COMPUTRAC, INC.
222 Municipal Drive
Richardson, TX 75080
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held July 15, 1998
To the Stockholders of CompuTrac, Inc:
Notice is hereby given that the 1998 Annual Meeting of
Stockholders of CompuTrac, Inc., a Texas corporation (the "Company"),
will be held on Wednesday, July 15, 1998, at the Company's offices, 222
Municipal Drive, Richardson, Texas 75080 beginning at 2:00 p.m. local
time for the following purposes:
1. To elect five (5) persons to the Company's Board of Directors
to hold office until their terms shall expire and until their
successors are duly elected and qualified.
2. To transact such other business as may properly come before
the meeting and any adjournment(s) thereof.
Stockholders of record at the close of business on May 29,
1998, are entitled to notice of, and to vote at, the Annual Meeting and
any adjournment(s) thereof.
You are cordially invited to attend the meeting. Whether or
not you expect to be present at the meeting, please date and sign the
enclosed Proxy and return it promptly in the enclosed envelope.
Returning the proxy will not affect your right to revoke it and vote
your shares in person if you attend the meeting.
By Order of the Board of Directors
/s/ Dana E. Margolis
Dana E. Margolis
Secretary and Treasurer
Richardson, Texas
June 5, 1998
<PAGE>
COMPUTRAC, INC.
222 Municipal Drive
Richardson, TX 75080
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of CompuTrac, Inc., a Texas
corporation (the "Company"), of proxies from the holders of the
Company's Common Stock, par value $.01 per share (the "Common Stock"),
for use at the 1998 Annual Meeting of Stockholders to be held on
Wednesday, July 15, 1998, at the Company's offices, 222 Municipal Drive,
Richardson, Texas 75080, beginning at 2:00 p.m. local time.
The approximate date that this Proxy Statement and the enclosed
form of Proxy are first being sent to stockholders is June 5, 1998.
Stockholders should review the information provided herein in
conjunction with the Company's Annual Report for the fiscal year ended
January 31, 1998 which accompanies this Proxy Statement. The Annual
Report does not form a part of this Proxy Statement and is not intended
to serve as soliciting material for the Proxy.
INFORMATION CONCERNING PROXY
The solicitation is made on behalf of the Board of Directors of the
Company. By executing and returning the enclosed Proxy card, you
authorize the persons named in the Proxy to represent you and vote your
shares in connection with the purposes set forth in the Notice of Annual
Meeting.
All shares represented by a valid Proxy received prior to the
meeting will be voted in accordance with any specification made on such
Proxy. Any stockholder giving a Proxy has the power to revoke it at any
time before it is exercised by submitting a notice of revocation to the
Company or by attending the meeting and voting in person.
The cost of preparing, assembling and mailing the enclosed material
will be borne by the Company. In addition to solicitation by mail,
employees of the Company may, without additional compensation, solicit
Proxies on behalf of the Board of Directors by telephone, telegraph or
personal interview. The Company may make arrangements with banks,
brokerage houses and other custodians, nominees and fiduciaries to send
Proxies and Proxy material to their principals and to request authority
for the execution of Proxies. The Company may reimburse such persons
for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's stockholders will consider and
vote upon the following matters:
1. The election of five (5) persons to the Company's Board of
Directors to hold office until their terms shall expire or
until their successors are duly elected and qualified.
2. Such other business as may properly come before the meeting,
including any adjournment or postponements thereof.
Unless contrary instructions are indicated on the enclosed Proxy,
all shares represented by valid Proxies received pursuant to this
solicitation (and which have not been revoked in accordance with the
procedures set forth above) will be voted for the election of the five
nominees for director named below. In the event a stockholder specifies
otherwise by means of the enclosed Proxy, those shares will be voted in
accordance with the specification so made.
<PAGE>
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on May 29,
1998 as the record date (the "Record Date") for determining stockholders
of the Company entitled to notice of and to vote at the Annual Meeting.
As of the Record Date, there were 6,268,665 shares of the Company's $.01
par value Common Stock issued and outstanding, all of which are entitled
to vote at the Annual Meeting. Only stockholders of record at the close
of business on the Record Date are entitled to vote at the meeting or
any adjournment thereof, each share being entitled to one (1) vote on
each matter to be voted on at the Annual Meeting. All shares of Common
Stock will vote as a single class and there are no cumulative voting
rights.
The attendance, in person or by proxy, of the holders of a majority
of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum. If less than a majority of
outstanding shares entitled to vote are represented at the Annual
Meeting, a majority of the shares represented may adjourn the Annual
Meeting to another date, time or place, and notice need not be given of
the new date, time or place if the new date, time or place is announced
at the meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall
determine the number of shares of Common Stock represented at the
meeting, the existence of a quorum and the validity and effect of
proxies, and shall receive, count and tabulate ballots and votes and
determine the results thereof. Abstentions will be considered as shares
present and entitled to vote at the Annual Meeting, but will not be
counted as votes cast for or against any given matter.
The inspector or inspectors of election will treat shares referred
to as "broker or nominee non-votes" (shares held of record by brokers or
nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote and which the broker or
nominee has not voted because it does not have discretionary voting
power on a particular matter) as shares that are present for purposes of
determining the presence of a quorum. For purposes of determining the
outcome of any matter as to which the proxies reflect broker or nominee
non-votes, shares represented by such proxies will be treated as not
entitled to vote on that matter and therefore will not be considered by
the inspectors when counting votes cast on the matter (even though those
shares are considered present for quorum purposes and may be entitled to
vote on other matters).
Directors will be elected by a plurality of the votes cast by
holders of shares of Common Stock represented in person or by proxy at
the Annual Meeting. Thus, any abstentions or broker or nominee non-
votes will have no effect on the outcome of the election of directors.
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of May 29, 1998, information
with respect to the beneficial ownership of the Common Stock of the
Company by (a) the Company's Chief Executive Officer and each of the
other "Named Executive Officers" (as defined below in "Executive
Compensation - Summary Compensation Table"), (b) each person known by
the Company to own beneficially 5% or more of such outstanding Common
Stock, (c) each director or nominee who owns any shares, and (d) all
current executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner (1) Beneficial Ownership (2) of Class
-------------------- ------------------------ ----------
<C> <C> <C>
Harry W. Margolis (3) 2,039,177 31.4
Dana E. Margolis (4) 28,217 (5)
George P. McGraw (6) 101,526 1.6
Bruce E. Staffin 352,810 5.6
c/o CompuTrac, Inc.
222 Municipal Drive
Richardson, TX 75080
Gerald D. Harris (7) 12,000 (5)
Kenneth R. Nicholas (8) 12,000 (5)
William Harris Investors, Inc. (9) 461,600 7.4
Two North LaSalle Street
Suite 505
Chicago, IL 60602-3703
All current directors and executive 2,386,291 35.3
officers (11 persons) as a group (10)
</TABLE>
____________________________
(1) Unless otherwise indicated, each person's address is 222 Municipal
Drive, Richardson, TX 75080.
(2) Unless otherwise indicated, each person has sole voting and
investment power with respect to such shares.
(3) Includes 225,000 shares Mr. Margolis has the right to acquire
through the exercise of options. Mr. Margolis may be deemed to be
the beneficial owner of the shares owned by his wife, Dana E.
Margolis.
(4) Dana E. Margolis may be deemed to be the beneficial owner of the
shares owned by her husband, Harry W. Margolis.
(5) Beneficial ownership is less than one percent (1%) of the Company's
outstanding shares.
(6) Includes 76,000 shares Mr. McGraw has the right to acquire through
the exercise of options.
(7) Represents 12,000 shares Mr. Harris has the right to acquire
through the exercise of options.
(8) Represents 12,000 shares Mr. Nicholas has the right to acquire
through the exercise of options.
(9) Information obtained from a Schedule 13G filed with the Company by
the beneficial owner dated February 12, 1998. The Schedule 13G
states that the holder is an investment advisor that shares with
its clients voting power, and has sole dispositive power, with
respect to all the shares.
(10) Includes 485,233 shares the directors and executive officers have
the right to acquire through the exercise of options.
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more
than ten percent of the Company's outstanding Common Stock, to file with
the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of Common Stock. Such
persons are required by SEC regulations to furnish the Company with
copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company during the Company's last
fiscal year, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have
been complied with.
ELECTION OF DIRECTORS
Directors are to be elected at the Annual Meeting to hold office
until the next Annual Meeting of Stockholders and until their successors
have been duly elected and qualified. The Company's Articles of
Incorporation provide that the number of directors constituting the
Company's Board of Directors shall not be less than two, but will be
fixed as determined in the manner provided by the Company's Bylaws. The
Company's Bylaws provide that the number of directors shall be fixed
from time to time by action of the Company's Board of Directors. The
Board of Directors has fixed the number of directors at five for the
ensuing year. The Board of Directors currently consists of four
persons. Cesar L. Alvarez resigned as a director effective October 13,
1997, and since that date there has been a vacancy on the Board.
It is intended that the shares represented by the Proxies will be
voted for the election of the Company's nominees except where authority
to so vote is withheld. Each of the four current members of the Board
of Directors has been nominated by the Company to be reelected as a
director at the Annual Meeting. In addition, the nominee for director
described below has been nominated by the Company for election as a
director at the Annual Meeting. All of the nominees for directorship
have agreed to serve if elected. Should any of such nominees become
unwilling or unable to accept nomination or election, the shares
represented by the Proxies solicited hereby will be voted for any
substitute nominee or nominees designated by the present Board of
Directors or the number of directors will be reduced accordingly.
Nominee for Director
D. Bruce Walter, age 55, is the Chairman of the Board of Radiomail
Corporation, a wireless internet company headquartered in San Mateo,
California. Mr. Walter previously held the position of Chief Executive
Officer at Radiomail Corporation from October 1994 to July 1997. He was
President and Chief Executive Officer of CoActive Computing Corporation,
located in California, from July 1993 until October 1994. Mr. Walter
was at Grid Systems Corporation, also located in California, from June
1983 to June 1993, where he was President and Chief Executive Officer
from 1991 to 1993. Prior to 1983, Mr. Walter spent sixteen years in
various management-level positions at Xerox Corporation. He is a 1965
graduate of Waynesburg College.
The Board of Directors recommends that you vote FOR the election of
each of the five nominees to the Board of Directors.
<PAGE>
MANAGEMENT
Executive Officers and Directors
The executive officers and directors of the Company at May 29, 1998
are as follows:
<TABLE>
Position(s) Held
Name Age With the Company
---- ---- -----------------
<C> <C> <C>
Harry W. Margolis 55 Chairman of the Board & Chief
Executive Officer
Dana E. Margolis 53 Secretary, Treasurer & Director
George P. McGraw 50 President
Cheri L. White 44 Vice President - Finance and
Chief Financial Officer
Deborah S. Greening 47 Vice President - Operations
Lynda K. Thomas 52 Vice President _ Administration
David D. Hester 42 Vice President - CT Labs
Irwin S. Arnstein 39 Vice President - LFMS Support
and Development
Michael R. Mueller 46 Vice President _ LFMS for
Windows Development
Kenneth R. Nicholas 56 Director
Gerald D. Harris 42 Director
</TABLE>
Harry W. Margolis is a co-founder of the Company and has served as
Chairman of the Board of the Company since its organization in 1977.
After graduating from U.C.L.A. in 1964 with a degree in Political
Science, Mr. Margolis attended Southern Methodist University Law School
and upon graduation in 1967, placed first in the Bar Examination
administered in the State of Texas. Mr. Margolis founded his own law
firm in 1967, which increased to eight members through internal growth
and by merger with an older firm, and practiced law until the Company
was organized in 1977.
Dana E. Margolis, a director since 1983, served as office manager
of the Company performing its accounting and purchasing functions from
1980 until 1983. In January 1984, Mrs. Margolis assumed the
responsibilities of Secretary and Treasurer of the Company. Mrs.
Margolis attended San Diego State University and is the wife of Harry W.
Margolis.
George P. McGraw joined the Company as Director of Customer Support
in March 1985, was elected Vice President of Customer Support in
December 1987, and was elected Executive Vice President in May 1990.
Mr. McGraw served as President and General Manager of the Company's
Legal Division from November 1993 to May 1996 at which time he was
elected President of the Company. Mr. McGraw is a 1970 graduate of the
electrical engineering department of Rochester Institute of Technology.
Prior to joining the Company, Mr. McGraw was self-employed. From 1979
until 1982 he held a number of marketing and financial positions with
Phillips Information Systems, Inc. Prior to that time, he held similar
positions with the Xerox Corporation.
Cheri L. White was elected Vice President of Finance in October
1993 and Chief Financial Officer in February 1995. Ms. White joined the
Company in February 1984, and served as the Company's Director of
Finance and Controller. Ms. White is also on the Board of Directors
for the Richardson Development Center for Children and serves as its
Treasurer. Ms. White is a graduate of Christopher Newport University
and is a Certified Public Accountant in the State of Texas.
<PAGE>
Deborah S. Greening was named Vice President of Operations in 1995.
Ms. Greening joined the Company in 1983 as Regional Sales Manager and
has held subsequent management positions in marketing, sales, support
and product development. Her previous experience included product
marketing, support and sales of word processing equipment at Xerox
Corporation and Phillips Information Systems. Ms. Greening is currently
on the Board of Directors of Richardson Development Center for Children
and served as its President during 1995. She attended the University of
Wisconsin and completed the Southern Methodist University Mid-Management
Program.
Lynda K. Thomas was elected Vice President of Administration in
December 1987. Ms. Thomas joined the Company in September 1981 as
executive assistant to the president and served as the Company's
business manager from August 1983 until her election to Vice President.
Previously, she was a corporate officer and director of public relations
for Republic Gypsum Company, a Dallas based manufacturer and supplier of
building materials. She attended the University of North Texas in
Denton, Texas.
David D. Hester has served as the Company's senior computer
programmer since June 1979 and has been responsible for the Company's
major software research and development efforts. He was elected Vice
President of the Company's CT Labs department in April 1996. Previously
he served as an assembly-language programmer for General Computer
Systems, a division of Telex. Mr. Hester attended the University of
Texas at Arlington and is an honor graduate of Control Data Institute.
Irwin S. Arnstein was elected Vice President of LFMS Support and
Development of the Company in May 1996 and is responsible for the
design, implementation and support of the Company's Law Firm Management
System product line. Mr. Arnstein holds a 1981 Bachelor of Arts of
Computer Science degree from the University of Texas. Mr. Arnstein
began his career with the Company 16 years ago as a Software Engineer
and has served as a Project Leader on several significant software
projects leading up to his 1995 promotion to Director of LFMS
Development.
Michael R. Mueller joined the Company in October 1984 as a support
programmer and was elected Vice President of Law Firm Management Systems
Development in May 1996. He has been involved in the development of
four of the Company's six generations of Law Firm Management Systems.
Prior to joining the Company, Mr. Mueller graduated from Texas A&M
University majoring in Computer Science with a minor in Accounting.
Kenneth R. Nicholas, a director of the Company since 1995, has been
the Managing Director of Nicholas, Flanagan & Bard, P.C., a Certified
Public Accounting firm in Dallas, Texas since January, 1987. Prior to
that time, Mr. Nicholas spent 22 years with Deloitte Haskins & Sells
(now Deloitte & Touche), including over ten years as a partner and seven
years as partner-in-charge of the Dallas tax practice. Mr. Nicholas
graduated from Southern Methodist University in 1964.
Gerald D. Harris, a director of the Company since 1994, is the
owner and operator of Harris Typesetting Services, a graphics design and
printing business located in Plano, Texas. Prior to beginning his
business in 1990, Mr. Harris was the head golf professional at the
prestigious Stonebriar Country Club in Frisco, Texas. Mr. Harris
attended the University of Oklahoma majoring in finance.
Meetings of the Board of Directors
During the fiscal year ended January 31, 1998, the Board of
Directors held one meeting. No director attended less than 75% of the
aggregate of (a) the number of Board meetings held during the fiscal
year, and (b) the number of meetings of committees of the Board held
during the period he served on such committees.
<PAGE>
Committees of the Board of Directors
The Company's Board of Directors has standing Compensation and
Audit Committees. In fiscal 1998, the Compensation Committee consisted
of Messrs. Nicholas and Alvarez. Due to the resignation of Mr. Alvarez
on October 13, 1997, the Board of Directors anticipates that a new
Compensation Committee will be elected following the Annual Meeting.
The Compensation Committee administers the Company's 1990 Stock Option
and Stock Purchase Plans, and makes recommendations to the Board with
respect to changes in officers' compensation and similar matters. The
Compensation Committee met once during fiscal year 1998.
The Company's Audit Committee consists of Messrs. Harris and
Nicholas. The Audit Committee reviews the Company's significant
accounting policies and operating controls, recommends independent
external auditors, and reviews audit reports prepared by the external
auditors. The Audit Committee met four times during fiscal year 1998.
The Company does not have a standing nominating committee.
Director Compensation
The Company pays directors who are not executive officers of the
Company $750.00 for attendance at each meeting of the Board of Directors
and $300.00 for each committee meeting attended. Directors who are also
executive officers of the Company do not receive any meeting fees or
other remuneration for their services as directors.
Directors are also eligible to be granted stock options under the
Company's 1990 Stock Option Plan. The plan provides for the grant of
options to employees and directors of the Company covering an aggregate
of 800,000 shares of Common Stock of the Company. Such options may be
incentive or nonqualified stock options, except that options granted to
directors who are not also employees of the Company may not be incentive
stock options. Options granted to directors under the plan may contain
such terms as may be determined by the Compensation Committee, except
that (i) the maximum term of any option is 10 years, (ii) no director
may be granted options in any calendar year for a number of shares
exceeding 10% of the total number of shares for which options may be
granted under the plan, (iii) shares acquired by a director upon
exercise may not be sold for six months after the date of grant, and
(iv) the exercise price of any option granted to a director may not be
less than the fair market value of the Common Stock on the date of
grant. The exercise period of any option begins and ends on such dates
as may be determined by the Compensation Committee, provided that an
option will terminate upon the termination of the holder's service as an
employee or director, subject to certain grace periods. The vesting of
outstanding options is also subject to acceleration in the discretion of
the Compensation Committee or upon the occurrence of certain change-in-
control events. No options were granted to directors under this Plan
during fiscal year 1998.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the aggregate compensation paid to
the Company's Chief Executive Officer and the only other executive
officer whose total annual salary and bonus for the 1998 fiscal year was
$100,000 or more (the Chief Executive Officer and such other executive
officer are sometimes referred to herein as the "Named Executive
Officers") with respect to each of the three fiscal years in the period
ended January 31, 1998.
<TABLE>
<CAPTION>
Annual Long-Term
Compensation (1) Compensation Awards
---------------- -------------------
Name and Number of Securities All Other
Principal Fiscal Underlying Options Compen-
Position Year Salary($) Bonus($) Granted sation($)
--------- ------ ------------------ ------------------- ---------
<S> <C> <C> <C> <C> <C>
Harry W.
Margolis 1998 542,250 - - 5,948(2)
Chairman of 1997 528,300 - - 5,756
the Board 1996 503,000 - 225,000 22,203
and Chief
Executive
Officer
George P.
McGraw 1998 125,362 - - 1,800 (3)
President 1997 121,096 - - 4,018
1996 113,526 - - 1,443
</TABLE>
________________________
(1) The column for "Other Annual Compensation" has been omitted because
there is no compensation required to be reported in such column.
The aggregate amount of perquisites and other personal benefits
provided to each Named Executive Officer is less than the lesser of
$50,000 or 10% of the total of annual salary and bonus of such
officer.
(2) Includes $5,948 attributable to the economic value of split-dollar
life insurance policies paid for by the Company naming Mr.
Margolis' estate as the beneficiary.
(3) Amount represents the Company's contribution to Mr. McGraw for
Company Common Stock purchases during the 1998 fiscal year pursuant
to the Company's Employee Stock Purchase Plan.
Aggregated Fiscal Year-End Option Value Table
The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers as of the
end of the 1998 fiscal year. Certain columns have been omitted from the
table because neither of the Named Executive Officers exercised any
stock options during the 1998 fiscal year nor held any in-the-money
options at the end of such fiscal year.
Number of Securities Underlying
Unexercised Options at 1998 Fiscal Year-End
Name Exercisable (E) Unexercisable (U)
----------------- ----------------------------------------
Harry W. Margolis 225,000(E)
George P. McGraw 81,000(E)
<PAGE>
Long-term Incentive and Pension Plans
The Company does not have any long-term incentive or pension plans.
Employment Agreements
On January 1, 1998, the Company entered into an Employment
Agreement with Harry W. Margolis, its Chairman of the Board and Chief
Executive Officer, which expires on December 31, 2002. Pursuant to the
Employment Agreement in effect during fiscal year 1998, Mr. Margolis was
paid an annual base salary of $542,250. Under the current Employment
Agreement, Mr. Margolis is entitled to receive minimum annual raises
equivalent to any annual increase in the Consumer Price Index for
Dallas, Texas during the previous year. In addition, at the discretion
of the Compensation Committee of the Board of Directors of the Company,
Mr. Margolis may be considered for an annual bonus in an amount that
does not exceed his salary. No bonuses were granted to Mr. Margolis
during fiscal 1998. Additionally, the Company furnishes Mr. Margolis
with certain fringe benefits, including the use of an automobile and a
membership in a country club. The Company is obligated to provide Mr.
Margolis and his family with health and dental benefits and has
purchased split-dollar life insurance policies insuring Mr. Margolis'
life and naming his estate as the beneficiary. In the event that Mr.
Margolis becomes disabled or is otherwise incapacitated, the Company
will be entitled to reduce his pay to 50% of his base salary (less
certain insurance proceeds) for the remainder of the term of the
Employment Agreement or until such earlier time that he is able to
resume his full duties under the agreement. In the event of Mr.
Margolis' death, his estate or designated beneficiary is entitled to
receive 50% of his annual salary, less any insurance payments made to
the estate or designated beneficiary from the above-referenced life
insurance policies, for the remaining term of the agreement. Mr.
Margolis is subject to certain restrictive covenants under the
agreement, including a noncompetition clause which extends eighteen
months beyond any termination of his employment other than termination
by Mr. Margolis for "Good Reason" (as defined in the agreement) or
termination due to the expiration of the agreement. The Company may at
any time terminate the Employment Agreement for "Cause" (as defined in
the agreement) with thirty days written notice, and, in the event that
the Company fails to earn a certain specified minimum rate of return on
equity for any fiscal years ending on or after January 31, 1999, the
Company's Board of Directors may reduce the term of the agreement to a
date which is no earlier than one year from the date Mr. Margolis
receives written notice of such term reduction. If Mr. Margolis'
employment is terminated (a) other than for Cause, disability, death or
the expiration of the agreement, including a termination attributable to
a "Change in Control" (as defined in the agreement), or (b) by Mr.
Margolis for Good Reason, including any intentional failure by the
Company to comply with the agreement, Mr. Margolis will be entitled to
(i) a lump sum payment of three times (or two times if termination
occurs during the last year of the agreement) the sum of his base salary
and highest bonus paid during either of the prior two years, (ii) all
compensation earned or deferred through the date of termination
(including a pro-rated bonus, determined as a percentage of the prior
year's bonus) and (iii) continue to participate in the Company's benefit
plans for the remainder of the term of the agreement, as if the
agreement had not terminated.
On February 1, 1992, the Company entered into a one year employment
agreement with George P. McGraw, its President, which renews
automatically and extends for successive one year terms, each February
1. This agreement provided for an initial base salary of $102,500 and
includes provisions for annual base compensation and eligibility
requirements for any bonus programs, all of which are directly tied to
the financial performance of the Company. During fiscal year 1998, Mr.
McGraw was paid an annual base salary of $125,362. Additionally, the
agreement contains certain restrictive covenants governing events upon
the executive's termination from the Company, including non-compete,
non-disclosure, and non-solicitation clauses. The agreement may be
terminated by the Company for "Cause" (as defined in the agreement), as
a result of the executive's inability to perform all or any material
portion of his responsibilities as a result of mental or physical
incapacity, illness or disability, or otherwise with written notice to
the executive.
<PAGE>
OTHER MATTERS
Stockholder Proposals
Any stockholder intending to present any proposal to the 1999
Annual Meeting of Stockholders must submit such proposal in writing to
the Company at its principal executive offices on or before
February 5, 1999.
Independent Public Accountants
The firm of Grant Thornton LLP served as independent public
accountants in connection with the audit of the Company's financial
statements for the fiscal year ended January 31, 1998 and has been
selected to serve in that capacity for the fiscal year ending January
31, 1999. A representative of the firm is expected to be present during
the annual meeting. Such representative will be afforded an opportunity
to make a statement at the meeting if he so desires and will be
available to answer appropriate questions.
On January 5, 1998, the Company dismissed the accounting firm of
Price Waterhouse LLP, Dallas, Texas, who had acted as certifying
accountants for the Company for the years ending January 31, 1984
through January 31, 1997. None of the prior certifying accountants'
reports on the Company's financial statements for the past two years
contained an adverse opinion or disclaimer of opinion, or were qualified
or modified as to uncertainty, audit scope or accounting principle. In
connection with its audits for the two most recent fiscal years and
through January 5, 1998, there have been no disagreements with Price
Waterhouse LLP on any matter of accounting principle or practice,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Price Waterhouse
LLP, would have caused Price Waterhouse LLP to make reference to the
subject matter of such disagreements in their reports on the financial
statements for such years.
Effective January 5, 1998, the Company engaged the accounting firm
of Grant Thornton LLP, Dallas, Texas, to act as certifying accountants
for the year ending January 31, 1998. The change of principal
accountants was approved by the Company's Board of Directors on December
29, 1997.
Other Business
The Board of Directors does not intend to present and does not have
any reason to believe that others in attendance will present at the
Annual Meeting any item of business other than those mentioned in the
Notice of Annual Meeting. If, however, any other business should
properly come before the Annual Meeting, the persons named in the
accompanying Proxy will vote the Proxy as in their discretion they may
deem appropriate, unless they are directed by the Proxy to do otherwise.
By Order of the Board of Directors
/s/ Dana E. Margolis
Dana E. Margolis
Secretary and Treasurer
Richardson, Texas
June 5, 1998
The Company's Form 10-KSB Annual Report, as filed with the
Securities and Exchange Commission, provides certain additional
information about the Company. A copy of this report may be obtained
without charge upon written request to: Investor Relations, CompuTrac,
Inc., 222 Municipal Drive, Richardson, Texas 75080 or via:
www.ctinc.com
