<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
E-PAWN.COM, INC.
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(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously 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 registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
E-PAWN.COM, INC.
2855 UNIVERSITY DRIVE, SUITE 200
CORAL SPRINGS, FLORIDA 33065
-------------------------------------------------------------------------------
Notice of Annual Meeting of Stockholders
to be held on December 4, 2000
TO THE STOCKHOLDERS OF E-PAWN.COM, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
E-Pawn.com, Inc., a Nevada corporation (the "Company") will be held on Monday,
December 4, 2000 at 10:00 a.m., local time at LaQuinta Inn, 3701 University
Drive, Coral Springs, Florida for the following purposes:
1. To elect five directors to hold office until the Next Annual Meeting
of Stockholders.
2. To approve the 2000 Non-Statutory Stock Plan
3. To ratify the selection of Feldman Sherb & Co., P.C. as independent
auditors of the Company for the Company's fiscal year ending May 31, 2001.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement of the meeting thereof.
These business items are more fully described in the Proxy Statement
accompanying this Notice.
The Board of Directors has fixed the close of business on October 31,
2000 as the record date for identifying those stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement of
this meeting.
By Order of the Board of Directors,
/s/ Jennifer Martin
Jennifer Martin, Secretary
Coral Springs, Florida
November 1, 2000
All Stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please complete, date, sign and
return the enclosed proxy as promptly as possible to ensure your representation
at the meeting. A return envelope (which is postage prepaid if mailed in the
United States) is enclosed for that purpose. Even if you have given your proxy,
you may still vote in person if you attend the meeting. Please note, however,
that if your shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, you must obtain from the record holder a proxy
issued in your name.
<PAGE>
E-PAWN.COM, INC.
2855 University Drive, Suite 200
Coral Springs, Florida 33065
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
December 4, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
E-Pawn.com, Inc. for use at the Annual Meeting of Stockholders to be held on
December 4, 2000, at 10:00 a.m., local time (the "Annual Meeting"), or at any
adjournment or postponement of this meeting, for the purposes set forth in this
proxy statement and in the accompanying Notice of Annual Meeting. The Annual
Meeting will be held at LaQuinta Inn, 3701 University Drive, Coral Springs,
Florida. The Company intends to mail this proxy statement and accompanying proxy
card on or about November 4, 2000, to all stockholders of record on October 31,
2000 entitled to vote at the Annual Meeting.
Solicitation
The Company will pay for the entire cost of proxy solicitations,
including preparation, assembly, printing and mailing of proxy solicitation
materials. The Company will provide copies of solicitation materials to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward these materials to the
beneficial owners of Common Stock. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials. Directors, officers or other regular employees of the
Company or, if the Company requests, Vanguard Communications Inc., may also
solicit proxies by telephone, telegram or in-person. The Company will not
additionally compensate directors, officers or other regular employees for these
services, but Vanguard Communications Inc. will be paid its customary fee of
approximately $5,000 if the Company uses it for solicitation.
Voting Rights and Outstanding Shares
Only stockholders of record at the close of business on October 31,
2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on October 31, 2000, 158,242,820 shares of Common Stock were
outstanding and entitled to vote. Each holder of record of Common Stock on that
date will be entitled to one vote for each share held on all matters to be voted
upon at the Annual Meeting. On October 31, 2000, Fortuna Holdings Limited held
50 million shares of Class A Preferred Stock and each share was eligible for
vote 100 shares for each share of Preferred Stock. The Board of Directors holds
the proxy to vote the 50 million shares of Class A Preferred Stock registered in
the name of Swiss Arctic Traders Ltd. The Board and Fortuna Holdings Limited
have nominated and Alison Madej and Jennifer Martin each as proxy to vote the
shares of Fortuna Holdings Limited and the Board proxy for the Class A Preferred
Stock. Alison Madej and Jennifer Martin each will also serve as proxy for the
common stock held by Fortuna Holdings Limited. Fortuna Holdings Limited will
also designate Alison Madej and Jennifer Martin each as the proxy to vote the
common stock registered in the name of Swiss Arctic Traders Ltd. which has
previously agreed to sell the share to Fortuna Holdings Limited. Alison Madej
and Jennifer Martin each holds the proxy for more than half of the outstanding
shares eligible to vote. The voting rights of these shares is approximately 90%
of eligible votes. Any action approved by Alison Madej or Jennifer Martin will
be passed.
The inspector of election appointed for the meeting will tabulate all
votes and will separately tabulate affirmative and negative votes, abstentions
and broker non-votes. Abstentions will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether a matter has been approved.
<PAGE>
Revocability of Proxies
Any person giving a proxy in response to this solicitation has the
power to revoke it at any time before it is voted. Proxies may be revoked by any
of the following actions:
filing a written notice of revocation with the Corporate Secretary at
the Company's principal executive office (2855 University Drive, Coral
Springs, Florida 33065);
filing with the Corporate Secretary at the Company's principal
executive office (2855 University Drive Coral Springs 33065) a properly
executed proxy showing a later date; or
attending the meeting and voting in person (attendance at the meeting
will not, by itself, revoke a proxy).
Stockholder Proposals
Proposals of stockholders that are intended to be presented at the
Company's 2001 Annual Meeting of Stockholders must be received by the Company
not later than March 1, 2001, in order to be included in the proxy statement and
proxy relating to that Annual Meeting. Stockholders are also advised to review
the Company's Bylaws, which contain additional requirements with respect to
notice of stockholder proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, the Stockholders will elect three directors to serve
until the next Annual Meeting and until a successor for such director is elected
and qualified, or until the death, resignation, or removal of such director. It
is intended that the proxies will be voted for the three directors named below
unless authority to vote for any such nominee is withheld.
The three nominees are presently serving as directors. Each person
nominated has agreed to serve if elected. The bylaw of the Company does not
provide for staggered terms or other structures. The Board of Directors has the
right to add directors by the vote of the directors and the Board has the right
to amend the Bylaws of the Company.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR the nominees named below. The three candidates receiving
the highest number of affirmative votes of the shares entitled to vote at the
Meeting will be elected directors of the Company. The proxies solicited by this
Proxy Statement may not be voted for more than the number of positions
nominated. If a nominees withdraws or cannot serve prior to the election, the
current Board will designate a replacement and the proxy holders will vote for
that nominee.
The provisions of the Class A Preferred Stock grant the holders the
right to elect a majority of the directors. The present Board holds the power to
vote the proxy for one half the Class A Preferred Stock, and the present Board
will instruct the proxy to vote for the following nominees. Fortuna Holding
Limited is the holder of one half of the Class A Preferred Stock. Fortuna
Holdings has instructed its nominee to vote for the following nominees. In
addition, Fortuna Holdings Limited is the record holder or the proxy for over
50% of the shares of common stock of the Company. Fortuna Holdings Limited has
declared that it will grant the proxy to the person named herein to vote the
shares to elect the nominees.
<PAGE>
The following is general information on the nominees to the Board of
Directors:
<TABLE>
<CAPTION>
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Nominee Name/ Age Position with the Company
First Elected to Board
-------------------------------------------------------------------------------------
<S> <C> <C>
Edward O. Ries 62 President, Chief Executive Officer,
July 2000 and Chairman of the Board
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Jennifer Martin 52 Secretary and Director
July 2000
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Alison Madej 30 Vice President and Director
July 2000
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</TABLE>
EDWARD O. RIES
Mr. Ries has broad experience managing companies involved in
manufacturing, marketing, finance and services. He has served as an officer and
director of public and private companies. Following the completion of the sale
of assets of a private Ohio company in which he was a principal and an
executive, Mr. Ries has moved to Florida where he will become directly involved
in the operations and administration of the Company.
JENNIFER MARTIN
Ms. Martin was a founder of E-Pawn, Inc. which the Company acquired in
January 2000. She is the President of Worldwide Web Designers, Inc., which has a
Consulting Agreement with the Company to manage the Company's Internet websites.
Ms. Martin has extensive experience with companies involved in finance,
marketing and merchandising with emphasis on directing international business
programs for her associated companies. Her work during the last three years has
been focused on development of Internet marketing programs.
ALISON MADEJ
Ms. Madej has been serving as the manager of public and investor
relations since May 1, 2000. Previously, she was involved in the administration
of an employee owned medical and health services company in the Tampa Bay
region, and she served as a director of the Florida ESOP Association. She is a
licensed real estate salesperson in Florida and a registered physical therapist
assistant. She is the daughter of Steven Bazsuly, a controlling person of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
PROPOSAL 2
APPROVAL OF THE 2000 NONSTATUTORY STOCK PLAN
In June 2000, the Board of Directors adopted the 2000 Nonstatutory
Stock Plan (the "Stock Plan") and reserved 10,000,000 shares of common stock for
issuance under the Stock Plan subject to finalization of the terms of the Stock
Plan by the Board of Directors. The Board has approved the Stock Plan.
Stockholders are requested in this Proposal 2 to approve the Stock
Plan. The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting will be
required.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
<PAGE>
The essential features of the Stock Plan are outlined below:
General
The Stock Plan provides for the grant of stock options, stock bonuses
and restricted stock purchase awards (collectively "awards"). Options granted
under the international plan are not intended to qualify as incentive stock
options under the Internal Revenue Code.
Purpose
The Board adopted the Stock Plan to provide a means by which employees,
directors and consultants of the Company and its subsidiaries may be given an
opportunity to acquire and receive stock in the Company. The Board believes that
the Stock Plan will assist us in retaining the services of such persons, in
securing and retaining the services of persons capable of filling such positions
and in providing incentives for such persons to exert maximum efforts for
success of the Company and its subsidiaries.
Administration
The Board administers the Stock Plan. Subject to the provisions of the
Stock Plan, it may construe and interpret the Stock Plan and determine the
persons to whom and the dates on which awards will be granted. It also may
determine the number of shares of stock to be subject to each award, the
exercise and vesting schedule, the exercise price, the type of consideration and
other terms of the award. Pursuant to its authority to delegate administration
of the Stock Plan to a committee of one or more Board members, the Board may
delegate administration to its Compensation Committee.
Eligibility
The Board intended the Stock Plan to benefit mainly employees,
directors, and consultants of the Company and its subsidiaries. However, all of
the employees and consultants and the employees, directors and consultants of
the Company's affiliates are eligible to participate in the Stock Plan.
Stock Subject to the Stock Plan
The Board has reserved an aggregate of 10,000,000 shares of common
stock for issuance under the Stock Plan. If awards granted under the Stock Plan
expire or otherwise terminate without being exercised, the shares of the
Company's stock not acquired pursuant to such awards again become available for
issuance under the Stock Plan. To date, the Board has not made any awards under
the Stock Plan.
Terms of Options
Exercise Price; Payment. The Board determines the exercise price of
options. The participant must pay the exercise price either in cash or, if
allowed by the Board, by delivery of other shares of the Company's common stock,
pursuant to a deferred payment arrangement or in any other form of legal
consideration acceptable to the Board.
Repricing. In the event of a decline in the value of the common stock,
the Board has inherent authority to offer participants the opportunity to
replace outstanding higher priced options with new lower priced options.
Option Exercise. Options granted under the Stock Plan may become
exercisable in cumulative increments ("vest") as determined by the Board, and
the Board may accelerate the time during which an option may vest or be
exercised. In addition, options may permit exercise prior to vesting, but in
such event the participant will be required to enter into an early exercise
stock purchase agreement that allows the Company to repurchase unvested shares,
generally at the participant's exercise price, should the participant's service
terminate before vesting. To the extent provided by the terms of an option, a
participant may satisfy any tax withholding obligation relating to the exercise
of the option by a cash payment upon exercise, by authorizing the Company to
withhold a portion of the stock otherwise issuable to the participant, by
delivering already-owned shares of common stock or by a combination of these
means.
<PAGE>
Term. The terms and conditions of options will depend to a large
extent upon the applicable law. However, the term is expected to generally be
10 years, and options generally are expected to terminate three months after
termination of the participant's service. If such termination is due to the
participant's disability, the option generally may be exercised (to the
extent the option was exercisable at the time of the termination of service)
at any time within 12 months of such termination. If the participant dies
during the option term, or within three months after termination of service,
the option generally may be exercised (to the extent the option was
exercisable at the time of the participant's death) within 18 months of the
participant's death. A participant may designate a beneficiary who may
exercise the option following the participant's death.
Terms of Stock Bonuses and Purchases of Restricted Stock
Payment. The Board determines the purchase price of the Company's stock
under a restricted stock purchase agreement. However, the Board may award stock
bonuses in consideration of past services without a purchase payment. The
participant must pay the purchase price either in cash or, if allowed by the
Board, by delivery of other shares of the Company's common stock, pursuant to a
deferred payment arrangement or in any other form of legal consideration
acceptable to the Board.
Vesting. Shares of stock sold or awarded under the international plan
may, but need not be, subject to a repurchase option in favor of us in
accordance with a vesting schedule as determined by the Board. The Board has the
power to accelerate the vesting of stock acquired pursuant to a restricted stock
purchase agreement or stock bonus award under the international plan.
Restrictions on Transfer
The participant may not transfer an award otherwise than by will or by
the laws of descent and distribution unless otherwise provided by the award
terms.
Adjustment Provisions
Transactions not involving the Company's receipt of consideration, such as a
merger, consolidation, reorganization, stock dividend, or stock split, may
change the class and number of shares of the Company's stock subject to the
international plan and to outstanding awards. In that event, the Board will
appropriately adjust the international plan as to the class and the maximum
number of shares of the Company's stock, and will adjust outstanding awards as
to the class, number of shares and price per share of the Company's stock.
Effect of Certain Corporate Events
In the event of the Company's dissolution or liquidation, outstanding
awards will terminate. However, outstanding awards do not automatically
terminate in the event of a change in control. A "change in control" means a
sale, lease or other disposition of all or substantially all of the Company's
assets, a merger or consolidation in which the Company is not the surviving
corporation, or a reverse merger in which the Company is the surviving
corporation but the shares of the Company's stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property.
In the event of a change in control, any surviving corporation or acquiring
corporation may assume or continue outstanding awards or may substitute similar
awards. If it refuses to do so, then with respect to awards held by participants
whose service has not terminated, the vesting of such awards (and, if
applicable, the time during which such awards may be exercised) will be
accelerated in full. The unexercised portion of all outstanding awards will
terminate upon the change in control. The acceleration of an award in the event
of a change in control may be viewed as an anti-takeover provision, which may
have the effect of discouraging a proposal to acquire or otherwise obtain
control of us.
Duration, Amendment and Termination
The Board may amend, suspend or terminate the international plan at any
time or from time to time. Stockholder approval of the international plan or an
amendment must be sought only if necessary under applicable laws or regulations,
but the Board may submit the international plan and any amendment thereto for
stockholder approval at its discretion.
<PAGE>
Federal Income Tax Information
Awards granted under the international plan to persons subject to
United States taxation generally have the following federal income tax
consequences:
There are no tax consequences to the participant or to us by reason of
the grant. Upon acquisition of the stock, the participant normally will
recognize taxable ordinary income equal to the excess, if any, of the stock's
fair market value on the acquisition date over the purchase price. However, to
the extent the stock is subject to certain types of vesting restrictions, the
taxable event will be delayed until the vesting restrictions lapse unless the
participant elects to be taxed on receipt of the stock. With respect to
employees, the Company is generally required to withhold from regular wages or
supplemental wage payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness, the provisions of Section 162(m)
of the Internal Revenue Code and the satisfaction of a tax reporting obligation,
the Company generally will be entitled to a business expense deduction equal to
the taxable ordinary income realized by the participant.
Upon disposition of the Company's stock, the participant will recognize
a capital gain or loss equal to the difference between the selling price and the
sum of the amount paid for such stock plus any amount recognized as ordinary
income upon acquisition (or vesting) of the stock. Such gain or loss will be
long-term or short-term depending on whether the participant held the stock for
more than one year. Slightly different rules may apply to participants who
acquire stock subject to certain repurchase options.
Long-term capital gains currently are generally subject to lower tax
rates than ordinary income or short-term capital gains. The maximum long-term
capital gains rate for federal income tax purposes is currently 20% while the
maximum ordinary income rate and short-term capital gains rate is effectively
39.6%. Slightly different rules may apply to participants who acquire stock
subject to the Company's repurchase right.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board has selected Feldman Sherb & Co., PC, as its independent
auditors for the fiscal year ending May 31, 2001. The Board is submitting its
selection of independent auditors for ratification by the stockholders at the
Annual Meeting. Feldman Sherb & Co., PC has audited the Company's financial
statements since March 2000, when it assumed the engagement for the 1998 and
1999 fiscal years of the Company when it operated as Wasatch International
Corporation. The firm also performed the audit for fiscal year ending May 31,
2000.
The Bylaws do not require that the stockholders ratify the selection of
Feldman Sherb & Co., PC as the Company's independent auditors. However, the
Board is submitting the selection of Feldman Sherb & Co., PC to the stockholders
for ratification as a matter of good corporate practice. Even if the selection
is ratified, the Board of Directors in their discretion may change the
appointment at any time during the year, if the Board determines that such a
change would be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the Annual Meeting
will be required to ratify the selection of Feldman Sherb & Co., PC.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Common Stock as of October 31, 2000
by (i) each stockholder that the Board knows is the beneficial owner of more
than 5% of the Common Stock, (ii) each director and nominee for director, (iii)
each of the executive officers named in the Summary Compensation Table and (iv)
all executive officers and directors as a group.
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially Owned (1)
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Name of Beneficial Owner Number Percent
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Edward O. Ries 1,500,000 < 1%
-------------------------------------------------------------------------------------------------------
Jennifer Martin 1,544,000 < 1%
-------------------------------------------------------------------------------------------------------
Alison Madej -0-
-------------------------------------------------------------------------------------------------------
Steve Bazsuly (2) 79,000,000 50%
-------------------------------------------------------------------------------------------------------
All Directors and Executive Officers 3,044,000 < 2%
as a group
-------------------------------------------------------------------------------------------------------
</TABLE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. Shares of common stock subject to options that are currently
exercisable or exercisable within 60 days of October 31, 2000 are deemed to be
outstanding for the purpose of computing the percentage ownership of the person
holding those options, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person. The percentage of
beneficial ownership is based on 158,242,820 shares of Common Stock outstanding
as of October 31, 2000.
(2) Steve Bazsuly is the general partner of a partnership that controls 80% of
Fortuna Holdings Limited. He is the controlling shareholder of Worldwide Web
Design, Inc., which owns the other 20% of Fortuna Holding Limited. Fortuna
Holdings Limited owns directly 50 million shares of common stock. On July 19,
2000, it purchased 25 million shares from Swiss Arctic Traders Ltd. Mr. Bazsuly
holds directly four million shares, and he disclaims ownership of one million
shares held by his wife, Susan Bazsuly. Swiss Article Traders Ltd. has granted
Fortuna Holdings Limited the option to acquire an additional 15 million shares
of common stock, and Swiss Arctic has agreed to grant a proxy to Fortuna
Holdings Limited for the 15 million shares and a proxy for an addition
13,650,000 shares which are owned by third parties who are affiliated with Swiss
Arctic Traders, Ltd. or its principal.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "1934
Act")requires the directors and executive officers, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
The Company believes, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended May 31, 2000, the Section
16(a) filing reports applicable to the Company's officers, directors and greater
than ten percent beneficial owners were not complied with, but that the current
Board has filed the Form 3, and no transactions occurred which would require the
filing of a Form 4 by the directors and officers. The former controlling
stockholder did not file a Form 3, and Fortuna Holdings Limited has only
recently filed a Form 3.
EXECUTIVE COMPENSATION
Compensation of Directors
The directors do not receive cash compensation for their services as
directors, but the Company reimburses each for reasonable expenses for attending
Board and Board committee meetings.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows compensation provided for during fiscal 2001
for the Chief Executive Officer and the other executive officers at October 31,
2000 ( the "Named Executive Officers"):
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------------
Long-Term and Other
Annual Compensation Annual Compensation
-------------------------------------------------------------------------------------------------------------------------
Name Year Salary Bonus Other Annual Restricted
Compensation Stock Awards
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward O. Ries 2000 $150,000 0 0 1.5 million shares of restricted common
stock of the Company
-------------------------------------------------------------------------------------------------------------------------
Jennifer Martin 2000 $60,000 0 0
-------------------------------------------------------------------------------------------------------------------------
Alison Madej 2000 $40,000 0 0
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
COMPENSATION ARRANGEMENTS
Mr. Ries employment agreement calls for an annual base salary of
$150,000 plus 1.5 million shares of restricted common stock of the Company. Mr.
Ries will also received an incentive bonus of an additional two million shares
of restricted common stock of the Company, if certain goals are met during the
term of his employment.
Ms. Martin's employment agreement calls for an annual base salary of
$60,000; and Ms. Madej's employment agreement calls for an annual base salary of
$40,000.
The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any filing
of the Company under the 1933 Act or 1934 Act, whether made before or after the
date hereof and irrespective of any general incorporation language contained in
such filing.
STOCK OPTIONS.
The Company's stock option plan is designed to provide its employees
with an opportunity to share, along with its stockholders, in the Company's
long-term performance. Initial grants of stock options are generally made to
eligible employees upon commencement of employment, with additional grants being
made to certain employees periodically or following a significant change in job
responsibilities, scope or title. Stock options under the option plans generally
vest over a period of years and expire ten years from the date of grant. The
exercise price of the Company's options is usually 100% of the fair market value
of the common stock on the date of grant, although some discounted options may
be granted.
Guidelines for the initial number of stock options for each participant
under the option plans are generally determined by a formula providing a range
of option grants for each job level. Follow-on option grants are based upon a
number of factors, including performance of the individual, job level,
potential, and past option grants. The Board of Directors has the authority to
make option grants to non-officers. All initial stock option grants to executive
officers have been negotiated as part of the hiring. The Company believes the
existing grants and vesting schedules currently align the objectives of the
executive team with those of the Company's stockholders.
The Company is limited by Section 162(m) of the Internal Revenue Code
of 1986 to a deduction for federal income tax purposes of up to $1 million of
compensation paid to certain Named Executive Officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation." The Company does not expect this limitation to affect the Company
in 2000.
<PAGE>
SUMMARY.
Through the plans described above, a significant portion of the
Company's compensation program for the Company's executive officers
(including the CEO) is contingent upon the individual's and the Company's
performance, and realization of benefits by the CEO and the other executive
officers is closely linked to increases in long-term stockholder value. The
Company remains committed to this philosophy of pay for performance,
recognizing that the competitive market for talented executives and the
volatility of the business may result in highly variable compensation during
any given annual period.
CERTAIN TRANSACTIONS
Since February 29, 2000, there has not been, nor is there currently
proposed, any transaction or series of similar transactions to which the Company
was or is a party in which the amount involved exceeds $60,000 and in which any
director, executive officer or holder of more than 5% of the Common Stock had or
will have a direct or indirect interest other than (i) compensation
arrangements, which are described where required under "Executive Compensation,"
and (ii) the transactions described below:
In January 2000, the E-Pawn entered into a consulting agreement with
World Wide Web Designers, Inc. ("WWW") to provide computer programming and
website design and maintenance. WWW is owned by four individuals, one of whom is
the general partner of the controlling shareholder of Fortuna Holdings Limited.
Another WWW shareholder, Jennifer Martin, is an officer and director of the
Company. This agreement runs through December 31, 2005, and provides for a fee
to WWW of $50,000 per month. WWW acquired 20 % of Fortuna and 20 % of Swiss
Arctic in connection with the sale of E-Pawn to Fortuna and Swiss Arctic. The
Company paid WWW $250,000 through May 31, 2000. The Company accrued expenses to
WWW of $150,000 for the three-month period ended August 31, 2000.
During the year ended May 31, 2000, the Company engaged the services of
Vanguard Communications Group Ltd. ("Vanguard") to assist in business
development and general public relations. Vanguard is owned by an affiliate of
the Company, Steve Bazsuly, who is the general partner of the controlling
shareholder of Fortuna Holdings Limited which controls the Company. As of May
31, 2000, total expenses for services rendered to the Company totaled $25,000.
During the three-months ended August 31, 2000, the Company borrowed $65,000 from
Vanguard.
On July 19, 2000, the Company acquired 80% of the shares of Home Realty
& Investment Corp., Inc. from Paul Rubeo and Peter Leon. The consideration
granted in the aggregate was 250,000 shares of common stock and $105,000.
Messrs. Rubeo and Leon will receive an additional 250,000 shares and $50,000 in
the aggregate on the first anniversary of the purchase. In addition, Messrs.
Rubeo and Leon received employment agreements from Home Realty providing a base
salary of $100,00 per year, plus bonuses for each.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, the persons named in the accompanying proxy intend
to vote on those matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ Jennifer Martin
Jennifer Martin
Secretary
<PAGE>
E-PAWN.COM, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 4, 2000
The undersigned hereby appoints Alison Madej and Jennifer Martin, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of E-Pawn.Com, Inc. that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
E-Pawn.Com, Inc. to be held on December 4, 2000, at 10:00 a.m. local time at
LaQuinta Inn, 3701 University Drive, Coral Springs, Florida, and at any and all
continuations and adjournments of that meeting, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS YOU INDICATE OTHERWISE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED
IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AS MORE SPECIFICALLY DESCRIBED IN THE
PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS.
Please mark your votes as [X] indicated in this example
Proposal 1: To elect three directors to hold office until the 2001 Annual
Meeting:
THE COMPANY RECOMMENDS A VOTE FOR THE ALL NOMINEES LISTED (except as written in)
listed below:
FOR WITHHOLD AUTHORITY
Edward O. Ries [ ] [ ]
Jennifer Martin [ ] [ ]
Alison Madej [ ] [ ]
THE COMPANY RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3.
Proposal 2: To approve the 2000 Non-Statutory Stock Plan
FOR WITHHOLD AUTHORITY
[ ] [ ]
Proposal 3: To ratify the election of Feldman Sherb & Co., PC
FOR WITHHOLD AUTHORITY
[ ] [ ]
I/WE WILL ATTEND [ ], WILL NOT ATTEND THE MEETING [ ]
Dated: , 2000
-----------------------------------------------------------
Signature
Please sign exactly as your name or names appear hereon. If
the stock is registered in the names of two or more persons,
each should sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add their titles. If
signer is a corporation, please give full corporate names
and have a duly authorized sign, stating title. If a signer
is a partnership, please sign in partnership name by an
authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
THAT IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
