SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
|X| Preliminary Proxy Statement
| | Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
| | Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Mikros Systems Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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| | Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
| | Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MIKROS SYSTEMS CORPORATION
707 Alexander Road, Building Two, Suite 208
Princeton, NJ 08540
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 21, 1998
The Annual Meeting of Stockholders of MIKROS SYSTEMS CORPORATION, a
Delaware corporation (the "Company"), will be held at the offices of the
Company, 707 Alexander Road, Building Two, Suite 208, Princeton, New Jersey on
Monday, December 21, 1998 at 11:00 A.M., local time, for the following purposes:
(1) To elect seven directors to serve until the next Annual Meeting of
Stockholders and until their respective successors shall have been duly
elected and qualified;
(2) To amend the Certificate of Incorporation of the Company, as amended, to
increase the number of authorized shares of Common Stock from 35,000,000
shares to 60,000,000; and
(3) To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Holders of Common Stock, Convertible Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, and Warrants to
purchase Series C Preferred Stock of record at the close of business on November
9, 1998 are entitled to notice of and to vote at the meeting, or any adjournment
or adjournments thereof. A complete list of such stockholders and warrantholders
will be open to the examination of any stockholder or warrantholder at the
Company's principal executive offices at 707 Alexander Road, Building Two, Suite
208, Princeton, New Jersey for a period of 10 days prior to the meeting. The
meeting may be adjourned from time to time without notice other than by
announcement at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE ENCLOSED RETURN ENVELOPE. EACH PROXY GRANTED MAY BE REVOKED BY THE
STOCKHOLDER OR WARRANTHOLDER APPOINTING SUCH PROXY AT ANY TIME BEFORE IT IS
VOTED. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE
REGISTERED IN DIFFERENT NAMES OR ADDRESSES OR BECAUSE YOU OWN MORE THAN ONE
CLASS OF STOCK, EACH SUCH PROXY CARD SHOULD BE SIGNED AND RETURNED TO ASSURE
THAT ALL OF YOUR SHARES WILL BE VOTED.
By Order of the Board of Directors
Patricia A. Bird
Secretary
Princeton, New Jersey
November 30, 1998
The Company's 1997 Annual Report accompanies the Proxy Statement.
<PAGE>
MIKROS SYSTEMS CORPORATION
707 Alexander Road, Building Two, Suite 208
Princeton, NJ 08540
--------------------------------------------------------
PROXY STATEMENT
--------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Mikros Systems Corporation (the "Company") of proxies
to be voted at the Annual Meeting of Stockholders of the Company to be held on
Monday, December 21, 1998 (the "Meeting"), at the Company's principal executive
offices at 707 Alexander Road, Building Two, Suite 208, Princeton, New Jersey,
at 11:00 A.M., local time, and at any adjournment or adjournments thereof.
Holders of record of Common Stock, $0.01 par value ("Common Stock"), Convertible
Preferred Stock, $0.01 par value ("Convertible Preferred Stock"), Series B
Preferred Stock, $0.01 par value ("Series B Stock"), Series C Preferred Stock,
$0.01 par value ("Series C Stock"), Series D Preferred Stock, $0.01 par value
("Series D Stock"), and warrants to purchase Series C Stock (the "Warrants"), as
of the close of business on November 9, 1998, will be entitled to notice of and
to vote at the Meeting and any adjournment or adjournments thereof. As of that
date, there were (i) 14,251,452 shares of Common Stock; (ii) 255,000 shares of
Convertible Preferred Stock; (iii) 1,131,663 shares of Series B Stock; (iv)
5,000 shares of Series C Stock; (v) 690,000 shares of Series D Stock; and (vi)
Warrants to purchase 104,500 shares of Series C Stock, issued and outstanding
and entitled to vote. Each share of Common Stock, Convertible Preferred Stock,
Series C Stock, Series D Stock and each Warrant is entitled to one vote on any
matter presented at the Meeting. Each share of Series B Stock is entitled to
three votes on any matter presented at the Meeting. The aggregate number of
votes entitled to be cast at the Meeting is 18,700,941. The holders of all
classes of stock will vote as a single class.
If proxies in the accompanying form are properly executed and returned, the
stock or Warrants represented thereby will be voted in the manner specified
therein. If not otherwise specified, the stock or Warrants represented by the
proxies will be voted (i) FOR the election of the seven nominees below as
Directors, (ii) FOR the proposal to amend the Certificate of Incorporation of
the Company, as amended, to increase the number of authorized shares of Common
Stock from 35,000,000 shares to 60,000,000 shares, and (iii) in the discretion
of the persons named in the enclosed form of proxy, on any other proposals which
may properly come before the Meeting or any adjournment or adjournments thereof.
Any Stockholder who has submitted a proxy may revoke it any time before it is
voted by written notice addressed to and received by the Secretary of the
Company, by submitting a duly executed proxy bearing a later date or by electing
to vote in person at the Meeting. The mere presence at the Meeting of the person
appointing a proxy does not, however, revoke the appointment.
The presence, in person or by proxy, of holders of Common Stock,
Convertible Preferred Stock, Series B Stock, Series C Stock, Series D Stock, and
Warrants having a majority of the votes entitled to be cast at the Meeting shall
constitute a quorum. All actions proposed herein may be taken upon the
affirmative vote of Stockholders and Warrantholders possessing a majority of the
voting power represented at the Meeting, provided a quorum is present in person
or by proxy.
This Proxy Statement, together with the related proxy card, is being mailed
to the Stockholders and Warrantholders of the Company on or about November 9,
1998. The Annual Report to Stockholders of the Company for the year ended
December 31, 1997, including financial statements (the "Annual Report"), is
being mailed concurrently with this Proxy Statement to all Stockholders and
Warrantholders of record as of November 9, 1998. In addition, the Company has
provided brokers, dealers, banks, voting trustees and their nominees, at the
Company's expense, with additional copies of the Annual Report so that such
record holders could supply such material to beneficial owners as of November 9,
1998.
<PAGE>
ELECTION OF DIRECTORS
At the Meeting seven Directors are to be elected to hold office until the
next Annual Meeting of Stockholders and until their successors shall have been
elected and qualified.
The number which constitutes the entire Board of Directors of the Company
is seven. As described below, certain debt and equity holders of the Company
have the right to designate 2/7ths of the Board of Directors of the Company.
Such right has not been exercised. Proxies cannot be voted for a greater number
of persons than the number of nominees named in this Proxy Statement.
It is the intention of the persons named in the enclosed form of proxy to
vote the stock or Warrants represented thereby, unless otherwise specified in
the proxy, for the election as Directors of the persons whose names and
biographies appear below. All of the persons whose names and biographies appear
below are at present Directors of the Company.
In the event any of the nominees named below should become unavailable or
unable to serve as a director, it is intended that votes will be cast for a
substitute nominee designated by the Board of Directors. The Board of Directors
has no reason to believe that the nominees named will be unable to serve if
elected. Each of the nominees has consented to being named in this Proxy
Statement and to serve if elected.
The nominees for election to the Board of Directors of the Company are as
follows:
Served as a Positions with
Name Age Director Since the Company
- ---- --- -------------- -----------
Joseph R. Burns 61 1984 Director
F. Joseph Loeper 54 1997 Director
Thomas C. Lynch 55 1997 Director
Thomas J. Meaney 63 1986 President, Chairman of the
Board and Director
Wayne E. Meyer 73 1988 Director
Frederick C. Tecce 63 1996 Director
John B. Torkelsen 53 1985 Director
The principal occupation and business experience, for at least the past
five years, of each Director is as follows:
Joseph R. Burns was a Director and President of the Company from May 1984
until July 1986. From July 1986 until December 1986, Dr. Burns was Chairman of
the Company. From January 1987 until April 1988, Dr. Burns was a consultant to
the Company. From April 1988 to March 1998, Dr. Burns served as Senior Vice
President and Chief Scientist of the Company. Since March 1998, Dr. Burns has
served as Executive Vice President of Ocean Power Technologies, Inc. Dr. Burns
currently serves as Director.
-2-
<PAGE>
F. Joseph Loeper has been a Director of the Company since February 1997. He
was first elected to the Pennsylvania Senate in 1979 to represent the 26th
Senatorial District and continues to serve in this capacity. He currently serves
as Majority Leader of the State Senate. Senator Loeper also serves as a member
of the Board of Governors of the State System of Higher Education and is a
Pennsylvania Commissioner on the Delaware River Port Authority.
Thomas C. Lynch has been a Director of the Company since February 1997. He
serves as Senior Vice President for Safeguard Scientifics, Inc. since retiring
at the rank of Rear Admiral, U.S. Navy in November 1995. Mr. Lynch serves on the
Boards of OAO International, Sanchez Computer Associates, Eastern Technology
Council, Safeguard Scientifics International and Enhanced Vision Systems Inc.
Thomas J. Meaney has been a Director of the Company since July 1986 and
Chairman of the Board since June 1997. He was appointed President in June 1986
and continued to serve until February 1997. On September 30, 1998, he was
reappointed President of the Corporation. From February 1983 to his appointment
as President of the Company in June 1986, Mr. Meaney was Senior Vice President
and Director of Robotic Vision Systems Incorporated ("RVSI"), a manufacturer of
robotic vision systems. Mr. Meaney served as a Director of RVSI until 1991 when
he resigned from the post. Prior to 1983 and for more than five years, he was
Vice President - Business Development, International of Norden Systems and
President - Norden Systems Canada, both divisions of United Technologies
Corporation and developers of computer and electronic products and systems.
Wayne E. Meyer has been a Director of the Company since April 1988 and
Chairman of the Board from 1990 to 1997. From 1986 to present he has been the
Founder and President of the W.E. Meyer Corporation which provides consulting
and advice to industry, government and academic institutions in matters of
system engineering, project management, strategic planning and military and
electronic designs. He enlisted in the U.S. Navy as an Apprentice Seaman in 1943
and retired in 1985 in the rank of Rear Admiral. As a national authority on
Ballistic Missile Defense, he serves on numerous boards, groups and panels.
Frederick C. Tecce has been a Director of the Company since July 1996. Mr.
Tecce is of Counsel to Klett Lieber Rooney & Schorling. Previously, Mr. Tecce
was Counsel to Pepper, Hamilton and Scheetz. Since 1995, he has served as
Co-Chairman of the Executive Committee of the Eastern Technology Council. In
1996, Mr. Tecce was named Chairman of the Finance Committee of the Pennsylvania
Schools Employees Retirement Systems.
John B. Torkelsen has been a Director of the Company since June 1985 and
served as Secretary of the Company from June 1985 to April 1996. Mr. Torkelsen
has been President of Princeton Venture Research, Inc., a financial research and
consulting firm located in Princeton, New Jersey from November 1984 to the
present. He is also a Director of Voice Control Systems, Inc., a voice
recognition technology company; Objective Communications, Inc., a video
communications company; and Princeton Video Image, Inc. a developer of video
insertion systems for the television broadcast industry.
None of the Company's Directors or executive officers is related to any
other Director or executive officer of the Company. In connection with the
acquisition of certain debt and equity instruments of the Company from third
parties, Messrs. Burns, Meaney, Meyer, Tecce and Torkelsen have the right to
designate 2/7ths of the Board of Directors of the Company. See "Certain
Relationships and Related Transactions."
The Board of Directors recommends that Stockholders and Warrantholders vote
FOR each of the nominees for the Board of Directors.
-3-
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors has a Compensation Committee which makes
recommendations concerning salaries and incentive compensation for employees of
and consultants to the Company. The current members of the Compensation
Committee are Messrs. Loeper, Meaney and Meyer. The Compensation Committee was
established in December 1992 and held one meeting in 1997. There were four
meetings of the Board of Directors in 1997, not including written consents of
the Directors. During 1997, each incumbent Director attended at least 75% of the
aggregate of all meetings of the Board of Directors and meetings of committees
on which he served.
COMPENSATION OF DIRECTORS
In December 1994, the Board of Directors authorized the payment to each
outside Director of $500 for each Board meeting attended in person and $150 for
each Board meeting attended telephonically. See "Certain Relationships and
Related Transactions".
EXECUTIVE OFFICERS
The following table identifies the current executive officers of the
Company:
Capacities in In Current
Name Age Which Served Position Since
- ---- --- ------------ --------------
Thomas J. Meaney 63 President, Chairman of the September 1998
Board and Director
Patricia A. Bird 32 Secretary and Treasurer September 1998
-4-
<PAGE>
EXECUTIVE COMPENSATION
Summary of Compensation in Fiscal 1997, 1996 and 1995
- -----------------------------------------------------
The following Summary Compensation Table sets forth information concerning
compensation for services in all capacities awarded to, earned by or paid to the
Company's Chief Executive Officer and the four most highly compensated executive
officers of the Company whose aggregate cash compensation exceeded $100,000
(collectively, the "Named Executives") during the years ended December 31, 1995,
1996 and 1997.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
Annual
Compensation(1)
----------------
Year Salary ($)
Name and Principal Position
(a) (b) (c)
- --------------------------------------------------------------------------------
Thomas J. Meaney, President and 1997 145,466
Chief Executive Officer 1996 140,263
1995 149,550
Joseph R. Burns, Senior Vice President(2) 1997 113,200
1996 108,012
1995 116,313
- ---------------------
(1) The costs of certain benefits are not included because they did not exceed,
in the case of each Named Executive, the lesser of $50,000 or 10% of the
total of annual compensation reported in the above table.
(2) Mr. Burns served as Senior Vice President until his resignation in March
1998.
-5-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
COMMON STOCK
The following table sets forth certain information, as of November 9, 1998,
with respect to holdings of the Company's Common Stock by (i) each person known
by the Company to be the beneficial owner of more than 5% of the total number of
shares of Common Stock outstanding as of such date, (ii) each of the nominees
(which includes all current directors and Named Executives), and (iii) all
current directors and officers as a group.
Amount and Nature
Name of of Beneficial Percent
Beneficial Owner Ownership(1) of Class
---------------- ------------ --------
(i) Certain Beneficial Owners:
Safeguard Scientifics 7,371,000(2) 37.4
(Delaware) Inc.
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087-1945
Transitions Two, Limited Partnership 2,137,775(3) 13.4
920 Hopmeadow Street
Simsbury, Connecticut 06070
(ii) Nominees:
Joseph R. Burns 1,113,081(4) 7.7
F. Joseph Loeper 177,000(5) 1.2
Thomas C. Lynch -- --
Thomas J. Meaney 1,908,000(6) 12.9
Wayne E. Meyer 1,170,550(7) 8.0
Frederick C. Tecce 1,425,000(8) 9.9
John B. Torkelsen 1,878,383(9) 12.4
(iii) All Current Directors and Officers 7,766,714(4)(5)(6)(7)(8)(9) 46.9
as a Group(eight persons)
- --------------------------
* Less than 1%
(1) Except as otherwise indicated, all shares are beneficially owned and the
sole investment and voting power is held by the persons named.
-6-
<PAGE>
(2) Includes 5,459,000 shares issuable upon exercise of warrants, and 504,916
shares of common stock granted by Safeguard to certain of its employees
pursuant to a long-term incentive plan. Safeguard will continue to exercise
voting rights with respect to these shares until the occurrence of certain
vesting requirements.
(3) Includes 1,750,275 shares issuable upon conversion of Series B Stock.
(4) Includes 14,748 shares issuable upon conversion of Series B Stock and
100,000 shares issuable upon the exercise of warrants.
(5) Includes 75,000 shares issuable upon the exercise of warrants and 100,000
shares issuable upon the exercise of options.
(6) Includes 50,000 shares issuable upon conversion of Convertible Preferred
Stock, 199,500 shares issuable upon conversion of Series B Stock and
275,000 shares issuable upon exercise of warrants.
(7) Includes 30,000 shares issuable upon conversion of Series B Stock, 100,000
shares issuable upon the exercise of options and 318,750 shares issuable
upon the exercise of warrants.
(8) Includes 100,000 shares issuable upon the exercise of warrants.
(9) Includes 130,000 shares held of record by Princeton Venture Research, Inc.,
a corporation wholly owned by Mr. Torkelsen. Also includes 202,500 shares
issuable upon conversion of Convertible Preferred Stock and 695,883 shares
issuable upon conversion of Series B Stock. The Series B Stock is held of
record by Princeton Venture Research, Inc.
-7-
<PAGE>
CONVERTIBLE PREFERRED STOCK
The following table sets forth certain information, as of November 9, 1998,
with respect to holdings of the Company's Convertible Preferred Stock by (i)
each person known by the Company to be the beneficial owner of more than 5% of
the total number of shares of Convertible Preferred Stock outstanding as of such
date, (ii) each of the nominees (which includes all current directors and Named
Executives), and (iii) all current directors and officers as a group.
Amount and Nature
Name of of Beneficial Percent of
Beneficial Owner Ownership(1) Class
---------------- ------------ -----
(i) Certain Beneficial Owners:
(ii) Nominees:
Joseph R. Burns -- --
F. Joseph Loeper -- --
Thomas C. Lynch -- --
Thomas J. Meaney 50,000 19.6
Wayne E. Meyer -- --
Frederick C. Tecce -- --
John B. Torkelsen 202,500 79.4
(iii) All Current Directors and 252,500 99.0
Officers as a Group (eight persons)
- --------------------------
(1) Except as otherwise indicated, all shares are beneficially owned and the
sole investment and voting power is held by the persons named.
-8-
<PAGE>
SERIES B STOCK
The following table sets forth certain information, as of November 9, 1998,
with respect to holdings of the Company's Series B Stock by (i) each person
known by the Company to be the beneficial owner of more than 5% of the total
number of shares of Series B Stock outstanding as of such date, (ii) each of the
nominees (which includes all current directors and Named Executives), and (iii)
all current directors and officers as a group.
Amount and Nature
Name of of Beneficial Percent of
Beneficial Owner Ownership(1) Class
---------------- ------------ -----
(i) Certain Beneficial Owners:
The Mercantile & General Reinsurance Company, 91,342 8.1
PLC
Moorfields House
Moorfields
London EC2Y 9AL
Transitions Two, Limited Partnership 583,425 51.6
920 Hopmeadow Street
Simsbury, Connecticut 06070
(ii) Nominees:
Joseph R. Burns 4,916 *
F. Joseph Loeper -- --
Thomas C. Lynch -- --
Thomas J. Meaney 66,500 5.9
Wayne E. Meyer 10,000 *
Frederick C. Tecce -- --
John B. Torkelsen 231,961(2) 20.5
(iii) All Current Directors and 313,377 27.7
Officers as a Group (eight persons)
- -------------------------
* Less than 1%
(1) Except as otherwise indicated, all shares are beneficially owned and the
sole investment and voting power is held by the persons named.
(2) Held of record by Princeton Venture Research, Inc., a corporation wholly
owned by Mr. Torkelsen.
-9-
<PAGE>
SERIES C STOCK
The following table sets forth certain information, as of November 9, 1998,
with respect to holdings of the Company's Series C Stock by (i) each person
known by the Company to be the beneficial owner of more than 5% of the total
number of shares of Series C Stock outstanding as of such date, (ii) each of the
nominees (which includes all current directors and Named Executives), and (iii)
all current directors and officers as a group.
Amount and Nature
Name of of Beneficial Percent of
Beneficial Owner Ownership(1) Class
---------------- ------------ -----
(i) Certain Beneficial Owners:
Transitions Two, Limited Partnership 5,000 100.0
920 Hopmeadow Street
Simsbury, Connecticut 06070
(ii) Nominees:
Joseph R. Burns 19,500(2) 79.6
F. Joseph Loeper -- --
Thomas C. Lynch -- --
Thomas J. Meaney 19,500(2) 79.6
Wayne E. Meyer 19,500(2) 79.6
Frederick C. Tecce 19,500(2) 79.6
John B. Torkelsen 19,500(2) 79.6
(iii) All Current Directors and 97,500(2) 95.1
Officers as a Group (eight persons)
- -----------------------
(1) Except as otherwise indicated, all shares are beneficially owned and the
sole investment and voting power is held by the persons named.
(2) Reflects warrants to purchase Series C Stock.
-10-
<PAGE>
SERIES D STOCK
The following table sets forth certain information, as of November 9, 1998,
with respect to holdings of the Company's Series D Stock by (i) each person
known by the Company to be the beneficial owner of more than 5% of the total
number of shares of Series D Stock outstanding as of such date, (ii) each of the
nominees (which includes all current directors and Named Executives), and (iii)
all current directors and officers as a group.
Amount and Nature
Name of of Beneficial Percent of
Beneficial Owner Ownership(1) Class
---------------- ------------ -----
(i) Certain Beneficial Owners:
(ii) Nominees:
Joseph R. Burns 138,000 20.0
F. Joseph Loeper -- --
Thomas C. Lynch -- --
Thomas J. Meaney 138,000 20.0
Wayne E. Meyer 138,000 20.0
Frederick C. Tecee 138,000 20.0
John B. Torkelsen 138,000 20.0
(iii) All Current Directors and 690,000 100.0
Officers as a Group (eight persons)
- ---------------------------
(1) Except as otherwise indicated, all shares are beneficially owned and the
sole investment and voting power is held by the persons named.
-11-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In a series of transactions consummated on October 27, 1992 and April 27,
1993, Joseph R. Burns, Thomas J. Meaney, Wayne E. Meyer, Frederick C. Tecce and
John B. Torkelsen, each a Director of the Company (collectively, the
Investors"), acquired all of the loan and equity interests in the Company from
certain third parties. Pursuant to such transactions, each of the Investors
acquired, in consideration of $50,000 each, 20% of (i) 50,000 shares of Common
Stock, (ii) promissory notes of the Company in the aggregate principal amount of
$916,875 (collectively, the "Investor Notes"), (iii) warrants to purchase 97,500
shares of Series C Stock (the "Series C Warrants"), and (iv) certain other loan
and equity rights in the Company, including the right to designate 2/7ths of the
Board of Directors of the Company. See "Election of Directors."
In December 1993, the Investors agreed to reduce the amounts owed by the
Company under the Investor Notes, including unpaid interest, in exchange for
shares of capital stock issued by the Company. In return for a reduction in
principal of $416,875 and accrued interest of $273,125, the Company issued
2,750,000 shares of Common Stock and 690,000 shares of Series D Stock. The
Investor Notes were modified to provide for 16 quarterly payments of principal
beginning January 1, 1994 and ending October 1, 1997. The Investors have
authorized deferral of all principal payments until 1998. Interest on the unpaid
principal balance is payable quarterly commencing March 31, 1994. As additional
consideration for the modification of such loans, the Company extended the
exercise period for the Series C Warrants until April 25, 1999.
In a series of events from February through May 1996, the Company raised an
aggregate of $641,500 in debt financing pursuant to the issuance of secured
promissory notes.
The promissory notes are for a term of approximately eighteen months and
include an interest rate of 12% on the unpaid balance. The first interest
payment was paid on June 15, 1996 and interest is due quarterly thereafter. The
principal payments were to be paid on the fifteenth of March, June and September
1998. The notes are secured by the assets of the Corporation. As additional
consideration, warrants for the purchase of Common Stock were granted (the
number of shares were based on the amount of the promissory note and equal to
five shares to each dollar). The warrant price is $.01 per share. As of December
31, 1997, the Company was in arrears the December interest payment. During 1998,
the Company was unable to meet its note obligations and is currently working to
restructure its debt to related and other parties.
The following officers and directors participated in the 1996 financing:
Wayne E. Meyer, Thomas J. Meaney and Patricia A. Bird.
On May 31, 1989, the Company retained the services of the W.E. Meyer
Corporation to provide engineering and management consulting services to the
Company. Under the agreement, the Company paid 1,000 to the W.E. Meyer
Corporation in 1997 for services rendered. Wayne E. Meyer, a Director of the
Company, is president of the W.E. Meyer Corporation.
On April 15, 1991, the Company retained the services of WVG Corporation, of
which William V. Goodwin, a former Director of the Company until his death in
1997, was President, to provide operations management and technical consulting
services. During 1997, the Company paid $5,000 to WVG Corporation under this
agreement.
-12-
<PAGE>
AMENDMENT TO CERTIFICATE OF INCORPORATION
Stockholders are being asked to consider and vote upon a proposal to amend
the Certificate of Incorporation of the Company, as amended, to increase the
number of authorized shares of Common Stock from 35,000,000 to 60,000,000 to
provide the Company with flexibility to undertake future financings or negotiate
potential acquisitions, partnering transactions or settlement of Company debts.
The Company has no definitive agreements relating to such transactions. The
Board of Directors believes, however, that the adoption of the proposed
amendment will afford the Company needed flexibility when negotiating such
potential transactions by allowing the Board to issue additional shares of
Common Stock without further stockholder approval. Under the Company's current
capitalization structure, approximately 12,902,155 shares of Common Stock are
reserved for issuance under outstanding option plans, warrants and convertible
securities. Consequently, the Company is significantly restricted in its ability
to undertake future financings or other potential transactions.
The increase in the number of authorized shares of Common Stock is required
to permit the issuance of additional shares in the future for corporate
purposes. There are currently no other plans to issue Common Stock. The rights
of the Company's stockholders will not be affected by the increase in the number
of shares of authorized Common Stock, except to the extent of their ownership
dilution of the Company. Stockholders of the Company are not entitled to
appraisal rights nor any preemptive rights as may be provided under the Delaware
General Corporation Law.
The Board of Directors has approved such amendment and recommends its
approval by the stockholders of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 35,000,000 TO 60,000,000.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The information appearing under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
Balance Sheets as of December 31, 1997 and December 31, 1996 and Statements of
Operations and Shareholders' Equity and Cash Flows for the years ended December
31, 1997, 1996 and 1995 and the independent accountant's report on such
financial statements contained in the Annual Report accompanying this Proxy
Statement are incorporated herein by reference to such portions of such Annual
Report.
STOCKHOLDERS' PROPOSALS
Stockholders deciding to submit proposals for inclusion in the Company's
proxy statement and form of proxy relating to the 1999 Annual Meeting of
Stockholders must advise the Secretary of the Company of such proposals in
writing by December 30, 1998.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the Meeting other than the matters referred to above and does not
intend to bring any other matters before the Meeting. However, if other matters
should come before the Meeting, it is intended that holders of the proxies will
vote thereon in their discretion.
One or more representatives of Druker, Rahl & Fein, the independent
auditors of the Company, is expected to attend the Meeting and have an
opportunity to make a statement or respond to appropriate questions from
stockholders.
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GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company, whose notice of meeting is attached to this Proxy
Statement, and the entire cost of such solicitation will be borne by the
Company.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by directors, officers and other employees of
the Company who will not be specially compensated for these services. The
Company will also request that brokers, nominees, custodians and other
fiduciaries forward soliciting materials to the beneficial owners of shares or
Warrants held of record by such brokers, nominees, custodians and other
fiduciaries. The Company will reimburse such persons for their reasonable
expenses in connection therewith.
Certain information contained in this Proxy Statement relating to the
occupations and security holdings of directors and officers of the Company is
based upon information received from the individual directors and officers.
MIKROS SYSTEMS CORPORATION WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF ITS
STOCKHOLDERS OR WARRANTHOLDERS OF RECORD ON NOVEMBER 9, 1998 AND TO EACH
BENEFICIAL STOCKHOLDER OR WARRANTHOLDER ON THAT DATE UPON WRITTEN REQUEST MADE
TO THE SECRETARY OF THE COMPANY. A REASONABLE FEE WILL BE CHARGED FOR COPIES OF
REQUESTED EXHIBITS.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN
THE ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD WILL BE
APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors
Patricia A. Bird, Secretary
Princeton, New Jersey
November 30, 1998
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MIKROS SYSTEMS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby constitutes and appoints Thomas J. Meaney and
Patricia A. Bird and each of them, his or her true and lawful agents and proxies
with full power of substitution in each, to represent and to vote on behalf of
the undersigned all of the shares and warrants of Mikros Systems Corporation
(the "Corporation") which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Corporation to be held at the Corporate Office,
707 Alexander Road, Building Two, Suite 208, Princeton, New Jersey at 11:00
A.M., local time, on Monday, December 21, 1998, and at any adjournment or
adjournments thereof, upon the following proposals more fully described in the
Notice of Annual Meeting of Stockholders and Proxy Statement for the Meeting
(receipt of which is hereby acknowledged).
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR proposals 1, 2, and 3.
1. ELECTION OF DIRECTORS.
Nominees: Joseph R. Burns, F. Joseph Loeper, Thomas C. Lynch, Thomas J.
Meaney, Wayne E. Meyer, Frederick C. Tecce and John B. Torkelsen.
(Mark one only)
[ ] VOTE FOR all the nominees listed above; except vote withheld from the
following nominees (if any).
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[ ] VOTE WITHHELD from all nominees. (continued and to be signed on reverse
side)
<PAGE>
2. APPROVAL OF PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK OF THE COMPANY FROM 35,000,000 to 60,000,000 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon other matters as
may properly come before the Meeting.
This proxy must be signed exactly as name appears hereon.
Dated:
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When shares are held by joint tenants, both should sign.
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Signture of Securityholder
If the signer is a corporation, please sign full
corporatename by duly authorized officer, giving full title
as such. If a partnership, please sign in partnership name
by If a partnership, please sign in partnership name by If a
partnership, please sign in partnership name by authorized
person.
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Signture of Securityholder
if held jointly
I [ ] WILL [ ] WILL not attend the Meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
