<PAGE>
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
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Equitex, Inc.
(Name of Registrant as Specified in its Charter)
Herrick K. Lidstone, Jr.
(Name of Persons(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(j)(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:
________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:____________
(4) Proposed maximum aggregate value of transaction:________
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:_________________________________
(2) Form, Schedule or Registration Statement No.:___________
(3) Filing Party:___________________________________________
(4) Date Filed:_____________________________________________
<PAGE>
PRELIMINARY COPY SUBJECT TO COMPLETION, DATED NOVEMBER 10, 1995
7315 East Peakview Avenue
Greenwood Executive Park, Building 8
Englewood, Colorado 80111
_________________________________________________________________
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on December 18, 1995
_________________________________________________________________
November 27, 1995
TO THE STOCKHOLDERS OF EQUITEX, INC.:
The 1995 Annual Meeting of Stockholders of Equitex, Inc., a Delaware
corporation (the "Company"), will be held at the offices of Friedlob
Sanderson Raskin Paulson & Tourtillott, LLC, 1400 Glenarm Place, Third Floor,
Denver, Colorado 80202, on December 18, 1995 at 10:00 a.m. Mountain Standard
Time, to consider and take action on:
1. The election of three directors to serve until the next annual
meeting of stockholders and until their successors have been elected and
qualified. (Passage of this proposal requires the affirmative vote of a
majority of the voting shares represented at the meeting.)
2. A proposal to amend Paragraph 4 of the Certificate of Incorporation
of the Company to cause a 1-for-2 reverse stock split whereby every two
shares of the Company's common stock (the "Old Common Stock") will be
exchanged for one share of newly created common stock (the "New Common
Stock"). No change will be made to the authorized Preferred Stock. (Passage
of this proposal requires the affirmative vote of the majority of the
outstanding voting shares.)
3. A proposal to ratify the appointment of Davis & Co., CPAs, P.C. as
the independent auditor of the Company for the year ending December 31, 1995.
(Passage of this proposal requires the affirmative vote of a majority of the
voting shares represented at the meeting.)
4. Such other business as may properly come before the meeting, or any
adjournment or adjournments thereof.
The discussion of the proposals of the Board of Directors set forth
above is intended only as a summary, and is qualified in its entirety by the
information relating to the proposals set forth in the accompanying Proxy
Statement.
<PAGE>
Only holders of record of Common Stock at the close of business on
November 16, 1995 will be entitled to notice of and to vote at this Annual
Meeting, or any postponements or adjournments thereof.
November 27, 1995 By Order of the Board of
Directors:
Thomas B. Olson
Secretary
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVING OF SUCH PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
YOUR VOTE IS IMPORTANT
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<PAGE>
EQUITEX, INC.
7315 East Peakview Avenue
Greenwood Executive Park, Building 8
Englewood, Colorado 80111
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 18, 1995
November 27, 1995
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH A SOLICITATION OF
PROXIES (IN THE FORM ENCLOSED) BY THE BOARD OF DIRECTORS OF EQUITEX, INC.
(THE "COMPANY") TO BE USED AT THE 1995 ANNUAL MEETING OF STOCKHOLDERS AT
10:00 A.M. (MOUNTAIN TIME), ON DECEMBER 18, 1995 AT THE OFFICES OF FRIEDLOB
SANDERSON RASKIN PAULSON & TOURTILLOTT, LLC, 1400 GLENARM PLACE, THIRD FLOOR,
DENVER, COLORADO 80202. THE PROXY AND PROXY STATEMENT WILL BE MAILED TO
STOCKHOLDERS ON OR BEFORE NOVEMBER 27, 1995.
REVOCABILITY OF PROXY
If the enclosed Proxy is executed and returned, it will be voted on the
proposals as indicated by the stockholder. The Proxy may be revoked by the
stockholder at any time prior to its use by notice in writing to the
Secretary of the Company, by executing a later dated proxy and delivering it
to the Company prior to the meeting or by voting in person at the meeting.
SOLICITATION
The cost of preparing, assembling and mailing the Notice of Meeting,
Proxy Statement and Proxy (the "Proxy Materials"), miscellaneous costs with
respect to the Proxy Materials and solicitation of the Proxies will be paid
by the Company. The Company also may use the services of its directors,
officers and employees to solicit Proxies, personally or by telephone and
telegraph, but at no additional salary or compensation. The Company intends
to request banks, brokerage houses and other custodians, nominees and
fiduciaries to forward copies of the Proxy Materials to those persons for
whom they hold such shares and request authority for the execution of the
Proxies. The Company will reimburse them for the reasonable out-of-pocket
expenses incurred by them in so doing.
VOTING SECURITIES
Holders of record of the Company's common stock, $.01 par value (the
"Old Common Stock"), at the close of business on November 16, 1995 (the
"Record Date") will be entitled to vote on all matters.
<PAGE>
On the Record Date the Company had 6,435,230 shares of Common Stock
outstanding. The holders of all shares of Common Stock are entitled to one
vote per share. The only class of voting securities outstanding is the
Common Stock. One-third of the issued and outstanding shares of the Common
Stock entitled to vote, represented in person or by proxy, constitutes a
quorum at any stockholders' meeting. Passage of each proposal requires the
affirmative vote of a majority of the voting shares represented in person or
by proxy at the meeting. Abstentions on a proposal will be counted as votes
against that proposal. Broker non-votes will not be counted as shares
represented at the meeting.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
Set forth below is information as to certain persons known by the
Company to be the beneficial owner of more than five percent of the
outstanding Common Stock and the beneficial ownership of the Company's
directors, individually, and officers and directors as a group as of
November 16, 1995:
<TABLE>
<CAPTION>
Shares owned
Name and address of beneficially Percent
beneficial owner and of record (1) of Class
- - ------------------ ----------------- --------
<S> <C> <C>
Henry Fong 1,054,658 (2) 14.9%
7315 E. Peakview Ave.
Englewood, CO 80111
Unnamed Association 375,000 5.3%
of Persons
c/o Gary L. Blum, Esq.
9595 Wilshire Blvd.
Suite 511
Beverly Hills, CA 90212
Russell L. Casement 150,000 (3) 2.1%
1355 South Colorado Blvd.
Denver, CO 80202
Aaron A. Grunfeld 110,000 (3) 1.6%
1880 Century Park East
Fifth Floor
Los Angeles, CA 90067
Officers and directors 1,324,658 (2,3,4) 14.4%
as a group (four
persons)
__________
* Owns less than one percent of the outstanding Common Stock.
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<PAGE>
(1) The beneficial owners exercise sole voting and investment power.
(2) Includes 413,090 shares underlying options granted under the Company's
1993 Stock Option Plan.
(3) Includes 100,000 shares underlying options granted to each of Messrs.
Casement and Grunfeld under the Company's 1993 Stock Option Plan for
Non-employee Directors, 50,000 of which are exercisable on January 6,
1996, and the remaining 50,000 are exercisable ratably over eighteen
months beginning February 5, 1996.
(4) Includes 10,000 shares underlying options granted under the Company's
1993 Stock Option Plan.
</TABLE>
No change in control of the Company has occurred since the beginning of
the last calendar year.
The Company does not know of any arrangements, the operation of which
may, at a subsequent date, result in a change in control of the Company.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The following three persons are to be elected as directors of the
Company for a term of one year and until the election and qualification of
their successors: Henry Fong, Russell L. Casement and Aaron A. Grunfeld.
These three directors will constitute the entire Board of Directors. The
persons named in the proxy intend to vote for Messrs. Fong, Casement and
Grunfeld who have been recommended for election by the Board of Directors of
the Company unless a stockholder withholds authority to vote for any or all
of the nominees. If any nominee is unable to serve or, for good cause, will
not serve, the persons named in the proxy reserve the right to substitute
another person of their choice as nominee in his place. Each of the nominees
has agreed to serve, if elected.
VOTE REQUIRED
A majority of the votes cast at the meeting by stockholders entitled to
vote thereon will be required for election to the Board of Directors.
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<PAGE>
INFORMATION ABOUT DIRECTORS AND OFFICERS
NAME PRINCIPAL OCCUPATION
Henry Fong,
Age 59* Mr. Fong has been the President, Treasurer and a director of
the Registrant since inception. Since 1987 Mr. Fong has been
the president, chief executive officer, treasurer and a
director of Roadmaster Industries, Inc., a publicly-held
investee on the Registrant. Mr. Fong has also been a
director of Roadmaster Corporation since August 1987,
Hamilton Lamp Corporation since October 1989 and Flexible
Flyer Industries, Inc. since September 1994. From August 1989
to September 1990, Mr. Fong was executive vice president,
treasurer and a director of MGS Acquisitions, Inc. and a
director of its wholly-owned subsidiary MacGregor Sports,
Inc. ("MSI-II"), which were formed to acquire the assets of
MacGregor Sporting Goods, Inc. ("MSI") out of bankruptcy.
After acquiring the assets of MSI, both MGS and MSI-II
subsequently filed for protection under the federal
bankruptcy laws in February 1991. Since February 1991, Mr.
Fong has served as the Chairman of the Board of Directors and
Treasurer of MacGregor Sports and Fitness Inc., a
publicly-held company engaged in the business of marketing
and distributing a broad range of sports, recreational and
fitness products under the MacGregor trademark. MacGregor
Sports and Fitness, Inc. was formed for the purpose of
acquiring and, in fact, did in May 1991 acquire certain of
the assets of MSI-II in that company's Chapter 11 bankruptcy
proceedings. From 1959 to 1982 Mr. Fong served in various
accounting, finance and budgeting positions with the
Department of the Air Force. During the period from 1972 to
1981 he was assigned to senior supervisory positions at the
Department of the Air Force headquarters in the Pentagon. In
1978, he was selected to participate in the Federal Executive
Development Program and in 1981, he was appointed to the
Senior Executive Service. In 1970 and 1971, he attended the
Woodrow Wilson School, Princeton University and was a
Princeton Fellow in Public Affairs. Mr. Fong received the
Air Force Meritorious Civilian Service Award in 1982. Mr.
Fong is a certified public accountant. In March 1994, Mr.
Fong was one of twelve CEO's selected as Silver Award winners
in FINANCIAL WORLD magazine's corporate American "Dream Team."
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<PAGE>
___________
* Mr. Fong is an "interested person" of the Company as defined under the
Investment Company Act of 1940, as amended, because he is an affiliated
person under that Act.
Russell L. Casement,
Age 52 Dr. Casement has been a director of the Registrant since
February 1989. In 1994, Dr. Casement became the President
of ProMark, Inc. a privately-held investee of the
Registrant which currently in inactive. In 1993, Dr.
Casement became a director of ProConnextions, Inc., a
privately-held investee of the Registrant which is currently
inactive. Since 1969, Dr. Casement has been the president of
his own private dental practice, Russell Casement, D.D.S.,
P.C., in Denver, Colorado. Dr. Casement earned a Doctor of
Dental Science degree from Northwestern University in 1967.
Dr. Casement is a member of the American Dental Association,
the Colorado Dental Association and the Metro Denver Dental
Association.
Aaron A. Grunfeld,
Age 48 Mr. Grunfeld has been a director of the Registrant since
November 1991. Mr. Grunfeld has been engaged in practice of law
for the past 20 years and has been a member of the firm of
Resch, Polster, Alpert, and Berger, LLP, Los Angeles, California
since November 1995. From April 1990 to November 1995,
Mr. Grunfeld was a member of the firm of Spensley Horn Jubas &
Lubitz, Los Angeles, California. From approximately October 1987
until April 1990 he was a partner in the firm of Alef Grunfeld
& Schwab. Mr. Grunfeld received an A.B. in Political Science
from UCLA in 1968 and a J.D. from Columbia University in 1971.
He is a member of the California Bar Association.
Thomas B. Olson,
Age 29 Mr. Olson has been Secretary of the Registrant since January
1988. Since February 1990, Mr. Olson has been a director,
and since May 1994 Secretary, of Immune Response, Inc. a
publicly held investee of the Registrant formerly engaged in
laboratory medical testing and related research activities but
which now is seeking other business opportunities. Mr. Olson
has attended Arizona State University and the University of
Colorado at Denver.
-5-
<PAGE>
The Board took action through four board meetings and no consent minutes
during the 1994 fiscal year.
The Board of Directors has an Audit Committee consisting of Dr.
Casement, as chairman, and Mr. Grunfeld, and a Compensation Committee
consisting of Mr. Grunfeld, as chairman, and Dr. Casement. The Board of
Directors does not have and does not expect to appoint a nominating committee.
The Audit Committee reviews and approves the scope of the annual audit
undertaken by the Company's independent public accountants and meets with
them as is necessary to review the progress and results of their work as well
as any recommendations they may make. The Committee also reviews the fees of
the independent public accountants and recommends to the Board of Directors
the appointment of independent public accountants. In connection with the
internal accounting controls of the Company, the Committee reviews internal
audit procedures and reporting systems. The Compensation Committee reviews
the Company's compensation arrangements as is necessary and makes
recommendations to the Board of Directors.
The Audit and Compensation Committees were established during the 1992
fiscal year. The Audit and Compensation Committees both met once during the
1994 fiscal year.
Each director receives an annual retainer of $10,000, paid monthly, and
$500 for each Board meeting attended, as well as reimbursement for expenses
incurred in attending Board meetings. Until June 1995, each director received
$1,500 for each Board meeting attended and no annual retainer.
COMPENSATION OF DIRECTORS AND
EXECUTIVE OFFICERS
COMPENSATION OF OFFICERS
Henry Fong, the President of the Company, the only officer of the
Company whose compensation exceeded $100,000 for the fiscal year ended
December 31, 1994. The following table summarizes compensation paid to Mr.
Fong during the years ended December 31, 1994, 1993, and 1992:
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<PAGE>
ANNUAL COMPENSATION ($$)
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
(a) (b) (c) (d) (e) (g) (i)
Name and Other All
Principal Annual Options Other
Position Year Salary Bonus Compensation & SARs Compensation
- - -------- ---- ------ ----- ------------ ------- ------------
($$) ($$) ($$) (##) ($$)
<S> <C> <C> <C> <C> <C> <C>
Henry Fong 1994 183,013 669,536* -0- -0- 165,000**
President,
Treasurer
Principal
Executive
Officer and
Accounting
Officer
Henry Fong 1993 183,013 703,958* -0- 413,090 165,120+**
Henry Fong 1992 183,013 474,721* -0- -0- 138,646**
__________
* Mr. Fong receives an annual bonus which equals 3% of the Company's total
assets as of year end.
** On April 1, 1992, the Company purchased a life insurance policy with
retirement benefits for Mr. Fong which pays his beneficiary
$2,600,000 in the event of Mr. Fong's untimely death or provides for
retirement benefits for Mr. Fong upon his retirement at or after age 65
utilizing the cash value of the policy at that time. This benefit is
being provided to Mr. Fong in consideration of his more than ten years
of service to the Company and in anticipation of his serving the Company
until retirement. The Company has no other retirement or pension plan
for Mr. Fong. The annual premium on this policy is $105,414 per year
for seven years until March 30, 1999, and may be considered other future
compensation to Mr. Fong. For the year ended December 31, 1994,
$105,414 was paid toward the policy and an additional $59,586 was paid
to Mr. Fong for deferred income taxes on the policy. The amount in this
column includes payments and tax liability on the life insurance policy.
+ Includes partial use of a company-owned vehicle.
</TABLE>
Also in April 1992, the Company bought a Keyman Life insurance policy
which pays the Company $3,000,000 in the event of Mr. Fong's untimely death.
The Company paid $9,050 and $6,920 on this policy in 1994 and 1993,
respectively, which is not considered compensation to Mr. Fong.
-7-
<PAGE>
OPTION/SAR GRANTS DURING FISCAL 1994
No stock options or stock appreciation rights were granted to the
person named in the Summary Compensation Table during the fiscal year ended
December 31, 1994.
AGGREGATED OPTION/SAR EXERCISES DURING FISCAL 1994 AND DECEMBER 31, 1994
OPTION/SAR VALUES
The following table summarizes information concerning the exercise of
options during the fiscal year ending December 31, 1994, and the unexercised
value of the options held by the person named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
Shares at FY-End (#) at FY-End (#)
Acquired on Valued Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- - ---- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
Henry Fong -0- -0- 413,090/-0- 140,451/-0-
__________
(1) Market value of the underlying securities at year-end, minus the exercise
price of "in-the-money" options/SARs.
</TABLE>
COMPENSATION OF DIRECTORS
Each director receives an annual retainer of $10,000, paid monthly, and
$500 for each Board meeting attended, as well as reimbursement for expenses
incurred in attending Board meetings. Until June 1995, each director received
$1,500 for each Board meeting attended and no annual retainer.
1993 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Company has adopted the 1993 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan") reserving an aggregate of 500,000 shares of
Common Stock for issuance pursuant to the exercise of stock options (the
"Options") which may be granted to non-employee directors of the Company. On
July 5, 1995, an order was issued by the Securities and Exchange Commission
authorizing the Directors' Plan and the options granted thereunder. The
Directors' Plan is for a ten year term commencing July 5, 1995 (the
"Effective Date"). Each Non-Employee Director automatically, as of
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<PAGE>
the Effective Date, was granted an option to purchase 100,000 shares of
Common Stock. Thereafter, each director who first becomes a Non-Employee
Director after the Effective Date shall automatically, as of the date 90 days
following the date such director first becomes a non-employee director, be
granted an option to purchase 100,000 shares of Common Stock. No additional
options can be granted under the Directors' Plan except to a director who
first becomes a Non-Employee Director after the Effective Date. No
discretionary grants can be made under the Directors' Plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
During 1992, the Company bought a life insurance policy on the Company's
President, Henry Fong, which provides for a payment to Mr. Fong's beneficiary
of $2,600,000 in the event of his untimely death or a retirement benefit to
Mr. Fong of the cash value of the policy upon Mr. Fong's retirement from the
Company at or after age 65. The Company has no other compensation plan or
arrangement with respect to any executive officer which plan or arrangement
results or will result from the resignation, retirement or any other
termination of such individual's employment with the Company. The Company
has no plan or arrangement with respect to any such persons which will result
from a change in control of the Company or a change in the individual's
responsibilities following a change in control.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
To the Company's knowledge, based solely upon a review of the copies of
the Forms 3, 4 and 5 filed pursuant to Section 16(a) of the Securities and
Exchange Act of 1934 as furnished to the Company and written representations
that no other reports were required, during the fiscal year ended December
31, 1994, all of the Corporation's officers, directors and greater than ten
percent beneficial owners made all required filings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company currently leases approximately 1,800 square feet of office
space in Greenwood Executive Park, 6400 South Quebec, Englewood, Colorado
from a partnership in which its President and his wife are sole partners, on
terms comparable to the existing market for similar facilities.
At various times throughout 1994, the President of the Company made
loans to the Company which totaled $268,000. These loans were
-9-
<PAGE>
unsecured demand notes which carried an interest rate of 10%. These loans
were repaid with interest totalling $2,351.10 during fiscal 1994. On August
2, 1995, the wife of the Company's President, Henry Fong, made a loan to the
Company in the amount of $50,000. This loan was due on demand and carried an
interest rate of 10%. As of November 15, 1995, this loan has been repaid in
full with interest totaling $602.74.
The Company has placed members of its Board and its officers on the
boards of directors of certain investee companies and other companies in
which it has obtained an equity interest or to which it has made loans or
guarantees. In most instances, the board representation was subsequent to
these acquisitions, loans or guarantees. The Company may be considered to be
in control of certain of its investee companies.
The Company was engaged by RMI as a management and computer systems
consultant for a one year period commencing on January 1, 1994 and was paid a
$144,000 consulting fee payable on a monthly basis for such services. This
consulting agreement is renewable on a yearly basis and was renewed on the
same terms on January 1, 1995. The President of the Company is an officer
and director of RMI.
PROPOSAL NUMBER TWO
TO AMEND PARAGRAPH 4 OF THE CERTIFICATE OF INCORPORATION
TO CAUSE A ONE-FOR-TWO REVERSE STOCK SPLIT
OF COMMON STOCK
Adoption of the proposed amendment to Paragraph 4 of the Company's
Certificate of Incorporation will effect a 1-for-2 reverse stock split
whereby every two shares of the Company's currently authorized and
outstanding common stock (the "Old Common Stock") will be exchanged for one
share of newly created common stock (the "New Common Stock"). The Company's
2,000,000 shares of authorized preferred stock will not be affected by the
proposed reverse stock split. Presently there are no outstanding shares of
Preferred Stock.
The Board of Directors has adopted a resolution to amend the Company's
Certificate of Incorporation to cause an exchange of each two shares of Old
Common Stock for 1 share of New Common Stock. The reverse split will be
accompanied by a reverse split in the number of authorized shares from
15,000,000 shares of Old Common Stock to 7,500,000 shares of New Common
Stock. For the reasons set forth hereafter, the Board recommends approval of
the proposal by stockholders. A copy of Paragraph 4 of the Certificate of
Incorporation as it would read following adoption of this proposal is
included herewith as Exhibit A.
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<PAGE>
DESCRIPTION OF AND REASONS FOR THE PROPOSED REVERSE STOCK SPLIT
The Board of Directors is submitting the 1-for-2 reverse stock split of
Common Stock for approval of the stockholders primarily because it believes
the reverse split would increase the likelihood of generating interest in the
Company's stock by more investors and members of the securities brokerage
industry and also would enhance the likelihood for success of any acquisition
or refinancing efforts which might be undertaken by the Company. As a result
of discussions by the Company's executive officers with members of the
brokerage and investment banking industries, the Company has been advised by
some members of the investment banking industry that brokerage firms might be
more willing to evaluate the Company's securities as a possible investment
opportunity for their clients and to act as a market maker in the Company's
securities if the price range for the Company's Common Stock were higher.
Additionally, the Company believes that the likelihood of the Company's
common stock becoming marginable may be increased following the proposed
reverse split to the extent the reverse stock split has a positive effect on
the trading market. Were the Company's common stock to become marginable
under the rules of the Federal Reserve Board, this may generate additional
interest on the part of the investment community. Based upon such
discussions, the Company believes that additional interest by the investment
community in the Company's stock (which is not assured) might result in a
more liquid trading market for the stock and that potential acquisition
candidates might be more willing to accept shares of Common Stock if the
trading prices were in a higher range and the market for the Common Stock
were believed to be less volatile. Although the Company believes that its
ability to complete acquisitions or conduct refinancings might be benefitted
by the proposed reverse stock split, there can be no assurance that this will
occur. At the current time the Company has no agreements for any acquisition
offers or financings.
The Company also believes that low trading prices of the Company's
equity securities may have an adverse impact upon the efficient operation of
the trading market in the securities. In particular, brokerage firms often
charge a greater percentage commission on low-priced shares than that which
would be charged on a transaction in the same dollar amount of securities
with a higher per share price. A number of brokerage firms will not
recommend purchases of low-priced stock to their clients or make a market in
such shares, which tendencies may adversely affect the Company. Stockholders
should note that the effect of the reverse split upon the market prices for
the Company's Common Stock cannot be accurately predicted. In particular,
there is no assurance that prices for shares of New Common Stock will be two
times the prices for shares of Old Common Stock immediately prior to the
reverse stock split.
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<PAGE>
Holders of Old Common Stock will not be required to recognize any gain
or loss as the result of any exchange of securities which occurs upon
approval of the reverse stock split. The tax basis of the aggregate shares of
New Common Stock received by present stockholders will be equal to the basis
of the aggregate shares of Old Common Stock exchanged for such New Common
Stock. The holding period for shares of New Common Stock will include the
holding period of Old Common Stock when calculated for purposes of taxation
or sales under Rule 144 of the Rules and Regulations promulgated under the
Securities Act of 1933, as amended. Rule 144 requires that "restricted
securities" as defined in Rule 144, be held at least two years before routine
sales can be made in accordance with the provisions of the Rule. Rule 144
provides that shares issued in a reverse stock split are deemed to have been
held from the date of acquisition of the shares involved in the reverse stock
split. Therefore, the reverse stock split, if approved, will not effect the
beginning of a new holding period for the shares of New Common Stock, which
will be deemed to have been held from the date of acquisition of the shares
of Old Common Stock exchanged therefor.
EXCHANGE OF STOCK CERTIFICATES AND DETERMINATION OF NUMBER OF SHARES ISSUABLE
UPON SUCH EXCHANGE
If Proposal Number Two is adopted by the stockholders, one share of New
Common Stock would be exchanged for each two shares of Old Common Stock.
Shares of New Common Stock may be obtained by surrendering certificates
representing shares of Old Common Stock to the Company's transfer agent,
American Securities Transfer, Inc., 938 Quail Street, Suite 101, Lakewood,
Colorado 80215 (the "Transfer Agent"). HOWEVER, THE COMPANY HAS ESTABLISHED
NO DEADLINE FOR THE EXCHANGE OF CERTIFICATES, AND THE PRESENT CERTIFICATES OF
OLD COMMON STOCK WILL BE EXCHANGEABLE FOR SHARES OF NEW COMMON STOCK AT ANY
TIME IN THE FUTURE FOR A FEE TO BE PAID BY THE STOCKHOLDER, WHICH IS
PRESENTLY $10.00 PER CERTIFICATE. To determine the number of shares of New
Common Stock issuable to any record holder, the total number of shares
represented by certificates issued in the name of that record holder as set
forth on the records of the Transfer Agent (on the date upon which the
reverse split becomes effective) will be divided by two. The holder will,
upon surrender of the share certificate(s) representing shares of Old Common
Stock, receive a share certificate representing the appropriate number of
shares of New Common Stock. Fractional shares of New Common Stock will be
issued if the division described above results in a quotient which contains a
fraction. Holders of certificates of Old Common Stock may transmit their
certificates to the Transfer Agent whenever they wish to obtain shares of New
Common Stock. The Company will not require any stockholder to exchange his
certificate(s) of Old Common Stock for New Common Stock. It is anticipated
that the reverse split will be effected only after shareholder approval and
-12-
<PAGE>
after required notices have been given to the Securities and Exchange
Commission and to the National Association of Securities Dealers, and NASDAQ.
If the necessary stockholder vote is not received at the scheduled
stockholder meeting, the Company will seek to effect the reverse split as
soon thereafter as possible.
EFFECTS OF APPROVAL OF PROPOSAL NUMBER TWO
Theoretically the market price of the Company's Common Stock should
increase approximately two-fold following the proposed reverse stock split.
It is hoped that this will result in a price level which will overcome the
reluctance, policies and practices of broker-dealers referred to above and
increase interest in the Company's securities by investors. However, there
can be no assurance that the foregoing will occur or that the per share price
level of the New Common Stock immediately after the proposed reverse stock
split actually will increase two-fold or be maintained at that level for any
period of time.
A further effect of the reverse stock split would be adjustments in the
number of shares granted and reserved under the Company's 1993 Stock Option
Plan and the 1933 Stock Option Plan for Non-Employee Directors. This plan
provides that the number of shares granted and reserved thereunder is to be
adjusted appropriately to give effect to any recapitalization such as a
reverse stock split. If the reverse stock split is approved, the number of
shares reserved for issuance under the existing 1993 Stock Option Plan will
be decreased from 1,500,000 to 750,000 shares. Adoption of Proposal Number
Two would require adjustments in the outstanding options granted under the
1993 Stock Option Plan and the 1993 Stock Option Plan for Non-Employee
Directors which would decrease the number of shares issuable upon exercise of
the options and increase the exercise price per share, each by a factor of
two.
An additional effect of the adoption of Proposal Number Two would be a
change in the par value of the Company's Common Stock to $.02 per share.
This change is being made to ensure that shares of New Common Stock will not
be confused with shares of Old Common Stock. The change in par value is not
expected to have a material effect upon the Company and its stockholders. Par
value represents the minimum consideration which may be received by the
Company for the issuance of a share of Common Stock and Preferred Stock.
The following table illustrates the effects of the proposed reverse
stock split and increase in the authorized shares of Common Stock on
authorized and outstanding numbers of shares of Common Stock:
-13-
<PAGE>
<TABLE>
<CAPTION>
Prior to proposed After proposed
reverse stock split, reverse stock split,
increase in authorized increase in authorized
Number of shares Common Stock and Common Stock and
of Common Stock proposed stock options proposed stock options
- - ---------------- ---------------------- ----------------------
<S> <C> <C>
Authorized 15,000,000 7,500,000
Outstanding 6,435,230 3,217,615
Treasury -0- -0-
Reserved* 2,000,000 1,000,000
---------- ---------
Available for future issuance 6,564,770 3,282,385
Percent of authorized available
for future issuance 44% 44%
__________
* Reserved for issuance upon exercise of outstanding options and for
exercises of options which might be granted under the Company's 1993
Stock Option Plan and the 1993 Stock Option Plan for Non-employee
directors.
</TABLE>
Presently there are no outstanding shares of Preferred Stock.
VOTE REQUIRED
The affirmative vote of the majority of the outstanding shares entitled
to vote thereon at the stockholders' meeting will be required to adopt the
proposed amendment to Paragraph 4 of the Certificate of Incorporation.
PROPOSAL NUMBER THREE
APPOINTMENT OF INDEPENDENT AUDITOR
The Board of Directors of the Company has appointed the firm of Davis &
Co., CPAs, P.C., as independent auditor of the Company for the year ended
December 31, 1995. A representative of Davis & Co., CPAs, P.C., is not
expected to be present at the meeting. There are no existing direct or
indirect understandings or agreements between the Company and Davis & Co.,
CPAs, P.C., that place a limit on current or future years' audit fees.
The firm of Davis & Co., CPAs, P.C., provided services to the Company
during the year ended December 31, 1994 relating principally to the
examination of the financial statements and related reporting which included
the annual audit of the Company's financial statements.
-14-
<PAGE>
VOTE REQUIRED
A majority of the votes cast at the meeting by stockholders entitled to
vote thereon will be required to ratify the appointment of the independent
auditors.
FINANCIAL INFORMATION
A copy of the 1994 Annual Report of the Company, including audited
financial statements, is being sent to stockholders with this Proxy Statement.
OTHER MATTERS
Management does not know of any other matters to be brought before the
meeting. However, if any other matters properly come before the meeting, it
is the intention of the appointees named in the enclosed form of Proxy to
vote in accordance with their best judgment on such matters.
STOCKHOLDER PROPOSALS
Any stockholder proposing to have any appropriate matter brought before
the 1996 Annual Meeting of Stockholders, tentatively scheduled for July 29,
1996, must submit such proposal in accordance with the proxy rules of the
Securities and Exchange Commission. Such proposals should be sent to Thomas
B. Olson, Secretary, Equitex, Inc., 7315 East Peakview Avenue, Greenwood
Executive Park, Building 8, Englewood, Colorado 80111, for receipt no later
than March 1, 1996.
By Order of the Board of
Directors:
EQUITEX, INC.
Date: November 27, 1995 Thomas B. Olson,
Secretary
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<PAGE>
_________________________________________________________________
PROXY
_________________________________________________________________
EQUITEX, INC.
7315 East Peakview Avenue
Greenwood Executive Park, Building 8
Englewood, Colorado 80111
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 18, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Equitex, Inc. (the "Company") hereby
constitutes and appoints Henry Fong or Thomas B. Olson as attorneys and
proxies, to appear, attend and vote all of the shares of the Common Stock of
Equitex, Inc. standing in the name of the undersigned at the 1995 Annual
Meeting of Stockholders of Equitex, Inc. to be held at the offices of
Friedlob Sanderson Raskin Paulson & Tourtillott, LLC, 1400 Glenarm Place,
Third Floor, Denver, Colorado 80202, on December 18, 1995, at 11:00 a.m.,
Mountain Time, and at any postponements or adjournments thereof:
1. To elect the following three directors to serve until the next
annual meeting of stockholders and until their successors have been elected
and qualified: Henry Fong, Russell L. Casement and Aaron A. Grunfeld.
For all nominees _______.
Withhold authority to vote for all nominee(s) ______.
Withhold authority to vote for nominee(s) named below:
____________________________________________________________
2. To consider and vote upon the amendment of Paragraph 4 of the
Company's Certificate of Incorporation to cause a 1-for-2 reverse stock split
whereby every two shares of the Company's common stock (the "Old Common
Stock") will be exchanged for one share of newly created common stock (the
"New Common Stock"). No change will be made to the authorized Preferred
Stock.
FOR _______ AGAINST _______ ABSTAIN_______
<PAGE>
3. To consider and vote upon the ratification of the appointment of
Davis & Co., CPAs, P.C., as independent auditor of the Company for the year
ending December 31, 1995.
FOR ______ AGAINST ______ ABSTAIN ______
4. To transact such other business as may properly come before the
meeting.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED HEREON WITH
RESPECT TO PROPOSALS ONE, TWO, THREE AND FOUR, BUT THEY WILL BE VOTED FOR THE
NOMINEES LISTED IN PROPOSAL ONE AND FOR PROPOSALS TWO, THREE, AND FOUR IF NO
SPECIFICATION IS MADE. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS.
Please mark, date and sign your name exactly as it appears hereon and
return the Proxy in the enclosed envelope as promptly as possible. It is
important to return this Proxy properly signed in order to exercise your
right to vote if you do not attend the meeting and vote in person. When
signing as agent, partner, attorney, administrator, guardian, trustee or in
any other fiduciary or official capacity, please indicate your title. If
stock is held jointly, each joint owner must sign.
Date: ____________, 1995
______________________________
Signature(s)
Address if different from that
on label:
______________________________
Street Address
______________________________
City, State and Zip Code
______________________________
Number of shares
Please check if you intend to be present at the meeting: ______
