SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FINGERMATRIX, INC
.................................................................
(Name of Registrant as Specified In Its Charter
FINGERMATRIX, INC
.................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.............................................................
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
4) Proposed maximum aggregate value of transaction:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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<PAGE>
FINGERMATRIX, INC.
145 PALISADE STREET
DOBBS FERRY, NEW YORK 10522-1617
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 8, 1997
Notice is hereby given that the Annual Meeting of Shareholders
of Fingermatrix, Inc. (the "Company") will be held on Tuesday, April 8, 1997, at
11:00 A.M. at the Tarrytown Hilton, 455 South Broadway, Tarrytown, New York, for
the following purposes:
1. To elect four Directors;
2. To consider and act upon a proposal to ratify the selection
of the firm of Farber, Blicht & Eyerman, LLP, as the Company's
independent public accountants for the fiscal year ending September 30,
1997; and
3. To transact any other business that may properly
come before the meeting or any adjournment thereof.
Only shareholders of record as of the close of business on
February 11, 1997 will be entitled to notice of and to vote at the meeting and
any adjournments thereof.
Shareholders are cordially invited to attend the meeting in
person. Whether or not you plan to attend the meeting, we urge you to execute,
date and return the accompanying proxy in the enclosed postage prepaid envelope,
in order to assure representation of your shares.
To ensure that your vote will be counted, please complete,
date and sign the enclosed proxy card and return it promptly in the enclosed
post-paid envelope, whether or not you plan to attend the meeting. Executed
proxy cards with no instructions indicated thereon will be voted for the slate
of directors proposed by the Board of Directors and for approval of the
engagement of Farber, Blicht & Eyerman, LLP as independent auditors. You may
revoke your proxy in the manner described in the accompanying Proxy Statement at
any time before it is voted at the Annual Meeting.
By Order of the Board of Directors,
Gordon R. Molesworth
Secretary
Dobbs Ferry, N.Y.
February 21, 1997
-1-
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the
solicitation by the Board of Directors of Fingermatrix, Inc. (the "Company") of
proxies in the accompanying form for use at the annual meeting of shareholders
("Annual Meeting") to be held at the Tarrytown Hilton, 455 South Broadway,
Tarrytown, New York at 11:00 A.M. on Tuesday, April 8, 1997, and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. Any shareholder may revoke his proxy at any time
prior to the meeting by filing with the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date and, in the event that
he attends the meeting, he may, if he so desires, vote in person. All properly
executed proxies will be voted at the meeting in accordance with the
specifications contained therein. In the absence of specifications to the
contrary, the shares will be voted for the nominees for the Board of Directors
and for the proposals set forth herein.
The expense of solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by mail, certain officers
and regular employees of the Company may, to a limited extent, solicit proxies
personally or by telephone or telegram, without extra compensation.
Additionally, arrangements may be made with brokerage firms, custodians,
nominees and fiduciaries to aid in the solicitation of proxies.
The Company will reimburse such persons for their expenses incurred thereby.
Only shareholders of record as of the close of business on
February 11, 1997 will be entitled to vote at the meeting or any adjournment
thereof. On that date, there were outstanding and entitled to vote 8,880,885
shares of Company's common stock, par value $.01 per share, ("Common Stock").
Holders of shares of Common Stock are entitled to cast one vote for each share
held.
THE PROXY STATEMENT AND FORM OF PROXY IS BEING FIRST MAILED TO
SHAREHOLDERS ON OR ABOUT FEBRUARY 21, 1997.
A COPY OF THE COMPANY'S 1996 ANNUAL REPORT, INCLUDING
FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1996, ARE MAILED HEREWITH.
NO PART OF SUCH ANNUAL REPORT SHALL BE REGARDED AS PROXY-SOLICITING MATERIAL OR
AS A COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS BEING OR IS TO BE MADE.
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ELECTION OF DIRECTORS
The Company is proposing to elect four (4) Directors, each to
hold office until the next Annual Meeting of Shareholders or until his successor
is duly elected and qualified. The management's nominees for election are Thomas
T. Harding, Gordon R. Molesworth, Seth M. Lukash, and Fred I. Sonnenfeld, all of
whom are presently serving on the Board. All of these Directors, along with one
Lewis Schiller, had been originally designated in the Chapter 11 bankruptcy
proceeding, which the Company had filed for in September 1993 and from which the
Company emerged In April 1995 after the creditors and the then shareholders of
the Company approved the Second Amended Plan of Reorganization ("the Plan") and
the election of the four above named nominees and Lewis Schiller. It is intended
that shares represented by properly executed proxies which contain no
instructions to the contrary will be voted for the election of the foregoing
four (4) nominees. The Company does not expect that any of the nominees will be
unavailable for election, but if that should occur before the meeting, the
proxies will be voted for a substitute nominee or nominees, as the case may be.
Set forth below is certain information with respect to each
nominee. No arrangements, understandings or family relationships exist among any
of the nominees herein.
THOMAS T. HARDING, age 58, presently he is President, Chief
Executive Officer and Director of the Company. After being a marketing and
management consultant to the Trustee of the Company's business and assets in the
Chapter 11 bankruptcy proceeding for a short period of several weeks, in
December 1994 the Trustee with Bankruptcy Court approval appointed Mr. Harding
as President of the Company. From 1979 to 1994, Mr. Harding was a marketing and
management consultant to various corporate clients, among them being the Company
for the period from 1982 to 1990. Prior to 1979, Mr. Harding was a corporate
vice-president and division manager with Perkin-Elmer (1976-1978), and division
vice president of Litton Industries, Inc. (1972-1975). Mr. Harding holds a
Bachelor of Science Degree in Electronics from the University of Scranton and he
did graduate work at George Washington University in engineering administration.
GORDON R. MOLESWORTH, age 80, presently Secretary and
Director. Mr. Molesworth was one of the leaders of the shareholders group who
sought the ouster of prior management of the Company and he was instrumental in
partially funding the financing of the Company, both after it filed the petition
for Chapter 11 bankruptcy relief and after confirmation of the Plan. He was
appointed to the Board of Directors on the grounds that he would be a
representative for the shareholders prior to the bankruptcy
3
<PAGE>
proceeding, as well
as for the new shareholders. He also serves as communications consultant to the
Company. He is the President of Molesworth Associates Inc., a communications and
public relations consulting company located in Green Valley, Arizona, which has
been in existence since 1954. Prior to 1990, Mr. Molesworth through his company
had been a consultant to the Company. His company is currently a consultant in
marketing and public relations to the Company, and has been such since April
1995 under a written agreement. Mr. Molesworth's company receives $4,000 per
month plus expenses for the services it renders to the Company.
SETH M. LUKASH, age 50, presently a Director. He is Chairman
and Chief Executive Officer of Tridex Corporation, an electronic equipment
manufacturer listed on the NASDAQ stock exchange. Mr. Lukash also serves as a
Director for the following organizations - Tanaka Capital Management, Inc., an
investment advisory firm located in New York, NY, and Job Direct Inc., an
Internet-based recruitment organization located in Greenwich, CT. Mr. Lukash is
also the Chairman of the Connecticut Chapter of the American Electronics
Association (AEA). He also is a Board Member of the AEA. He had no connection
with the Company prior to his appointment under the Plan in April 1995. Mr.
Lukash was designated to be director of the Company under the Plan by reason of
his success in managing and operating his own company.
FRED I. SONNENFELD, age 69, presently a Director. He is an
attorney licensed to practice in the State of New York for over forty years. He
is a partner in Sonnenfeld & Richman which is counsel to the Company. Between
1990 and January, 1993, Mr. Sonnenfeld's law firm was general counsel to the
Company when his firm resigned such position. Mr. Sonnenfeld was one of three
members of the committee for general unsecured creditors, and was designated in
the Plan as a director to represent the creditors.
4
<PAGE>
OTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
COMMITTEES
The By-laws of the Company permit the Board of Directors by a
resolution adopted by a majority of its members to create committees for any
lawful purpose. In addition, the By-laws specify two committees, namely, an
Audit Committee and a Compensation Committee, both of which have been created
and are functioning. Presently, there are no other committees. The Audit
Committee generally reviews financial matters and it, among other things,
supervises accounting procedures, reviews and recommends the engagement of
independent auditors, and interviews and reviews appointments of corporate
officers. The Audit Committee consists of Messrs. Molesworth, Lukash and
Sonnenfeld. The Compensation Committee reviews compensation, including bonuses,
stock options, stock purchase plans for officers and employees. While the
By-laws permit employees to be on the Compensation Committee, provided they do
not constitute a majority, none of the present members are employees of the
Company. The Compensation Committee presently consists of Messrs. Lukash and
Sonnenfeld. It is expected that the current members of the Audit Committee and
Compensation Committee will be reappointed following the Annual Meeting of
Shareholders.
During the fiscal year ended September 30 1996, the Board of
Directors met ten times. The Audit Committee and Compensation Committee each
held one meeting. For the fiscal year ended September 30, 1996, four of the five
Directors (all of whom are now candidates for re-election) have attended all
meetings.
5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
NAME AGE POSITION EXPIRES*
Thomas T. Harding 58 President (Chief 4/17/97
Executive Officer)
Gordon R. Molesworth 80 Secretary 7/25/97
Biographical information concerning each of the two present
officers is presented above under heading "ELECTION OF DIRECTORS". Mr. Harding
has also served as financial officer of the Company, and he will continue to do
so until a full time financial officer is appointed.
- ---------------
* Officers of the Company will be elected at the Annual Meeting of the
Board of Directors immediately following the Annual Meeting of
Shareholders, and their term of office will expire one year from said
election. Mr. Harding has an employment contract with the Company which
runs from year to year expiring on April 17th of each year, unless
either the Company or Mr. Harding gives notice of termination at least
thirty days prior to the end of each contract year. Accordingly, his
employment agreement expires April 17, 1997.
Resignation of Lewis S. Schiller On October 26, 1996, Mr. Schiller, one of the
five directors designated under the Plan, resigned from the Board of Directors
stating that the pressure of other business prevented him from serving. He is
the president and chief executive officer of SIS Capital Corp. ("SIS"), the firm
which loaned to the Company after it filed for relief under Chapter 11 of the
Bankruptcy Law the sum of $1,067,000. By reason of moneys owed to SIS and the
lien SIS received on Company's assets until SIS would be paid, Mr. Schiller was
designated to the Board of Directors. The Company has paid to SIS on account of
said debt of $1,067,000 the sum of $850,000 and there remains to paid the sum of
$217,000 which is payable on April 19, 1997. In June of 1996, SIS released its
lien on the Company's assets. SIS is an affiliate of Consolidated Technologies,
Inc., a publicly owned company of which Mr. Schiller is also the chairman and
chief executive officer. Mr. Schiller is the brother of Michael Schiller, the
former president and chief executive officer of the Company.
No replacement has thus far been found for the vacancy created
by Mr. Schiller's resignation.
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CONSULTANTS TO THE COMPANY
Molesworth Associates, Inc., an Arizona corporation, of which Mr.
Gordon R. Molesworth is President, is a public relations consultant to the
Company and it receives pursuant to a written contract $4,000 per month plus
expenses for services rendered. The contract is of indefinite duration, but
either the Company or Molesworth Associates, Inc., may cancel on sixty days
notice to the other.
In December 1996, the Company entered into a consulting agreement with
Newell-Storr & Co. Inc. ("N-S"), of which Daniel N. Storr is the President.
Under the consulting agreement, N-S shall advise the Company as to the most
economical and beneficial methods to raise additional capital for the Company,
and N-S shall endeavor to locate suitable investors for the Company. A monthly
retainer fee of $5,000 is payable commencing February 1, 1997 plus reimbursement
for expenses up to $500 per month. In addition, N-S shall receive a fee of 8% of
the gross value of capital invested in the Company through its efforts. The
monthly retainer fees paid to N-S shall be deducted from the 8% fee. Up to
February 18, 1997, N-S has been responsible for arranging $510,000 of Regulation
S purchases of the Company's Common Stock, including the purchase of 313,720
shares of Common Stock for the sum of $450,000 referred to below at "CERTAIN
RELATIONSHIPS AND SPECIAL TRANSACTIONS". Accordingly, N-S shall be entitled to
an 8% fee or $40,800 on these transactions less monthly fees paid. The Company
has the right to terminate the agreement and retainer arrangement at anytime
after March 1, 1997 upon thirty days notice to N-S.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 11, 1997, those
individuals known to the Company to be the beneficial owners of more than five
percent (5%) of the Common Stock (the only class of voting securities) and the
ownership of the directors and officers, individually and as a group. Said table
does not include any options or warrants which may be exercisable by the persons
designated below, except as noted in the footnotes.
TITLE NAME OF AMOUNT OF % OF
OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
Common Stock P.T. Dolak Permei 1,500,000 shs. 17.00(2)
" " City of Tampa Firemen &
Policemen Pension Fund 540,120 shs. 6.00
" " Thomas T. Harding 116,237 shs. 1.00(3)
" " Gordon R. Molesworth 48,491 shs. 0.54(4)
" " Seth M. Lukash -0- 0.00
" " Fred I. Sonnenfeld 14,500 shs. 0.02
" " All directors and
and officers as a 179,228 shs. 2.01
as a group (4 persons)
- ----------------------
1 For Messrs. Molesworth, Lukash and Sonnenfeld, the shares indicated do not
include non-employee director stock options to purchase 75,000 shares of common
stock at $2.375 per share under the Director Stock Option Plan.
2 P.T. Dolak holds said 1,500,000 shares for itself and as trustee for its
clients. By December 31, 1996, P.T. Dolak had purchased 2,000,000 shares, but in
October 1996, 500,000 shares were sold or transferred out to fifty different
entities, all of whom are represented to be non-U.S. persons as that term is
understood under Regulation S promulgated under the Securities Act of 1933, as
amended. See, below, "CERTAIN RELATIONSHIPS AND SPECIAL TRANSACTIONS - P.T.
Dolak Permei Stock Purchase".
3 Mr. Harding has options to purchase 237,500 shares at $2.375 per share which
if all exercised would give him beneficial ownership of approximately 6.4%
assuming no other Common Stock were issued beyond the 8,880,885 shares shown as
of February 11, 1997.
4 Does not include 376,203
warrants and options to purchase the common stock at varying prices per share,
which if exercised would have Mr. Molesworth owning 4.7% of the Common Stock
assuming no other shares were issued beyond the 8,880,825 shares outstanding on
February 11, 1997.
9
<PAGE>
COMPENSATION
The following table sets forth all cash compensation paid by
the Company to all of its executive officers who earned compensation in excess
of $70,000 (one in number) for the Company's fiscal year ended September 30,
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ------------------------ -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------- ------------ ----------- ------------ ------------ ----------- ------------ ------------
(A) (B) (C) (D) (E) (F) (G) (H)
- -------------- ------------ ----------- ------------ ------------ ----------- ------------ ------------
SECURITIES
NAME AND OTHER RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS ANNUAL STOCK OPTIONS/SARS LTIP COMPENSATION
POSITION ($) ($) COMPENSATION AWARD(S) ($) PAYOUTS ($)
($) ($) ($)
- -------------- ------------ ----------- ------------ ------------ ----------- ------------ ------------
THOMAS T. $140,000(5) 0(6) 0 0(7) 0 0 0
HARDING -
PRESIDENT, CHIEF
EXECUTIVE OFFICER
GORDON R.
MOLESWORTH -
SECRETARY $0(8) 0 0 0 0(9) 0 0
<FN>
- --------------
5 Mr. Harding's employment commenced in December, 1994.
6 Under the Plan, Mr. Harding received as a bonus for his work during the
bankruptcy proceeding 115,000 shares of Common Stock.
7 115,000 shares of Common Stock were issued to Mr. Harding in January, 1996.
8 Pursuant to a written agreement with the Registrant made in April 1995,
Mr. Molesworth's company, Molesworth Associates, Inc. is paid $4,000 per
month plus expenses for consulting and public relations
services it renders to the Registrant.
9 Under the Plan, Mr. Molesworth received 250,000 A-Warrants and 150,000
C-Warrants for his services in reorganizing the Registrant and arranging for
financing of Registrant. He exercised 50,000 A-Warrants and 50,000 C-Warrants to
receive 100,000 shares of Common Stock, which Mr. Molesworth gave to his
children.
</TABLE>
The total cash compensation to all executive officers (one in number) for the
fiscal year ended September 30, 1996 was $140,000.00. In addition, approximately
$147,500 was paid to
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two technical managerial employees for said fiscal year. As
of September 30, 1996, the total annual payroll for all full-time technical and
managerial staff, including the salary of the President (at $140,000 per year),
was approximately $1,000,000. Because of the Company's inability to offer cash
bonuses, five technical employees received among them 19,500 shares of Common
Stock in October 1995 having a market value of $2.375 per share. The share
certificates for these bonus shares bear a legend restricting their sale,
transfer, pledge or other disposition except in accord with the Securities Act.
Mr. Harding has an employment agreement with the Company which
commenced on the confirmation of the Plan (April 17, 1995) and which continued
for one year thereafter. The employment agreement was automatically renewed on
April 17, 1996 for one year and will be renewable year after year unless Mr.
Harding or Company gives notice to terminate the employment relationship at
least thirty days prior to the annual date of renewal. His annual salary under
the employment agreement is $140,000. As additional compensation to Mr. Harding,
the employment agreement provides that he was to receive, and he did receive on
January 5, 1996, without any payment on his part, 115,000 shares of the Common
Stock, having a bid price of $1.875 per share. He also obtained an option to
purchase 237,500 shares of the Common Stock at an exercise price which shall be
equal to the "bid" price at the close of business on July 21, 1995 ($2-3/8 per
share) in accordance with the Employee Stock Option Plan and which will expire
July 21, 2005. The stock and the options were in discharge of options
contemplated to be granted under the Plan to Mr. Harding. Mr. Harding is
reimbursed for all reasonable and necessary expenses which he incurs in the
performance of his duties. Apart from the right to participate as an employee in
whatever employee benefit plans the Company shall afford to its employees, Mr.
Harding receives no other benefits and compensation other than those set forth
above.
During the fiscal year ended September 30, 1996, Mr. Sonnenfeld's law
firm received $91,125 in fees and was reimbursed $2,465.75 for disbursements.
Officers of the Company who serve as Directors do not receive any
compensation as Directors. Until the Company generates revenues from its
operations, the non-employee Directors are waiving any compensation and have
agreed to accept the non-employee director stock options.
During the fiscal year ended September 30, 1996 and for the fiscal year
ending September 30, 1997, the Company has no other arrangements with its
Directors.
10
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EMPLOYEE STOCK OPTION PLAN
The Employee Stock Option Plan (ESOP), as adopted by the Board of
Directors and approved by the shareholders of the Company at the last annual
meeting held in August 1996, provides for the granting of incentive stock
options ("ISO"), non-qualified stock options, or both, which shall be determined
by a Compensation Committee made up of non-employee members of the Company's
Board of Directors. The prices of the options are to be determined by the
Compensation Committee within certain guidelines, namely, for non-qualified
stock options, the price per share may not be less than 85% of the "fair market
value" on the date of the grant of the option, and for ISOs, the price per share
may not be less than 100% of the fair market value of a share on the date of
grant (and not less than 110% of the fair market value of a share for an
employee who owns more than ten percent of the outstanding securities of the
Company. The fair market value is determined by the following criteria which may
be applicable: (i) the closing price on the date of grant as reported on a
national securities exchange; (ii) if the shares of stock are not listed on a
national securities exchange, then the closing price on the date of the grant as
reported by the National Association of Securities Dealers Automatic Quotation
System ("NASDAQ"); (iii) if the shares are not traded on NASDAQ, then the
average of the closing bid and asked prices on the date of the grant as reported
in the over-the counter-market; and (iv) and if none of the foregoing are
applicable, then by determination of the Compensation Committee.
Options may be granted by the Compensation Committee up to ten
years from July 25, 1995, when the ESOP itself expires. The Compensation
Committee also determines the nature of the option (i.e., ISO or non-qualified),
the number of shares to be covered by each option and the terms of vesting and
exercise of such options. All employees of the Company are eligible. Selection
of employees who merit such options is done by the Compensation Committee after
receiving recommendations from the President of the Company. The Compensation
Committee meets after or before a Board of Directors meeting when required.
The ESOP contains provisions against dilution of the options
granted when, among other circumstances, there are stock splits, stock
dividends, reorganization of capital, etc. Exercise of options and vesting are
accelerated in cases of merger, sale of the Company, and other events such as
death of employee while in employ of the Company, or change in control of
management of the Company.
The Compensation Committee considers factors such as an
employee's duties and potential contributions to the success of the Company in
determining the award of Incentive Options.
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The following table sets forth information as to the Employee
Stock Options granted and outstanding during the fiscal year ended September 30,
1996 to (i) all executive officers of the Company (one in number), and (ii) all
managerial employees (five in number) earning over $60,000 as a group:
Name of Individual Exercise Price Number Expiration
or Number in Group Date per Share Granted Date
- ------------------ ------- -------------- ------- ----------
Thomas T. Harding 7/21/95 $2.375 237,500 7/21/2005
All managerial varying from $1.75 low 38,500 7/21/2005
employees dates from to $2.375 high
7/21/95 to
4/11/96
DIRECTORS STOCK OPTION PLAN
In July 1995, the Board of Directors of the Company adopted a
Non-Employee Director Stock Option Plan ("DSOP") which was approved by the
shareholders of the Company at the last annual shareholders meeting held in
August 1996.
The options to be granted under DSOP are effective for ten years from
July 21, 1995. It is not an incentive stock option plan. The options are
non-transferable except where the transfer is by will or by laws of intestacy.
The non-employee directors who were appointed under the Plan, of which there are
four, are the only persons currently eligible to receive such options. They are
each entitled to options to purchase 75,000 shares of Common Stock for a total
of 300,000 shares, but only options to purchase 37,500 shares were vested on
July 21, 1996 in each director. Accordingly, in each of the three years
following 1996, options to purchase an additional 12,500 shares shall vest on
the anniversary date of July 21st, provided that the director is still in office
on each anniversary date. The price for each share is the fair market value of
the Common Stock on July 21, 1995, which is $2.375 per share.
Any new non-employee directors appointed or elected after the July 25,
1995 shall be awarded options to purchase 25,000 shares of Common Stock upon
their appointment or election at the fair market value of a share of Common
Stock on such date of appointment or election. On each anniversary of the
appointment or election of such director, the director is entitled to an option
to purchase an additional 12,500 shares of Common Stock at the fair market value
existing on such anniversary date up to a maximum of 37,500 shares.
12
<PAGE>
Fair market value of the options is determined by the Board of
Directors of the Company in the same manner as determined by the Compensation
Committee with respect to the ESOP.
The DSOP, like the ESOP, contains provisions against dilution of the
options granted when, among other circumstances, there are stock splits, stock
dividends, reorganization of capital, etc. Exercise of options and vesting are
accelerated in cases of merger, sale of the Company, and other events such as
death of a director, or change in control of management of the Company. In the
event a director ceases to be a director for any reason other than death or
permanent disability, all options shall terminate immediately, except where a
director is 65 years or older, his vested options shall continue to be
exercisable for three months after termination.
Copies of the DSOP may be obtained by the shareholders upon request to
the Company or examined at the Company's offices.
Each of the four present directors has the vested right to purchase
37,500 shares of Common Stock of the Company under the DSOP with the date of
grant for all options under DSOP being July 21, 1995 and the option exercise
price being $2.375 per share. Assuming each of the four present directors are
re-elected, options to purchase another 12,500 shares shall be vested and
available for exercise on or after July 21, 1997, 1998 and 1999. In totality,
after July 21, 1999, each of the four present directors shall have options to
purchase 75,000 shares of the Company's common stock (assuming they remain
directors at least to said date) which options will expire on July 21, 2005,
unless sooner terminated upon their ceasing to be directors of the Company, as
happened with Lewis S. Schiller when he resigned in October 1996.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors recommends that Farber Blicht & Eyerman, LLP,
certified public accountants, be re-appointed as independent auditors for the
fiscal year ending September 30, 1997. This accounting firm was appointed in
November 1995 by the Board of Directors. By reason of the considerable research
which this firm has done, it has acquired a knowledge and experience which the
Company should utilize in the current fiscal year.
13
<PAGE>
CERTAIN RELATIONSHIPS AND SPECIAL TRANSACTIONS
P.T. DOLAK STOCK PURCHASE
Unable to raise sufficient capital financing contemplated under the
Plan the holders of the Company's shares through the efforts of the three
representatives of the Shareholder Alliance, the Company, on or about August 30,
1995, entered into a private placement agreement with P.T. Dolak Permei (also
known as P.T. Dolak Permei) ("Dolak"), an Indonesian company, totally
independent of the Company, whereby the Company would sell 2,000,000 shares of
Common Stock at a price of $1.00 per share for an aggregate price of $2,000,000.
$1,000,000 of the $2,000,000 purchase price was paid in September, 1995, and
thereafter the balance was to be paid in monthly installments of $100,000,
commencing January 1, 1996. By March 1996, Dolak had purchased 1,100,000 shares
for $1,100,000, at which time Dolak requested a deferral of the remaining
purchases until June 1, 1996 when monthly purchases of 100,000 shares at $1 per
share resumed. By December 2, 1996, Dolak had purchased the entire 2,000,000
shares of Common Stock for an aggregate price of $2,000,000. The shares issued
to Dolak were sold in accordance with Regulation S promulgated under the
Securities Act with a restriction barring sale one year from issue of each
purchase of shares.
In the Stock Purchase Agreement, Dolak represented to the Company that
it was purchasing the shares for its own account or as fiduciary for one or more
trusts, and that Dolak and each of the trusts are accredited investors within
the meaning of Rule 501(a) of Regulation D promulgated under the Act.
In October 1996, Dolak sold or transferred 500,000 shares of Common
Stock to approximately fifty entities, and by the addresses listed for these
entities and according to the representation of Dolak, each entity is a
"non-U.S. persons" as that term is defined in Rule 902 (i) of Regulation S
promulgated under the Securities Act of 1933, as amended.
INVESTMENT OF TAMPA FUND
In May, 1996, the Fireman's and Policeman's Pension Fund of Tampa
Florida ("Tampa Fund") authorized the conversion of the Promissory Note in the
sum of $250,000 into 250,000 restricted shares of Common Stock. The Promissory
Note was originally issued in November 1994 in exchange for a loan of $250,000
to the Company after approval by the United States Bankruptcy Court. Under the
original conversion terms, the loan was to be converted into two and
one-half(2-1/2%) percent of the equity at confirmation date which would have
entitled the Tampa Fund to 75,000 shares of the
14
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Common Stock, or a price of over
$3.00 per share. In order to have the conversion price be closer to market and
to recognize the aid given by the Tampa Fund to the Company during the
bankruptcy proceeding, the Board of Trustees amended the conversion right to
$1.00 per share.
SALE OF COMPANY'S COMMON STOCK THROUGH REGULATION S OFFERING
On January 28, 1997, ABN AMRO CARRINGTON PEMBROKE, LIMITED ("ABN"), an
English company, totally independent of the Company, purchased as agent for its
eleven named clients 313,720 shares of the Company's common stock, $.01 Par
value ("Common Stock") pursuant to a Regulation S Subscription Agreement
("Subscription Agreement") at a price of $1.4344 per share for an aggregate
price of $450,000. The purchase is exempt from registration under the Securities
Act of 1933, as amended (the "Act") in accordance with Regulation S promulgated
under the Act. While the Company has full use of the monies raised, the company
has a commitment to refund the $450,000 in the event the company ceases being a
"reporting company" as that term is defined in Regulation S promulgated under
the Act.
Based upon the terms of the Subscription Agreement, there was no
underwriter or placement agent involved, although the Company was paying a fee
of 8% of the aggregate price to its investment adviser, Newell-Storr & Co., Inc.
whose president is Daniel Storr. Under the Subscription Agreement, ABN
represented for its clients that each client was purchasing for its own account.
ABN received no commission or other remuneration.
The purchase price of $1.4344 per share was determined by taking a 15%
discount from the average of the low and high bid prices of the Common Stock as
quoted on the electronic bulletin board of NASDAQ for the Company's Common Stock
on January 28, 1997 which prices averaged $1.6875. Upon taking the 15% discount
from the average price of $1.6875 in the sum of $.2531 per share, the purchase
price per share of $1.4344 is arrived at. As reported on electronic bulletin
board of NASDAQ, 12,700 shares were traded on January 28, 1997 at sales or
market prices per share which varied from $1.6875 low and $1.8125 high for an
average price of $1.7500.
The Company still does not have any revenues to sustain itself.
Accordingly, the Company shall have to seek additional financing through private
placements of its securities. It makes no representations that it will able to
secure such financing.
15
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VOTE REQUIRED AND OTHER BUSINESS
Directors will be elected by a plurality of the votes cast at the
meeting by holders of shares of Common Stock entitled to vote. The affirmative
vote of a majority of the votes entitled to be cast at the meeting by holders of
Common Stock shall be required to approve the selection of Farber, Blicht &
Eyerman, LLP, as the Company's independent public accountants.
A representative of Farber, Blicht & Eyerman, the Company's independent
auditors for the year ended September 30, 1996, is expected to be in attendance
at the annual meeting and he will respond to any questions shareholders may
have.
The Board of Directors knows of no other business that will be
presented at the meeting. If any other business properly comes before the
meeting, the proxies named in the accompanying form of proxy are authorized to
vote in accordance with their best judgments on such business.
PROXIES REVOCABLE
All proxies delivered pursuant to this solicitation are
revocable at the option of the persons executing the same prior to exercise. If
not revoked, the shares represented thereby will be voted at the meeting as
directed by the shareholders. If no directions are given, the proxies will be
voted for the election of the four designated Directors and the appointment of
the auditors as set forth herein.
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR NEXT ANNUAL MEETING
Proposals of shareholders of the Company intended to be
presented at the next Annual Meeting of Shareholders must be received by the
Company for inclusion in the Company's proxy statement and form of proxy
relating to the next Annual Meeting no later than December 31, 1997.
MATERIAL INCORPORATED BY REFERENCE
The financial statements and notes thereto as reported by
Farber, Blicht & Eyerman, LLP for the year ended September 30, 1996 and the
Management's Discussion and Analysis of Financial Condition and Results of
Operation as contained in the accompanying Annual Report to Shareholders are
incorporated herein by reference.
By Order of the Board of Directors,
Gordon R. Molesworth
Secretary
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FINGERMATRIX, INC.
COMMON STOCK PROXY FOR 1997 ANNUAL MEETING
SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints THOMAS T. HARDING and GORDON R. MOLESWORTH, or
any one of them, each with the power of substitution, proxies to vote all shares
of Common Stock which the undersigned would possess if personally present at the
Annual Meeting of Shareholders (including all adjournments thereof) of
Fingermatrix, Inc. (the "Company"), to be held at 11:00 A.M. on April 8, 1997 at
the Tarrytown Hilton, 455 South Broadway, Tarrytown, New York.
Shareholders are requested to date and sign this Proxy and return it
promptly in the enclosed envelope. No postage is required if mailed in
the United States of America.
UNLESS OTHERWISE SPECIFIED THE VOTE REPRESENTED BY THIS PROXY WILL BE CAST FOR
THE ELECTION OF ALL THE DIRECTORS NOMINATED BY THE BOARD OF TRUSTEES AND FOR THE
SELECTION OF THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 1997.
(Go to Reverse Side)
<PAGE>
----- Please mark your
A X votes as in this
----- example.
Election of Directors
Nominees: Thomas T. Harding, Gordon R. Molesworth,
Seth M. Lukash, Fred I. Sonnenfeld
(MARK ONLY ONE BOX.)
YES [ ] for all Nominees
NO [ ] for all Nominees
YES [ ] for all Nominees except the following nominees, if any:
Ratification of the Selection of Farber, Blicht & Eyerman, LLP
as Auditors for the Company
FOR AGAINST ABSTAIN
/ / / / / /
Upon such other business as may proerly come before the meeting.
PLEASE SIGN HERE as your name appears in this Proxy. For joint account, each
joint owner should sign. When signing as attorney, executor,, administrator,
trustee guardian or other fiduciary, please give full title. If the signer is a
corporation, sign full corporate name by by duly authorized officer.
Date Signature of Shareholder
2
