Sector Communications, Inc.
Notice of 1997
Annual Meeting of Stockholders
and
Proxy Statement
YOUR VOTE IS IMPORTANT!
Please mark, date, sign and return your proxy
form in the enclosed envelope.
<PAGE>
Sector Communications, Inc.
August XX, 1997
Dear Shareholder:
On behalf of the Board of Directors, it is my pleasure to invite you to
attend the Annual Meeting of Stockholders of Sector Communications, Inc. on
September 25, 1997, in McLean, Virginia. Information about the meeting is
presented in the following pages.
In addition to the formal items of business to be brought before the
meeting, members of management will report on the Company's operations and
answer stockholder questions.
Your vote is very important. Please ensure that your shares will be
represented at the meeting by completing, signing and returning your proxy card
in the envelope provided. Please return the proxy card even if you plan to
attend the meeting. Sending us your proxy will not prevent you from voting in
person at the meeting, should you wish to do so.
Sincerely,
Theodore J. Georgelas
President and Chief Executive Officer
<PAGE>
Sector Communications, Inc.
August XX, 1997
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the annual meeting of the stockholders of
Sector Communications, Inc. (the "Company") will be held at the Company's
offices located at 7601 Lewinsville Road, Suite 250, McLean, Virginia 22102, on
September 25, 1997 at 10:00 a.m. local time, for the following purposes:
1. To elect the Directors of the Company to serve for the ensuing year;
2. To approve an amendment to the Company's Articles of Incorporation to
increase the number of authorized shares;
3. To approve Merdinger, Fruchter, Rosen & Corso, P.C. as independent
auditors;
4. To transact such other and further business as may properly come before
the meeting.
The accompanying Proxy Statement contains further information with respect
to these matters.
The Board of Directors has fixed the close of business on August 1, 1997,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting. A list of such stockholders showing the address and
number of shares registered in the name of each Stockholder will be available
during regular business hours at the Company's office located at 7601
Lewinsville Road, Suite 250, McLean, Virginia 22102, on or after August 2, 1997,
for inspection by any stockholder for any purpose germane to the meeting. The
list will also be available at the meeting.
By Order of the Board of Directors,
Jeff Shear
Secretary
<PAGE>
Sector Communications, Inc.
PROXY STATEMENT
GENERAL INFORMATION
Proxy Solicitation
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sector Communications, Inc. (the "Company")
for use at the annual meeting of stockholders of the Company to be held at the
time and place and for the purposes set forth in the foregoing Notice of Annual
Meeting of Stockholders. The address of the Company's principal executive office
is 7601 Lewinsville Road, Suite 250, McLean, Virginia 22102. This Proxy
Statement and the form of proxy are being mailed to stockholders on or about
August 19, 1997.
A copy of the Company's Annual Report, including financial statements for
the fiscal year ended February 28, 1997 is being mailed with this Proxy
Statement.
Revocability and Voting of Proxy
A proxy given by a stockholder may be revoked at any time before it is
exercised by giving another proxy bearing a later date, by notifying the
Secretary of the Company in writing of such revocation at any time before the
proxy is exercised, or by attending the meeting in person and casting a ballot.
Any proxy returned to the Company will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated on the proxy,
the proxy will be voted FOR the election of the nominees for Directors named
herein and in favor of Items 2 and 3 in the Notice of Annual Meeting. The
Company knows of no reason why any of the nominees named herein would be unable
to serve. In the event, however, that any nominee named should, prior to the
election, become unable to serve as a Director, the proxy will be voted in
accordance with the best judgment of the Proxy Committee named therein. The
Board of Directors knows of no matters, other than as described herein, that are
to be presented at the meeting, but if matters other than those herein mentioned
properly come before the meeting, the proxy will be voted by that Committee in a
manner that the members of the Committee (in their judgment) consider to be in
the best interests of the Company.
Record Date and Voting Rights
Only stockholders of record at the close of business on August 1, 1997, are
entitled to vote at the meeting. On such record date the Company had outstanding
and entitled to vote 45,998,066 shares of Common Stock. Each stockholder
entitled to vote shall have one vote for each share of Common Stock registered
in such stockholder's name on the books of the Company as of the record date.
PRINCIPAL SECURITY HOLDERS
The following table sets forth the Common Stock ownership information as of
February 28, 1997, and is adjusted for the reverse stock split and stock
dividend described in the Annual Report, with respect to (i) each person known
to the Company to be the beneficial owner of more than 5% of the Company's
Common Stock; (ii) each director of the Company; and (iii) all directors,
executive officers and designated stockholders of the Company as a group. This
information as to beneficial ownership was furnished to the Company by or on
behalf of the persons named. Unless otherwise indicated, each has sole voting
and investment power with respect to the shares beneficially owned.
- 1 -
<PAGE>
Shares of Company Common Stock Beneficially Owned
Number of Percentage
Beneficial Owner Shares of Total
---------------- ------ --------
Telecom Partners Ltd. 16,000,000 (1) *
1350 Beverly Road, #115-339
McLean, VA 22102
S. Allan Kline 3,223,391 (2) 7.16%
1415 Bay Laurel Drive
Menlo Park, CA
Biomyne North Company 3,049,681 (3) 6.78%
c/o S. Allan Kline
1415 Bay Laurel Drive
Menlo Park, CA
Theodore Georgelas 851,000 (4) 1.89%
7601 Lewinsville Road
Suite 250
McLean, VA 22102
Jeff Shear 172,377 (5) *
1421 Wildhorse Parkway
Chesterfield, MO 63005
Geoff Button 655,000 (6) 1.46%
The Millhouse
Chicksgrove
Salisbury, Wilts SP3 6LY, UK
Joan Brown 5,384,800 11.97%
Isle of Man, UK
All Officers and Directors 1,678,377 3.74%
as a group (6 persons) (4,5,6)
- ----------------
* - represents less than 1%.
(1) Shares received effective June 18, 1996, in exchange for 100% of the capital
stock interest in Global Communications Group, Inc. acquired by the Company
on that date. These shares were subsequently reissued to the following
persons or entities: Jeff Finley (1,000,000), Keith Finley (1,000,000),
Murray Services, Ltd. (1,000,000), Private Equity Investors, Ltd.
(1,000,000), Northern Capital Corporation, Ltd. (1,000,000), Azimud, Ltd.
(1,000,000), Ayala Financial Holding Limited (918,000), Dahlia Financial
Limited (1,080,000), Silver Creek Investments, Ltd. (1,188,000), Wallington
Investments, Ltd. (945,000), Maroon Bell Holding, Ltd. (1,100,000), Rover
Enterprises, Ltd. (1,100,000), Western Slopes, Ltd. (1,100,000), Brentwood
Financial, Ltd. (1,100,000), Vicente Holdings, Ltd. (1,100,000), H. E.
Sheikh Faisal Alhegelan (600,000). None of the above described persons or
entities are known to the Company to be a beneficial owner of more than 5%
of the Company's Common Stock.
(2) Consists of 173,710 shares of Common Stock held directly by Mr. Kline and
3,049,681 shares of Common Stock held by Biomyne North Company on May 15,
1996. Biomyne Technology Company, of which Mr. Kline is a general partner,
is the sole shareholder of Biomyne, Inc. Biomyne Inc. is the general partner
of Biomyne North Company. Mr. Kline is the president and a director of
Biomyne, Inc. Mr. Kline was granted 166,666 shares of Common Stock effective
June 18, 1996, which grant was rescinded prior to the issuance of these
shares by mutual agreement between Mr. Kline and the Company.
(3) Biomyne North Company, a limited partnership, holds 3,049,681 shares of
Common Stock received as part consideration for the transfer of its mining
claims to the Company on August 9, 1991.
(4) Consists of 500,000 shares of Common Stock received by Mr. Georgelas on June
18, 1996; 1,000 shares purchased on June 18, 1996 and 100,000 shares
purchased on January 31, 1997 and held directly by him; and assumes exercise
of presently exercisable warrants to purchase 250,000 shares at $0.79 per
share.
(5) Consists of 166,666 shares of Common Stock received by Mr. Shear on June 18,
1996 held directly by him and the right to purchase of 5,711 shares issuable
on the exercise of a presently exercisable warrant.
(6) Consists of 50,000 shares granted by the Company on July 19, 1996 and 5,000
of Common Stock purchased by Mr. Button on July 26, 1996 and held by him
directly and assumes exercise of a vested stock option to purchase 300,000
shares at $0.32 per share
- 2 -
<PAGE>
and the exercise of a presently exercisable warrants, granted on July 19,
1996, to purchase 100,000 shares at $2.25 per share, 100,000 shares at $3.00
per share and 100,000 shares at $4.00 per share.
Legal Proceedings
The Company is not aware of any material proceeding to which any director,
officer or 5% shareholder of the Company is a party to the Company or has a
material interest adverse to the small business issuer.
ITEM 1: ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting to hold office until
the next annual meeting of stockholders and until their respective successors
shall have been elected and qualified. Except as herein stated, the proxies
solicited hereby will be voted FOR the election of the four nominees listed
below, unless otherwise directed. Each nominee elected is expected to serve
until the next annual meeting and until his successor shall be duly elected and
qualified.
The Board has been informed that all persons listed below are willing to
serve as directors, but in case any one or more of the nominees is unable or
unwilling to stand for election or serve if elected, the named proxies will vote
for such person or persons as they in their discretion may choose to replace any
such nominees. The Board has no reason to believe that any nominees will be
unable or unwilling to stand for election or serve if elected.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF THE BELOW LISTED NOMINEES AS DIRECTORS
The name, age, principal occupation for the last five years, selected
biographical information, and period of previous service as a director of the
Company with respect to each such nominee are set forth below. The principal
occupations listed refer to positions with the Company unless otherwise
indicated.
Name Age Position
---- --- --------
Theodore J. Georgelas 50 President, Chief Executive Officer and
Chairman of the Board of Directors
Geoffrey A. Button 48 Vice President, Chief Operating Officer
Jeff Shear 55 Outside Director
C. Donald Johnson 49 Outside Director
All directors hold office until the annual meeting of stockholders of the
Company and until their successors have been elected and qualified. Information
about each nominee for Director is given below.
Theodore J. Georgelas became President and Chief Executive Officer
effective January 17, 1996, and was elected as Chairman of the Board of
Directors of the Company at that time. Mr. Georgelas has been the Manager/Member
of various partnerships established as developers of commercial, retail,
industrial and residential properties both domestically and internationally for
at least the last six years. He serves on the Executive Committee and Board of
United Bankshares, Inc. and is Chairman of the Board of one of its subsidiaries,
United Bank (Virginia). He is a cofounder of a cellular telephone business in
Delaware and a cofounder of DBE Software, Inc., a software company marketing a
database utility programming tool.
Geoffrey A. Button joined Sector's board on July 19, 1996 and was appointed
Vice President and
- 3 -
<PAGE>
Chief Operating Officer on February 3, 1997. Prior to joining the Company, he
was an independent real estate and financing consultant. Prior to 1996, he was
executive Director of Wyndham Investments Limited, a property holding company of
Allied Domecq Pension Funds. He has also been on the board of Duke Realty
Investments Inc. since 1993 and is a member of that board's audit and
compensations committees.
Jeff Shear has been a director of the Company since March 31, 1993. Since
1988 he has been president of Shear Kershman Labs, a consulting company for new
products for food and pharmaceutical companies. He was formerly chairman and
chief executive officer of Pharmaceutical Delivery Systems, a company that
manufactured and marketed pharmaceuticals.
C. Donald Johnson, an international corporate lawyer by profession, joined
Sector's Board of Directors subsequent to the year ending February 28, 1997. He
is currently the President of Global Markets, Inc., an international trade and
investment company which focuses on the newly emerging markets in South Asia and
Eastern Europe. Prior to 1994, he served as a U.S. Congressman representing the
10th District of the State of Georgia. During his congressional tenure, Mr.
Johnson's principal areas of interest included budget reform, national security,
international trade, and economic and technology policies.
ADDITIONAL INFORMATION CONCERNING THE BOARD
OF DIRECTORS OF THE COMPANY
Regular meetings of the Board of Directors of the Company are normally held
bi-monthly. During 1997, the Board of Directors held six meetings. A quorum of
Directors attended each meeting of the Board of Directors. The full Board of
Directors fulfills the functions of an audit and compensation committee. In
addition to regularly scheduled meetings, a number of Directors were involved in
several informal meetings with management, offering valuable advice and
suggestions on a broad range of corporate matters.
Compensation of Directors
Directors who are not employees of the Company receive a monthly fee of
$2,000, and are reimbursed for out-of-pocket expenses incurred in their capacity
as members of the Board of Directors. As part of his compensation as director,
Mr. Button received warrants, granted on July 19, 1996, to purchase 100,000
shares of common stock at $2.25 per share, 100,000 shares at $3.00 per share and
100,000 shares at $4.00 per share.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of beneficial ownership and reports of changes in beneficial
ownership of Common Stock of the Company. Officers, directors and greater than
10% shareholders are required by the Securities and Exchange Commission to
furnish the Company with copies of all section 16(a) reports they file. To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company, all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% beneficial owners were complied
with for the year ended February 28, 1997 and were filed in a timely manner with
the exception of one 10% shareholder, Joan Brown, who despite being notified of
the reporting requirement of Section 16, has failed to file a Form 3.
Executive Officers
The executive officers of the Company as of July 31, 1997, are as follows:
Name Age Position
---- --- --------
Theodore J. Georgelas 50 Chief Executive Officer and President
Geoffrey A. Button 48 Vice President and Chief Operating Officer
-4-
<PAGE>
See "Election of Directors" for information regarding Theodore Georgelas
and Geoffrey Button.
Summary Compensation Table
The following table sets forth the compensation of the current Chief
Executive Officer of the Company in the fiscal year ended February 28, 1997. The
table includes compensation paid to Mr. Grabowski, Mr. Silver and Mr. Schultz
all of whom also served in such capacity during the fiscal years ended February
29, 1996 and February 28, 1995. No other Executive officers of the Company
received cash compensation of salary and bonus of more than $100,000 due such
fiscal year as an executive officer.
Summary Compensation Table
Annual Compensation Long-term Compensation
-------------------------- -------------------------
Restricted
Stock
Name Year Salary Bonus Awards (#) Options (#)
---- ---- ------ ----- ---------- -----------
Theodore Georgelas (1) 1997 $120,000 $82,500 500,000 0
President and CEO
Armin Grabowski (2) 1996 14,000 0 0 0
Former President and CEO
Douglas Silver (3) 1996 124,000 0 0 0
Former President and CEO
Trevor Schultz (4) 1996 130,150 0 0 0
Former President and CEO
- -----------
(1) On January 17, 1996, Mr. Theodore J. Georgelas was appointed Chairman of
the Board of Directors and President and CEO of the Company. Mr. Georgelas'
annual base salary is $120,000. On June 17, 1996, upon the purchase of 100%
of the outstanding capital stock of Global Communications Group, Inc. and
completion of the reverse stock split, the Company issued to Mr. Georgelas,
in connection with his employment agreement, 500,000 fully vested shares of
post split Company common stock. None of the above shares of Company Common
Stock have been registered by the Company, however, the shares do hold
piggyback registration rights. Additionally, Mr. Georgelas received a bonus
in the form of warrants to purchase 250,000 shares of the Company's common
stock at $0.79 per share. The market value per share on the date of grant
was $1.12 yielding a net bonus of $82,500. The warrant expires July 18,
1999.
- 5 -
<PAGE>
(2) Mr. Armin Grabowski, who was appointed Chairman of the Board of Directors,
President and CEO of the Company on November 22, 1995 resigned from the
Board of Directors as well as all of his positions in the Company effective
January 1, 1996 because of increased commitments in Germany.
(3) Mr. Silver's employment with the Company began on June 1, 1995. At that
time he was appointed President and Chief Executive Officer, and elected to
the Board of Directors of the Company. In connection with the appointment
of Mr. Grabowski, Mr. Silver stepped down as the Company's Chief Executive
Officer and as a director but remained President. Mr. Silver resigned as
President on December 1, 1995. In connection with Mr. Silver's resignation,
the Company entered into a Severance Agreement with him and he received
payment of $50,000 in full satisfaction of any potential severance
obligations the Company had under his Employment Agreement. This amount is
included in the above summary compensation table. The unvested portion of
Mr. Silver's outstanding stock option was canceled upon his resignation,
and the vested portion expired, unexercised on February 29, 1996.
(4) Mr. Schultz's employment with the Company began in December of 1993. He was
appointed as President and Chief Executive Officer, and elected to the
Board of Directors on January 5, 1994. On May 1, 1995, Mr. Trevor Schultz
resigned as President, Chief Executive Officer and as a Director of the
Company for personal reasons. Concurrent with Mr. Schultz's resignation,
the Company entered into a Consulting Agreement with him which provided
for, among other things, a severance payment of $104,720 on May 1, 1995,
which amount is included in the above summary compensation table, and for
monthly payments of $6,000 during the consulting period. Mr. Schultz was
paid monthly payments totaling $18,000 during the year ended February 29,
1996. The Consulting Agreement also provided that all stock options granted
to Mr. Schultz which were not exercised on May 1, 1995 become fully
exercisable and that the Company register on a Form S-8 registration
statement the common stock issuable on the exercise of unexercised options
held by Mr. Schultz. Mr. Schultz purchased 300,000 shares through the
exercise of his stock options during the year ended February 29, 1996. The
Consulting Agreement terminated when Mr. Schultz obtained full time
employment.
The Company and Mr. Georgelas have entered into an Employment Agreement
which is effective until January 1998. Mr. Georgelas is compensated at a rate of
$120,000 per year, effective January 15, 1996, subject to annual review by the
Board of Directors and annual bonuses at the discretion of the Board of
Directors. The amount of any increases to base salary and bonuses granted by the
Board of Directors is based upon a review of Mr. Georgelas' overall performance.
The Company does not have any contingent forms of remuneration, including
any pension, retirement, stock appreciation, cash or stock bonus, or other
compensation plan.
CERTAIN TRANSACTIONS
As of the date of the acquisition of Sector AG, Murray Services, Ltd.
("Murray") beneficially owned 1,000,000 shares of the Company's common stock,
representing less than a 5% interest in the Company. These shares were being
held at that time for Murray by Telecom Partners Ltd. ("Telecom") and were
received by Telecom in connection with the Company's acquisition of Global. Mr.
Hugo Wyss, a director of both Sector AG and Histech, is also a director of
Murray.
On February 18, 1997, the Company entered into an agreement (the "Peacetime
Agreement") with Peacetime Communications, Ltd. ("Peacetime"); Emerald Capital,
Inc. ("Emerald"); and Wallington Investment, Ltd. ("Wallington"), whereby the
Company canceled obligations to Peacetime, Emerald and Wallington in the
aggregate amount of approximately $4,080,000 and obtained additional financing
in the amount of $1,000,000 (or less, at the Company's discretion) through the
sale of 25% of its ownership in
- 6 -
<PAGE>
Histech; all of the Company's interests in DBE Software, Inc. ("DBE"); and
1,000,000 shares of the Company's common stock. Under this Agreement, Wallington
received 134 shares of Histech common stock (representing 1% of the total number
of outstanding shares of Histech) and 500,000 shares of the Company's common
stock. Wallington previously held 945,000 shares of the Company's common stock.
The Company currently subleases 49% of its leased office space to DBE at
the face rate of the lease apportioned by square footage (approximately $9,100
per month). The Chairman and CEO of the Company owns 38,700 shares of DBE common
stock purchased in October 1993 prior to the Company's investment of $1.1M in
DBE.
On August 23, 1996, Sector AG acquired 54.45% of the capital stock of
Histech from two Histech shareholders, Joan Brown and Aledo Services, Ltd.
("Aledo"), and 100% of the stock of Mountain from Simon Brown, the sole
shareholder of Mountain, in exchange for 9,846,154 shares and 1,712,375 shares
of the Company's common stock, respectively. The Company also purchased 3,428
shares of previously unissued Histech shares representing a 25.55% interest for
$1,200,000. Hugo Wyss, a director of Sector AG and the Chairman of the Board of
Directors of Histech, is also a director of Aledo.
ITEM 2: INCREASE IN AUTHORIZED SECTOR COMMUNICATIONS
COMMON STOCK
At the Annual Meeting, shareholders will vote upon the proposal to amend
the Sector Communications, Inc. (the "Company") Certificate of Incorporation to
authorize the issuance of up to 60,000,000 shares of the Company's Common Stock.
The Company's Certificate of Incorporation presently authorizes the issuance of
up to 50,000,000 shares of the Company's Common Stock. At the close of business
on August 1, 1997, there were 45,998,066 shares issued, outstanding, and
entitled to vote, and an aggregate 5,405,680 shares of the Company's Common
Stock reserved for issuance pursuant to outstanding options and warrants which
are not entitled to vote at the Annual Meeting.
The Board of Directors of the Company has proposed that the Fourth Article
of the Company's Certificate of Incorporation be amended to increase the number
of shares of Sector Communications, Inc. Common Stock which the Company is
authorized to issue from 50,000,000 to 60,000,000 shares. If approved by the
shareholders, such additional authorized shares of Common Stock would be
available for issuance at the discretion of the Board of Directors without
further stockholder approval (subject to the Company's Bylaws and Nevada law) in
connection with possible mergers and acquisitions, in connection with employee
benefit plans, and for other corporate purposes, such as the issuance of shares
as part of a plan relative to improving the Company's capital structure, without
the significant time delay and expenses incident to the holding of a special
meeting of shareholders to consider any specific issuance.
The Company presently has no specific plans, agreements, or understandings
with respect to the issuance of any shares of Sector Communications Common Stock
except as contemplated in connection with the Company's employee and directors'
stock options. However, the Company has in the past and continues on an ongoing
basis to review acquisition candidates and to have preliminary discussions in
this regard.
The Sector Communications Common Stock for which authorization is sought
would become part of the existing class of the Company's Common Stock. The new
shares, when issued, would have the same rights and privileges as the shares of
the Company's Common Stock presently outstanding. No shareholder of Sector
Communications has any preemptive right to subscribe for or purchase any of the
shares of the Company's Common Stock proposed to be authorized, and, once
authorized, such shares would be available for issuance at such time and on such
terms as the Board of Directors may consider appropriate.
- 7 -
<PAGE>
Nevada's Anti-Takeover Law
Sections 78.411 to 78.444 (the "Anti-Takeover Law") of the Nevada
Corporation, Partnership and Association Law (the "Nevada Law") prevents certain
Nevada corporations, including those whose securities are listed on the NASDAQ
Stock Market, from engaging, under certain circumstances, in a "combination"
(which includes a merger or sale of more than 10% of the corporation's assets)
with any "interested shareholder" (a shareholder who acquired 15% or more of the
corporation's outstanding voting stock without the prior approval of the
corporation's board of directors) for three years following the date that such
shareholder became an "interested shareholder." A Nevada corporation may "opt
out" of the Anti-Takeover Law with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or bylaws resulting from a shareholders amendment approved by at
least a majority of the outstanding voting shares. Sector Communications, Inc.
has not "opted out" of the provisions of the Anti-Takeover Law.
Potential Disadvantages to Shareholders of an Increase in the Number of Shares
Authorized for Issuance
If the increase in the authorized shares of Sector Communications, Inc.
Common Stock and Preferred Stock is approved, management will have authority to
issue the shares to effect transactions that shareholders might not approve if
they were given the opportunity to vote on the transactions. Under certain
circumstances, there will be a potential for dilution to existing shareholders
upon the issuance of common shares or preferred stock. The authorized but
unissued shares of Sector Communications, Inc. Common Stock could be used by
incumbent management to make more difficult a change in control of Sector
Communications. Under certain circumstances, such shares could be used to
frustrate persons seeking to effect a takeover or change in control of Sector
Communications or to effect a merger, sale of all or any part of Sector
Communications' assets or a similar transaction, since the issuance of shares
could be used to dilute the stock ownership of shares of the Company's voting
stock held by such person. Although the Board of Directors has a fiduciary duty
to act in the best interests of the Company's shareholders at all times, the
ability of the Board to issue additional shares of Sector Communications, Inc.
Common Stock could prevent the proposal of transactions which some shareholders
might consider to be in their best interest.
To effect the increase in authorized Sector Communications, Inc. Common
Stock, the Fourth Article of the Company's Certificate of Incorporation would be
amended to read as follows:
"FOURTH: This corporation is authorized to issue two classes of stock to be
designated, respectively, Common Stock and Preferred Stock. The total number of
shares of Common Stock that the corporation is authorized to issue is 60,000,000
shares, par value $0.001 per share. The total number of shares of Preferred
Stock that this corporation is authorized to issue is 5,000,000 shares, par
value $0.001 per share."
The affirmative vote of the holders of a majority of the shares of Sector
Communications Common Stock outstanding and entitled to vote at the Company's
Annual Meeting is required to approve the amendment to the Company's Certificate
of Incorporation.
THE BOARD OF DIRECTORS OF SECTOR COMMUNICATIONS, INC. UNANIMOUSLY
RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE SECTOR COMMUNICATIONS
CERTIFICATE OF INCORPORATION.
ITEM 3: APPROVAL OF INDEPENDENT ACCOUNTANTS
Action will be taken with respect to the approval of independent
accountants for the Company for the year 1997. The Audit Committee and Board of
Directors have, subject to such approval, selected Merdinger, Fruchter, Rosen &
Corso, P.C. ("MFR&C") of New York, New York to serve in this capacity. MFR&C
will
- 8 -
<PAGE>
serve as the Company's principal accountant to audit the Company's financial
statements.
Representatives of MFR&C are expected to be present at the Annual Meeting,
and will have the opportunity to make a statement if they desire to do so, and
are expected to be available to respond to appropriate questions.
Change in Accountants
Pursuant to a letter dated December 9, 1996, the Company informed Stark
Tinter & Associates ("Stark Tinter") that it would no longer engage Stark Tinter
as the independent auditors to audit the Company's financial statements. The
Board of Directors unanimously approved the engagement of Merdinger, Fruchter,
Rosen and Corso, P.C. as the Company's independent auditors.
No disagreements between the Company and Stark Tinter regarding any matter
of accounting principles or practice, financial statement disclosure, or
auditing scope or procedure occurred in connection with the audits of the years
ending February 28, 1995 and 1996, or during the period from February 28, 1996
to December 9, 1996.
The reports of Stark Tinter on the Company's financial statements for the
years ended February 28, 1996 and 1995 were unqualified.
Merdinger, Fruchter, Rosen and Corso, P.C. has been the independent
auditors for Global Communications Group, Inc., a company acquired by the
Company in June 1996, for the years ended December 31, 1995 and 1994.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL
TO APPROVE THE ENGAGEMENT OF MERDINGER, FRUCHTER, ROSEN
AND CORSO, P. C. AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
AVAILABILITY OF FORM 10-KSB
The Company has mailed a copy of its Annual Report to each stockholder
entitled to vote at this meeting. Copies of the Company's Form 10-KSB for the
year ended February 28, 1997 and Form 10-QSB for the three months ended May 31,
1997 are available, upon request, at no charge to all stockholders upon request
to the Company and will also be available at the Annual Meeting.
STOCKHOLDER PROPOSALS FOR 1998
Proposals of security holders intended to be presented at the Company's
1998 Annual Meeting of Stockholders must be received by the Company by not later
than April 20, 1998.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company and will
consist primarily of printing, postage and handling, including the expenses of
brokerage houses, custodians, nominees, and fiduciaries in forwarding documents
to beneficial owners. Solicitation also may be made by the Company's officers,
Directors, or employees, personally or by telephone.
By Order of the Board of Directors
Jeff Shear
Secretary
McLean, Virginia
August XX, 1997
- 9 -
SECTOR COMMUNICATIONS, INC.
7601 LEWINSVILLE ROAD
McLEAN, VIRGINIA 22102
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Theodore Georgelas and Geoffrey Button and
each of them, with full power of substitution, as proxies to vote as designated
on the reverse side, all the shares of common stock held by the undersigned at
the annual meeting of shareholders of Sector Communications, Inc. to held on
September 25, 1997, at 10:00 a.m. at the Company's corporate offices, or any
adjournment thereof, and with discretionary authority to vote on all other
matters that may properly come before the meeting.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
[ X ] Please mark your
votes as in this
example.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. INCREASE IN [ ] [ ] [ ] 3. APPROVAL OF [ ] [ ] [ ]
NUMBER OF INDEPENDENT
COMMON SHARES ACCOUNTANTS
AUTHORIZED
FOR WITHHELD Nominees: Theodore J. Georgelas
2. ELECTION OF [ ] [ ] Geoffrey A. Button
DIRECTORS Jeff Shear
C. Donald Johnson
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS INDICATED, WILL BE VOTE FOR ALL
NOMINEES LISTED ABOVE FOR ELECTION OF DIRECTORS
AND FOR APPROVAL OF THE INCREASE IN NUMBER OF
AUTHORIZED COMMON SHARE AND FOR APPROVAL OF THE
INDEPENDENT AUDITORS AND IN THE DISCRETION OF THE
PERSONS NAMED AS PROXIES WITH RESPECT TO ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE
MEETING.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS, YOU MAY
JUST SIGN AND DATE BELOW AND MAIL IN THE POSTAGE
PAID ENVELOPE PROVIDED. SPECIFIC CHOICES MAY BE
MADE ABOVE.
SIGNATURE_______________ DATE_______ __________________________ DATE_________
SIGNATURE, IF HELD JOINTLY
NOTE: Please sign exactly as names appears hereon. Joint owners each should
sign. When signing as attorney, executor, administrator, trustee or guardian
please give full title as such.
