1999 $ 125,000 10,000
Vice President -- Marketing
and Director
John D. Westfield..................... 1999 $ 195,000 ---
Vice President -- Technology
</TABLE>
STOCK OPTION GRANTS FOR THE LAST FISCAL YEAR
Set forth below is information on grants of stock options under the 1999
Incentive Compensation Plan for the named executive officers for the period
January 1, 1999 to December 31, 1999.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price per Expiration
Name Granted in 1999 Share Date
---------------------------------- ------- ------- ----- ----
<S> <C> <C> <C> <C>
Gerald R. Alderson (1)
Granted Sept. 1999............ 10,000 8% $ 4.50 10/1/09
Alexander Ellis, III (1)
Granted Sept. 1999............ 10,000 8% $ 4.50 10/1/09
</TABLE>
(1) Options were granted on September 30, 1999 and were fully exercisable
on October 1, 1999.
All options reported above were awarded under the 1999 Incentive
Compensation Plan. The Company has not granted any stock appreciation rights.
Pursuant to the terms of the 1999 Incentive Compensation Plan, the exercise
price per share for all options is not less than the fair market value of a
share of our Common Stock on the grant date.
6
<PAGE>
PENSION PLAN
The Company adopted a 401(k) retirement plan effective January 1, 1999 (the
"Pension Plan"), which provides for employee salary deferrals limited to 25% of
a participant's compensation as well as discretionary Company contributions. The
Pension Plan covers employees who have completed one month of service and have
attained the minimum age requirement, as defined in the Pension Plan. The
Pension Plan year ends on December 31st and all employee contributions vest
immediately. The Company made no contribution to the Pension Plan during the
fiscal year ended December 31, 1999.
DIRECTORS' COMPENSATION
Compensation of non-employee directors consist solely of reimbursement of
their expenses for attending meetings. In addition, each director receives
immediately exercisable options to purchase 10,000 shares of Common Stock on the
date of the annual meeting of stockholders, except that in 1999 the grant
occurred on September 30, 1999. The options have an exercise price equal to not
less than the fair market value of a share of our Common Stock on the date of
grant.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On January 1, 1998, WattMonitor LLC, as the Company's predecessor, entered
into an Employment Agreement with Mr. Alderson. On February 26, 1999, the
Company assumed Mr. Alderson's employment agreement. Mr. Alderson's initial
employment term expires on December 31, 2000, but will be automatically renewed
for an unlimited series of one-year periods unless either party notifies the
other.
Mr. Alderson currently receives a base salary of $150,000 per year, which
is subject to an annual adjustment at the discretion of the board of directors.
Under the terms of the agreement, Mr. Alderson is eligible to receive a bonus
for services rendered, subject to the discretion of the board of directors. In
the event the Company terminates Mr. Alderson's employment for any reason other
than "for cause", then Mr. Alderson will be entitled to receive a lump sum
termination payment equal to two years' base salary.
In the event the Company experiences a change in control and Mr. Alderson
resigns, or is terminated, within six months of the change in control Mr.
Alderson will be entitled to receive two years base salary, payable in one lump
sum. He will also be entitled to receive a payment equal to the greater of his
bonuses for the three years prior to the termination or eighteen months base
salary. In no event will this termination payment exceed 2.99 times Mr.
Alderson's average annual cash compensation during the five years prior to his
termination.
7
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
It is the duty of the Compensation Committee to develop, administer, and
review the Company's compensation plans, programs, and policies, to monitor the
performance and compensation of executive officers and other key employees and
to make appropriate recommendations and reports to the Board of Directors
relating to executive compensation.
The Company's compensation program is intended to motivate, retain and
attract management, linking incentives to financial performance and enhanced
shareholder value. The program's fundamental philosophy is to tie the amount of
compensation "at risk" for an executive to his or her contribution to the
Company's success in achieving superior performance objectives.
The compensation program currently consists of two (2) components: a base
salary and the potential for an annual cash and/or stock option bonus based upon
the satisfaction of certain performance criteria set annually. The criteria may
relate to overall Company performance, the individual executive's performance or
a combination of the two, depending upon the particular position at issue.
All amounts paid or accrued during fiscal year 1999 under the
above-described compensation program are included in the table found in the
section captioned "Summary Compensation Table."
Respectfully submitted,
THE COMPENSATION COMMITTEE
Stephen D. Klein
Gerald R. Alderson
Ajmal Kahn
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of April 14, 2000, certain information
with respect to the beneficial ownership of each class of the Company's equity
securities by each director, each named executive officer of the Company and all
directors and executive officers of the Company as a group. The percentages set
forth in the table assume 13,421,520 shares of Common Stock outstanding as of
April 14, 2000.
Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended, and unless otherwise
indicated, represents shares for which the beneficial owner has sole voting and
investment power. The percentage of class is calculated in accordance with Rule
13d-3. Unless otherwise indicated the address for each individual is c/o Wattage
Monitor Inc., 1100 Kietzke Lane, Reno, Nevada 89502.
Mr. Alderson's and Mr. Klein's beneficial ownership columns include
warrants (exercisable at any time) to purchase an aggregate of 66,666 shares of
Common Stock beneficially owned.
The aggregate amount for Mr. Dumaresq and Mr. Khan includes shares
beneficially owned by Verus Capital Corp. which includes warrants (exercisable
at any time) to purchase 100,000 shares of Common Stock from Valiant Growth
Fund, options to purchase 50,000 shares of Common Stock and options to purchase
250,000 shares of Common Stock underlying our Series B preferred stock. Mr.
Dumaresq and Mr. Khan have the right to acquire 30% and 70% respectively, of the
options or the underlying shares. Mr. Dumaresq and Mr. Khan each disclaim
beneficial ownership of such shares.
The numbers in Mr. Ellis', Mr. Westfield's and Mr. Forrest's beneficial
ownership columns represent options to purchase an aggregate of 369,750 shares
of Common Stock, which are immediately exercisable. The numbers do
8
<PAGE>
not include options to purchase an additional 281,250 shares of Common Stock,
which are not currently exercisable.
Mr. DeWolf is married to Pamela Ehrenkranz DeWolf, who owns 12,500 shares
of Common Stock. Mr. DeWolf disclaims beneficial ownership of his wife's shares.
The aggregate amounts for Mr. Alderson, Mr. Klein, Mr. Khan, Mr. Ellis and
Mr. Dumaresq, and Mr. DeWolf each include 10,000 options to purchase an
aggregate of 60,000 shares of our Common Stock, granted to them. The
options are exercisable immediately.
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Percentage of
Name and Address of Beneficial Owner Beneficially Owned Beneficial Ownership
------------------------------------ ------------------ --------------------
<S> <C> <C>
Gerald R. Alderson 1,713,243 12.7%
Stephen D. Klein 1,313,920 9.8%
200 West 79th Street, #9-S
New York, NY 10024
Ajmal Khan 290,000 2.1%
c/o Verus International Ltd.
#2000 - 1177 West Hastings Street
Vancouver, BC V6E 2K3
Canada
Alexander Ellis, III 253,750 1.9%
Joel Dumaresq 130,000 1.0%
c/o Verus International Ltd.
#2000 - 1177 West Hastings Street
Vancouver, BC V6E 2K3
Canada
Robert E. Forrest 62,500 *
John D. Westfield 53,500 *
Daniel I. DeWolf 22,500 *
c/o Wit Capital Group
826 Broadway, Sixth Floor
New York, NY 10003
All Officers and Directors (8 persons) 3,839,413 26.9%
</TABLE>
* Less than one percent (1.0%)
9
<PAGE>
PROPOSAL NO. 2
APPROVAL OF INCREASE IN SHARES AVAILABLE FOR ISSUANCE
UNDER THE COMPANY'S 1999 INCENTIVE COMPENSATION PLAN
On March 8, 2000, the board of directors authorized, subject to shareholder
approval, an increase to the number of shares authorized for issuance under the
Company's 1999 Incentive Compensation Plan from 1,500,000 to 2,500,000.
The board of directors believes that it is in the best interests of the
Company and its shareholders to approve the amendment to the 1999 Incentive
Compensation Plan, which will allow the Company to continue to grant options
under the 1999 Incentive Compensation Plan in order to help the Company secure
and retain the services of key employees and consultants.
DESCRIPTION OF THE 1999 INCENTIVE COMPENSATION PLAN AND AMENDMENT
On April 19, 1999, the Company adopted the 1999 Incentive Compensation Plan
in order to motivate qualified employees and certain consultants of the Company
and its affiliates, as well as to assist the Company and its affiliates in
attracting employees and to align the interests of such persons with those of
the shareholders of the Company. As of April 14, 2000, 31 individuals and/or
entities held options under the 1999 Incentive Compensation Plan.
The major features of the 1999 Incentive Compensation Plan are summarized
below. The description provided below is qualified in its entirety by reference
to the actual 1999 Incentive Compensation Plan, a copy of which was filed as an
Exhibit to the Company's Registration Statement on Form SB-2 filed with the SEC
on October 13, 1999.
The 1999 Incentive Compensation Plan provides for the discretionary grants
of "incentive stock options" ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonqualified stock options ("Nonqualified Options") to officers and key
employees of, and consultants to, the Company and its affiliates at an exercise
price equal to not less than the fair market value of a share of our Common
Stock on the grant date. The 1999 Incentive Compensation Plan is administered by
the Compensation Committee.
The 1999 Incentive Compensation Plan currently authorizes the issuance of
options to purchase a maximum of 1,500,000 shares of Common Stock. The 1999
Incentive Compensation Plan contains customary provisions with respect to
adjustments for stock splits and similar transactions. If any stock option
granted under the 1999 Incentive Compensation Plan terminates, expires
unexercised, or is cancelled, the shares of Common Stock that would otherwise
have been issuable pursuant thereto will be available for issuance pursuant to
the grant of new stock options.
As of April 14, 2000, there are 350,050 reserved shares of our Common Stock
which remain available for issuance, and 1,149,950 shares of Common Stock that
are reserved for the exercise of existing grants. Options have maximum terms of
ten years from the grant date. Options are not assignable or transferable other
than by will or by the laws of inheritance. Options may be exercised only by the
optionee. The optionee has no rights with respect to shares of Common Stock of
the Company underlying the options until the options are exercised and the
option price is paid for the purchased shares. The board of directors of the
Company is authorized to cancel outstanding options in return for the grant of
new options, stock or cash. The 1999 Incentive Compensation Plan terminates on
the earlier of April 19, 2009 or the date on which all shares available for
issuance have been issued or cancelled. As of April 14, 2000, executive officers
and all other employees were eligible to participate. If the Company is acquired
by merger, consolidation or asset sale, or there is a hostile change in control,
each option granted under the plan may be accelerated, and all unvested shares
issued thereunder become immediately vested.
10
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
A. Incentive Stock Options. The following general rules are applicable,
under existing law, to holders of Incentive Stock Options and to the Company for
Federal income tax purposes:
1. Generally, no taxable income results to the optionee upon the
grant of an Incentive Stock Option or upon the issuance of shares to him, her or
it upon exercise of an Incentive Stock Option;
2. No tax deduction is allowed to the Company upon either the grant
or exercise of an Incentive Stock Option under the 1999 Incentive Compensation
Plan;
3. If shares acquired upon the exercise of an Incentive Stock Option
are not disposed of prior to the later of: (i) two years following the date the
Incentive Stock Option was granted; or (ii) one year following the date the
shares are transferred to the optionee pursuant to the exercise of such
Incentive Stock Option, the difference between the amount realized on any
subsequent disposition of the shares and the exercise price will generally be
treated as long-term capital gain or loss to the optionee;
4. If shares acquired upon the exercise of an Incentive Stock Option
are disposed of before the expiration of one or both of the requisite holding
periods (a "disqualifying disposition"), then, in most cases, the lesser of: (i)
any excess of the fair market value of the shares at the time of exercise of the
Incentive Stock Option over the exercise price; or (ii) the actual gain on
disposition, will be treated as compensation to the optionee and will be taxed
as ordinary income in the year of such disposition;
5. Any excess of the amount realized by the optionee as the result
of a disqualifying disposition over the sum of: (i) the exercise price; and (ii)
the amount of ordinary income recognized under the above rules, will be treated
as either a long-term or short-term capital gain, depending upon the time
elapsed between receipt and disposition of the shares;
6. In any year that an optionee recognizes compensation income on a
disqualifying disposition of shares acquired by exercising an Incentive Stock
Option, the Company will generally be entitled to a corresponding deduction for
income tax purposes; and
7. The bargain element at the time of exercise of an Incentive Stock
Option (i.e., the amount by which the fair market value of the Common Stock
acquired upon exercise of the Incentive Stock Option exceeds the exercise price)
may be taxable to the optionee under the "alternative minimum tax" provisions of
the Code.
B. Nonqualified Stock Options. The following general rules are
applicable, under existing law, to holders of Nonqualified Stock Options and to
the Company for Federal income tax purposes:
1. The optionee will not realize any taxable income upon the grant
of a Nonqualified Stock Option, and the Company is not allowed a business
expense deduction by reason of any such grant;
2. The optionee will recognize ordinary compensation income at the
time of the exercise of a Nonqualified Stock Option in an amount equal to the
excess, if any, of the fair market value of the shares on the date of exercise
over the exercise price. Gain or loss upon a subsequent disposition of the
shares underlying a Nonqualified Stock Option will be either long-term or
short-term capital gain or loss, depending on the time elapsed between receipt
and disposition of such shares disposed of; and
3. In general, the Company will be entitled to a tax deduction upon
the exercise of a Nonqualified Stock Option.
11
<PAGE>
OPTIONS OUTSTANDING UNDER THE 1999 INCENTIVE COMPENSATION PLAN
As of April 14, 2000, options to acquire a total of 1,149,950 shares of
Common Stock were issued and outstanding under the 1999 Incentive Compensation
Plan, which includes options to the Company's Directors and the named Executive
Officers as follows:
<TABLE>
<CAPTION>
Number of Shares
Underlying
Name and Address of Beneficial Owner Options Granted
------------------------------------ ---------------
<S> <C>
Alexander Ellis, III 310,000
John D. Westfield 225,000
Robert E. Forrest 125,000
Stephen D. Klein 10,000
Gerald R. Alderson 10,000
Ajmal Khan 10,000
Joel Dumaresq 10,000
Daniel I. DeWolf 10,000
</TABLE>
The number of shares which may be subject to options to be granted under
the 1999 Incentive Compensation Plan in the future is entirely within the
discretion of the Compensation Committee and is, therefore, not determinable at
this time.
The closing sale price of the Company's Common Stock on April 14, 2000, as
reported on the OTC Electronic Bulletin Board, was $1.25 per share.
Approval by a majority of the votes cast at the Annual Meeting, by the
shareholders entitled to vote thereon, will be required for approval of the
amendment to the 1999 Incentive Compensation Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF PROPOSAL
NO. 2.
12
<PAGE>
PROPOSAL NO. 3
APPROVAL OF THE APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS
Pursuant to the recommendation of the Audit Committee, the board of
directors has proposed the appointment of the firm of Grant Thornton LLP as
independent certified public accountants to audit the consolidated financial
statements of the Company for the fiscal year ending December 31, 2000.
The stockholders are requested to approve the proposed appointment at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF PROPOSAL
NO. 3.
OTHER MATTERS ARISING AT THE ANNUAL MEETING
The matters referred to in the Notice of Annual Meeting and described in
this Proxy Statement are, to the knowledge of the board of directors, the only
matters that will be presented for consideration at the Annual Meeting. If any
other matters should properly come before the Annual Meeting, the persons
appointed by the accompanying proxy will vote on such matters in accordance with
their best judgment pursuant to the discretionary authority granted to them in
the proxy.
PRINCIPAL SHAREHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 14, 2000, certain information
about all persons or entities who, to the Company's knowledge, were beneficial
owners of 5% or more of Common Stock of the Company.
Beneficial ownership is determined in accordance with the rules promulgated
by the SEC and the information is not necessarily indicative of beneficial
ownership for any other purpose. This table is based upon information supplied
to us by officers, directors and principal stockholders. Except as otherwise
indicated, we believe that the persons or entities named in the table have sole
voting power with respect to all shares of our Common Stock shown as
beneficially owned by them, subject to community property laws where applicable.
The table should be read in conjunction with the information that follows
it. The percentages set forth in the table assume 13,421,520 shares of Common
Stock outstanding as of April 14, 2000.
Mr. Lessin's beneficial ownership column includes 564,706 shares of Common
Stock beneficially owned through RHL Ventures LLC, warrants (exercisable at any
time) to purchase an aggregate of 383,333 shares of Common Stock beneficially
owned through RHL Ventures LLC, and 2,541,963 shares of Common Stock owned
directly.
The aggregate beneficial ownership of Salomon Smith Barney Inc., Salomon
Brothers Holding Company Inc., Salomon Smith Barney Holdings Inc., and Citigroup
Inc. (identified in the table below as Salomon Smith Barney/Citigroup) of
2,217,409 shares of the Company's Common Stock is evidenced by the filing of a
Schedule 13(g) on November 30, 1999. We are relying solely on that filing for
the purposes of this table.
Mr. Alderson's and Mr. Klein's beneficial ownership columns include
warrants (exercisable at any time) to purchase an aggregate of 66,666 shares of
Common Stock beneficially owned. Also included are options (exercisable at any
time) to purchase an aggregate of 20,000 shares of our Common Stock.
13
<PAGE>
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Percentage of
Name and Address of Beneficial Owner Beneficially Owned Beneficial Ownership
------------------------------------ ------------------ --------------------
<S> <C> <C>
Robert H. Lessin 3,490,002 25.3%
c/o Wit Capital
826 Broadway, 6th Floor
New York, NY 10003
Salomon Smith Barney/Citigroup 2,217,409 16.5%
Gerald R. Alderson 1,713,243 12.7%
c/o Wattage Monitor
1100 Kietzke Lane
Reno, NV 89502
Stephen D. Klein 1,313,920 9.8%
200 West 79th Street, #9-S
New York, NY 10024
</TABLE>
INTERESTED PARTY TRANSACTIONS
On August 14, 1998, RHL Ventures LLC loaned the Company $425,000. The loan
is evidenced by a promissory note for $425,000, bearing interest at 12% per
annum. The principal balance of the note, plus accrued interest of $62,581 was
converted into 325,054 shares of our Common Stock, at an exercise price of $1.50
per share, on October 29, 1999.
On August 14, 1998, the Company also issued a warrant to RHL Ventures
exercisable through August 1, 2005, to purchase 283,333 shares of Common Stock
at an exercise price of $1.50 per share. The warrant is exercisable immediately
but has not yet been exercised. RHL Ventures is a shareholder of the Company.
Mr. Lessin, is also a shareholder of the Company, the President and Chief
Executive Officer of RHL Ventures.
Between October 7, 1998 and January 18, 1999, Verus Capital Corp., on
behalf of investors, advanced to the Company an aggregate of $1,000,000. The
right to this advance was subsequently assigned by the investors to the Company
prior to its merger in exchange for 2,750,000 shares of Common Stock. Upon the
merger of the Company and Watt Monitor LLC, the advance became an accounts
payable to the Company and was canceled. Mr. Khan is the President of Verus and
one of our directors.
On December 29, 1998, RHL Ventures loaned us $150,000, with interest at 12%
per annum. The note was repaid in February of 1999. On December 29, 1998, the
Company also issued a warrant to RHL Ventures exercisable through December 29,
2005, to purchase 100,000 shares of Common Stock at an exercise price of $1.50
per share. The warrant was exercisable immediately. Mr. Lessin, one of the
shareholders of the Company, is the President and Chief Executive Officer of RHL
Ventures.
On December 29, 1998, Gerald R. Alderson loaned the Company $50,000, with
interest at 12% per annum. The note was repaid in March of 1999. On December
29, 1998, we also issued a warrant to Mr. Alderson exercisable through December
29, 2005, to purchase 33,333 shares of Common Stock at an exercise price of
$1.50 per share. The warrant was exercisable immediately. Mr. Alderson is the
President and Chief Executive Officer of the Company, as well as one of its
directors.
On December 29, 1998, Stephen D. Klein loaned $50,000 to the Company, with
interest at 12% per annum.
14
<PAGE>
The note was repaid in February of 1999. On December 29, 1998, the Company also
issued a warrant to Mr. Klein exercisable through December 29, 2005, to purchase
33,333 shares of our Common Stock at an exercise price of $1.50 per share. The
warrant was exercisable immediately. Mr. Klein is the Chairman of the board of
directors of the Company and a shareholder. For the period ended December 31,
1998, the Company paid approximately $132,000 for software development to
Kirshenbaum Bond & Partners. During the same period, the Company also purchased
approximately $112,000 of equipment from Kirshenbaum. Stephen D. Klein, a
partner of Kirshenbaum, is a director of the Company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has entered into indemnity agreements with each of its
directors and executive officers. The indemnity agreements provide that
directors and executive officers (the "Indemnities") will be indemnified and
held harmless to the fullest possible extent permitted by law including against
all expenses (including attorney's fees), judgments, fines, penalties and
settlement amounts paid or incurred by them in any action, suit or proceeding on
account of their services as director, officer, employee, agent or fiduciary of
the Company or as directors, officers, employees or agents of any other company
or entity at the request of the Company. The Company will not, however, be
obligated pursuant to the agreements to indemnify or advance expenses to an
indemnified party with respect to any action (1) in which a judgment adverse to
the Indemnitee establishes (a) that the Indemnitee's acts were committed in bad
faith or were the result of active and deliberate dishonesty and, in either
case, were material, or (b) that the Indemnitee personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled,
or (2) which the Indemnitee initiated, prior to a change in control of the
Company, against the Company or any director or officer of the Company unless
the Company consented to the initiation of such claim.
SHAREHOLDER PROPOSALS
A shareholder of the Company who wishes to present a proposal for action at
the Company's 2001 Annual Meeting of Shareholders must submit such proposal to
the Company, in accordance with Rule 14-8 under the Securities Exchange Act of
1934. To be eligible for inclusion such proposal must be received by the
Company, no later than January 9, 2001.
COST OF SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement is made by and
on behalf of the Company's Board of Directors. The cost of such solicitation
will be paid by the Company. Such cost includes the preparation, printing and
mailing of the Notice of Annual Meeting, Proxy Statement, Annual Report and form
of proxy. The solicitation will be conducted principally by mail, although
directors, officers and employees of the Company (at no additional compensation)
may solicit proxies personally or by telephone or telegram. Arrangements will be
made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of proxy material to the beneficial owners of shares held of
record by such fiduciaries, and the Company may reimburse such persons for their
reasonable expenses in so doing.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than ten percent (10%) of a registered class of the Company's equity
securities, to file with the SEC, reports of ownership and changes in ownership
of Common Stock and other equity securities of the Company. Executive officers,
directors and greater than ten percent (10%) beneficial owners are required by
SEC regulation to furnish the Company with copies of all Section 16(a) reports
that they file. Based solely upon a review of the copies of such reports
furnished to the Company or written representations that no other reports were
required, the Company believes that, during fiscal year 1999, all filing
requirements applicable to its executive officers, directors, and greater than
ten percent (10%) beneficial owners were met.
15
<PAGE>
ANNUAL REPORT ON FORM 10-KSB
The Company will provide without charge to each person whose proxy is
solicited, upon the written request of any such person, a copy of the Company's
Form 10-KSB for the period January 1, 1999 through December 31, 1999, filed with
the SEC, including the financial statements and the schedules thereto. The
Company does not undertake to furnish without charge copies of all exhibits to
its Form 10-KSB, but will furnish any exhibit upon the payment of Twenty Cents
($0.20) per page, with a minimum charge of Five Dollars ($5.00). Such written
requests should be directed to Wattage Monitor, Attn: Investor Relations, 1100
Kietzke Lane, Reno, Nevada, 89502. Each such request must set forth a good faith
representation that, as of May 3, 2000, the person making the request was a
beneficial owner of securities entitled to vote at the Annual Meeting.
By Order of the Board of Directors,
Daniel I. DeWolf
Secretary
Reno, Nevada
April 25, 2000
16
<PAGE>
PROXY
WATTAGE MONITOR INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
MAY 23, 2000 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Wattage Monitor Inc., a Nevada corporation
(the "Company"), hereby appoints Stephen D. Klein, Gerald R. Alderson and Daniel
I. DeWolf, or any of them, voting singly in the absence of the others, as
his/her/its attorney(s) and proxy(ies), with full power of substitution and
revocation, to vote, as designated on the reverse side, all of the shares of
Common Stock that the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at the offices of Camhy Karlinsky & Stein
LLP at 9:30 a.m. (local time), on Tuesday, May 23, 2000, or any adjournment or
adjournments thereof, in accordance with the instructions on the reverse side
hereof.
This Proxy, when properly executed, will be ------------------------
voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this Proxy will Please mark your ---
be voted "FOR" Proposal Nos. 1, 2 and 3. The proxies votes as indicated X
are authorized to vote as they may determine, in their in this example ---
discretion, upon such other business as may properly
come before the Meeting. ------------------------
FOLD AND DETACH HERE
<PAGE>
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" Proposal Nos. 1, 2 and 3
FOR ALL WITHHOLD
nominees AUTHORITY to
FOR ALL except as vote for
nominees crossed out nominees
listed below below listed below
PROPOSAL NO. 1 / / / / / /
ELECTION OF THE BOARD OF DIRECTORS
Stephen D. Klein Gerald R. Alderson Joel Dumaresq
Alexander Ellis III Daniel I. DeWolf
FOR AGAINST ABSTAIN
PROPOSAL NO. 2 / / / / / /
APPROVAL OF INCREASE IN SHARES AVAILABLE FOR ISSUANCE UNDER
THE COMPANY'S 1999 INCENTIVE COMPENSATION PLAN
FOR AGAINST ABSTAIN
PROPOSAL NO. 3 / / / / / /
APPOINT GRANT THORNTON LLP AS AUDITORS
The proxies are authorized to vote as they may determine, in their
discretion, upon such other business as may properly come before the Meeting.
Signature: ________________________ Signature: ____________________________
Date: ______________ Date: _____________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by an authorized officer. If a partnership, please have
partnership name signed by an authorized person.
