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 Sectioin 240.14a-12
Equitex, Inc.
-------------
(Name of Registrant as Specified in its Charter)
Gerald Raskin, Esq.
Seth Weiss, Esq.
Friedlob Sanderson Raskin Paulson & Tourtillott, LLC
1400 Glenarm Place
Denver, Colorado 80111
(303) 571-1400
(303) 595-3970
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] 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
pursuat to Exchange Act Rule 0-11:____________________________
(4) Proposed Maximum aggregate value of transaction:______________
(5) Total Fee Paid:_______________________________________________
[ ] Fee previously paid 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 regitration 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>
EQUITEX, INC.
7315 East Peakview Avenue
Greenwood Executive Park, Building 8
Englewood, Colorado 80111
NOTICE OF 1998 ANNUAL MEETING
Dear Equitex Stockholder:
On Friday, December 4, 1998, Equitex, Inc. ("Equitex") will hold its 1998 Annual
Meeting of Stockholders at the offices of Friedlob Sanderson Raskin Paulson &
Tourtillott, LLC, located at 1400 Glenarm Place, third floor, Denver, Colorado.
The meeting will begin at 10:00 a.m. local time.
Only stockholders who own stock at the close of business on October 30, 1998 can
vote at this meeting or any postponements or adjournments that may take place.
At the meeting, we will:
1. Elect a Board of Directors;
2. Approve the appointment of our independent auditors for 1998;
3. Approve the issuance of warrants, options or other securities
that may be changed into common stock of Equitex; and
4. Attend to other business properly presented at the meeting.
Your Board of Directors recommends that you vote in favor of the three proposals
outlined in the proxy statement.
At the meeting we will also report on Equitex's 1997 business results and other
matters of interest to stockholders.
By Order of the Board of Directors,
Thomas B. Olson
Secretary
October __, 1998
<PAGE>
TABLE OF CONTENTS
Page Number
-----------
General Questions and Answers 3
Questions and Answers Regarding the Proposal to Grant
Authority to Issue Warrants, Option, and Preferred Convertible Stock 6
Proposals You May Vote On 8
Nominees For the Board of Directors and Principal Executive Officers 10
Statement on Corporate Governance 12
Directors' & Executive Officers' Ownership of Company Stock 13
Executive Officers' Compensation 14
Aggregated Option/SAR Exercises in 1997 and Year-End Values 15
Directors' Compensation 16
Compliance with Section 16(a) of the Securities and Exchange Act of 1934 17
Certain Relationships and Related Transactions 17
Other Matters 18
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<PAGE>
GENERAL QUESTIONS AND ANSWERS
Q: WHAT AM I VOTING ON?
A: Three matters are presented for your consideration. First, the election
of three directors (Henry Fong, Russell L. Casement and Aaron A.
Grunfeld). Second, ratification of Davis & Co. P.C. as Equitex Inc.'s
(referred to in these materials as the "Company") independent auditors.
Third, granting the Company the authority to issue of warrants, options
or other securities that may be changed into common stock of the
Company.
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on October 30, 1998 (the
"Record Date").
Q: WHO IS SOLICITING THE PROXIES?
A: The Board of the Company is soliciting proxies to be voted at the
meeting.
Q: HOW MANY VOTES IS EACH SHARE ENTITLED TO?
A: Each share of common stock is entitled to one vote.
Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends a vote FOR each of the nominees, FOR the
appointment of Davis & Co., P.C. as independent auditors for 1998, and
FOR granting authority to the Company to issue warrants, options or
other securities that may be changed into common stock of The Company.
Q: HOW DO I VOTE?
A: Sign and date each proxy card you receive and return it in the prepaid
envelope. If you return your signed proxy card but do not mark the
boxes showing how you wish to vote, you give authority to Henry Fong
and Thomas B. Olson to vote on the three proposals and any other matter
that may arise at the meeting.
Q: WHAT IF I WANT TO CHANGE MY VOTE?
A: You have the right to revoke your proxy at any time before the meeting
by: (a) notifying Thomas B. Olson, the Company's corporate secretary;
(b) voting in person at the meeting; or (c) returning a later-dated
proxy card.
Q: WHO WILL COUNT THE VOTES?
A: Our transfer agent, American Securities Transfer & Trust, Inc. ("AST")
will tabulate the votes, and act as inspector of the election.
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<PAGE>
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Proxy cards, ballots and voting tabulations are mailed directly to
AST, and handled in a manner that protects your voting privacy. Your
vote will not be disclosed except: (1) as needed to permit AST to
tabulate and certify the vote; (2) as required by law; or (3) in
limited circumstances such as a proxy contest in opposition to the
Board. All comments written on the proxy card will remain confidential,
unless you ask that your name be disclosed.
Q: WHAT SHARES ARE INCLUDED ON THE PROXY CARD?
A: The shares on your proxy card(s) represent ALL of your shares,
including those received pursuant to the exercise of options granted by
the Company.
Q: WHAT IF I GET MORE THAN ONE PROXY CARD?
A: Your shares are probably registered differently or are in more than one
account. Sign and return all proxy cards to ensure that all your shares
are voted.
Q: HOW MANY SHARES CAN VOTE?
A: As of the Record Date,________ shares of common stock were issued and
outstanding.
Q: WHAT IS A QUORUM?
A: A quorum is one-third of the outstanding shares. They may be present at
the meeting or represented by proxy. There must be a quorum for the
meeting to be held.
Q: WHAT IF I LEAVE MY PROXY CARD BLANK?
A: If you submit a properly executed proxy card, but abstain from voting,
you will be considered part of the quorum. Abstentions are not counted
in the tally of votes for or against a proposal.
Q: WHAT IF I DON'T VOTE AT ALL?
A: If you fail to return the proxy card, do not attend the meeting and do
not notify the Company's Secretary, your votes will not be counted
toward established quorum, nor will they be counted in the tally of
votes for or against the proposals.
Q: WHAT VOTE IS NECESSARY TO ADOPT A PROPOSAL?
A: A proposal must receive more than 50% of the shares voting.
Q: WHAT PERCENTAGE OF STOCK DO THE DIRECTORS AND OFFICERS OWN?
A: As of ____________, approximately __% of the Company's common stock is
owned by directors and officers of the Company. See page 13 for more
details.
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<PAGE>
Q: WHO ARE THE LARGEST PRINCIPAL STOCKHOLDERS?
A: As of October 14, 1998:
Henry Fong beneficially owned 1,400,184 shares (including 676,200
shares underlying options granted under the Company's 1993 Stock Option
Plan), or ____%;
Wayne W. Mills beneficially owned 490,000 shares, or ____%;
An Unnamed Association of Persons beneficially owned 187,500 shares, or
____%;
Russell L. Casement beneficially owned 175,000 shares (including 50,000
shares underlying options granted under the Company's 1993 Stock Option
Plan for Non- Employee Directors and 100,000 shares in a profit sharing
plan), or ____%.
Aaron A. Grunfeld beneficially owned 100,000 shares (including 50,000
shares underlying options granted under the Company's 1993 Stock Option
Plan for Non- Employee Directors), or ____%.
Q: WHEN ARE THE STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING DUE?
A: All stockholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to Thomas B. Olson,
Corporate Secretary, Equitex, Inc., 7315 East Peakview Avenue,
Greenwood Executive Park, Building 8, Englewood, Colorado 80111 by
March 31, 1999.
Q: WHAT DOCUMENTS ARE BEING DELIVERED WITH THIS PROXY STATEMENT?
A: A copy of the 1997 Annual Report of the Company, which contains audited
financial statements.
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<PAGE>
QUESTIONS AND ANSWERS REGARDING
THE PROPOSAL TO GRANT AUTHORITY TO ISSUE
WARRANTS, OPTIONS AND PREFERRED CONVERTIBLE STOCK
Q: WHAT WARRANTS, OPTIONS AND OTHER SECURITIES DOES THE COMPANY PLAN TO
ISSUE?
A: The Company plans to issue warrants, options and preferred convertible
stock (the "Securities") which will be exercisable or convertible into
common stock of the Company.
Q: WHY DOES THE COMPANY SEEK STOCKHOLDER APPROVAL BEFORE ISSUING THE
SECURITIES?
A: The Company has been operating as a business development company under
the Investment Company Act of 1940. The statutes and regulations that
govern business development companies ("BDC Law") require stockholders
to approve the issuance of the Securities.
Q: WILL STOCKHOLDERS HAVE TO APPROVE EACH SUBSEQUENT ISSUANCE?
A: No. The Company intends to use this general grant of authority in
connection with all future issuances of Securities.
Q: ARE THE SECURITIES, ONCE ISSUED, TRANSFERRABLE?
A: No. Under BDC Law, once the Securities are issued they not transferable
unless publicly distributed.
Q: DO THE SECURITIES EXPIRE IF NOT EXERCISED OR CONVERTED?
A: Yes. Under BDC Law, the Securities must be exercised or converted into
common stock within ten years of issuance, or they expire.
Q: ARE THE SECURITIES SUBJECT TO A MINIMUM EXERCISE OR CONVERSION PRICE?
A: Yes. Under BDC Law, the exercise or conversion price of the Securities
must be greater than or equal to the market value of the common stock
on the date of issuance.
Q: DOES BDC LAW RESTRICT WHO MAY RECEIVE THE SECURITIES?
A: No. Directors, officers, employees, consultants and persons with whom
the Company does business are all eligible to receive the Securities.
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<PAGE>
Q: WHY DOES THE COMPANY WANT TO ISSUE THE SECURITIES?
A: The Board has no specific plan to issue the Securities, but wishes to
have the authority to make such an issuance to obtain additional
capital, be able to offer the Securities to consultants for future
services and for future acquisitions.
Q: HOW MANY SECURITIES DOES THE COMPANY PLAN TO ISSUE?
A: The Board has no specific amount of Securities it plans to issue. Under
BDC Law, the amount of common stock that would result from the exercise
or conversion of the Securities may not exceed 25% of the outstanding
common stock of the Company.
-7-
<PAGE>
PROPOSALS YOU MAY VOTE ON
1. ELECTION OF DIRECTORS
There are three nominees for election this year. The nominees are:
Henry Fong, Russell L. Casement and Aaron A. Grunfeld. Detailed
information on each nominee is provided on page 10. Each director is
elected annually, and serves a one-year term until the election and
qualification of their respective successor. The persons named in the
enclosed proxy intend to vote the proxy for the election of each of the
three nominees unless you indicate on the proxy card that your vote
should be withheld from any or all such nominees. Each nominee has
agreed to serve if elected.
The principal occupation and certain other information about the
nominees is provided on page 10.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
2. APPROVAL OF THE APPOINTMENT OF DAVIS & CO., P.C. AS INDEPENDENT
AUDITORS
The Board has appointed Davis & Company, P.C. as the Company's
independent auditors for 1998, subject to your approval. Davis & Co.
has served as the Company's independent auditors since 1990. They have
unrestricted access to the Board to discuss audit findings and other
financial matters. Representatives of Davis and Co. are not expected to
be present at the meeting. There are no agreements between the Company
and Davis & Co. that limit current or future years' audit fees.
Audit services provided by Davis & Co. during 1997 included an audit of
the Company's consolidated financial statements and related reporting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF DAVIS & CO.
AS INDEPENDENT AUDITORS FOR 1998.
3. APPROVAL OF THE AUTHORITY TO ISSUE WARRANTS, OPTIONS OR OTHER
SECURITIES THAT MAY BE CHANGED INTO COMMON STOCK OF THE
COMPANY
Since its formation, the Company has been operating as a business
development company under the Investment Company Act of 1940. At a
special meeting held on April 3, 1998, the stockholders approved a
proposal that would allow the Company to withdraw its business
development company election and become an operating company. While the
Company plans to withdraw its election in the near
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<PAGE>
future, until it does it is still subject to the statutes and
regulations that govern business development companies. Statutes
applicable to business development companies allow it to issue
warrants, options or other securities that may be converted into common
stock ("Securities"), but only if:
1. The Securities expire within 10 years;
2. The Securities are not transferable unless publicly
distributed;
3. The exercise prices of the Securities are greater
than or equal to the market value of the common stock
on the date of issuance; and
4. The proposal to issue the Securities is authorized
by the stockholders.
Pursuant to statute, the amount of common stock that would result from
the exercise of the Securities may not exceed 25 percent of the
outstanding common stock of the Company.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE PLAN TO ISSUE THE
SECURITIES.
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<PAGE>
NOMINEES FOR THE BOARD OF DIRECTORS
AND PRINCIPAL EXECUTIVE OFFICERS
HENRY FONG
Age 61
Nominee for Director
Director since inception
President, Treasurer, Principal Executive and Accounting Officer
From 1987 to June 1997, Mr. Fong was chairman of the board and chief executive
officer of RDM Sports Group, Inc. (f/k/a Roadmaster Industries, Inc.) a
publicly-held investee of the Company and was its president and treasurer from
1987 to 1996. Mr. Fong resigned from his positions with RDM on June 20, 1997
concurrent with the closing of a $100 million financing. In August 1997, RDM
filed for Chapter 11 bankruptcy. Mr. Fong has been named as a defendant in a
class action suit filed by former RDM shareholders. From July 1996 to October
1997, Mr. Fong was a director of IntraNet Solutions, Inc., a publicly-held
investee company which provides internet/intranet solutions to Fortune 1000
companies and was the chairman of the board and treasurer of its predecessor
company, MacGregor Sports and Fitness, Inc. from February 1991 until the two
companies merged in July 1996. Since January 1993, Mr. Fong has been chairman of
the board and chief executive officer of California Pro Sports, Inc., a
publicly-traded former manufacturer and distributor of in-line skates, hockey
equipment and related accessories. 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 CEOs selected as Silver Award winners in
FINANCIAL WORLD magazine's corporate American "Dream Team."
RUSSELL L. CASEMENT
Age 55
Nominee for Director
Director since 1989
In 1994, Dr. Casement became the president of ProMark, Inc. a privately-held
investee of the Company 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
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<PAGE>
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 51
Nominee for Director
Director since 1991
Mr. Grunfeld has been engaged in the practice of law for the past 27 years and
has been of counsel to 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. 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 32
Secretary of the Company since 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 Company
formerly engaged in laboratory medical testing and related research activities
and now is seeking other business opportunities. Mr. Olson attended Arizona
State University and the University of Colorado at Denver.
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<PAGE>
STATEMENT ON CORPORATE GOVERNANCE
ROLE AND COMPOSITION OF THE BOARD
The Board is the ultimate decision-making body of the Company except with
respect to those matters reserved to the stockholders. It selects the senior
management team, which is charged with the conduct of the Company's business.
Having selected the executive officers, the Board acts as an advisor and
counselor and ultimately monitors their performance.
The Company's Board held 6 meetings during 1997.
The full Board considers all major decisions of the Company. However, the Board
has also established the following committees:
THE AUDIT 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 to review the progress and results of
their work. The Audit Committee also recommends the appointment, and
reviews the fees of, the Company's independent public accountants. In
connection with the internal accounting controls of the Company, the
Committee reviews internal audit procedures and reporting systems. The
Audit Committee is chaired by Dr. Casement. Mr. Grunfeld is also on the
Audit Committee. The Audit Committee held 1 meeting during 1997.
THE COMPENSATION COMMITTEE. The Compensation Committee reviews matters
related to compensation of senior management well as the general
employee compensation and benefit policies and practices the Company,
and makes recommendations to the Board. The Compensation Committee is
chaired by Mr. Grunfeld. Dr. Casement is also on the Compensation
Committee. The Compensation Committee held 1 meeting during 1997.
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<PAGE>
DIRECTORS' & EXECUTIVE OFFICERS' OWNERSHIP OF COMPANY STOCK
The following table contains information as of October 14, 1998, as to the
beneficial ownership of shares of the Company's common stock of each person who,
to the knowledge of the Company, is a beneficial owner of five percent or more
of such common stock, each person who is a director or executive officer of the
Company and all persons as a group who are directors and executive officers of
the Company:
<TABLE>
<CAPTION>
Title of Class Name and address of Amount and nature of Percent of class
beneficial owner beneficial ownership (1)
- - -------------- ------------------- ------------------------ ----------------
<S> <C> <C> <C>
Common Stock Henry Fong
7315 E. Peakview Avenue 1,400,184(2) ___%
Englewood, CO 80111
Common Stock Wayne W. Mills
5020 Blake Road South 490,000 ___%
Edina, MN 55436
Common Stock Russell L. Casement
1355 S. Colorado Blvd. 175,000(3) ___%
Suite 320
Denver, CO 80202
Common Stock Aaron A. Grunfeld
10390 Santa Monica Blvd. 100,000(4) ___%
4th Floor
Los Angeles, CA 90025
Officers and Directors as a 1,730,184(2)(3)(4)(5) ___%
group (four persons)
</TABLE>
(1) The beneficial owners exercise sole voting and investment
power.
(2) Includes 676,200 shares underlying options granted under the
Company's 1993 Stock Option Plan.
(3) Includes 50,000 shares underlying options granted under the
Company's 1993 Stock Option Plan for Non-Employee Directors,
and 100,000 shares in a profit sharing plan.
(4) Includes 50,000 shares underlying options granted under the
Company's 1993 Stock Option Plan for Non-Employee Directors.
(5) Includes 45,000 shares underlying options granted under the
Company's 1993 Stock Option Plan.
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<PAGE>
CHANGE OF CONTROL. No change in control of the Company has occurred since the
beginning of the last calendar year, and the Company does not know of any
arrangements that may result in a change of control.
EXECUTIVE OFFICERS' COMPENSATION
MOST HIGHLY COMPENSATED EXECUTIVE OFFICERS. Henry Fong, President of the
Company, is the only officer of the Company whose compensation exceeded $100,000
in 1997. The following table shows Mr. Fong's compensation over the last three
years:
<TABLE>
<CAPTION>
Annual Compensation ($$)Long-Term
------------------------------------ Compensation
Awards
Other All
Name & Annual Other
Principal Salary Bonus Compensation Options Compensation
Position Year ($) ($) ($) & SARs(#) ($)
- - -------- ---- --- --- --- --------- ---
<S> <C> <C> <C> <C> <C> <C>
Henry Fong 1997 183,013 151,153 (a) -0- -0- 165,000 (b)
President, 1996 183,013 314,328 (a) -0- -0- 165,000 (b)
Treasurer 1995 183,013 571,693 (a) -0- -0- 165,000 (b)
</TABLE>
a. For 1997, Mr. Fong received an annual bonus equaling 3% of
the Company's
total assets as of year end.
b. On April 1, 1992, the Company bought a life insurance policy
on Mr. 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 Equitex at or after age
65. The annual premium on this policy is $105,414 per year
until March 30, 1999, and may be considered other compensation
to Mr. Fong. For the year ended December 31, 1997, $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.
In April 1992, the Company bought a key-man life insurance policy which pays the
Company $3,000,000 in the event of Mr. Fong's untimely death. The Company paid
$16,550 on this policy in 1997 which is not considered compensation to Mr. Fong.
Option/SAR Grants During Fiscal 1997. No stock options or stock appreciation
rights were granted to Mr. Fong during the Company's fiscal year ended December
31, 1997.
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<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1997
AND YEAR-END VALUES
The following table shows information for Mr. Fong, the Company's sole Highly
Compensated Officer, covering: (I) exercises of stock options and SARs during
1997; and (ii) the amount and values of unexercised stock options and SARs as of
December 31, 1997:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options/SARs
Options/SARs at Year-End at Year-End(#)
Shares
acquired on Value
Name exercise (#) Realized ($)
(#) Exercisable (#) Exercisable
/Unexercisable /Unexercisable
- - ----- ------------ ------------ ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Henry 0 0 206,545/0 (451,818)/0
Fong
</TABLE>
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<PAGE>
DIRECTORS' COMPENSATION
FEES AND BENEFIT PLANS FOR DIRECTORS. Each Director receives an annual cash
retainer fee of $10,000 per year. Each Director also receives a fee of $500 for
attending each Board meeting and is reimbursed for expenses incurred in
attending such meetings.
STOCK OPTION AWARDS. The Company has adopted the 1993 Stock Option Plan for Non-
Employee Directors (the "Plan"), reserving 250,000 shares of common stock for
issuance pursuant to the exercise of stock options granted under the Plan. On
July 15, 1995, the Securities and Exchange Commission issued an order
authorizing the Plan.
The Plan has a ten-year term which commenced on July 5, 1995. On July 15, 1995,
each non-employee director serving the Company was granted an option to purchase
50,000 shares of the Company's common stock at $3.00 per share. After July 15,
1995, each non-employee director newly elected to the Board automatically will
be granted an option to purchase 50,000 shares of the Company's common stock at
$3.00 per share after 90 days of service on the Board. No discretionary grants
can be made under the Plan.
On April 1, 1992, the Company bought a life insurance policy on Mr. 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 Equitex at or after age 65. The annual
premium on this policy is $105,414 per year until March 30, 1999, and may be
considered other compensation to Mr. Fong. For the year ended December 31, 1997,
$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.
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<PAGE>
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
The Company believes that during 1997, all SEC filings of its officers,
directors and ten percent stockholders complied with the requirements of Section
16 of the Securities Exchange Act of 1934, based on a review of forms filed, or
written notice that no annual forms were required.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company currently leases roughly 1,800 square feet of office space in
Greenwood Executive Park, 6400 South Quebec, Englewood, Colorado from a
partnership in which Mr. Fong and his wife are sole partners. The terms of the
lease are comparable to the existing market for similar facilities.
The Company has placed members of its Board and its officers on the boards of
companies it has invested in.
Effective October 29, 1997, the Company entered into an agreement with an
investee company, IntraNet Solutions, Inc. ("IntraNet"). Because the Company had
entered into a prior indemnification agreement with IntraNet in July 1996, it
agreed to purchase a certain note receivable in the amount of $564,755 which
IntraNet had from an RDM subsidiary, Hutch Sports USA ("Hutch"). Hutch had filed
bankruptcy on August 29, 1997. The Company paid $414,755 of the purchase amount
to IntraNet on October 29, 1997. The balance of $150,000 was due on demand but
no later than December 31, 1997 carried an interest rate of 8.75% per annum, was
secured by an officer's pledging of a common stock purchase warrant relating to
62,550 shares of IntraNet and was also personally guaranteed by the Company's
President. This note was repaid on January 23, 1998. Furthermore, the Company's
President agreed to resign from the Board of IntraNet, both IntraNet and the
Company agreed to terminate effective October 29, 1997 the indemnification
agreement under which the Company's maximum exposure was $2,000,000, and agreed
to mutually release each other from any claims relating to this agreement and
certain other items.
During 1997, Mr. Fong loaned the Company $531,000. Of this, $353,401 was repaid,
leaving a principal balance due on December 31, 1997 of $177,599 plus interest
accruing at a rate of 8% per year. The remaining balance was repaid to Mr. Fong
during the first quarter of 1998.
In August 1997, an related entity loaned the Company $100,000 at an annual
interest rate of 12%. The loan is due on demand, and is collateralized by 25,000
shares of common stock from the Company's portfolio.
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<PAGE>
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, the appointees
named in this proxy will vote in accordance with their best judgment.
By Order of the Board of Directors,
Thomas B. Olson
Secretary
Denver, Colorado
October __, 1998
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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 4, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stock-holder of Equitex, Inc. (the "Company") appoints Henry
Fong or Thomas B. Olson as attorneys and proxies to attend and vote all of the
shares of the Common Stock of the Company standing in the name of the
undersigned at the 1997 Annual Meeting of Stockholders on December 4, 1998, at
10:00 a.m., and at any postponements or adjournments that may take place:
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 the following nominee(s):
2. To consider and vote upon the ratification of the appointment of
Davis & Co., CPAs, P.C., as independent auditor of the Company for 1998.
FOR ______ AGAINST ______ ABSTAIN ______
3. To approve the issuance of warrants, options or other securities
that may be changed into common stock of the Company.
FOR ______ AGAINST ______ ABSTAIN ______
4. To transact such other business as may properly come before the
meeting.
THE SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED AS SPECIFIED BY
YOU. 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 on the
label, and return it in the enclosed envelope as promptly as possible. It is
important to return this Proxy properly signed to exercise your right to vote if
you choose not 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.
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Date:___________________
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: ______
