ENGINEERING MEASUREMENTS COMPANY
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD OCTOBER 30, 1998
The undersigned hereby constitutes, appoints and authorizes Charles E. Miller,
as the true and lawful attorney and Proxy of the undersigned with full power of
substitution and appointment, for and in the name, place and stead of the
undersigned to act for and vote as designated below, all of the undersigned's
shares of the $.01 par value common stock of Engineering Measurements Company, a
Colorado corporation, at the Annual Meeting of Shareholders to be held at the
Company's headquarters, 600 Diagonal Highway, Longmont Colorado at 10:00 a.m.
local time on October 30, 1998 and at any and all adjournments thereof, for the
following purposes:
1. To elect Directors to serve until the next Annual Meeting of Shareholders and
until their successors are duly elected and qualified:
[ ] FOR all nominees listed below (except as marked to the contrary):
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below:
Charles E. Miller Walter Kluck Thomas G. Miller William A. Ringer
(Instructions: To withhold authority to vote for any individual nominee, draw a
line through or otherwise strike out his name. If authority to vote for the
election of any nominee is not withheld, the execution of this Proxy shall be
deemed to grant such authority.)
2. To approve the Company's 1998 Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
- --------------------------------------------------------------------------------
The undersigned hereby revokes any Proxies as to said shares heretofore given by
the undersigned, and ratifies and confirms all that said attorneys and Proxies
may lawfully do by virtue 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 BE VOTED
FOR ALL PROPOSALS. THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN RESPECT TO
MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF THE
ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement furnished herewith and the Company's Annual
Report on Form 10-KSB previously mailed to shareholders. Signature(s) should
agree with the name(s) shown hereon. Executors, administrators, trustees,
guardians and attorneys should indicate when signing. Attorneys should submit
power of attorney.
Dated: , 1998
_______________________________
Signature of Shareholder
________________________________
Joint Owner Signature (if any)
_________
Please indicate change of address
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ENGINEERING
MEASUREMENTS COMPANY. PLEASE SIGN AND RETURN THIS PROXY TO THE COMPANY. THE
GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING.
<PAGE>
ENGINEERING MEASUREMENTS COMPANY
600 DIAGONAL HIGHWAY
LONGMONT, CO 80501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on October 30, 1998
TO THE SHAREHOLDERS OF ENGINEERING MEASUREMENTS COMPANY:
The Annual meeting of the Shareholders of Engineering Measurements Company,
hereinafter referred to as the "Company", will be held at the Company's
headquarters, 600 Diagonal Highway, Longmont Colorado on October 30, 1998, at
10:00 a.m., local time, pursuant to call therefor by the Board of Directors for
the following purposes:
1. To elect Directors to serve until the next Annual Meeting of Shareholders of
the Company or until their successors have been duly elected and qualified.
2. To approve the Company's 1998 Employee Stock Purchase Plan.
3. To transact such other business as may properly come before the meeting, or
any adjournment thereof.
The Board of Directors has fixed the close of business on September 16, 1998 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting.
By Order of The Board of Directors
/s/ Charles E. Miller
Charles E. Miller, President
September 30, 1998
YOUR VOTE IS IMPORTANT
Please complete, sign, date and execute and return the enclosed Proxy Card
promptly, whether or not you intend to be present at the meeting. Should you
decide to attend the meeting and are a shareholder of record, you may vote in
person at that time if you so desire. Your attention to the enclosed Proxy
Statement furnished by Management and authorized by the Board of Directors is
urged. Your proxy may be revoked at any time before it is voted.
<PAGE>
ENGINEERING MEASUREMENTS COMPANY
600 Diagonal Highway
Longmont, CO 80501
(303) 651-0550
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
To Be Held on October 30, 1998
The accompanying Proxy is solicited by the Board of Directors of Engineering
Measurements Company, a Colorado corporation, hereinafter called the "Company,"
for use at the Annual Meeting of Shareholders to be held on Friday, October 30,
1998 at 10:00 a.m. local time, at the Company's headquarters, 600 Diagonal
Highway, Longmont Colorado 80501, and at any recesses or adjournments thereof.
This Proxy Statement and the accompanying Proxy Card and Proxy Notice materials
are being mailed to shareholders on or about September 30, 1998.
The Proxy may be revoked at any time by the shareholder of record before it is
exercised. All shares of stock represented by valid Proxies received prior to
the meeting pursuant to this solicitation and not revoked before they are
exercised will be voted. In each case where the shareholder has appropriately
specified how the Proxy is to be voted, it will be voted in accordance with such
specification. Unless specific instructions are given to the contrary, the
persons named in the accompanying proxy will vote FOR the election of the four
persons nominated to serve as directors of the Company and FOR the 1998 Employee
Stock Purchase Plan. Abstentions received with respect to any proposal will be
counted for purposes of determining whether a quorum is present at the Meeting,
but will not be counted for purposes of determining whether the requisite vote
has been obtained for the proposal. Broker non-votes with respect to a
particular proposal will not be counted for purposes of either determining
whether a quorum is present at the Meeting or determining whether the requisite
vote for such proposal has been obtained. The giving of a proxy will not affect
a shareholder of record's right to attend the meeting and vote in person. Any
shareholder giving a proxy has the right to revoke it at any time before it is
exercised by executing and returning a proxy bearing a later date, by giving
written notice of revocation to the Company's secretary, or by attending the
meeting and voting in person.
The Board of Directors recommends a vote FOR the election of Directors and FOR
approval of the Employee Stock Purchase Plan.
PERSONS MAKING THE SOLICITATION
This Proxy is solicited by the Board of Directors of the Company. In addition
to the solicitation of Proxies by mail, certain of the officers or employees of
the Company, without extra remuneration, may solicit Proxies personally or by
telephone, facsimile, telegraph or cable. The total expense of such
solicitation will be borne by the Company and will include reimbursement paid to
brokerage firms and other custodians, nominees and fiduciaries for their expense
in forwarding solicitation material regarding the meeting to beneficial owners.
PAGE 1 OF 10
<PAGE>
REQUIRED VOTE FOR EACH PROPOSAL
The four nominees for director receiving the highest number of votes cast by
shareholders of the Company entitled to vote thereon, assuming that a quorum of
a majority (a "Quorum") of the outstanding shares of common stock of the Company
entitled to vote at the Meeting is present in person or by proxy, will be
elected to serve on the Board of Directors. The Employee Stock Purchase Plan
will be adopted if the number of votes cast favoring the Plan exceeds the number
of votes against the adoption of the Plan, assuming a Quorum is present at the
Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The date for determination of Shareholders entitled to vote at the meeting (the
"Record Date") is the close of business on September 16, 1998. On such date
there were outstanding 3,217,048 shares of Common Stock, $.01 par value (the
"Common Stock") of the Company, each of which is entitled to one (1) vote.
On the Record Date the security ownership of each person who owned of record or
beneficially, to the knowledge of the Company, five percent (5%) or more of any
class of voting securities of the Company, and of each current Director (and
each nominee Director) and of the Officers and Directors (and nominees) as a
group was as follows. All information is based on information furnished by each
such person. Unless otherwise stated, the indicated persons have sole voting
and investment power over the shares listed.
<TABLE>
Name of Amount and Nature Percent
Title of Class Beneficial Owner of Ownership of Class
<S> <C> <C> <C> <C>
Common Stock Charles E. Miller 1,256,021 (1) 38.8
Common Stock William A. Ringer 103,900 (2) 3.2
Common Stock Saeid Hosseini 71,400 (3) 2.2
Common Stock David S. Miller 391,959 (4) 12.2
Common Stock Walter Kluck 27,750 (5) 0.9
Common Stock Thomas G. Miller 355,390 (6) 11.0
Common Stock Ken Teegardin 30,000 (7) 0.9
</TABLE>
All Directors and Officers as a Group
(Six Persons) 1,844,461 54.9
PAGE 2 OF 10
<PAGE>
(1) Record and Beneficial; includes 1,235,146 shares of common stock owned
directly; an option to purchase 20,875 shares of common stock under
the 1991 Incentive Plan; Mr. Miller has sole voting and investing
power on 1,208,846 of the owned shares; the remaining 26,300 shares
have shared voting and investment power. Charles E. Miller's business
address is 600 Diagonal Highway, Longmont, CO 80501.
(2) Record and Beneficial; includes 78,900 shares of common stock owned
with sole voting and investment power; an option to purchase 20,000
shares of common stock under the 1991 Non-Employee Director Stock
Plan; and an option to purchase 5,000 shares of common stock under the
1997 Incentive Plan. William A. Ringer's business address is 5675
Arapahoe Avenue, Boulder, CO 80303.
(3) Record and Beneficial; includes 41,230 shares of common stock owned
with sole voting and investment power; an option to purchase 20,170
shares of common stock under the 1991 Incentive Plan; and an option to
purchase 10,000 shares of common stock under the 1997 Incentive Plan.
Saeid Hosseini's business address is 600 Diagonal Highway, Longmont,
CO 80501.
(4) Record and Beneficial; includes 391,959 shares of common stock owned.
David Miller has sole voting and investment power for 375,414 of the
shares; the remaining 16,545 shares have shared voting and investment
power. David S. Miller's business address is 420 E. Armour, N. Kansas
City, MO 64166.
(5) Record and Beneficial; includes 2,750 shares of common stock owned
with sole voting and investment power; an option to purchase 20,000
shares of common stock under the 1991 Non-Employee Director Stock
Plan; and an option to purchase 5,000 shares of common stock under the
1997 Incentive Plan. Walter Kluck's business address is P.O. Box 421,
Clifton, NJ 07015.
(6) Record and Beneficial; includes 345,390 shares of common stock owned
directly with sole investment power; an option to purchase 5,000
shares of common stock under the 1991 Non-Employee Director Stock
Plan; and an option to purchase 5,000 shares under the 1997 Incentive
Plan. Thomas G. Miller's business address is 11725 W. 112th St.,
Overland Park, KS 66210.
(7) Record and Beneficial; includes an option to purchase 20,000 shares of
common stock under the 1991 Incentive Plan; and an option to purchase
10,000 shares under the 1997 Incentive Plan. Ken Teegardin's business
address is 600 Diagonal Highway, Longmont, CO 80501.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Bylaws, as amended, provide for a Board of four (4) Directors. Management
recommends the election of the nominees listed below as Directors, to hold
office until the next Annual Meeting of Shareholders or until their successors
are elected and qualify. Except where otherwise instructed, proxies will be
voted for election of all the nominees. If, at the time of the 1998 Annual
Meeting of Shareholders, any of such nominees should be unable to or decline to
serve, the discretionary authority provided in the Proxy will be exercised to
vote for a substitute. Management has no reason to believe that any substitute
nominee or nominees will be required.
PAGE 3 OF 10
<PAGE>
The following Table indicates the name of each of the Company's Directors and
nominees for Directors, their ages and business experience during the past five
(5) years:
<TABLE>
Year First Position, Date first held
Elected as and Principal Occupation
Name of Director Age Director (For Past Five Years)
<S> <C> <C> <C>
Charles E. Miller 60 1967 Chief Executive Officer, President,
Director and Chairman of the Board;
Member of the Incentive Plan Committee;
previously President from 1967 to 1987.
William A. Ringer 64 1978 Director, Member of the Audit,
Compensation and Incentive Plan
Committees; President of Granville
Phillips Company, Boulder, Colorado,
which is not an affiliate of the
Company. Employed by Granville Phillips
in an executive capacity for more than
five years prior to the date of this
report.
Thomas G. Miller 51 1995 Director, Member of the Compensation and
Incentive Plan Committees; CEO and
physician of College Park Family Care
Center of Overland Park, Kansas, which
is not an affiliate of the Company.
Employed by College Park Family Care
Center in an executive capacity for more
than five years prior to the date of
this report.
Walter Kluck 70 1995 Director, Member of the Audit,
Compensation and Incentive Plan
Committees; CEO of Industrial
Representatives, Inc. of Clifton, New
Jersey, which is not an affiliate of the
Company. Employed by Industrial
Representatives, Inc. in an executive
capacity for more than five years prior
to the date of this report.
</TABLE>
The Board of Directors has standing Audit, Compensation and Incentive Plan
Committees. Mr. Ringer and Mr. Kluck constitute the members of the Audit
Committee, and Messrs. Thomas Miller, Ringer, and Kluck serve on the
Compensation Committee. The Audit Committee reviews financial statements. The
Audit Committee met once during the fiscal year ending April 30, 1998. The
Compensation Committee meets informally as required to recommend to the Board of
Directors the compensation to be paid to the officers of the Company and to
recommend to the Board of Directors any other profit sharing and bonus issues
that may come before the Board of Directors. The Compensation Committee did not
meet formally during fiscal year 1998. The entire Board of Directors serves as
the committee under the Company's 1997 Incentive Plan which provides for equity
compensation to officers, directors, shareholders and contractors. Charles
Miller, William A. Ringer, Thomas G. Miller and Walter Kluck constitute the
members of the Incentive Plan Committee, which did not meet during the fiscal
year ending April 30,1998.
The Board of Directors held four meetings during the fiscal year ending April
30, 1998. All Directors attended all meetings.
All Directors hold office until the next annual meeting of the shareholders of
the Company or until their successors have been elected and qualified. Officers
serve at the discretion of the Board of Directors and are elected annually.
PAGE 4 OF 10
<PAGE>
None of the Directors have been involved in any litigation or bankruptcy during
the past five years.
Charles E. Miller, Thomas G. Miller and David S. Miller are brothers. David S.
Miller is one of the Company's investment brokers.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulation to furnish the Company with the copies of all Section 16(a) forms
they file. Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the last fiscal year, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with, except for Mr. Charles E. Miller who filed late on
the exercise of 20,000 options and the conversion of debt to 345,766 shares of
common stock.
PROPOSAL 2 - ADOPTION OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN
On September 9, 1998, the Board of Directors adopted, subject to
shareholder approval, the Company's 1998 Employee Stock Purchase Plan (the
"Plan") including an aggregate of 150,000 shares of the Company's $0.01 par
value Common Stock (subject to adjustment for certain stock dividends, stock
splits or other relevant changes to the Company's capitalization). The Company
believes that granting the opportunity to employees to acquire shares of its
Common Stock under the Plan is in the best interests of the Company. A copy of
the Plan is attached hereto as Exhibit A.
THE BOARD OF DIRECTORS BELIEVES THE PLAN IS IN THE BEST INTERESTS OF THE COMPANY
AND ITS SHAREHOLDERS AND THEREFORE RECOMMENDS A VOTE FOR THE ADOPTION OF THE
PLAN.
The following is a summary of some of the principal terms of the 1998 Stock
Purchase Plan:
Offerings; Number and Purchase Price of Shares. The Plan will be
implemented in eight semi-annual offerings of the Company's Common Stock
("Offerings"), or, if less, in such number of Offerings in which options are
exercised to purchase the maximum number of shares of Common Stock reserved for
the Plan by the Company. The maximum number of shares issued in each six month
Offering Period will be 18,750 shares plus unissued shares, if any, from prior
Offering Periods. The first Offering Period under the Plan will commence on the
first day of the month following shareholder approval of the Plan, or at a later
date set by the Board, at its discretion, prior to April 30, 1999, and will
terminate six months thereafter, or on April 30, 1999, at the Board's
discretion. Each subsequent Offering will begin on the first business day after
the termination of the prior offering period and will end six months thereafter.
The Company will grant to each participant an option to purchase on the
last day of the Offering Period, the number of full shares of Common Stock as
his or her accumulated payroll deductions on the last day of the Offering Period
will pay for at the Option Price, subject to certain limits on the number of
options that may be purchased by participants under the Plan and provided that
the employee remains eligible to participate in the Plan throughout the Offering
Period. Options granted under the Plan expire on the last day of each Offering
Period and employees may only exercise options on the last day of the
PAGE 5 OF 10
<PAGE>
Offering Period. The Company will pay no interest on payroll deductions held in
accounts during the Offering Periods.
The Option Price of stock purchased with payroll deductions made during an
Offering Period shall normally be the lower of: (a) 85% of the closing price of
the Stock on the Offering Commencement Date, or the nearest prior business day
on which trading occurred on the NASDAQ National Market System; or (b) 85% of
the closing price of the Stock on the Offering Termination Date, or the nearest
prior business day on which trading occurred on the NASDAQ National Market
System. The Board or committee administering the Plan has the discretion to set
such price at a higher amount up to 100% of such closing prices.
Eligible employees may elect to have up to 10% withheld each month from his
or her regular base salary to be deposited into an account for the purchase of
Common Stock under the Plan during each Offering Period. In any Plan year, no
employee may purchase more than either 500 shares of Common Stock or $25,000
worth of Common Stock under the Plan, whichever is less. Employees who purchase
Common Stock under the Plan and who are subject to Section 16(a) of the
Securities Exchange Act of 1934 must agree to hold their shares for a period of
at least six (6) months after acquisition of such Common Stock. All other
participants must agree to hold their shares for at least two (2) months after
acquisition of Common Stock under the Plan.
Eligibility. Except for employees already holding 5% or more of the total
voting power of capital stock of the Company and employees earning an annual
base salary that exceeds $80,000, each employee of the Company having at least
two (2) years of continuous service as of the beginning of an Offering Period
and who ordinarily works twenty (20) or more hours per week and more than five
(5) months per year is eligible to participate in the Plan. As of September 25,
1998, approximately 80 employees were eligible to participate in the Plan.
Amendment, Termination and Administration. The Board of Directors of the
Company may amend the Plan at any time. However, no such amendment shall be
made without prior approval of the shareholders of the Company if such amendment
would (a) increase the number of shares of Common Stock to be offered under the
Plan, except as provided in Sections 10.1 and 13.4 of the Plan; or (b) change
the class of employees eligible to participate in the Plan; or (c) cause the
Plan to no longer comply with Rule16b-3 under the Securities Exchange Act of
1934 or with Section 423 of the Internal Revenue Code. The Plan will be
administered by the Board of Directors, unless a committee of non-employee
directors is appointed by the Board. The interpretations of the Plan by the
Board, or by a committee if one is appointed, will be final and binding on the
Company and all employees and Plan participants.
Federal Income Tax Consequences. The Plan is intended to qualify as an
"employee stock purchase plan" as defined in Section 423 of the Internal Revenue
Code.
The employee realizes no income when he or she purchases the stock under
the Plan and the Company has no trade or business deduction at such time.
If (a) the employee is an employee of the Company at all times during the
relevant Offering Period, and (b) the employee makes no disposition of the stock
within two (2) years after the first business day of the relevant Offering
Period (the "Holding Period"), the employee must report ordinary income in an
amount equal to the lesser of (a) the excess of the fair market value of the
stock at the time of such disposition over the Option Price, and (b) the excess
of the fair market value of the stock at the time of purchase over the Option
Price. Any further gain on disposition is taxed as long-term capital gain. If
the price received on disposition is less than the Option Price, the employee
will report the loss as a long-term capital loss. The Company receives no
deduction when the Holding Period is met, even if ordinary income results to the
employee.
PAGE 6 OF 10
<PAGE>
If the employee disposes of the stock before the Holding Period expires,
the employee will recognize ordinary income equal to the difference between the
disposition price and the Option Price. The Company will have a deduction in
the same amount. The income is treated as received for the tax year of the
employee when the disposition occurs. Similarly, the deduction is treated as
allowable for the tax year of the Company when the disposition occurs.
The employee must report as ordinary income all amounts withheld from
regular base pay in each Offering Period pursuant to an Authorization signed by
him, as well as any interest earned on such funds, if any, while they are held
by the Company on behalf of the employee.
Ordinary income is taxed for federal tax purposes at rates ranging from 15%
to 39.6%. The maximum federal tax rate imposed on net capital gain for most
assets (including Company stock) is 20%. Net capital gain means the excess of
net long-term capital gain over net short-term capital loss. Net capital losses
can be deducted against ordinary income, subject to a limitation of $3,000
annually.
Employees who participate in the Plan should consult their own tax advisors
to determine the specific tax consequences of the Plan for them.
EXECUTIVE OFFICERS
The Table below indicates the name of each of the Company's executive officers,
their ages and positions, and their business experience during the past five (5)
years.
<TABLE>
Name of Officer Age Position, Principal Occupation (for the past 5 years)
<S> <C> <C>
Charles E. Miller 60 Chief Executive Officer, President, Chairman of
the Board and Secretary; previously President
from 1967 to 1987.
Saeid Hosseini 35 Vice President Sales and Marketing. Previously Product
Line Manager, and Manager of Applications Engineering.
Employed by the Company for more than five years prior
to the date of this proxy statement.
Ken H. Teegardin 36 Vice President of Operations. Previously Director
of Manufacturing, employed at the Company since 1995.
Employed in a manufacturing management capacity at
Johnson Yokogawa Corporation, Newnan, Georgia, which
is not an affiliate of the Company, for more than five
years prior to the date of this proxy statement.
</TABLE>
PAGE 7 OF 10
<PAGE>
SIGNIFICANT EMPLOYEES
The Table below indicates the name of each of the Company's significant
employees, their ages and positions, and their business experience during the
past five (5) years.
<TABLE>
Position, Principal
Name of Employee Age Occupation (for the past 5 years)
<S> <C> <C>
John B. Thompson 41 Controller since August 1992.
Louis T. Yoshida 56 Director of Engineering since January 1995.
Employed as president, director of research and
development at Innovative Technology Corporation,
Longmont, Colorado, which is not an affiliate of the
Company, for more than five years prior to the date of
this proxy statement.
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation awarded to, earned by, or
paid to the Company's Chief Executive Officer and no other officers received
compensation over $100,000 for services in all capacities to the Company during
the fiscal years ended April 30, 1996, 1997 and 1998:
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
<CAPTION>
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h)
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options/ Compen-
Position Year Salary($) Bonus($) sation($) Awards($) SAR's# sation($)(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Charles E. 1996 $121,664 $7,133 0 0 0 $1,217
Miller, 1997 $133,688 $2,651 0 0 10,000 $1,408
CEO and 1998 $135,000 $0 0 0 0 $1,350
Chairman
of the Board
</TABLE>
(1) Other Compensation for Mr. Miller reflects the matching portion of the
Company's 401K plan.
PAGE 8 OF 10
<PAGE>
Option/SAR Grants in Last Fiscal Year
During fiscal year ending 1998, no stock options were granted to the Chief
Executive Officer.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and
FY-End Option/SAR Values
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SAR's at Options/SAR's
FY-End (#) at FY-End ($)
Shares Exercisable/ Exercisable/
Acquired
Name On Exercise Value Unexercisable Unexercisable
(#) Realized ($)
<S> <C> <C> <C> <C>
Charles E. Miller 20,000 67,500 0/0 $0/$0
10,875/0 $24,414/$0
5,000/0 $12,475/$0
5,000/0 $9,375/$0
</TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
During fiscal year 1998 there were no Long Term Incentive Plans of the Company.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company received an annual Director's fee
of $3,000. This fee is paid whether or not the Director attends meetings of the
Board and its Committees.
Under the 1997 Incentive Plan, in fiscal year 1999, non-qualified stock options
were granted to purchase 60,000 shares, 20,000 each to William A. Ringer, Walter
Kluck, and Thomas G. Miller, exercisable at $4.94 per share and vesting over the
period from October 22, 1998 to October 22, 2001.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 11, 1991, DVCO, Inc. ("DVCO"), a wholly owned subsidiary of MGAS entered
into a Sale and License Agreement with EMCO. Pursuant to that agreement, DVCO
acquired the compressed natural gas (CNG) Dispenser and certain licenses to the
underlying digital valve technology from EMCO.
EMCO and DVCO also entered into a Manufacturing and Lease Agreement, pursuant to
which EMCO agreed to manufacture the digital valve (a key component of the CNG
Dispenser) for up to 25 CNG dispensers for DVCO. The agreement has been amended
and renewed by the parties for additional digital valves, and may be renewed in
the future by mutual agreement. Sales from the Company to DVCO was
approximately $0 in fiscal year 1998, and $29,000 for the fiscal year ending
1997. The Company recorded $50,000 royalty income from DVCO in fiscal year
ending 1997 and $0 in fiscal year ending 1998. The royalty agreement expired
April 30, 1997 with the Company.
PAGE 9 OF 10
<PAGE>
During the fiscal year ended April 30, 1998, Mr. Charles Miller converted
$353,790 in loans from a stockholder into 345,766 shares of common stock of the
Company as provided in the loan agreement.
During fiscal year 1997, the Company sold all of its 154,000 shares of Marcum
Natural Gas Services, Inc. (MGAS) stock, which resulted in a loss of
approximately $117,000. Charles E. Miller, the Chairman and Chief Executive
Officer of the Company, resigned as Director of MGAS in the fiscal year 1997.
The 154,000 shares of MGAS common stock which were sold by the Company
represented approximately two percent of MGAS's outstanding common stock.
INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton served as the Company's independent certified public accountants
for the year ended April 30, 1998. It is expected that a representative of
Grant Thornton will be present at the Annual Meeting of the Shareholders. Such
representative will have the opportunity to make a statement, if he desires to
do so, and is expected to be available to respond to appropriate questions.
PROPOSALS BY SHAREHOLDERS
The Securities and Exchange Commission has amended the provisions of Rule 14a-4
under the Securities Exchange Act of 1934 to provide that the Company's proxies
solicited in connection with its annual meeting of shareholders, including the
1999 Annual Meeting, may confer discretionary voting authority on Company
management with respect to certain types of shareholder proposals that may be
raised at the Annual Meeting unless the proposing shareholder notifies the
Company at least 45 days prior to the date of mailing the prior year's proxy
that such proposal will be made at the meeting.
Any shareholder who wishes to submit a proposal to be considered at the Annual
Meeting of the Company's shareholders, to be held after the April 30, 1999
fiscal year end, must submit the proposal to the Company by August 15, 1999 for
the proposal to be included in the Proxy Statement for that meeting. Any such
proposals should be sent to the Company's principal executive offices at 600
Diagonal Highway, Longmont, Colorado 80501.
OTHER MATTERS
Management is not aware that any matters not referred to in the Proxy Statement
will be presented for action at the meeting. If any other matters properly come
before the meeting, the persons named in the enclosed Proxy will vote such Proxy
in accordance with their best judgment.
AVAILABILITY OF ANNUAL REPORT
The Company will provide any Shareholder with a copy of its Annual Report on
Form 10-KSB for its fiscal year ended April 30, 1998, without charge upon
receipt of a written request for such report. Such requests should be addressed
to the Company's secretary at 600 Diagonal Highway, Longmont, Colorado 80501.
The Annual Report is not a part of this proxy statement.
Longmont, Colorado
September 30, 1998
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