WCM CAPITAL, INC.
76 Beaver Street
Suite 500
New York, NY 10005-3402
Telephone (212) 344-2828
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Friday, November 24, 2000
An Annual Meeting of Stockholders of WCM Capital, Inc., a Delaware
corporation (the "Company") will be held at the Holiday Inn, 275 South Airport
Boulevard, South San Francisco, California 94080 on Friday, November 24, 2000 at
9:00 a.m., for the following purposes:
(1) To elect five directors for a term expiring at the 2001 Annual Meeting
of Stockholders or until their respective successors have been duly elected and
qualified;
(2) To approve the appointment of J.H. Cohn LLP as independent auditors for
the Company for fiscal year ended December 31, 2000; and
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only holders of the Company's common stock, par value $0.01 per share (the
"Common Stock"), of record on October 18, 2000 are entitled to notice of, and to
vote at, the meeting or any adjournment thereof. At October 18, 2000, the record
date for determination of stockholders entitled to vote at the meeting or any
adjournments thereof, 1,782,676 shares of Common Stock were issued and
outstanding.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL
OUT, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
PROXIES FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS
REQUESTED BY THEM. THE PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE INVOLVED
IN FURTHER COMMUNICATION.
By Order of the Board of Directors,
/s/ Richard Brannon
New York, New York
October 20, 2000 /s/ Richard Brannon
-------------------
Richard Brannon, Secretary
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WCM CAPITAL, INC.
(Formerly, Franklin Consolidated Mining Co., Inc.)
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ANNUAL MEETING OF STOCKHOLDERS
Friday, November 24, 2000
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PROXY STATEMENT
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GENERAL INFORMATION
This Proxy Statement (the "Proxy Statement") is furnished in connection with the
solicitation of proxies by the Board of Directors of WCM Capital, Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders of the Company to be held on Friday, November 24, 2000, or any and
all adjournments thereof, with respect to the following matters:
(1) To elect five directors for a term expiring at the 2001 Annual Meeting
of Stockholders or until their respective successors have been duly
elected and qualified (the "Election of Directors");
(2) To approve the appointment of J.H. Cohn LLP as independent auditors
for the Company for fiscal year ended December 31, 2000; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Annual Meeting (the "Meeting") will be held on Friday, November 24, 2000 at
9:00 a.m. at the Holiday Inn, 275 South Airport Boulevard, South San Francisco,
California 94080. The Notice of Annual Meeting, Proxy Statement, Proxy Card, and
the Annual Report will be mailed on or about October 23, 2000 to stockholders of
record of the Company as of October 18, 2000.
If the enclosed proxy card is properly executed and returned in time to be voted
at the meeting, the shares of Common Stock represented will be voted in
accordance with the instructions contained therein. Executed proxies that
contain no instructions will be voted in favor of all of the proposals set forth
above.
If the Annual Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Annual Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Annual Meeting (except for proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively voted
on the same or any other matter at a previous meeting.
The presence at the Annual Meeting, whether in person or by proxy, of the
holders of at least a majority of the outstanding shares of Common Stock
entitled to vote thereat constitutes a quorum for the transaction of business.
For purposes of the quorum and the discussion below regarding the votes
necessary to take stockholder action, Stockholders of record who are present at
the meeting in person or by proxy and who abstain, including brokers holding
customers' shares of record who cause abstentions to be recorded at the meeting,
are considered Stockholders who are present and entitled to vote and they count
toward the quorum.
Brokers holding shares of record for customers generally are not entitled to
vote on certain matters unless they receive voting instructions from their
customers. As used herein, "uninstructed shares" means shares held by a broker
who has not received instructions from its customers on such matters and the
broker has so notified the Company on a proxy form in accordance with industry
practice or has otherwise advised the Company that it lacks voting authority. As
used herein, "broker non-votes," means the votes that could have been cast on
the matter in question by brokers with respect to uninstructed shares if the
brokers had received their customers' instructions.
<PAGE>
Election of Directors. Directors are elected by a plurality vote and the five
nominees who receive the most votes will be elected. In the election of
Directors, votes may be cast in favor of or withheld with respect to each
nominee. Abstentions and broker non-votes will not be taken into account in
determining the outcome of the election.
Approval of Auditor. To be approved, this matter must receive the affirmative
vote of the majority of the shares present or by proxy at the Annual Meeting and
entitled to vote. Uninstructed shares are entitled to vote on this matter.
Therefore, abstentions and broker non-votes have the effect of negative votes.
On October 18, 2000 (the "Record Date"), there were outstanding 1,782,676 shares
of Common Stock. Only holders of record of Common Stock at the close of business
on the Record Date will be entitled to notice of, and to vote at, the Annual
Meeting. Each share of Common Stock is entitled to one vote for each director to
be elected and upon all other matters to be brought to a vote by the
Stockholders at the forthcoming Annual Meeting.
Commencing 11 days prior to the date of the Annual Meeting, a complete record of
the stockholders entitled to vote at the Annual Meeting, or any adjournment
thereof, shall be available for inspection at the Company's executive office
during normal business hours by any stockholder for any purpose germane to the
Annual Meeting. This record will also be available to stockholders for such
purposes at the place of and during the Annual Meeting
The Company's executive offices are currently located at 76 Beaver Street, Suite
500, New York, New York 10005.
REVOCABILITY OF PROXIES
Stockholders who execute proxies for the Annual Meeting may revoke their proxies
at any time prior to their exercise, by delivering written notice of revocation
to the Company at the address on the Notice of Annual Meeting, by delivering a
duly executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person.
BOARD OF DIRECTORS PROXY SOLICITATION
The costs of soliciting the proxies and of the meeting, including the costs of
preparing and mailing this Proxy Statement and other material, will be borne by
the Company. In addition to solicitation by mail, certain directors, officers,
and regular employees of the Company may, without additional compensation,
solicit proxies by telephone, personal interview, or facsimile transmission to
encourage stockholder participation in the voting process. The Company also will
request banks, brokers and others who hold shares in the Company in nominee
names to distribute proxy-soliciting material to beneficial owners, and will
reimburse such banks and brokers for reasonable out-of-pocket expenses, which
they may incur in so doing.
<PAGE>
ELECTION OF DIRECTORS
Item 1 on Proxy
The Board of Directors has fixed the number of directors constituting the whole
Board as five and has selected the following nominees for election to a term
expiring at the 2001 Annual Meeting or until their successors have been elected
and qualified:
Robert L. Waligunda
Vincent DeMartino
William C. Martucci
William H. Wishinsky
Casey Myhre
Unless authority to vote for directors is withheld in the proxy, the persons
named in the accompanying proxy intend to vote for the election of the five
nominees listed above.
All nominees have indicated a willingness to serve as directors, but if any of
them should decline or be unable to act as a director, the persons named in the
proxy will vote for the election of another person or persons as the Board of
Directors recommends. Of all of the nominees for director, only Mr. DeMartino
was not elected by the stockholders at the last Annual Meeting of Stockholders
held in November 1999. There are no family relationships between the nominees
for the Board of Directors.
The following biographical information is furnished with respect to each of the
five nominees for election at the Annual Meeting.
WILLIAM C. MARTUCCI, Director, age 58. Mr. Martucci has been a Director of the
Company since October 28, 1998. From 1974 to the present, Mr. Martucci has
served as president and chairman of United Grocers Clearing House, Inc., a
privately held company he founded to serve the coupon redemption, fulfillment
and promotional needs of manufacturers and retailers. Additionally, Mr. Martucci
is the sole shareholder, director, and president of US Mining, Inc., the
Company's principal creditor. Mr. Martucci received a Bachelor of Science in
Philosophy from Florida International University in 1973.
ROBERT L. WALIGUNDA, Director, President and Treasurer, age 53. Mr. Waligunda
has served as a Director of the Company since 1985 and Treasurer of the Company
since August 1995. He is a member of the Audit Committee of the Board of
Directors. He was Secretary from August 1995 to October 1998 From 1965 to the
present, Mr. Waligunda has served as founder, President and principal
stockholder of Sky Promotions, Inc., a Pittstown, New Jersey marketing and
management company involved in sales, advertising and marketing of hot air
balloons and inflatable products. He is the founder and director of
International Professional Balloon Pilots Racing Association, a member of the
advisory board of Aerostar International, Inc., the world's oldest and largest
balloon manufacturing company, and a member of the National Aeronautic
Association, the Experimental Aircraft Association, and the Airplane Owner and
Pilots Association. Mr. Waligunda received a Masters of Science degree in
guidance and psychological services from Springfield College in 1968.
<PAGE>
WILLIAM H. WISHINSKY, Director, age 36. Mr. Wishinsky has been a Director of the
Company and a member of the Audit Committee of the Board of Directors since
October 4, 1999. Since 1990, Mr. Wishinsky has been the owner of William H.
Wishinsky, CPA, P.C., an accounting firm. From 1988 until 1990, he was an
accountant at Friedman, Alpren & Green, CPA's in New York City. Mr. Wishinsky
graduated from Pace University in New York and received a B.B.A. in Accounting
in June 1986. He became a certified public accountant in 1990.
CASEY MYHRE, Director, age 35. Mr. Myhre has been a Director of the Company and
a member of the Audit Committee of the Board of Directors since October 4, 1999.
Since early 1999, Mr. Myhre has been manager of Kimball International, a
furniture manufacturing company. For the four years prior to his being promoted
to management he worked for Kimball International as a salesman. Mr. Myhre
attended Minnesota School of Business and graduated in 1987.
VINCENT DEMARTINO, Director, age 33. Mr. DeMartino has been a Director of the
Company since March 23, 2000. Since 1996, Mr. DeMartino has been Professional
Sales Representative and District Trainer for TAP Pharmaceuticals Inc. Prior to
1996 Mr. DeMartino was account executive for Boston Group in New York and
maintained brokerage accounts for customers with growth objectives and managed
over one million dollars in assets. Mr. DeMartino attended Seton Hall University
and received a Bachelors of Arts Degree in May 1989 and majored in criminal
justice. He is also accredited with a Series 7 in 1963.
The Board of Directors met by phone two times during 1999. None of the directors
attended less than 100% of the meetings of the Board. The Board of Directors
established an Audit Committee that currently is comprised of Messrs Waligunda,
Wishinsky, and Myhre. Messrs. Wishinsky and Myhre were appointed to the
Committee in September 1999 and replace Ronald Ginsberg (who resigned on May 27,
1999) and Robert W. Singer (who resigned on October 4, 1999). All members were
reappointed in November 1999 after the Annual Meeting of Shareholders. The Audit
Committee did not meet during 1999. The Board of Directors will appoint new
members to the Audit Committee at its annual meeting, immediately following the
Annual Meeting of Stockholders. The Audit Committee's function includes
recommending annually to the Board of Directors a firm of independent auditors
to audit and review the Company's books, records and the scope of such firm's
audit, reviewing reports and recommendations of the Company's independent
auditors, reviewing the scope of all internal audits and reports and
recommendations in connection therewith and review non-audit services provided
by the Company's principal independent auditors.
EXECUTIVE OFFICERS
The executive officers of the Company are appointed annually by the Board of
Directors and, to date, have served an indefinite term. The current officers
serve on a part-time basis. No family relationship exists between any of the
executive officers of the Company.
Name Age Position
Robert L. Waligunda 53 President, Treasurer and Director
Richard Brannon 49 Vice President and Secretary
Mr. Waligunda's and Mr. Brannon's biographical information is set forth above.
RICHARD BRANNON has served as the Vice President-West Coast Operations since
February 1996 and Secretary of the Company since October 1998. Mr. Brannon is a
California licensed real estate broker and 100% owner of A Reel Mortgage, Inc.,
a mortgage and loan servicing company organized in 1991. Mr. Brannon is a
founding director of the California Trustee Mortgage Broker Association, a
not-for-profit corporation.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
Directors, Executive Officers and Principal Stockholders
The following table lists the beneficial ownership of shares of the
Company's Common Stock as of October 15, 2000 for (a) each director, (b) each
nominee for director (c) each executive officer, (d) each person who is known by
the Company to be the beneficial owner of five percent or more of the
outstanding shares of Common Stock and (e) all directors and executive officers
as a group.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percentage
Owner Ownership of Class
---------- --------- -------------
Robert L. Waligunda (1) 856 (4) *
George E. Otten(1) -0- -0-
William C. Martucci (1) -0-(3) -0-
Richard Brannon (1)(4) 169,750 10%
William H. Wishinsky (1) -0- -0-
Casey Myhre (1) -0- -0-
Joseph Laura (5) 153,690 10%
All Directors and Executive
Officers as a Group (6 persons,
including the above-listed former
officers and directors) %
-------------- ----------
324,296 20 %
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* Less than 1%
1. Executive officer and/or director of the Company
2. Includes 856 shares pledged as collateral to a non-affiliate individual.
3. Although Mr. Martucci does not own any shares of the Company's common
stock, he is, through his affiliates, the principal creditor of the Company
and the principal source of funding for the Company. Accordingly, he has
the ability to exert significant influence on the management of the
Company. See "Certain Transactions with Executive Officers and Directors"
below.
4. Includes 169,750 shares issued in connection with a Service Agreement,
dated May 26, 2000.
5. Includes 153,690 shares issued in connection with a Service Agreement,
dated May 26, 2000.
<PAGE>
To the Company's knowledge and based solely on a review of such materials as are
required by the Securities and Exchange Commission, no officer, director or
beneficial holder of more than ten percent of the Company's issued and
outstanding shares of Common Stock ("Beneficial Owner") has filed any forms and
reports required to be filed pursuant to Section 16(a) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), during the fiscal year
ended December 31, 1999; and no officer, director or Beneficial Holder has
submitted any representation letter to the Company stating that they are not
subject to the filing requirements under Section 16 of the Exchange Act for
fiscal year 1999.
EXECUTIVE COMPENSATION
The Company's two executive officers, Messrs. Waligunda and Brannon, received no
significant compensation in fiscal year 1999. The Company granted no options to
any of the Company's Executive Officers in 1999. None of the Company's executive
officers owns any options of the Company and there were no exercises of any
option in 1998 by any such persons.
On May 26, 2000 the Company entered into a Services Agreement with Mr. Brannon
pursuant to which Mr. Brannon was issued 169,750 shares of common stock of the
Company. The Company registered these shares on Form S-8 on June 6, 2000.
The Company has not adopted any stock option plans, medical insurance plans, or
retirement, pension, profit sharing or insurance plans for the benefit of its
directors, officers or employees.
No officer or director of the Company receives any cash compensation for
services rendered as a director and/or office.
None of the Company officers have entered into written employment agreements
with the Company.
CERTAIN TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
During fiscal year 1998, J. Terry Anderson, former director and officer of the
Company, loaned the Company approximately $23,000 and Anderson Chemical Company,
a company for which Mr. Anderson serves as director and president, loaned the
Company approximately $85,000 for working capital and other expenses.
Additionally, in July 1996, Anderson Chemical Company loaned the Company $20,000
evidenced by a Promissory Note bearing interest at a rate of 12% per annum. As
of the Record Date, these loans remain outstanding.
On December 25, 1976, the Company leased 28-patented mining claims from Audrey
and David Hayden ("Hayden") and Dorothy Kennec pursuant to a mining lease and
option to purchase dated November 12, 1976 (the "Hayden/Kennec Lease"). The
leases expired. However, on November 13, 1997, US Mining, Inc. ("USM"), a New
Jersey corporation wholly-owned and controlled by William C. Martucci, a Company
director, entered into an agreement with Hayden to purchase her interest in the
Hayden/Kennec Lease for a purchase price of $70,000 (the "Hayden-USM Purchase
Agreement"). The purchase price is evidenced by note, due on February 2, 1998.
Upon the execution of the Hayden-USM Purchase Agreement, USM agreed to extend
the Hayden/Kennec Leases upon the same terms and conditions then in effect
through March 13, 1998. As of the date hereof, USM has not consummated the
transaction contemplated by the Hayden-USM Purchase Agreement; however, the
termination date has been extended through December 31, 2000. USM has continued
to make royalty payments to Mrs. Hayden pursuant to the terms of the Hayden-USM
Purchase Agreement. No assurance can be given as to whether the Hayden-USM
Purchase Agreement will be consummated. In the event that the Hayden-USM
Purchase Agreement is not consummated the lease will become invalid and there is
no assurance can be given that the Company will not lose its rights to the
leasehold properties.
<PAGE>
The Company had outstanding an 8% promissory note (the "Note") plus additional
liabilities (collectively, the "USM Indebtedness") with an aggregate balance of
$ 1,576,158 at September 15, 1999. The USM Indebtedness represents monies
advanced to the Company by an affiliate of USM, obligations assumed in
connection with the contributions of Joint Venture interests in 1997 and
additional advances by USM. The Note was payable on May 4, 1998, and is secured
by all the Company's mining claims and mining properties, as well as its
interests in the Hayden/Kennec Leases. The Note was subject to successive 30-day
extensions throughout 1998 upon the mutual agreement of the maker and lender for
no additional consideration. The Note was assigned to USM on March 5, 1998. As
of September 15, 1999, the Company has not made any payments of principal and/or
interest accrued on the USM Indebtedness. USM and its affiliates have verbally
pledged to provide financing to the Company on an as needed basis until on or
about December 31, 2000. The Company cannot assure, however, that USM will
fulfill its commitment to fund the Company's operations.
In May 2000, the Company entered into a Service Agreement with Mr. Brannon
pursuant to which Mr. Brannon was issued 169,750 shares of Common Stock. The
shares were registered on Form S-8 in June 2000.
History Of Transactions Between Company And Mr. Martucci And His Affiliated
Companies
In early 1997, a former officer of the Company introduced Gems to William C.
Martucci ("Martucci") at which time Gems began negotiations with Martucci to
effectuate a business combination with Martucci's businesses and Gems business
ventures. At that time, Gems controlled an 82.5% interest in the Zeus No. 1
Investments, a California General Partnership formed by the Company and Gems to
facilitate the rehabilitation, reclaimation and reopening of the Company's
mining ventures (the "Zeus Joint Venture").
However, during mid 1997, it had become apparent to the Company that Gems did
not possess the technical and financial resources required to bring the Franklin
Mines into operation as contemplated by the Zeus Joint Venture. It was also
during this time that the Company began discussions directly with Martucci with
respect to a possible business combination between his entities and the Company.
As a result of these discussions, on September 25, 1997, the Company entered
into a letter of intent with Martucci to acquire all of the outstanding shares
of certain entities owned by him, including US Mining, Inc. ("USM") in exchange
for 85% of the outstanding shares of stock of the Company. USM is a New Jersey
corporation engaged in the business of acquiring and holding mining properties
and related acquisition was consummated. Management believed that the financial
support to be supplied by Mr. Martucci pursuant to the Martucci letter of intent
would be sufficient to fund the Company prior to the consummation of the
Transaction.
On November 13, 1997 USM entered into an agreement with Audrey Hayden to acquire
her interest in the 28-patented claims comprising the Hayden/Kennec Leases. See
Item 2 - Property - Hayden/Kennec Leases.
On November 25, 1997 USM acquired an aggregate of 82.5% interest in the Zeus
Joint Venture in exchange for the assumption of approximately $100,000 in
liabilities of Gems (the "Gems Liabilities"). USM thereafter simultaneously
assigned the acquired interest to the Company in exchange for the assumption of
the Gem's liabilities. The assignment effectively terminated the Zeus Joint
Venture giving the Company 100% control over its mining ventures.
On April 6, 1998, Martucci terminated the Letter of intent but continued to fund
the Company (the "Advances"). On March 9, 1998, the Company executed a Loan
Agreement and Promissory Note (the "USM Note") evidencing the terms upon which
the Company would repay the USM
<PAGE>
advances and upon which USM would advance additional funds to the Company on an
"as needed" basis. The USM Note in the principal amount of $955,756 at December
31, 1997 bore interest at a rate of 8% per annum and was due and payable on May
4, 1998, but could be extended on a month-to-month basis. The USM Note is
secured by a first priority lien on substantially all of the assets of the
Company. As of December 31, 1999, the Company owed USM $1,669,040 of which
$1,470,295 is attributable to principal and $198,745 to accrued unpaid interest
on the USM Note.
On or about August 3, 1998, the Company entered into agreements with each of USM
(the "USM Agreement") and Martucci (the "POS Agreement"). Pursuant to the USM
Agreement, USM agreed to forgive the indebtedness of the Company evidenced by
the USM Note; release the security interests in the collateral of the Company
securing the USM Note and assign its rights to the Hayden-USM Purchase Agreement
in exchange for 42.5% of the issued and outstanding shares of the Company. Under
the terms of the POS Agreement, Martucci agreed to sell to the Company 100% of
the outstanding shares of POS and 100% of the assets in exchange for
approximately 42.5% of the issued and outstanding shares of the Company. The
Company intended to seek stockholders' approval of these transactions at its
Annual Meeting of Stockholders held in October 1998.
In August 1998, the Company filed a preliminary proxy statement with the
Securities and Exchange Commission (the "Commission") for its annual meeting of
stockholders, which included proposals to approve each of the USM Agreement and
the POS Agreement. Shortly after the filing of the preliminary proxy materials,
the Commission informed the Company that the staff of the Commission (the
"Staff") would be conducting a review of the proxy materials and the proposals.
The Company informed USM and Martucci of the Staff's inquiry and was thereafter
notified that both parties wished to terminate the agreements under the premise
that the Company could not secure stockholder approval of the transactions in a
timely manner.
On September 21, 1998, the Company received a letter from USM concerning the
monies loaned to the Company by USM, which included the monies owed to USM by
the Company pursuant to the terms of the USM Note and an additional $144,280
loaned to the Company subsequent to the date of the USM Note. At a meeting of
the Board of Directors of the Company on October 8, 1998, a negotiated
settlement agreement was approved by the Board, whereby USM agreed to convert
the Company's indebtedness to USM into shares of common stock of the Company at
a conversion price equal to 50% of the closing bid price as of the close of
business October 7, 1998. The price of the Company's common stock at the close
of business on October 7, 1998 was $1.98, as adjusted per share. Therefore, the
conversion rate under the settlement agreement would be one share of common
stock of the Company for each $1.00, as adjusted of indebtedness of the Company
to USM.
It was further agreed that the settlement plan would be implemented in a
two-step transaction. Approximately $306,160 of loans would be paid by
converting that portion into 309,252, as adjusted shares of common stock of the
Company resulting in USM holding approximately 19% of the total issued and
outstanding shares of common stock of the Company. The conversion of the
remaining indebtedness would be predicated upon either (i) stockholder approval
of the
<PAGE>
issuance of more than 20% of the Company's common stock in the aggregate to USM
at a discount to market price as required by the rules of corporate governance
promulgated by the NASDAQ Small Cap Market ("NASDAQ"), or (ii) the issuance of a
waiver by the NASDAQ excepting the Company for compliance with this rule. USM
also agreed that it would continue to provide the Company with financing going
forward as further inducement to consummate the settlement agreement set forth
above.
Due to the fact that the Company had already expended significant monies to
conduct a proxy solicitation for its annual meeting scheduled on October 12,
1998, the Company made application to NASDAQ for a waiver of the meeting
requirement described above.
On October 19, 1998, the Company made a formal application to NASDAQ in
accordance with Rule 4310(C)(25)(H)(ii) of the NASDAQ Stock Market for a waiver
of the requirement that the Company call a meeting of its stockholders to
approve the issuance of over 20% in the aggregate of its stock to USM at a price
below market price. The rule allows for a waiver of this requirement when, among
other things, a delay in securing stockholder approval would seriously
jeopardize the financial viability of the Company. On or about October 24, 1998,
the NASDAQ Stock Market contacted the Company and indicated that it was inclined
to deny the Company's application unless additional information was submitted
for review. The Company thereafter withdrew its application and re-opened
negotiations with USM. The Company sought to continue discussions with Martucci
in hopes of preventing a foreclosure on the USM Note. The Company was successful
in convincing Martucci to continue funding the Company in hopes that the Company
could begin operations and generate revenues to repay the USM Not.
Mr. Martucci was elected to the Board of Directors of the Company in October
1998.
On or about June 21, 1999, the Company entered into a letter of intent with USM
to purchase substantially all of its assets in exchange for shares of common
stock of the Company equal to 69% of the issued and outstanding shares of common
stock. The letter of intent further contemplated the forgiveness of the USM Note
and release of the security therefore upon the closing of the transaction. On or
about October 5, 1999 USM notified WCM Capital, Inc. that it was withdrawing its
letter of intent.
On January 18, 2000, the Company, Martucci and USM entered into an agreement
whereby the Company agreed to acquire USM in exchange for 7,473,013 shares of
the Common Stock, which is approximately 85% of the Company's common stock (the
"Transaction"). The terms of this agreement were negotiated between Mr. Martucci
and Mr. Waligunda and was approved by the Board of Directors of the Company. The
agreement may be terminated by unanimous consent of the parties, in the event of
a breach of the terms of the contract by any of the parties, in the event of an
injunction preventing the closing or if the closing has not occurred on or
before July 16, 2000. As a condition to closing, the Company must seek
shareholder approval of the Transaction. In addition, the Company has agreed to
grant Martucci piggyback and demand registration rights with respect to the
shares he is to receive in the Transaction. The Company has filed a proxy
statement with respect to the Transaction which is currently subject to a review
by the staff. Upon approval of the proxy statement by the Commission the Company
will submit the Transaction to its shareholders for approval.
<PAGE>
In March 2000, the Company announced that it has reached an agreement in
principal with Martucci to acquire Shoppers Online, Inc. and Freebees, Inc., two
related Internet companies 100% owned by him. Shoppers Online was in the process
of launching an on line shopping portal (www.shoppersonline.com) and incubator
for the development of business-to-business e-commerce. Freebees is developing a
give-away, fulfillment and refund web site to be linked to Shoppers Online which
will allow Internet consumers to participate in promotional and redemption
programs offered by various companies operating in both e-commerce and brick and
mortar retail businesses. To memorialize our agreement, the Company and Martucci
executed a letter of intent on April 17, 2000. It was anticipated that the
Company and Martucci would amend the USM Stock Purchase Agreement to include
these Internet businesses as part of the stock for stock transaction
contemplated thereby.
After completing our investigation of Shoppers Online and Freebees, it became
evident that both Shoppers Online and Freebees were both in the developmental
stages and were not generating any revenues. Moreover, we believed that these
companies would require additional investments of capital before full-scale
operations could begin. At this point, the Company determined that the
acquisition of these companies would not add any value to our Company as neither
company could provide us with much needed revenues. Therefore, we terminated our
letter of intent and decided not to proceed with this transaction. However, we
remain committed to acquiring USM.
Appointment of Auditors
Item 2 on Proxy Card
The Board of Directors has appointed JH Cohn LLP ("Cohn"); to audit the
financial statements of the Company for the fiscal year ended December 31, 2000.
Stockholders are being asked to ratify this appointment. JH Cohn audited the
Company's financial statements for the fiscal years ended December 31, 1995 and
1996. In fiscal year 1999, Ehrenkrantz etal. audited the Company's financial
statements. Representatives of JH Cohn or Ehrenkrantz will not be present at the
meeting to answer questions or make a statement.
The Company initially retained LLF as its independent auditors for fiscal year
1997 after notifying JH Cohn, LLP ("Cohn") of its decision to dismiss the firm
as its independent auditors. The decision to dismiss Cohn was approved by the
Board of Directors of the Company. During fiscal year 1995 and 1996 of the
Company, none of the reports issued by Cohn on the financial statements of the
Company contained an adverse opinion or a disclaimer of opinion or was qualified
or modified as to audit scope, or account principles; however, Cohn did include
in its audit reports an explanatory paragraph concerning the Company's ability
to continue as a going concern. During fiscal years 1995 and 1996 and any
subsequent interim periods prepared by Cohn prior to their dismissal, there were
no disagreements between the Company and Cohn concerning accounting principles
or practices, financial statement disclosure, or auditing scope or procedure
which would have caused Cohn to make a reference to the subject matter thereof
in its report had such disagreement not been resolved to the satisfaction of
Cohn.
The proposal will be approved if it receives the affirmative vote of a majority
of the shares of Common Stock of the Company represented at the meeting.
The Board of Directors recommends that you vote IN FAVOR OF the appointment of
Cohn. Proxies solicited by the Board of Directors will be so voted unless
stockholders specify otherwise.
<PAGE>
OTHER BUSINESS
The Board of Directors is not aware of any other matters to be presented at the
meeting. If any other matters would properly come before the meeting, the
persons named in the enclosed proxy form will vote the proxies in accordance
with their best judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
A Stockholder of record may present a proposal for action at the next Annual
Meeting of Stockholders provided that the Company receives such proposal at its
executive office no later than June 7, 2000. Upon receipt of such proposal, the
Company shall set forth the proposal in its Proxy Statement for that meeting.
The proponent may submit a maximum of one (1) proposal of not more than five
hundred (500) words for inclusion in the Company's proxy materials for a meeting
of security holders. At the next Annual Meeting, management proxies will have
discretionary authority to vote on stockholder proposals that are not submitted
for inclusion in the Company's proxy statement unless received by the Company
before August 7, 2000.
The Company files annual, quarterly, and special reports, proxy statements, and
other information with the Commission. You may read and copy any reports,
statements, and other information that the Company files at the Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the Commission at 1-800-SEC-0330 for further information on the operations
of the Public Reference Room. The Company's Commission filings also are
available on the Commission's Internet site, which is http://www.sec.gov. The
Company's Annual Report on Form 10-KSB for the year ended December 31, 1999 is
delivered herewith.
Date: October 20, 1999 By Order of the Board of Directors
/s/ Richard Brannon
-------------------
Richard Brannon, Secretary
<PAGE>
WCM CAPITAL, INC.
76 Beaver Street - Suite 500
New York, New York 10005-3402
Phone (212) 344-2828
NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS
To Be Held Thursday, November 24, 2000
The undersigned hereby appoints Robert L. Waligunda as Proxy, with the
power to appoint his substitute, and hereby authorizes him to represent and to
vote as designated on the reverse side, all the shares of common shares, $0.01
par value per share (the "Common Shares"), of WCM Capital, Inc., a Delaware
corporation (the "Company"), at a Special Meeting of Shareholders (the
"Meeting") to be held at the Holiday Inn South San Francisco Airport North, 275
South Airport Blvd., South San Francisco, California 94080, on Thursday,
November 24, 2000 at 9 a.m., or any postponement or adjournment thereof, for the
following purposes.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED FOR ALL
PROPOSALS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Please date, sign and mail your
Proxy card back as soon as possible!
Special Meeting of Stockholders
WCM CAPITAL, INC.
November 24, 2000
Please detach and Mail in the Envelope Provided
/ / Please mark your
Votes as in this
example
FOR AGAINST ABSTAIN
(1) To elect five directors for a term expiring / / / / / /
at the 2001 Annual Meeting of Stockholders or
until their respective successors have been
duly elected and qualified;
(2) To approve the appointment of J.H. Cohn LLP / / / / / /
as independent auditors for the Company for
fiscal year ended December 31, 2000; and
(3) To transact such other business as may / / / / / /
properly come before the meeting or any
adjournment thereof.
Only holders of the Company's common stock, par value $0.01 per share (the
"Common Stock") of record on October 18, 2000 are entitled to notice of, and to
vote at, the meeting or any adjournment thereof. October 18, 2000, the record
date for determination of stockholders entitled (a vote at the meeting or any
adjournments thereof, 1,782,676 shares of Common Stock were issued and
outstanding.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
FILL OUT, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. PROXIES FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE
RETURNED AS REQUESTED BY THEM. THE PROMPT RETURN OF PROXIES WILL SAVE THE
EXPENSE INVOLVED IN FURTHER COMMUNICATION.
Signature ____________________ Signature_______________________ Date__________
NOTE: Please sign exactly as the name appears above. When shares are held
by joint tenants, both should sign
