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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Sectioin 240.14a-12
Equitex, Inc.
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(Name of Registrant as Specified in its Charter)
Gerald Raskin, 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
Englewood, Colorado 80111
(303) 796-8940
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on December 28, 1999
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December 3, 1999
TO ALL STOCKHOLDERS OF EQUITEX, INC.
An 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 located at 1400 Glenarm Place, Third Floor, Denver,
Colorado, on Tuesday, December 28, 1999, at 9:00 a.m. local time, to consider
and take action on the following matters:
1. The election of three directors to serve until the next annual
meeting of stockholders and until their successors have been
elected and qualified.
2. A proposal to ratify the appointment of Gelfond Hochstadt
Pangburn, P.C. as the independent auditor of the Company for
the year ended December 31, 1999.
3. Such other business as may properly come before the meeting,
or any adjournment or adjournments thereof.
Stockholders holding shares of Common Stock of record at the closing of
business on December 2, 1999, will be entitled to receive notice of and vote at
the meeting.
Stockholders, whether or not they expect to be present at the meeting, are
requested to sign and date the enclosed proxy and return it promptly in the
envelope enclosed for that purpose. Any person giving a proxy has the power to
revoke it at any time by following the instructions provided in the Proxy
Statement.
By Order of the Board of Directors:
Thomas B. Olson, Secretary
PLEASE 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
<PAGE>
EQUITEX, INC.
7315 East Peakview Avenue
Englewood, Colorado 80111
(303) 796-8940
----------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 28, 1999
-----------------------------------------------
To Our Stockholders:
This Proxy Statement (the "Proxy Statement") is furnished to stockholders
of Equitex, Inc., a Delaware corporation (the "Company") in connection with the
solicitation of proxies by and on behalf of the Company's Board of Directors
(the "Board") for use at the Annual Meeting of Stockholders of the Company (the
"Meeting") to be held on December 28, 1999 at the offices of Friedlob Sanderson
Raskin Paulson & Tourtillott, LLC located at 1400 Glenarm Place, Third Floor,
Denver, Colorado, at the time and for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders. This Proxy Statement, the accompanying
proxy card and the Notice of Annual Meeting (collectively, the "Proxy
Materials") will be first sent to stockholders on or about December 3, 1999.
AVAILABLE INFORMATION
The Company reports under the information requirements of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Such reports
and other information filed with the Commission can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, NW, Washington, DC 20549 or at the Regional Offices of the
Commission which are located as follows: Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can also
be obtained from the Commission at prescribed rates. Written requests for such
material should be addressed to the Public Reference Section, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549. The Commission
maintains a Web site that contains reports, proxy statements and other
information filed electronically by the Company with the Commission which can be
accessed over the internet at http://www.sec.gov.
GENERAL INFORMATION
As of the close of business on December 2, 1999, the record date for
entitlement to notice of and vote at the Annual Meeting, the Company had
outstanding 7,140,293 shares of common stock, $.02 par value per share (the
"Common Stock"). The presence, in person or by
<PAGE>
proxy, of holders of one-third of the shares of Common Stock entitled to vote at
the Meeting constitutes a quorum for the transaction of business at the Meeting.
Each share of Common Stock outstanding on the record date is entitled to
one vote on each matter presented at the Meeting.
Abstentions will be treated as shares present or represented and entitled
to vote for purposes of determining the presence of a quorum, but will not be
considered as votes cast in determining whether a matter has been approved by
the stockholders. As to any shares a broker indicates on its proxy that it does
not have the authority to vote on any particular matter because it has not
received direction from the beneficial owner thereof, said shares will not be
counted as voting on a particular matter.
A stockholder who gives a proxy may revoke it at any time before it is
voted by giving notice of the revocation thereof to the Secretary of the
Company, by filing another proxy with the Secretary or by attending the Meeting
and voting in person. All properly executed and unrevoked proxies delivered
pursuant to this solicitation, if received in time, will be voted in accordance
with the instructions of the beneficial owners contained thereon.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy materials to the beneficial
owners of the Company's Common Stock for whom they hold shares and will
reimburse them for their reasonable expenses in so doing.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is certain information as of October 31, 1999, with respect
to ownership of the Company's Common Stock held of record or beneficially by (i)
the Company's executive officers named in the summary compensation table, (ii)
each director of the Company, (iii) each person who owns beneficially more than
five percent of the Company's outstanding Common; and (iv) all directors and
executive officers as a group:
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<PAGE>
Percentage
Number of Owned of
Name and Address Common Common
of Beneficial Owner Stock Owned (1) Stock
------------------- --------------- ----------
Henry Fong 1,154,544 (2)(3) 15.2%
7315 East Peakview Avenue
Englewood, Colorado 80111
Wayne W. Mills 475,000 (4) 6.7%
5020 Blake Road South
Edina, Minnesota 55436
Russell L. Casement 402,900 (5) 5.4%
1355 S. Colorado Blvd., Suite 320
Denver, Colorado 80222
Aaron L. Grunfeld 334,700 (6) 4.5%
10390 Santa Monica Blvd., Fourth Floor
Los Angeles, California 90025
All officers and directors
as a group (four persons) 1, 953,444 (7) 31.4%
----------------------
(1) The beneficial owners exercise sole voting and investment power.
(2) Includes 469,700 shares underlying options granted under the Company's
1999 Stock Option Plan. (3) Includes 459,554 shares owned by a
corporation in which Mr. Fong is an officer and director.
(4) Based upon the stockholder's most recently filed Schedule 13G.
(5) Includes 36,400 shares underlying options granted under the Company's
1993 Stock Option Plan for Non- Employee Directors and 245,500 shares
underlying options granted under the Company's 1999 Stock Option Plan.
(6) Includes 50,000 shares underlying options granted under the Company's
1993 Stock Option Plan for Non- Employee Directors and 245,500 shares
underlying options granted under the Company's 1999 Stock Option Plan.
(7) Includes 86,400 shares underlying options granted under the Company's
1993 Stock Option Plan for Non- Employee Directors and 1,000,000 shares
underlying options granted under the Company's 1999 Stock Option Plan.
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.
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<PAGE>
PROPOSAL 1
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.
INFORMATION ABOUT DIRECTORS AND OFFICERS
NAME
PRINCIPAL OCCUPATION
HENRY FONG
Age 64
Mr. Fong has been the President, Treasurer and a director of the Company
since inception. 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. Subsequent to Mr. Fong's
departure from RDM, it filed on Chapter 11 bankruptcy petitions for RDM and
all of its subsidiaries with the U.S. Bankruptcy Court for the Northern
District of Georgia on August 29, 1997. 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. From January 1993 to January
20, 1999, Mr. Fong was chairman of the board and Chief Executive Officer of
California Pro Sports, Inc., a publicly-traded 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,
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<PAGE>
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 has passed the uniform
certified public accountant exam. In March 1994, Mr. Fong was one of twelve
CEOs selected as Silver Award winners in FINANCIAL WORLD magazine's
corporate American "Dream Team."
THOMAS B. OLSON
Age 33
Mr. Olson has been Secretary of the Company 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 Company 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.
RUSSELL L. CASEMENT
Age 56
Dr. Casement has been a director of the Company since February 1989. In
1994, Dr. Casement became the President of ProMark, Inc. a privately-held
investee of the Company which currently is 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 52
Mr. Grunfeld has been a director of the Company since November 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.
MEETINGS OF THE BOARD OF DIRECTORS
During the last full fiscal year, the Company has held five meetings of the
Board of Directors and took action through unanimous consent on three separate
occasions.
AUDIT, NOMINATING AND COMPENSATION COMMITTEES
The Company has appointed an Audit Committee currently consisting of Dr.
Casement as chairman and Mr. Grunfeld and a Compensation Committee currently
consisting of Mr.
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<PAGE>
Grunfeld as chairman and Dr. Casement. The Company does not have a nominating
committee of the Board of Directors, or any other committees performing similar
functions.
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 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 and
reporting systems in conjunction with management and the accountants. The
Compensation committee reviews the Company's compensation arrangements as
necessary and makes recommendations to the Board of Directors.
During the year ended December 31, 1999, the Audit Committee met twice and
the Compensation Committee met once and took action through unanimous written
consent twice.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Henry Fong, the President of the Company and the only officer of the
Company whose total compensation exceeded $100,000 for the fiscal year ended
December 31, 1998, received an annual salary of $183,013. In January, 1998, the
Compensation Committee of the Company's board of directors retained an
independent consultant to review the President's compensation. As a result of
that review, a new compensation arrangement was instituted based on
recommendations made by the independent consultant. In addition to Mr. Fong's
annual salary, beginning January 1, 1998, Mr. Fong is to receive an annual bonus
equaling 1% of the Company's total assets combined with 5% of the increase in
the market value of the Company's common stock calculated quarterly from January
1 to December 31 of any fiscal year. During the year ended December 31, 1998,
this bonus totaled $1,208,042. This new compensation arrangement replaces the
previous bonus of 3% of the Company's total assets at year end which totaled
$151,153 for the year ended December 31, 1997.
On April 1, 1992, the Company obtained a life insurance policy with
retirement benefits for Mr. Fong which pays his beneficiary $2,600,000 in the
event of Mr. Fong's 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 16
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, 1998, $105,414 was paid toward the policy
and an additional $59,586 was paid to Mr. Fong for deferred income taxes on the
policy. Concurrently, the Company obtained a Key-man Life Insurance policy which
pays the Company $3,000,000 in the event of Mr. Fong's death. The Company paid
$20,223 on this policy in 1998 which is not considered compensation to Mr. Fong.
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<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation paid to
the officers of the Company during the years ended December 31, 1998, 1997 and
1996:
<TABLE>
<CAPTION>
Annual Compensation ($$) Long-Term
------------------------ Compensation
Awards
------
(a) (b) (c) (d) (e) (g) (i)
Other All
Name & Annual Other
Principal Salary Bonus Compensation Options Compensation
Position Year ($) ($) ($) & SARs(#) ($)
- -------- ---- --- --- --- --------- ---
<S> <C> <C> <C> <C> <C> <C>
Henry Fong 1998 183,013 1,208,042 -0- 469,655 165,000 (1)
President, Treasurer
Principal Executive
Officer and
Accounting Officer
Henry Fong 1997 183,013 151,153 -0- -0- 165,000 (1)
Henry Fong 1996 183,013 314,328 -0- -0- 165,000 (1)
</TABLE>
(1) Includes payments and tax liability on the life insurance policy as
explained more fully in "Item 10 (a) General" above.
OPTION/SAR GRANTS IN FISCAL 1998
Grant Date
Individual Grants Value
(a) (b) (c) (d) (e) (f)
Number
of
Securities % of Total
Under- Options/
Lying SARs
Options/ Granted to Exercise Grant
SARs Employees or Base Date
Granted in Fiscal Price Expiration Present
Name (#) Year ($/Sh) Date Value($)
- ---- ------- --------- -------- ---------- ---------
Henry Fong 469,655 87% $3.19 6/2/2003 1,498,200
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<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1998 AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number oF
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End (#) at FY-End (#)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- ---- ------------ ------------ ------------- -------------
Henry Fong 100,000 508,250 576,200/-0- $2,143,541/-0-
COMPENSATION OF DIRECTORS
Each independent member of the Company's Board of Directors, Messrs.
Russell L. Casement and Aaron A. Grunfeld, receive $10,000 per year payable
monthly and $500 for each Board of Director's meeting attended either in person
or by telephone. For the year ended December 31, 1998, Messrs. Casement and
Grunfeld each received a total of $12,500. Members of the Board of Directors
also receive reimbursement for expenses incurred in attending board meetings.
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 250,000 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 the Effective Date, was
granted an option to purchase 50,000 shares of common stock at $3.00 per share.
Thereafter, each director who first becomes a non-employee director shall
automatically, as of the date 90 days following the date such person becomes a
non-employee director, be granted an option to purchase 50,000 shares of common
stock. No additional options can be granted under the Directors' Plan except to
an individual who first becomes a non-employee director after the Effective
Date. No discretionary grants can be made under the Directors' Plan.
On June 2, 1998, the Company's board of directors authorized the granting
of 75,000 options to purchase common stock of the Company to each of the
Company's two independent directors at $3.19 per share for a period of five
years. The grant of these options was contingent upon the
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<PAGE>
Company's successful withdrawal as a business development company. After
obtaining the necessary vote of the stockholders to change the business of the
Company, the Company on January 4, 1999 withdrew its election to be treated as a
business development company as defined in the Investment Company Act of 1940.
1999 STOCK OPTION PLAN
On January 5, 1999, the Company's board of directors adopted a new stock
option plan, the 1999 Stock Option Plan. On January 5, 1999, the Company's two
independent directors each received options to purchase 158,700 shares of the
Company's common stock at an exercise price of $6.75 per share expiring on
January 5, 2004. These options were granted in lieu of the 75,000 options at
$3.19 per share, which were cancelled. In addition, each director received
86,800 options to purchase 86,800 shares of the Company's common stock at an
exercise price of $6.75 per share under the 1999 Plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On April 1, 1992, the Company obtained a life insurance policy on the
Company's President, Henry Fong, which policy provides for a payment to Mr.
Fong's beneficiary of $2,600,000 in the event of his death or a retirement
benefit to Mr. Fong consisting 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
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16")
requires the Company's officers, directors and persons who own more than ten
percent of the Company's voting securities to file reports of their ownership
and changes in such ownership with the Securities and Exchange Commission (the
"Commission"). Commission regulations also require that such persons provide the
Company with copies of all Section 16 reports they file. Based solely upon its
review of such reports received by the Company, or written representations from
certain persons that they were not required to file any reports under Section
16, the Company believes that, during 1998, its officers and directors have
complied with all Section 16 filing requirements.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
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 is the sole partner, on terms comparable to
the existing market for similar facilities.
During the year ended December 1, 1997, the Company's President loaned the
Company a total of $531,000. Of this amount, $353,401 was repaid leaving a
principal balance due at December 31, 1997 of $177,599 plus accrued interest.
These uncollateralized loans were due on demand and carried an interest rate of
8% per annum. All of the remaining balance was repaid during the first quarter
of 1998. During 1998, a company in which the Company's President is an officer
and director, loaned the Company a total of $165,000 which is due on demand and
bears interest at 8% per annum. Of that amount, $22,672 was repaid during 1998
leaving a principal balance due at December 31, 1998 of $142,328 which as of the
date of this statement remains unpaid.
In addition, a related entity loaned the Company $100,000 in August 1997.
This loan carried an interest rate of 12% per annum, was due on demand and was
collateralized by 25,000 shares of the Company's investment in an investee
company's common stock. The Company paid $30,000 in principal due on this note
during 1998 leaving a principal balance due of $70,000 at December 31, 1998.
During the second quarter of 1999, all principal and interest due under this
note was repaid.
During 1998, the Company loaned VP Sports, Inc. a total of $89,000. All
loans are due on demand and bear interest at the rate of 10% per annum. As of
December 31, 1998, $24,734 of these loans had been repaid leaving an outstanding
principal balance at year end of $64,266. During the first quarter of 1999, the
Company loaned VP an additional $70,000 under terms identical to the previous
loans. All principal and interest due under these loans was repaid during July
1999.
During 1998, a director of the Company purchased 39,200 shares of common
stock of the Company pursuant to a private placement at $1.16 per share. In
payment of the shares, the director executed a note payable to the Company in
the amount of $45,472, which was due on December 15, 1998 and carried interest
at 8% per annum. The due date on this note was subsequently extended to February
15, 1999. All principal and interest due was paid on this note prior to the
extended expiration date.
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
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<PAGE>
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.
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.
PROPOSAL 2
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of Gelfond
Hochstadt Pangburn, P.C. as independent auditor of the Company for the year
ended December 31, 1999. A representative of Gelfond Hochstadt Pangburn is not
expected to be present at the meeting. There are no existing direct or indirect
understandings or agreements between the Company and Gelfond Hochstadt Pangburn
& Co. that place a limit on current or future years' audit fees.
The firm of Davis & Co., CPA's, P.C. provided services to the Company
during the year ended December 31, 1998 relating principally to the examination
of the financial statements and related reporting which included the annual
audit of the Company's financial statements.
On August 20, 1999, the Company dismissed Davis & Co., CPA's, P.C. as its
independent certified public accountant. There have been no adverse opinions,
disclaimers of opinion or qualifications or modifications as to uncertainty,
audit scope or accounting principles regarding the reports of Davis & Co.,
CPA's, P.C. on the Company's financial statements for each of the fiscal years
ended December 31, 1998 and 1997, or any subsequent interim period. The Audit
Committee of the Company's Board of Directors approved the change of accountants
and that action was ratified by the Board of Directors of the Company. There
were no disagreements with Davis & Co., CPA's, P.C. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures leading to their dismissal.
There were no reportable events, in each case, during either of the
Company's two most recent fiscal years or any subsequent interim period.
Simultaneously with the dismissal of its former accountants, the Company
approved and engaged Gelfond Hochstadt Pangburn, P.C. to act as its independent
certified public accountant
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<PAGE>
as successor to Davis & Co., CPA's, P.C. During the Company's two most recent
fiscal years or subsequent interim periods the Company has not consulted Gelfond
Hochstadt Pangburn, P.C. regarding the application of accounting principles to a
specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Company's financial statements, or any
matter that was the subject of a disagreement or a reportable event.
VOTES 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 1998 Annual Report of the Company, including a copy of the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1999, is
being sent to stockholders with this Proxy Statement.
OTHER MATTERS
Management of the Company knows of no other matter which may come before
the Annual Meeting. However, if any additional matters are properly presented at
the Annual Meeting, it is intended that the person named in the enclosed Proxy
Statement, or his substitute, will vote such Proxy in accordance with his
judgment on such matters.
STOCKHOLDER PROPOSALS
Any stockholder proposing to have any appropriate matter brought before the
2000 Annual Meeting of Stockholders, tentatively scheduled for July 28, 2000,
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, Englewood, Colorado 80111,
for receipt no later than March 31, 2000.
EQUITEX, INC.
By Order of the Board
of directors:
Thomas B. Olson, Secretary
Date: December 3, 1999
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PROXY
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EQUITEX, INC.
7315 East Peakview Avenue
Greenwood Executive Park, Building 8
Englewood, Colorado 80111
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 28, 1999
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 1999 Annual Meeting of Stockholders on December 28, 1999, at
9:00 a.m. local time, 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
Gelfond Hochstadt Pangburn, PC, as independent auditor of the Company for 1999.
FOR ______ AGAINST ______ ABSTAIN ______
3. 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: ______
