SYNAPTIX SYSTEMS CORPORATION
2450 South Shore Boulevard, Suite 210
League City, Texas 77573
Telephone: (281) 334-0405
Facsimile: (281) 334-0306
November 3, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting (the "Meeting")
of Shareholders of Synaptix Systems Corporation (the "Company") to be held on
December 16, 1997. The Meeting will begin at 10:00 a.m., Houston Time, at the
principal executive offices of the Company, 2450 South Shore Drive, Suite 210,
League City, Texas 77573.
At the Meeting you will be asked to elect a Board of Directors for the
ensuing year and ratify the appointment of the Company's independent auditors.
During the Meeting a report will be given on the operations of the
Company. Directors and executive officers of the Company will be present to
respond to any questions that shareholders may have.
Please fill out, sign, date and return the enclosed Proxy Card
promptly. If you attend the Meeting and wish to vote your shares personally, you
may revoke your proxy at that time. Your interest is very much appreciated.
Sincerely yours,
SYNAPTIX SYSTEMS CORPORATION
Edward S. Fleming, Acting President
<PAGE>
SYNAPTIX SYSTEMS CORPORATION
2450 South Shore Boulevard, Suite 210
League City, Texas 77573
Telephone: (281) 334-0405
Facsimile: (281) 334-0306
NOTICE OF ANNUAL MEETING
To the Shareholders of SYNAPTIX SYSTEMS CORPORATION:
Notice is hereby given that the Annual Meeting (the "Meeting") of
Shareholders of Synaptix Systems Corporation (the "Company") will be held on the
16th day of December, 1997, at the principal executive offices of the Company,
2450 South Shore Boulevard, Suite 210, League City, Texas 77573, at 10:00 a.m.
Central Standard Time, for the purpose of:
(1) electing a board of directors for the ensuing year;
(2) ratification of the appointment of Smith & Company, the
Company's Independent Auditors, for the ensuing year; and
to transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The holders of record of Common Stock at the close of business on
October 28, 1997, will be entitled to vote at the Meeting and at any
adjournments thereof. Proxy soliciting material is first being mailed or given
to shareholders on or before November 3, 1997.
By Order of the Board of Directors,
Edward S. Fleming, Acting President
Dated: November 3, 1997
IMPORTANT: Your presence at the Meeting is desired, but if you cannot be present
in person, please fill out, sign, date and return the enclosed form of proxy in
the envelope provided. Due to the number of shareholders, your cooperation in
returning your proxy promptly is essential and will be very much appreciated.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. TO VOTE YOUR
SHARES, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN
THE ENCLOSED RETURN ENVELOPE.
<PAGE>
SYNAPTIX SYSTEMS CORPORATION
2450 South Shore Boulevard, Suite 210
League City, Texas 77573
Telephone: (281) 334-0405
Facsimile: (281) 334-0306
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on December 16, 1997
PROXY STATEMENT
This Proxy Statement and accompanying Proxy are being furnished in
connection with the solicitation by the Board of Directors of Synaptix Systems
Corporation, ("Synaptix" or the "Company") of proxies to be voted at the Annual
Meeting of Shareholders of the Company to be held on Tuesday, December 16, 1997
at 10:00 a.m. at the principal executive offices of the Company, 2450 South
Shore Boulevard, Suite 210, League City, Texas 77573, and at any adjournment or
postponement thereof (the "Annual Meeting"), for the purposes set forth in this
Proxy Statement and the accompanying Notice of Annual Meeting. This Proxy
Statement and accompanying Proxy are being mailed to shareholders on or about
November 3, 1997, to shareholders of record on October 28, 1997.
SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL
MEETING, TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE. Your executed Proxy may be
revoked at any time before it is exercised by filing with the Secretary of the
Company, at the Company's principal executive offices, a written notice of
revocation or a duly executed Proxy bearing a later date. The execution of the
enclosed Proxy will not affect your right to vote in person, should you find it
convenient to attend the Meeting and desire to vote in person. Attendance at the
Annual Meeting will not in and of itself constitute the revocation of a Proxy.
The purpose of the Annual Meeting is to elect five (5) directors to
serve one-year terms until the next Annual Meeting which will be held in
December 1998, and until their respective successors shall be elected and
qualified. The Company is soliciting proxies for four (4) nominees, and for
authority to vote on any other nominees that may be nominated at the meeting. If
sufficient nominees are not nominated at the meeting, there may be a vacancy on
the Board of Directors. Pursuant to the Company's Bylaws, such vacancy may be
filled by the Board at a later time.
The Company intends to solicit proxies principally by the use of the
mails and will bear all expenses in connection with such solicitations. In
addition, some of the directors, officers and regular employees of the Company
may, without extra compensation, solicit proxies by telephone, telegraph and
personal interview. Arrangements have been made with banks, brokerage houses and
other custodians and nominees to forward copies of the Proxy Statement and the
Company's Annual Report for the fiscal year ended June 30, 1997, to persons for
whom they hold stock of the Company
2
<PAGE>
and to request authority for the execution of proxies. The Company will
reimburse the foregoing persons for their reasonable expenses, upon request.
VOTING SECURITIES
On October 28, 1997, the Record Date for the determination of
shareholders entitled "to notice of and to vote at the Annual Meeting,
15,493,700 shares of the Company's Common Stock ("Common Stock") were
outstanding. Shareholders are entitled to one vote per share on all matters to
be considered at the Meeting.
In accordance with the Company's Articles of Incorporation, one-third
of the shares entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. When with respect to any
action to be taken by shareholders of the corporation Colorado General
Corporation Law requires the vote or concurrence of the holders of two-thirds of
the outstanding shares, of the shares entitled to vote thereon. Except as
otherwise specified by law, if a quorum is present, the affirmative vote of a
majority of the shares represented in person or by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders.
Shareholders are not entitled to cumulative voting, in accordance with Article
Fourth of the Company's Articles of Incorporation. If a quorum is present,
directors are elected by a plurality of the votes cast by the shares entitled to
vote. Votes will be counted as being represented at the Meeting for quorum
purposes but will not have an effect on the vote.
The shareholders shall also vote on the proposals presented by the
Company to approve and ratify the selection of Independent Auditors, and to
consider and act upon one proposal. As to any other business which may properly
come before the Annual Meeting, the proxy holders will vote in accordance with
their best judgment. Management of the Company does not presently know of any
other such business.
The shares represented by an executed proxy will be voted for the
election of directors, or withheld if so specified, and to approve and ratify
the selection of Independent Auditors. If no specification is made in said
proxy, the proxy will be voted "FOR" the nominees listed herein, and "FOR" the
selection and ratification of Smith & Company, Independent Auditors.
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
Directors
The following table sets forth the name, principal occupation, age and,
if applicable, the year in which the individual first became a director for each
nominee, and all persons nominated or chosen to become directors, together with
all positions and offices with the Company held by each such person and term or
period during which each nominee has served, for election as a director at the
Annual Meeting of Shareholders to be held on December 16, 1997.
3
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Served as a
Occupation Age Director Since
- ------------------------------------------- ---------- ------------------------
<S> <C> <C>
Edward S. Fleming, Vice President, 41 December 1996
Chief Financial Officer and Director (1)
Mark F. Walz, Director (2) 40 December 1996
Matthew Hutchins(3) 42 Not applicable
Daniel A. Gillett(4) 35 Not applicable
</TABLE>
(1) Mr. Fleming is currently Acting President, in addition to his position
as Vice President, Chief Financial Officer, and Director. Mr. Fleming
was elected to serve as Vice President and Chief Financial Officer on
December 23, 1996. From 1993 to the present, Mr. Fleming has held the
position of Geologic Science Advisor to the Astronaut Office, Johnson
Space Center, and was primarily responsible for the planning,
coordination and evaluation of military and civilian manned space
observations of the Earth, including the management of all Army
personnel assigned to the Space Center. He has an extensive background
in systems administration of the SUN and UNIX programs, as well as
experience in a wide variety of sophisticated remote sensing software
packages. Prior to 1993, Mr. Fleming held a succession of various
leadership positions of national and military prominence while serving
as an officer in the United States Army for more than 20 years.
(2) Mr. Walz was elected to serve as a member of the Board of Directors on
December 23, 1996. Mr. Walz has held the position of Chief Financial
Officer for Inliner Americas, Inc., a leading company engaged in the
development, application and international licensing of proprietary
trenchless pipeline rehabilitation processes, since January 1997. Prior
to that time, Mr. Walz held the positions of Vice President - Financial
Accounting and Controller for the period October 1995 through December
1996, and November 1994 through September 1995, respectively. Mr. Walz
held various management positions with CRSS, Inc., prior to joining
Inliner Americas, Inc., most recently as Controller of CRSS Architects,
Inc., and as Assistant Director of Internal Audit. He has also held
various management positions with Arthur Andersen & Co. and Ernst &
Young for a combined period of more than nine years. Mr. Walz is a
Certified Public Accountant.
(3) Mr. Hutchins, a nominee for director, is a founding principal of, and
from 1995 to the present has been the chief executive officer of, The
Tiger Group, L.L.C., a full-service strategic business development
consulting firm formed in 1995 and located in Dallas, Texas. The Tiger
Group specializes in market expansion and strategic business
development for its clients. From 1990 to 1994, Mr. Hutchins was
employed by SpectraVision, Inc., a publicly held company engaged in the
business of video entertainment and interactive services for the
lodging and hospitality industry, as Vice President - International and
a member of the senior executive staff, with responsibility for all
aspects of SpectraVision's international operations. From 1990 to 1994,
Mr. Hutchins additionally held the positions of Vice President, Chief
Legal Officer and Corporate Secretary at SpectraVision. Mr. Hutchins is
an attorney at law admitted to practice in the State of Texas.
(4) Mr. Gillett, a nominee for director, has been an affiliate of The Tiger
Group, L.L.C. since July, 1997, and has been a partner in MG Capital, a
Dallas-based financial advisory firm, since May, 1995. From 1989 to
1995, Mr. Gillett served in the Investment Banking Department of CS
First Boston, where he held the position of Vice President. Mr. Gillett
has also served in various positions with PepsiCo, Inc. and Price
Waterhouse. Mr. Gillett received his MBA from Harvard Business School
in 1989.
4
<PAGE>
Meetings of the Board of Directors
Standing Committees. The Company does not have any Standing Committees,
which would consist of an audit, compensation or nominating committee. No
director serves as a member of the Board of Directors of any other company with
a class of securities registered under the Securities Act of 1934, as amended,
or which is registered as an investment company under the Investment Company Act
of 1940.
Attendance at Board Meetings. During the last fiscal year, the Board of
Directors of the Company held three (3) special meetings. The Board of Directors
consisted of three directors during the last fiscal year ended June 30, 1997.
All directors attended all board meetings.
Compensation of Directors
On October 13, 1997, the board of directors resolved to compensate the
sole non-employee director by granting him an option under the Company's 1997
Employee Stock Option Plan to purchase up to 200,000 shares of the Company's
common stock at an option price of $.20 per share. Such option was granted in
consideration for services rendered as a non-employee director for the period
December 1996 through October 1997. In addition, non-employee directors will be
reimbursed for reasonable expenses incurred in connection with any meetings.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors proposes the election of four directors, each to
hold office for a term of one year until the 1998 Annual Meeting and until their
respective successors are elected and qualified. The Board increased the number
of directors from three to five on October 27, 1997. Management is proposing
four (4) nominees to stand for election for the 1998 term, which will leave one
vacancy on the board. This vacancy may be filled by appointment of an additional
director by the board at a later date. If any person other than the nominees
proposed by management is nominated for election as a director, the persons
named in the accompanying Proxy, unless otherwise directed, may, in their
discretion vote so as to elect the maximum number of management nominees. All of
the nominees have consented to serve if elected. Although it is not anticipated
that any of the nominees will decline or be unable to serve, if that should
occur, the proxy holders may, in their discretion, vote for substitute nominees.
If other persons are nominated at the meeting, the proxy holders may, in their
discretion, vote for such other nominees.
The Board of Directors recommends a vote "FOR" the election of the
nominees listed above for election as directors.
5
<PAGE>
Executive Officers
The executive officers of Synaptix Systems Corporation, together with
the years in which such Officers were named to their present office, are as
follows:
<TABLE>
<CAPTION>
Positions held with Year Named to
Name Age the Company Present Position
- ------------------- -------- --------------------------------------- -------------------------
<S> <C> <C>
Alan W. Harvey 37 Former Chairman, President, December 1996
Chief Executive Officer(1) to October 1997
Edward S. Fleming 41 Vice President and Chief Financial December 1996
Officer
Christine N. Croneau 34 Secretary (2) December 1996
Samuel M. Skipper 38 Chairman, President and Chief August 1995 to
Executive Officer, Director (3) December 1996
</TABLE>
(1) Mr. Harvey resigned as a director and officer of the Company on October
17, 1997. Mr. Harvey was elected to serve as Chairman of the Board,
President and Chief Executive Officer effective as of December 23,
1996. Prior to joining the Company, Mr. Harvey held the position of
Vice President Development of Synaptix, a company that provides
management consulting services with an emphasis in the marketing and
development of Oracle Financials and Oracle EIS solutions through large
system integrators to non-Fortune 1000 companies. From 1992 to 1993,
Mr. Harvey held the position of Oil & Gas Practice Director at Oracle
Corporation, and was responsible for comprehensive consulting and
vertical software integration services, as well as the creation and
development of Oracle's Environmental Information System. From 1991 to
1992, Mr. Harvey served as Director of MIS at Exlog Inc., a subsidiary
of Baker Hughes, and was responsible for the implementation of an MIS
strategic plan to implement Oracle Financials worldwide.
(2) Ms. Croneau was appointed to serve as Secretary of the Company on
December 15, 1996. During the past five years, Ms. Croneau has held
various management positions with Lockheed-Martin Services, Inc. in
Houston, Texas, and most recently held the position of Senior
Engineer/Biomedical Engineer. Prior to that time, Ms. Croneau held the
position of Research Assistant at Baylor College of Medicine.
(3) Mr. Skipper served as Chairman of the Board, President and Chief
Executive Officer for the period August 1995 through December 23, 1996.
Each of the Executive Officers serves at the pleasure of the Board of
Directors.
6
<PAGE>
SUMMARY COMPENSATION TABLE
Executive Compensation
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by, or paid to, the Company's
Chief Executive Officer during the fiscal year ended June 30, 1997 and for the
period through October 28, 1997. The Company did not compensate any other of its
executive officers, on an annual basis, in excess of $60,000.
<TABLE>
<CAPTION>
Annual Compensation
Name and Principal Other Annual All other
Position Year Salary Bonus Compensation Compensation
($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Alan W. Harvey, former 1997 $10,596 0 0 0
Chairman, President and
Chief Executive Officer
</TABLE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Incentive Stock Option Plan and Non-Statutory Stock Option Plan
The Company has adopted an Incentive Stock Option Plan and a
Non-Statutory Stock Option Plan (together, the "Option Plan"), and has
registered the stock reserved for the plan pursuant to a Registration Statement
on Form S-8, filed with the Securities and Exchange Commission. The Option Plan
provides that the Company may award stock options to employees, including
non-employee directors of the Company. The Company intends to make such awards
to employees in order to induce qualified persons to accept employment with the
Company, and to reward key personnel of the Company in lieu of cash bonuses. A
total of four million shares of the Company's Common Stock has been reserved for
issuance pursuant to the Compensation Plan. Of this amount, three million shares
have been awarded to Alan W. Harvey, and were exercised immediately.
Employee Stock Compensation Plan
The Company has adopted an Employee Stock Compensation Plan (the
"Compensation Plan"), and has registered the stock reserved for the plan
pursuant to a Registration Statement on Form S-8, filed with the Securities and
Exchange Commission. The Compensation Plan provides that the Company may issue
stock awards to employees, including consultants who have provided bona fide
services to the Company not connected to any financing activities. The Company
intends to make such awards to employees and consultants for services rendered
on behalf of the Company, in lieu of cash payments otherwise owing to these
individuals, and to make future awards as the Board of Directors determines in
order to induce qualified persons to accept employment with the Company, and to
reward key personnel of the Company in lieu of cash bonuses. A total of four
million shares of the Company's Common Stock has been reserved for issuance
pursuant to the Compensation Plan.
7
<PAGE>
In May, 1997, the Company issued 3,750,000 shares of the Company's common stock
pursuant to this plan for services rendered and expenses paid.
Other Compensation of Executive Officers
During fiscal 1997, the Company provided travel and entertainment
expenses to its executive officers and key employees. The aggregate amount of
such compensation, as to any executive officer or key employee, did not exceed
the lesser of $25,000 or 10% of the cash compensation paid to such executive
officer or key employee, nor did the aggregate amount of such other compensation
exceed 10% of the cash compensation paid to all executive officers or key
employees as a group.
On January 10, 1997, Alan W. Harvey was granted an option to purchase
up to 1,750,000 shares of common stock under the Company's 1997 Non-Statutory
Stock Option Plan, in addition to being granted a straight option to purchase up
to 3,000,000 shares of the Company's common stock on May 17, 1997. Mr. Harvey
exercised his option to purchase up to 1,750,000 and 3,000,000 shares of the
Company's common stock at an exercise price of $.005 per share on May 17, 1997.
Of the shares exercised under the options, 1,750,000 shares are held in the name
of Variable Resources, Inc., 750,000 shares were held in the name of Alan W.
Harvey, 750,000 shares are held in the name of Highbrook Management Corp.,
750,000 shares were gifted to Tropicana International, Inc., and 750,000 shares
were gifted to Youngstown Worldwide, Inc. Arley L. Harvey, father of Alan W.
Harvey, is the Corporate Agent for Tropicana International, Inc. and Youngstown
Worldwide, Inc. Arley L. Harvey and Alan Harvey, as a group, may be deemed to be
a controlling person of Synaptix by virtue of their share ownership.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the grant of
options under the Company's 1997 Non-Statutory Stock Option Plan and Incentive
Stock Option Plan during the fiscal year ended June 30, 1997, and subsequent to
fiscal year end.
<TABLE>
<CAPTION>
Number of Percent of total Market
Securities options granted Price on Grant
underlying to employees in Exercise or Grant Expiration Date
options granted fiscal year base price Date Date Value(1)
Name (#) (%) ($/Share) ($/Share)
<S> <C> <C> <C> <C> <C> <C>
Alan W. Harvey 4,750,000 88.59 $.005 N/A 5/1/2002 $14,250
</TABLE>
(1) The options shown were exercised immediately upon grant, and prior to
commencement of trading in the Company's stock.
8
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and FYE Option Values
Number of securities Value of unexercised
Shares underlying unexercised in-the-money options
acquired Value options at fiscal year-end at fiscal year-end
Name on Exercise Realized Exercisable/unexercisable Exercisable/unexercisable
(#) ($) (#) ($)
<S> <C> <C> <C> <C>
Alan W. Harvey 4,750,000 $14,250(1) 0/0 0/0
</TABLE>
(1) The options shown were exercised immediately upon grant, and prior to
commencement of trading in the Company's stock.
SECURITY OWNERSHIP OF
MANAGEMENT AND BENEFICIAL OWNERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of October 28, 1997, by
each person or entity known to the Company to own beneficially 5% or more of the
outstanding shares of Common Stock, and the beneficial ownership of the
Company's Common Stock, and all directors and executive officers as a group. No
director or executive officer personally owns any of the Company's Voting
Preferred Stock.
<TABLE>
<CAPTION>
Amount and
Nature of Percent Percent of Total
Name and Address of Beneficial of Outstanding
Title of Class Beneficial Owner Interest Class Voting Securities
- ------------------ ----------------------------- ----------------- ---------- ---------------------
<S> <C> <C> <C> <C>
$.003 par value Alan W. Harvey(1) 1,865,500(D) 12.04% 12.04%
Common Stock 2450 South Shore Drive
Suite 210
League City, Texas 77573
$.003 par value Swallen Investments Corp. 3,000,000(D) 19.36% 19.36%
Common Stock 7507 Dawn Mist Court
Sugarland, Texas 77479
$.003 par value Variable Resources, Inc.(1) 1,750,000(I) 11.29% 11.29%
Common Stock P.O. Box 1338
League City, Texas 77479
$.003 par value Omaha Capital Corp. 1,000,000(D) 6.45% 6.45%
Common Stock 233 College Street
Suite 151
Toronto, Ontario M5T 3R5
$.003 par value Georgia Capital Corp. 1,000,000(D) 6.45% 6.45%
Common Stock 2938 Dundas St. West
Suite 70567
Toronto, Ontario M6P 1Y8
$.003 par value Highbrook Management 750,000(I) 4.84% 4.84%
Common Stock Corp.(1)
$.003 par value Youngstown Worldwide, 750,000(I) 4.84% 4.84%
Common Stock Ltd.(2)
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$.003 par value Tropicana International 750,000(I) 4.84% 4.84%
Common Stock Corp.(2 )
$.003 par value Edward S. Fleming(3) 350,000(D) 2.26% 2.26%
Common Stock
$.003 par value Mark F. Walz(4) 200,000(D) 1.29% 1.29%
Common Stock
All directors and 550,000 3.55% 3.55%
officers as a group,
including the entities
named above(2)
</TABLE>
Unless otherwise indicated in the footnotes below, each person or
entity has sole voting and dispositive power over the shares indicated.
(1) Alan W. Harvey beneficially holds directly 1,865,000 shares of common
stock in his name, and indirectly holds 1,750,000 shares as corporate
agent of Variable Resources, Inc., and indirectly holds 750,000 shares
of common stock as corporate agent of Highbrook Management Corp. Arley
L. Harvey and Alan Harvey, as a group, may be deemed to be a
controlling person of Synaptix by virtue of their share ownership. See
"EXECUTIVE COMPENSATION AND OTHER INFORMATION -- Option Grants in Last
Fiscal Year."
(2) Arley L. Harvey beneficially holds indirectly, 750,000 shares as
corporate agent of Tropicana International Corp., and 750,000 shares of
Youngstown Worldwide, Ltd., which shares were gifted to Arley L. Harvey
from Alan W. Harvey.
Arley L. Harvey and Alan Harvey, as a group, may be deemed to be a
controlling person of Synaptix by virtue of their share ownership.
(3) Edward S. Fleming was granted an option to purchase up to 350,000
shares of the Company's common stock under the Company's 1997 Employee
Stock Option Plan at an option price of $.20 per share in consideration
of services rendered as an officer and director of the Company for the
period December 1996 through October 1997.
(4) Mark F. Walz was granted an option to purchase up to 200,000 shares of
the Company's common stock under the Company 1997 Employee Stock Option
Plan at an option price of $.20 per share in consideration of services
rendered as a director of the Company for the period December 1996
through October 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Business Relationships.
Transactions with Management and Others
No executive officer, director, stockholder known to the Company to
own, beneficially or of record, more than 5% of the Company's Common Stock, or
any member of the immediate family of any of those persons has engaged since the
beginning of the Company's last fiscal year ended June 30, 1997, or proposes to
engage in the future, in any transaction or series of similar transactions with
the Company, directly or indirectly through a separate entity, in which the
amount involved exceeded or will exceed $60,000.
10
<PAGE>
No director of the Company has served during the last fiscal year or
currently serves as a partner or executive officer of any investment banking
firm that performed services for the Company during the last fiscal year ended
June 30, 1997, or that the Company proposes to have perform services during the
current year. The Company knows of no other relationship between any director
and the Company substantially similar in nature and scope to those described
above.
Certain Business Relationships
Certain shareholders of the Company are also shareholders of Synaptix
Systems Corporation ("Synaptix Florida"), a Florida corporation not affiliated
with the Company. Synaptix Florida was formed in 1996 by Alan Harvey, the former
president of the Company, with the intention of acquiring the Old Synaptix
assets and developing the software. Funds were raised by Synaptix Florida from
third-party investors for this purpose, although to the Company's best knowledge
Synaptix Florida never entered into any actual agreement to acquire the Old
Synaptix assets from the owner.
In December 1996, Mr. Harvey acquired control of the Company and
contracted with Swallen Investment Corp. to acquire the Old Synaptix assets. Mr.
Harvey, in his personal capacity, represented to certain Synaptix Florida
shareholders that they would receive stock in the Company in place of their
Synaptix Florida shares; these representations and the existence of Synaptix
Florida were not disclosed to the Board of Directors by Mr. Harvey until June,
1997. At that time, the Company wrote to the shareholders of Synaptix Florida to
inquire as to their interest in exchanging their shares for Company stock, in
anticipation of a projected merger of the two companies. No offer to exchange
shares was made at that time. Since that date, the Company learned that Synaptix
Florida had substantial undisclosed liabilities and has abandoned plans to merge
the companies. The Company has not issued any shares of its stock to any
Synaptix Florida shareholders in exchange for any Synaptix Florida shares.
Synaptix Florida is not currently conducting any operations. Alan
Harvey remains the president of that company. The funds raised by Synaptix
Florida apparently were expended in anticipation of the acquisition of the
assets. Mr. Harvey has alleged, on behalf of Synaptix Florida, that some portion
of these funds were loaned or otherwise contributed to the Company. The Company
cannot confirm any such loans or contributions of funds from Synaptix Florida.
The Company has determined that potential claims by Synaptix Florida or
its shareholders could be asserted against Alan Harvey, and potentially against
the Company as well, in connection with the Company's acquisition of the Old
Synaptix assets and the alleged loans or contribution of Synaptix Florida funds
to the Company, although the Company does not believe that any such claim would
be upheld as against it. In order to settle any such claims, Mr. Arley L.
Harvey, Alan Harvey's father, has agreed to have Variable Resources, Inc., a
company controlled by Arley L. Harvey, acquire all rights to any derivative
claims from the shareholders of Synaptix Florida in exchange for shares of the
Company's stock held by Variable Resources, Inc., and to provide the Company
with a complete release. In addition, in September, 1997, the Company entered
into a separate Release Agreement with Synaptix Florida, settling all claims for
alleged loans or contributions of funds to the Company and providing for a
general release of claims between the two companies. As a result of
11
<PAGE>
these actions, Management does not believe that these potential claims will have
any material adverse effect upon the Company.
Indebtedness of Management.
During the Company's last fiscal year, no executive officer, director,
any member of the immediate family or any of those persons, any corporation or
organization for which any of those persons serve as an executive officer or
partner or which they own directly or indirectly 10% or more of its equity
securities, or any trust or other estate in which any of the Company's executive
officers or directors have a substantial beneficial interest or for which they
serve as a trustee or in a similar capacity, has owed the Company at any time
since the beginning of its last fiscal year more than $60,000.
Termination and Change In Control Arrangements.
The Company has no compensatory plan or arrangement with respect to its
Executive Officers that would result from the resignation, retirement or
termination of any Executive Officer's employment with the Company, from a
change in control of the Company, or from a change in an Executive Officer's
responsibilities following a change in control of the Company.
PROPOSAL 2
RATIFICATION AND APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has reappointed the firm of Smith & Company,
independent public accountants, as the Company's auditors for the fiscal year
ending June 30, 1998, subject to the approval of and ratification by the
shareholders. Smith & Company has served as the Company's auditors for a period
of four years, including the fiscal year most recently completed. The Company
does not expect any representatives of Smith & Company to attend the annual
meeting.
The Board of Directors recommends a vote "FOR" the approval and
ratification of the reappointment of Smith & Company.
Vote Required
Approval of the ratification of the appointment of Smith & Company as
the independent auditors of the Company requires the affirmative vote of the
holders of a majority of the shares of the Company's Common Stock present at the
Meeting, in person or by proxy, voting as a single class.
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SECTION 16 COMPLIANCE
Based upon a review of the original Forms 3 and 4 furnished to the
Company during its last fiscal year and the original and amended Forms 5
furnished to the Company with regard to its last fiscal year, the Company does
not know of any person who failed to file on a timely basis any reports required
by Section 16(a) of the Securities Exchange Act of 1934, as amended, except for
(1) the Form 4 for Alan W. Harvey to reflect the exercise of options granted to
Mr. Harvey in the amount of 4,750,000 shares.
SHAREHOLDER PROPOSALS FOR ANNUAL MEETING
From time to time the shareholders of the Company submit proposals
which they believe should be voted upon by the shareholders. The Securities and
Exchange Commission has adopted regulations which govern the inclusion of such
proposals in the Company's annual proxy materials. All such proposals must be
submitted to the Corporate Secretary not later than July 15, 1998, in order to
be considered for inclusion in the proxy materials for the Company's Annual
Meeting of Shareholders to be held in December 1998.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Certificate of Incorporation of the Company provides for the
indemnification of the officers, directors and other agents and employees of the
Company to the fullest extent allowed under Colorado law against liability for
any losses, expenses or damages (including costs and attorneys' fees) incurred
by them, or any of them, or by the Company resulting from errors in judgment or
omissions. Generally this will cover all actions or omissions by such
individuals, unless gross negligence, gross misconduct or breach of fiduciary
duty is involved on their part. Therefore, shareholders of the Company may have
a more limited right of action than they would have absent such limitation in
the Certificate of Incorporation. Investors should note that indemnification of
the officers, directors and other agents and employees of the Company could
deplete the assets of the Company. INSOFAR AS INDEMNIFICATION FOR LIABILITIES
ARISING UNDER THE SECURITIES ACT OF 1933 MAY BE PERMITTED TO ANY PERSON OR
PERSONS PURSUANT TO THE TERMS OF THE ARTICLES OF INCORPORATION, IT IS THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THAT ACT AND IS THEREFORE UNENFORCEABLE.
OTHER BUSINESS
The Company does not intend to present any other business for action at
the Annual Meeting and does not know of any other business intended to be
presented by others. Should any other matters come before the meeting, the
Proxies will be voted by the persons authorized therein, or their substitutes,
in accordance with their best judgment on such matters.
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ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1997, as filed with the Securities and Exchange Commission, is being
mailed concurrently with the mailing of this Proxy Statement to shareholders of
record on October 28, 1997. The cost of furnishing such Annual Report on Form
10-KSB and of making this proxy solicitation will be borne by the Company.
Copies of exhibits to the Annual Report on Form 10-KSB are available, but a
reasonable handling fee will be charged to the requesting shareholder. Each
written request must set forth a good faith representation that, as of the
record date, the person making the request is a beneficial owner of the
Company's Common Stock and entitled to vote at the Annual Meeting. Shareholders
should direct their written request to the Company, Attention: Secretary, 2450
South Shore Drive, Suite 210, League City, Texas 77573.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Edward S. Fleming
Dated: November 3, 1997 Edward S. Fleming, Acting President
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SYNAPTIX SYSTEMS CORPORATION
2450 South Shore Boulevard, Suite 210
League City, Texas 77573
VOTING BALLOT
The undersigned hereby appoints Edward S. Fleming and Mark F. Walz as
Proxies, each with power to appoint his substitute, to represent and to vote on
behalf of the undersigned all shares of Common Stock which the undersigned is
entitled to vote at the Annual Meeting of Shareholders scheduled to be held at
the principal executive offices of Synaptix Systems Corporation, League City,
Texas, on December 16, 1997, and to any and all adjournments thereof, with all
powers the undersigned would possess if personally present and particularly with
respect to Proposals 1 and 2, in their discretion, and upon such other business
as may properly come before the meeting. This proxy, when properly executed,
will be voted in the manner directed herein by the undersigned shareholder. If
no direction is made, this proxy will be voted "FOR" Proposals 1 and 2, and in
accordance with the best judgment of the proxies on any other matters which may
properly come before the meeting.
1. ELECTION OF DIRECTORS
NOMINEES: Edward S. Fleming, Mark F. Walz, Matthew Hutchins and Daniel
A. Gillett. (INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the space
below.)
[ ] FOR all nominees listed, except [ ] WITHHOLD AUTHORITY
as marked to the contrary to vote for all nominees
listed
2. APPROVE AND RATIFY THE SELECTION OF SMITH & COMPANY,
AS THE CORPORATION'S INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT OF THE MEETING.
DATED:
(Signature)
(Signature if held jointly)
Please sign exactly as name appears in type. When the shares are held for joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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