SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
UNIDYNE Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
UNIDYNE CORPORATION
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, AUGUST 11, 1999
To the Stockholders of UNIDYNE CORPORATION:
Notice is hereby given that the Annual Meeting of stockholders of UNIDYNE
Corporation (the "Company") will be held at the Hotel Inter-Continental, Beekman
Room II, 111 East 48th Street, New York, New York 10017, on Wednesday, August
11, 1999 at 4:00 p.m., for the following purposes:
(i) To elect two Class A directors to serve for three-year terms until the
2002 Annual Meeting and until their respective successors are elected
and qualified;
(ii) To ratify the selection of Strouss, Hui & Ellis, P.C. as independent
auditors for the fiscal year ending December 31, 1999; and,
(iii) To consider and act upon any matters incidental to the foregoing or
any other matters which may properly come before the meeting or any
adjournments or postponements thereof.
Only stockholders of record at the close of business on June 23, 1999 will
be entitled to notice and to vote at the Annual Meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors,
/s/ CHARLOTTE E. DOREMUS
Charlotte E. Doremus
Secretary
July 16, 1999
Exton, Pennsylvania
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING OF THE
STOCKHOLDERS. ACCORDINGLY, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE. IF YOU SO CHOOSE, YOU
MAY VOTE YOUR SHARES IN PERSON AT THE MEETING.
<PAGE>
UNIDYNE CORPORATION
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
August 11, 1999
This Proxy Statement and the accompanying proxy card are being mailed to
stockholders commencing on or about July 9, 1999. The accompanying proxy is
solicited by the Board of Directors of UNIDYNE Corporation (the "Company") for
use at its Annual Meeting of stockholders to be held at the Hotel
Inter-Continental, Beekman Room II, 111 East 48th Street, New York, New York
10017, on Thursday, August 11, 1999 at 4:00 p.m., and any adjournments or
postponements thereof. The cost of the solicitation of proxies will be borne by
the Company. Directors, officers and a limited number of employees may assist in
the solicitation of proxies by mail, telephone and personal interview without
additional compensation.
When a proxy is returned properly signed, the shares represented thereby
will be voted by the persons named as proxies in accordance with the
stockholder's directions. You are urged to specify your choices on the enclosed
proxy card. If the proxy is signed and no instructions are given, the shares
will be voted "FOR" the nominee named herein under proposal number 1 and "FOR"
proposal number 2 as set forth in the preceding Notice of Annual Meeting, and in
the proxies' discretion, except as to other matters that automatically revoke a
stockholder's proxy. A stockholder may, however, revoke a proxy at any time
prior to the voting thereof on any matter by filing with the Secretary of the
company a written notice of revocation, by delivering a duly executed proxy
bearing a later date or by attending the Annual Meeting and voting in person.
The Board of Directors has fixed June 23, 1999 as the record date for the
meeting. Only stockholders of record on the record date are entitled to notice
of and to vote at the meeting and any adjournments or postponements thereof. As
of June 23, 1999, there were 9,755,352 shares of the Company's Common Stock, par
value $.001 per share (the "Common Stock"), and 500,000 shares of the Company's
Class B Convertible Preferred Stock, par value $10.00 per share (the "Preferred
Stock"), issued and outstanding. Each share of Common Stock is entitled to one
vote. A majority of the outstanding shares will constitute a quorum at the
meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of the votes cast on proposals presented
to stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information as of June 23, 1999 with
respect to the shares of Common Stock of the Company beneficially owned by (i)
any person who is known to the Company
<PAGE>
to be the beneficial owner of five percent or more of the outstanding Common
Stock of the Company, (ii) each director of the Company and each of the nominees
for election as director of the Company, (iii) each of the executive officers
named in the Summary Compensation Table (the "Summary Compensation Table") and
(iv) all directors and executive officers as a group.
BENEFICIAL OWNERS
The following persons are known by the Company to be the beneficial owners of
more than five percent of the Registrant's common stock as of December 31, 1998.
<TABLE>
<CAPTION>
Amount (1)
Name and Address and Nature Percentage
of Beneficial Owner of Ownership of Class
- ------------------------------------------------ ----------------- -------------
<S> <C> <C>
Capital Idea, Inc. 5,103,860 (2) 49%
118 Pickering Way, Suite 104, Exton, PA 19341
C. Eugene Hutcheson 5,291,360 (3) 51%
UNIDYNE Corporation
118 Pickering Way, Suite 104, Exton, PA 19341
Charlotte E. Doremus 5,316,360 (4) 51%
UNIDYNE Corporation
118 Pickering Way, Suite 104, Exton, PA 19341
David M. Barrett 1,027,074 (5) 10%
1000 Thomas Jefferson St., N.W., Suite 507
Washington, DC 20007
</TABLE>
- -----------------
(1) Unless otherwise indicated, all ownership is direct.
(2) Includes 500,000 shares which Capital Idea has the right to acquire upon
conversion of the Company's Class B Convertible Preferred Stock (the
Preferred Stock)
(3) Includes 87,495 shares which Mr. Hutcheson has the right to acquire within
sixty days through the exercise of options, 4,603,860 shares owned by
Capital Idea, of which Mr. Hutcheson is Chairman of the Board of Directors
and Chief Executive Officer and a 50% shareholder, and 500,000 shares which
Capital Idea has the right to acquire upon conversation of the Company's
Class B Convertible Preferred Stock (the "Preferred Stock").
(4) Includes 167,957 shares which Ms. Doremus has the right to acquire within
sixty days through the exercise of options, 4,603,860 shares owned by
Capital Idea, of which Ms. Doremus is a director, Secretary and Treasurer,
and a 50% shareholder, and 500,000 shares which Capital Idea has the right
to acquire upon conversion of the Preferred Stock.
(5) Includes 247,923 shares which Mr. Barrett has the right to acquire within
sixty days through the exercise of options.
DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
The following is certain information regarding the Common Stock of the Company
beneficially owned by each of its directors and executive officers and all
directors and executive officers as a group as of December 31, 1998.
<PAGE>
<TABLE>
<CAPTION>
Amount (1)
Name and Address And Nature Percentage
of Beneficial Owner Position of Ownership of Class
0------------------- -------- ------------ ----------
<S> <C> <C> <C>
C. Eugene Hutcheson Chairman of the Board, Chief Executive 5,291,360 (2) 51%
Officer, Director and Director Nominee
Wayne R. Lorgus President and Chief Financial Officer 100,000 1%
Charlotte E. Doremus Chief Administrative Officer, 5,316,360 (3) 51%
Secretary, Treasurer and Director
David M. Barrett, Esq. Director and Director Nominee 1,027,074 (4) 10%
Juan E. Cintron Director 50,000 --
David J. Packo President and Chief Operating Officer
of Dynamatic Corporation 50,000 --
Robert L. Mason President and Chief Operating
Officer of Maxwell Emission Test
Systems, Inc. -- --
James M. Liou President and Chief Operating Officer
of UNIDYNE Test Systems, Inc. 100,000 (5) 1%
Directors and executive
officers as a group 6,830,934 64%
</TABLE>
- -------
(1) Unless otherwise indicated, all ownership is direct.
(2) Includes 87,495 shares which Mr. Hutcheson has the right to acquire within
sixty days through the exercise of options, 4,603,860 shares owned by
Capital Idea, of which Mr. Hutcheson is Chairman of the Board of Directors
and Chief Executive Officer and a 50% shareholder, and 500,000 shares which
Capital Idea has the right to acquire upon conversion of the Preferred
Stock.
(3) Includes 167,957 shares which Ms. Doremus has the right to acquire within
sixty days through the exercise of options, 4,603,860 shares owned by
Capital Idea, of which Ms. Doremus is a director, Secretary and Treasurer,
and a 50% shareholder, and 500,000 shares which Capital Idea has the right
to acquire upon conversion of the Preferred Stock.
(4) Includes 247,923 shares which Mr. Barrett has the right to acquire within
sixty days through the exercise of options.
(5) Includes 100,000 shares which Mr. Liou has the right to acquire within
sixty days through the exercise of options.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange commission ("SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten percent beneficial
owners are required by SEC
<PAGE>
regulation to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were complied
with during the fiscal year ended December 31, 1998.
CHANGES IN CONTROL
The company was incorporated under the laws of the State of Delaware on
December 1, 1980, under the name of Blue Jay Energy Corporation, to engage in
oil and gas exploration and development. Subsequently, the Company changed its
name to Blue Jay Enterprises, Inc. ("Blue Jay"). In or about 1986, Blue Jay
ceased operations in the oil and gas field and until 1990 confined its
activities to the winding up of matters arising out of the prior years'
operation. Blue Jay discontinued all business operations in or about 1990.
On September 2, 1996, Blue Jay completed the acquisition of all the issued
and outstanding stock of United Dynamatic, Inc. ("UDI"), a Delaware corporation,
and certain assets of Capital Idea, Inc. in exchange for a total of 6,677,031
shares of the Company's Common stock. The number of shares issued in exchange
for the Assets constituted approximately 90% of the Company's Common Stock at
the time of issuance. Prior to acquisition of the Assets, Robert M. Bernstein
owned 51.9% of the Company's issued and outstanding Common Stock. After the
acquisition, Mr. Bernstein's shares represented less than 5% of the Company's
issued and outstanding Common Stock. After the acquisition, Blue Jay changed its
name to UNIDYNE Corporation.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
Pursuant to Delaware law, the Board of Directors of the Company has voted
to fix the number of directors at four and to classify the Board of Directors.
The members of each class are elected for terms to continue until the Annual
Meeting of stockholders held in the third year following the year of their
election and until their respective successors are elected and qualified.
Consequently, the term of office of the nominees elected to the Board of
Directors at the 1999 Annual Meeting will continue until the Annual Meeting of
stockholders to be held in 2002 and until their respective successors are
elected and qualified.
The nominees for the Class A Directors to be voted upon at the meeting are
David M. Barrett and C. Eugene Hutcheson, the current holders of the Class A
directorships. PROXIES WILL BE VOTED FOR THESE NOMINEES UNLESS OTHERWISE
SPECIFIED IN THE PROXY. Management does not contemplate that the nominees will
be unable to serve, but in such an event, proxies solicited hereby will be voted
for the election of another person or persons, if any, to be designated by the
Board of Directors.
The affirmative vote of a majority of the outstanding shares of the
Company's Common Stock present or represented at the Annual Meeting is required
for the election of directors.
<PAGE>
The following table sets forth information regarding Messrs. Barrett and
Hutcheson, the nominees for the Board of Directors, as well as information
regarding each director whose term is not to expire until the 2001 or 2002
Annual Meeting of stockholders and each executive officer of the company. The
number of years remaining in the term of office for each director is listed
below. All directors have served since their election on September 2, 1996,
except for Juan E. Cintron who was elected on December 21, 1998.
<TABLE>
<CAPTION>
TERM (YEARS)
NAME AGE POSITION REMAINING IN TERM
- ---- --- -------- -----------------
<S> <C> <C> <C>
C. Eugene Hutcheson 56 Chairman of the Board, Chief Executive Officer, Director One
Charlotte E. Doremus 55 Chief Administrative Officer, Secretary, Treasurer, Director Two
David M. Barrett, Esq. 62 Director One
Juan E. Cintron 56 Director Three
Wayne R. Lorgus 46 President and Chief Financial Officer N/A
David J. Packo 56 President and Chief Operating Officer
of Dynamatic Corporation N/A
Robert M. Mason 43 President and Chief Operating Officer
of Maxwell Emission Test Systems, Inc. N/A
James M. Liou 64 President and Chief Operating Officer
of UNIDYNE Test Systems, Inc. N/A
</TABLE>
C. EUGENE HUTCHESON has been Chief Executive Officer and Chairman of the Board
of Directors since September 2, 1996 and was President from September 2, 1996
through February 27, 1998. Mr. Hutcheson serves as Chairman and Chief Executive
Officer of the Company's subsidiaries. Mr. Hutcheson is Chairman, CEO, and
President of Capital Idea, Inc. Previously, he was the Chairman and President of
CIDCO Group, Inc., which developed and patented products for the packaging and
container industry.
CHARLOTTE E. DOREMUS has been Chief Administrative Officer, Secretary, Treasurer
and Director of the Company since September 2, 1996. Ms. Doremus is also
Secretary/Treasurer and a Director of the Company's subsidiaries and Capital
Idea. Ms. Doremus has been an investor in start-up companies for more than ten
years. Ms. Doremus has also been an Assistant to the Research Director and head
of the Portfolio Review Department at Argus Research Corp., and a Registered
Representative and Portfolio Analyst for Dean Witter Reynolds in New York City.
DAVID M. BARRETT, Esq., is a senior partner of the law firm of Barrett &
Schuler, Washington, D.C. Mr. Barrett has been an instructor in law at Notre
Dame Law School. He has been an Assistant United States Attorney for the
District of Columbia and has been appointed Independent Counsel for an
investigation of a member of the Cabinet of the President of the United States.
JUAN E. CINTRON is Chairman of the Board and CEO of Consultores Internacionales
CLB, SA. De C.V. and Grupo Industrial CINTRON, S.A. Mr. Cintron is a graduate of
the University of Notre Dame and has advanced studies from the Advanced
Management Program from the same university. He presently serves or has in the
past served as President of the Mexican chapter of the World Presidents
Organization, Junior Achievement of Mexico, Mexico City chapter of the Young
Presidents Organization, Board of Trustees of Instituto Cultrual Cuernavaca,
Board of Trustees of Instituto Technologico y de Estudies Superiores de
Monterrey, University of Notre Dame Alumni Association of
<PAGE>
Mexico, and Junior Achievement International (Vice-Chairman). He also serves on
the following Board of Directors: Grupo Modelo, S.A. de C.V., International
Advisory Council University of Notre Dame and Cone Tech Mex, S.A. de C.V.
WAYNE R. LORGUS(1) joined the Company on May 1, 1999 as President and Chief
Financial Officer(1). Mr. Lorgus previously served in a number of management
positions at Camden, New Jersey-based Campbell Soup Company, including General
Manager of its $300 million Swanson Traditional Meals Division, General Manager
of its $75 million Swanson Frozen Breakfast Division, and Director of Worldwide
Auditing, reporting directly to the Audit Committee of Campbell's Board. He was
later the CEO of Williamstown, New Jersey-based Snow Ball Foods, a privately
held food processing company. Most recently, he served as Executive Vice
President and Chief Financial Officer of New York-based Sandberg and Sikorski
Corporation, a privately held manufacturer of fine jewelry. Previously, Mr.
Lorgus worked as a CPA for over seven years at the New York and Philadelphia
offices of Arthur Andersen & Co.
(1) FRANCIS T. PRENDERGAST was Chief Financial Officer of the Company from June
29, 1998 to April 30, 1999.
DAVID J. PACKO joined Dynamatic Corporation as General Manger of Operations July
7, 1998 to oversee the manufacturing, assembly, distribution, quality, sales and
customer service of this division. On June 17, 1999 Mr. Packo was promoted to
President and Chief Operating Officer of Dynamatic Corporation. He brings with
him 30 years of experience in all facets of plant operations. Prior to joining
Dynamatic he was Director of Operations at Accurate Coatings, Dexter Corporation
and Aerotrans Corporation. He was also employed with ITW Corp. and Dow Chemical
Corporation for a total of 23 years where he held various management positions.
Mr. Packo holds a bachelor=s degree in Industrial Engineering.
ROBERT L. MASON joined Maxwell Emission Test Systems, Inc. on September 2, 1997
as Executive Vice President to supervise the division's manufacturing and
software development of the emission test stand dynamometers. On August 18, 1998
Mr. Mason was promoted to President and Chief Operating Officer of this
division. Prior to joining Maxwell he had been a Vice President at ASPIRE, Inc.
His primary responsibilities included product development, sales and marketing.
He also brings with him 10 years of experience at United Technologies as a
product development specialist with the Hamilton Test Systems division. One of
his professional accomplishments includes the award of two U.S. patents for
engine analyzer design.
JAMES M. LIOU has been President and Chief Operating Officer of the Company=s
subsidiary, UNIDYNE Test Systems, Inc., since March 10, 1997. Prior to joining
the Company, Mr. Liou served as President of Ulan Corporation and Thai-Nippon
Foods of Hayward, California until 1994, when he retired. Mr. Liou also served
previously as an executive of Ricca International. Mr. Liou presently serves as
a consultant to a U.S. container company doing business in China.
INFORMATION ABOUT BOARD OF DIRECTORS AND COMMITTEES
Directors and Executive Officers
Directors who are not employees of the Company or otherwise compensated by
the Company did not receive any compensation for services rendered in such
capacity for the fiscal year ended December 31, 1998 but are eligible to
participate in the Company's 1996 Stock Option Plan (the "Plan") and the 1997
Omnibus Stock Incentive Plan. Pursuant to the Plan, each eligible director is
granted options at the discretion of the Board of Directors. In the fiscal year
ended December 1996, pursuant to the Plan,
<PAGE>
Charlotte E. Doremus and C. Eugene Hutcheson were each granted options to
purchase 212,500 shares of the Company's Common Stock, David M. Barrett, Esq.,
was granted options to purchase 241,000 shares of the Company's Common Stock.
Additionally, directors who are also employees of the Company were eligible to
participate in the Company's 1996 Employee Stock Purchase Plan. The Company's
1997 Omnibus Stock Incentive Plan was approved on June 11, 1997.
The Board of Directors has a standing Audit Committee. This committee is
reconstituted at the first meeting of the Board of Directors following the
Annual Meeting of stockholders. The Audit Committee, which met one time during
fiscal year ended December 31, 1998, reviews and makes recommendations to the
full Board regarding the internal controls of the Company, as well as
interfacing with the Company's appointed auditors. The present members of this
committee are Messrs. Cintron (Chairman) and Barrett.
The Board of Directors has a standing Compensation Committee. This
committee is reconstituted at the first meeting of the Board of Directors
following the Annual Meeting of stockholders. The Compensation Committee, which
met one time during fiscal year ended December 31, 1998, reviews and makes
recommendations to the full Board regarding the compensation of senior officers
of the Company. The present members of this committee are Messrs. Barrett
(Chairman) and Cintron.
Compensation of Directors and Executive Officers
The following table provides certain summary information concerning the
compensation paid or accrued by the Company to or on behalf of its Chief
Executive Officer and other named executive officers of the Company for services
rendered in all capacities to the Company and its subsidiaries for the years
ended December 31, 1998, December 31, 1997, and the four months ended December
31, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARD PAYOUTS
- --------------------------------------------------------------------------------------------------------------------------------
NAME AND OTHER RESTRICTED
PRINCIPAL ANNUAL STOCK OPTIONS/ ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS SARS LTIP PAYOUTS COMPENSATION
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Eugene Hutcheson 1998 $225,000 -- $83,500 -- -- -- --
Chief Executive Officer, --------------------------------------------------------------------------------------------------
Chairman of the Board 1997 $271,015 (1)(2) -- -- --
of Directors, President --------------------------------------------------------------------------------------------------
and Director 1996 $234,000 -- -- -- 212,500 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Charlotte E. Doremus 1998 $200,000 -- -- -- -- -- --
Chief Administrative --------------------------------------------------------------------------------------------------
Officer, Secretary, 1997 $251,298 (2) -- -- -- -- --
Treasurer and --------------------------------------------------------------------------------------------------
Director 1996 $204,000 -- -- -- 212,500 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Francis T. Prendergast 1998 $ 57,462 -- -- -- -- --
Chief Financial Officer
- --------------------------------------------------------------------------------------------------------------------------------
David J. Packo 1998 $ 50,000 -- -- -- -- -- --
President and Chief --------------------------------------------------------------------------------------------------
Operating Officer of
Dynamatic Corporation
- --------------------------------------------------------------------------------------------------------------------------------
Robert L. Mason 1998 $123,360 -- -- -- -- -- --
President and Chief --------------------------------------------------------------------------------------------------
Operating Officer of 1997 $ 42,265 -- -- -- -- -- --
Maxwell Emission --------------------------------------------------------------------------------------------------
Test Systems, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) $43,750 of UNIDYNE Corporation base compensation for Mr. Hutcheson was
converted into UNIDYNE Corporation common stock through the exercise of
options.
(2) Includes accrued salaries for previous years due from Maxwell Dynamometer
Systems, Inc., $64,765 for each of the parties noted above. These accrued
salaries were converted into UNIDYNE Corporation common stock through the
exercise of options.
Non-employee directors of the Company are not compensated for attending
Board and Committee meetings and receive only reimbursement of travel expenses
Option/SAR Grants in Last Fiscal Year
None.
Certain Relationships and Related Transactions
The Company was provided legal services by the firm Barrett and Schuler.
David M. Barrett, Esq., a director of the Company, is a partner in the firm. The
Company expensed $105,000 and $90,000 for legal fees to this firm for the years
ended December 31,1998, and 1997, respectively.
The Company expensed $113,705 and $55,000 during the years ended December
31, 1998 and 1997 in legal fees to a firm in which a director of the Company was
a partner. This director resigned during 1998.
The Company sub-leases its Exton, Pennsylvania facility from Capital Idea,
Inc. The Company expensed $99,630 and $97,200 for the years ended December 31,
1998 and 1997, respectively.
The Company believes that all related party transactions were on terms
equivalent to terms which would have existed if the participants had been
unrelated.
PROPOSAL NUMBER 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTS
The Board of Directors has selected Strouss, Hui & Ellis, P.C., independent
certified public accountants, to audit the books, records and accounts of the
Company for the fiscal year ending December 31, 1999. In accordance with a vote
of the Board of Directors, this selection is being presented to the stockholders
for ratification at this meeting.
The firm of Strouss, Hui & Ellis, P.C. has audited the books and records of
the Company since April 14, 1999. For the fiscal year ended December 31, 1997
and through March 26, 1999, the Company's independent accountants were Arthur
Andersen, LLP, who resigned on that date. Except as described below, the reports
of the Company's prior principal auditors for the two most recent fiscal years
did not contain an adverse opinion or disclaimer of opinion, or modification as
to uncertainty, audit scope, or accounting principles. Arthur Andersen's opinion
of the December 31, 1997 financial statements was modified for an uncertainty as
to the Company's ability to continue as a going concern. There have been no
disagreements regarding accounting principles or practices, financial statement
disclosure, or auditing scope or procedure between the Company and its present
or former principal auditors in the past two years or in any interim period
through the date of resignation.
<PAGE>
Arthur Andersen, LLP took issue with the quality of some of the Company's
internal controls over payroll and inter-company transfer of funds. Arthur
Andersen resigned on March 26, 1999, reporting to management that certain
internal controls were deemed not adequate to permit reliance for purposes of
completing an audit.
While the Company differs as to whether the matters raised by Arthur
Andersen indicate issues regarding internal controls and funds transfers at the
Company, the Company has instituted measures to prevent the issues raised from
recurring. The Company authorized Arthur Andersen to respond fully to the
inquiries of the successor accountant regarding this matter. Arthur Andersen has
not yet discussed these issues with the Audit Committee or the Board of
Directors.
The Board of Directors authorized the Audit Committee and outside counsel
to investigate the issues raised by Arthur Andersen. The former investigation
concluded that upon fuller examination of the issues, they do not rise to the
level of material weaknesses in internal control.
Strouss, Hui & Ellis, P.C. has no direct or indirect material financial
interest in the Company. A representative of Strouss, Hui & Ellis, P.C. is
expected to be present at the Annual Meeting and will be given the opportunity
to make a statement, if he so desires. The representative also will be available
to respond to questions raised by those in attendance at the meeting.
The affirmative vote of a majority of the outstanding shares of the
Company's Common Stock present or represented at the Annual Meeting of
stockholders is required to approve the proposal. Ratification by the
stockholders is not required. If the proposal is not approved by the
stockholders, the Board of Directors does not plan to change the appointment for
the fiscal year ending December 31, 1999, but will consider the stockholder vote
in appointing auditors for fiscal 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
OTHER MATTERS
The management of the Company knows of no matter not specifically referred
to above as to which any action is expected to be taken at the meeting. It is
intended, however, that the persons named as proxies in regard to such other
matters and the transaction of such other business as may properly be brought
before the meeting, as seems to them to be in the best interest of the company
and its stockholders.
STOCKHOLDER PROPOSALS
In accordance with the rules established by the SEC for a proposal of a
stockholder to be included in the Board of Directors' Proxy Statement for the
Company's 1999 Annual Meeting, the proposal must be received at the principal
executive offices of the Company on or before January 1, 1999. Such a proposal
must also comply with the requirements as to form and substance established by
the SEC in order to be included in the Proxy Statement.
<PAGE>
DETACH HERE
PROXY
UNIDYNE CORPORATION
118 Pickering Way, Suite 104
Exton, PA 19341
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For Annual Meeting of Stockholders, August 11, 1999
The undersigned hereby appoints C. Eugene Hutcheson and Charlotte E.
Doremus, each or either of them individually, attorneys with full power of
substitution, for and in the name of the undersigned, with all powers the
undersigned would possess if personally present, proxies to vote all of the
shares of the common stock of UNIDYNE Corporation held of record by the
undersigned on June 23, 1999, which the undersigned is entitled to vote at the
Annual Meeting of the Stockholders on August 11, 1999, or at any adjournment or
postponement thereof.
PLEASE DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED ON THE REVERSE SIDE
AND RETURN IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING IN PERSON. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDERS. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
<PAGE>
- --------------------------------------------------------------------------------
THIS IS YOUR PROXY,
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of
Stockholders, you can be sure your shares are represented at the Meeting by
promptly returning your proxy (attached below) in the enclosed envelope.
Thank you for your attention to this important matter.
- --------------------------------------------------------------------------------
DETACH HERE
|X| Please mark
votes as in
this example.
The Board of Directors recommends a vote "FOR" each proposal:
1. ELECTION OF DIRECTORS.
Nominees: David M. Barrett and C. Eugene Hutcheson to Class A
Directorships for 3-year terms.
FOR WITHHELD
|_| |_|
|_| __________________________________________
Withhold vote from the nominees that I/we
have written on the above line
2. PROPOSAL TO RATIFY THE APPOINTMENT OF STROUSS, HUI & ELLIS, P.C. AS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. In their discretion, upon other matters as may properly come before
the meeting.
|_| MARK HERE FOR ADDDRESS CHANGE AND NOTE AT LEFT
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD ONCE USING THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE U.S.A.
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE. IF JOINT ACCOUNT,
EACH OWNER SHOULD SIGN, WHEN SIGNING IN A REPRESENTATIVE CAPACITY. PLEASE
GIVE TITLE.
Signature:_________________________________ Date: ________________
Signature:_________________________________ Date: ________________
