ECOS GROUP, INC.
1000 SOUTHERN BOULEVARD, SUITE 200
WEST PALM BEACH, FLORIDA 33405
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 8, 1997
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ECOS
Group, Inc., a Colorado corporation (the "Company"), will be held on Monday
December 8, 1997, beginning at 3:00 o'clock P.M., Eastern Time, at the Palm
Beach Airport Hilton, 150 Australian Avenue, West Palm Beach, Florida for the
following purposes, which are set forth more completely in the accompanying
proxy statement:
(1) To elect six directors representing the Common Stock
shareholders;
(2) To approve an up to one-for-eight reverse split of the
Company's Common Stock the date and final divisor to be at the
discretion of the Board of Directors; and
(3) To approve an increase in the authorized post-split shares of
Common Stock to 75,000,000.
Pursuant to the Company's By-laws, the Board of Directors has fixed the
close of business on October 10, 1997 as the record date for the determination
of shareholders entitled to notice of and to vote at the Annual Meeting. Only
record holders of the Company's Common Stock are entitled to notice of and to
vote at the Annual Meeting. A form of proxy is enclosed.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH DOES NOT
REQUIRE POSTAGE IF MAILED WITHIN THE UNITED STATES OF AMERICA.
BY ORDER OF THE BOARD OF DIRECTORS
Michael Baker, Secretary
West Palm Beach, Florida
November 27, 1997
<PAGE>
ECOS GROUP, INC.
1000 SOUTHERN BOULEVARD, SUITE 200
WEST PALM BEACH, FLORIDA 33405
------------------------
PROXY STATEMENT
------------------------
GENERAL
The enclosed proxy is solicited by the Board of Directors of ECOS Group,
Inc. a Colorado corporation, for use at the Annual Meeting of Shareholders to be
held on Monday December 8, 1997, beginning at 3:00 o'clock P.M., Eastern Time,
at the Palm Beach Airport Hilton, 150 Australian Avenue, West Palm Beach,
Florida. The approximate date on which this Statement and the enclosed proxy
were first sent to shareholders was November 27, 1997. You are urged to indicate
your vote on each matter in the space provided. Proxies will be voted as marked.
If no space is marked, a proxy will be voted by the persons therein named at the
Annual Meeting: (i) the election of the six nominees for director, (ii) the
approval of the up to one-for-eight reverse split of the Company's Common Stock
the date and final divisor to be at the discretion of the Board of Directors;
and (iii) the approval of the increase in authorized number of post-split shares
The cost of the Board of Directors' proxy solicitation will be borne by the
Company. In addition to solicitation by mail, directors, executive officers and
employees of the Company may solicit proxies personally and by telephone,
telecopy and telegraph, all without extra compensation.
At the record date for the Annual Meeting, the close of business on October
10, 1997, the Company had outstanding 17,600,026 shares of Common Stock, $.012
par value per share (the "Common Stock"). Each share of Common Stock entitles
the holder thereof on the record date to one vote on each matter submitted to a
vote of shareholders. Only Common Stock shareholders of record at the close of
business on October 10, 1997 are entitled to notice of and to vote at the Annual
Meeting. In the event that there are not sufficient votes in attendance at the
meeting in person or by proxy for approval of any of the matters to be voted
upon at the Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies. The quorum necessary to conduct business
at the Annual Meeting consists of the holders of a majority of the issued and
outstanding shares of Common Stock present in person or by proxy. The six
persons receiving the highest number of votes for director by holders of the
Common Stock will be elected as directors.
A SHAREHOLDER WHO SUBMITS A PROXY ON THE ACCOMPANYING FORM HAS THE POWER TO
REVOKE IT AT ANY TIME PRIOR TO ITS USE BY DELIVERING A WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY, BY EXECUTING A LATER DATED PROXY OR BY ATTENDING THE
MEETING AND VOTING IN PERSON. PROXIES THAT ARE PROPERLY EXECUTED WILL BE VOTED
FOR THE PROPOSALS SET FORTH THEREON AND IN FAVOR OF THE ELECTION OF THE SIX
NOMINEES FOR DIRECTOR NAMED HEREIN.
SECURITY INTEREST OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT
The following table sets forth certain information, as of October 10, 1997,
regarding the Company's Common Stock and the Company's Series B Convertible
Preferred Stock (the "Series B Preferred Stock") owned of record or beneficially
by (i) each shareholder who is known by the Company to beneficially own in
excess of 5% of the outstanding shares of Common Stock or of the Series B
Preferred Stock, (ii) each director and the executive officer named in the
Summary Compensation Table below, and (iii) all directors and executive officers
as a group. Except as otherwise indicated, each shareholder listed below has
sole voting and investment power with respect to shares beneficially owned by
such person.
In accordance with Rule 13d-3, promulgated under the Securities Exchange
Act of 1934, as amended, shares that are not outstanding but that are issuable
within 60 days upon exercise of outstanding options, warrants, rights or
conversion privileges or which are otherwise required by Rule 13d-3 to be
included have been deemed to be outstanding for the purpose of computing the
percentage of outstanding shares owned by the person owning such rights and all
directors and executive officers as a group, but have not been deemed
outstanding for the purpose
<PAGE>
of computing the percentage for any other person. As of October 10, 1997, there
were 17,600,026 shares of Common Stock issued and outstanding and 1,000,000
shares of Series B Preferred Stock issued and outstanding.
<TABLE>
<CAPTION>
SERIES B
COMMON STOCK PREFERRED STOCK
------------------------ -------------------------
NAME AND ADDRESS AMOUNT % OF CLASS AMOUNT % OF CLASS
---------------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
5% HOLDER
Strategica Capital Corporation................................. 2,540,193(1) 14.4%
1221 Brickell Avenue
Suite 2600
Miami, Florida
COMMON STOCK DIRECTORS
Wendell R. Anderson, Esq....................................... 30,000(2) *
720 Baker Building
Minneapolis, MN 55403
Luis De la Cruz
241 Sevilla Avenue Suite 805
Coral Gables, Florida 33134
Leon S. Eplan.................................................. 37,500(3) *
55 Trinity Avenue, S.W.
Suite 1450
Atlanta, GA 30335
Charles C. Evans............................................... 450,000(4) 2.52%
99 Southeast Fifth Street
Fourth Floor
Miami, Florida 33131
John B. McCracken, Esq.
505 S. Flagler Drive
7th Floor
West Palm Beach, FL 33401
Joseph F. Startari
Biotechna Environmental Limited
2600 McCormick Drive
One Prestige Place
Clearwater, Florida 33619
SERIES B PREFERRED STOCK DIRECTORS
Michael S. Klein............................................... 3,585,723(5) 18.1% 275,880 27.6%
100 Shoreline Highway
Suite A190
Mill Valley, CA 94941
Enrique A. Tomeu............................................... 8,233,650(6) 35.2% 633,365 63.3%
1000 Southern Blvd.
Suite 300
West Palm Beach, FL 33405
All Directors, and Executive Officers as a Group............... 12,429,438(7) 55.52% 909,245 90.9%
(15 persons)
</TABLE>
- ------------------
* Less than 1%.
(1) Includes (i) 175,000 shares of Common Stock issuable under warrants granted
by a predecessor corporation and (ii) 761,731 shares of Series A Convertible
Preferred Stock issuable under warrants.
(2) Represents 30,000 shares of Common Stock issuable under options.
(3) Represents 37,500 shares of Common Stock issuable under options.
(4) Includes 11,200 shares of Common Stock issuable under options.
(5) Includes 2,758,800 shares of Common Stock issuable upon conversion of
275,880 shares of the Series B Preferred Stock.
(6) Includes conversion of 6,333,650 shares of Common Stock issuable upon
conversion of 633,365 shares of the Series B Preferred Stock.
(7) Includes an aggregate of 87,000 shares of Common Stock issuable under
options and 9,092,450 shares of Common Stock issuable upon conversion of
909,245 shares of the Series B Preferred Stock.
2
<PAGE>
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who beneficially own more than
10% of the Company's Common Stock, to file reports of securities ownership and
changes in such ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors and greater than 10% beneficial owners also are
required by rules promulgated by the SEC to furnish the Company with copies of
all Section 16(a) forms they file. Based solely upon a review of the copies of
such forms furnished to the Company and written representations that no other
reports were required, the Company believes that, for the fiscal year ended
March 31, 1997, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with;
except that Dr. Charles Evans and Antonio L. Contreras, Jr. did not file timely
Forms 4 with respect to an aggregate of 43,200 shares sold.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth information about the compensation paid or
accrued by the Company during the fiscal years ended March 31, 1997, 1996 and
1995 to the Company's Chief Executive Officer, the only employee whose aggregate
compensation exceeded $100,000 for the fiscal year ended March 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
--------------
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------------------- UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
------------------ --------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
Enrique A. Tomeu,.................................................... 1997 $ 102,800 $ 0 $ 0
President and Chief
Executive Officer (1)
John C. "Jack" Reynolds,............................................. 1997 $ 52,500 $ 0 0
Interim President and Chief 1996 $ 164,500 $ 0 200,000
Executive Officer(2) 1995 $ 7,000 $ 0 31,250
</TABLE>
- ------------------
(1) Mr. Tomeu became President of the Company on July 10, 1996.
(2) Mr. Reynolds was employed as Interim President of the Company through July
11, 1996 pursuant to a consulting arrangement with R.J. Quintero & Co.
("Quintero"). None of the above compensation was paid to Mr. Reynolds. All
compensation payments and option issuance's were made to directly Quintero.
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted during the fiscal year ended March 31, 1997 for
those persons named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the value of unexercised
stock options at the end of the 1997 fiscal year for those persons named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT FISCAL
ACQUIRED ON VALUE FISCAL YEAR END YEAR END ($)
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Enrique A. Tomeu(1).................... 0 0 0 0
John C. "Jack" Reynolds(2)............. 0 0 231,250 / 0 $98,581/ $0
</TABLE>
3
<PAGE>
- ------------------
(1) Mr. Tomeu became President of the Company on July 10, 1996.
(2) Mr. Reynolds was employed as Interim President of the Company through July
11, 1996 pursuant to a consulting arrangement with R.J. Quintero & Co.
("Quintero"). None of the above compensation was paid to Mr. Reynolds. All
compensation payments and option issuance's were made to directly Quintero.
COMPENSATION AGREEMENTS
Enrique A. Tomeu is employed as the chief executive officer and president
of the Company pursuant to a four-year employment agreement dated as of July 8,
1996. As compensation thereunder, Mr. Tomeu receives an annual salary of
$150,000, an automobile, a $900 per month non-accountable expense allowance, an
expense account for business travel and other expenses, six weeks' paid vacation
annually, health insurance for himself and his family, and a $3,000,000 life
insurance policy on his life payable to his designees. Upon termination of his
employment with the Company for other than "cause" (as defined in the
agreement), Mr. Tomeu is entitled to convert any Series B Convertible Preferred
Stock which he then may own to Common Stock as though the earnouts had been
earned. As a part of his employment agreement, Mr. Tomeu has agreed not to
compete with the Company's business for a period of one year following his
voluntary resignation or the termination of his employment for cause.
Dr. Charles Evans is employed by the Company pursuant to a three-year
employment agreement and a three-year consulting agreement both entered into on
July 3, 1996. The employment agreement provides for an annual salary of $24,000,
a $500 auto allowance, an expense account for business travel and other
expenses, and eight weeks' paid vacation annually. The consulting agreement
provides for annual fees of $50,000 and an expense account for business travel
and other expenses. In addition, Dr. Evans may be entitled to a bonus based on
the performance of the Company in the discretion of the Board of Directors. Dr.
Evans has agreed not to compete with the Company's business for a period of one
year following his voluntary resignation or the termination of his employment
with the Company for "cause."
CERTAIN TRANSACTIONS
On October 23, 1997, the Company disposed of its remediation subsidiary
American Remedial Technologies, Inc. ("ART") by transferring all of the Common
Stock of ART to Messrs. Mark Patton, Fred Miller and Joe Torres Jr., the holders
of a $500,000 promissory note owed by the Company in order to settle default on
a note (see below). The Company originally purchased ART for $7,500,000.
In July 1995, the Company borrowed $85,000 from Lisa Robbins, the spouse of
Dr. Charles Evans, the Chairman of the Board of Directors. The note is due upon
demand and bears interest at 12% per annum. Dr. Evans disclaims any beneficial
interest in the loan. The present balance on this note is $50,000.
ART received a loan, represented by a note dated June 30, 1996, from
Transportation Financial Services, Inc., an entity owned by Mr. Enrique Tomeu,
the Company's Chief Executive Officer and one of its directors. This note had an
original balance of $495,000 and a 13.5% per annum interest rate. The
outstanding balance as of March 31, 1997 was $303,000. On October 21, 1997, the
balance of the note was forgiven in return for 1,889,800 shares of Common Stock
of the Company, the note was canceled.
In June 1996, ART acquired a used thermal desorption plant located at the
Port of Los Angeles for a purchase price of $600,000. This equipment was
acquired on behalf of the company by Mr. Sam Klein, the father of one of the
company's directors and shareholders, pursuant to a demand note for $515,000
bearing interest at 12% per annum. This note was secured by the acquired plant.
The outstanding balance as of March 31, 1997 was $515,000. On September 23, 1997
the note was declared in default for nonpayment of principal and interest. The
obligations of this note were assumed by the acquirer of ART.
On December 31, 1996 the Company borrowed $1,000,000 from Mr. Michael
Klein, a shareholder and director of the Company, pursuant to a one-year
promissory note bearing interest at 14% per annum. For the first three months of
the note, while the Company sought alternative long-term financing, the note was
unsecured with monthly interest only payments. Commencing March 1997, monthly
payments of principal and interest were required until maturity in December
1997, and the note was secured with all trade accounts receivable of the
4
<PAGE>
Company. This note was repaid on May 5, 1997 from the proceeds of a $1,000,000
loan received from Mr. Sam Klein. This latter loan was a three-month promissory
note maturing on August 5, 1997, with monthly interest only payments at 12% per
annum. The note was secured by all trade receivables of the Company. On
September 23, 1997 the Company was notified of its default on this note for
nonpayment of principal and interest. The Company settled its default by
delivering a $608,000 promissory note dated October 29, 1997 in favor of Sam
Klein, bearing interest at 12% per annum with quarterly principal and interest
payments and issuing 2,666,667 shares of the Company's Common Stock to Sam
Klein. This new note and issuance of stock extinguished the $1,000,000
promissory note dated May 5, 1997.
On June 18, 1997, ART obtained a $500,000 promissory note from Sam Klein to
fund its continuing operations. This note, bearing interest at 12% per annum,
was due on June 18, 1998. The note was secured by all of the Common Stock of ART
and was required to be repaid from expected proceeds from a $2,200,000
convertible equity offering the Company was pursuing. The convertible equity
offering never materialized. On September 23, 1997 ART was notified that this
$500,000 note was in default for nonpayment of interest. On October 23, 1997,
Sam Klein sold the note to a third party. In settlement of all amounts owed
under the note, the Company transferred all the common stock of ART to the
holder of the note, thereby effectively disposing of ART and extinguishing the
obligation.
PROPOSAL 1.
ELECTION OF DIRECTORS
The Board of Directors of the Company has nominated the following persons
to serve as directors representing the Common Stock shareholders:
<TABLE>
<CAPTION>
IN OFFICE
NAME AGE POSITION(S) SINCE
---- --- ----------- ----------
<S> <C> <C> <C>
Wendell R. Anderson............................ 64 Director 1994
Luis De la Cruz................................ 44 Director 1996
Leon S. Eplan.................................. 68 Director 1993
Dr. Charles C. Evans........................... 40 Chairman of the Board of Directors 1993
John B. McCracken.............................. 51 Director 1996
Joseph F. Startari............................. 49 Director 1996
</TABLE>
In addition to the directors representing the Common Stock shareholders,
the Articles of Incorporation of the Company provide that the holders of the
Series B Preferred Stock may elect six directors; presently there are four
vacancies in this regard. The two directors representing the Series B Preferred
Stock shareholders are listed below, the Common Stock shareholders are not
entitled to vote for preferred directors:
SERIES B PREFERRED STOCK DIRECTORS
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Michael S. Klein..................................... 42 Director
Enrique A. Tomeu..................................... 42 Chief Executive Officer, President and Director
</TABLE>
BIOGRAPHIES OF NOMINEES:
WENDELL R. ANDERSON has been Of Counsel to the law firm of Larkin, Hoffman,
Daly & Lindgren, Ltd., based in Minnesota, since 1979. He is also a director of
the following public companies: Fingerhut Corp. (since 1991), National City Bank
Corporation (since 1981) and Super Mail International (since 1994). Mr. Anderson
is a former United States Senator and Governor of the state of Minnesota.
LUIS DE LA CRUZ since 1990 has been president and a shareholder of De la
Cruz & Cutler, P.A., a law firm in Coral Gables, Florida. His principal areas of
practice are real estate and commercial transactions. He has a B.S. degree in
civil engineering and a J.D. degree from the University of Florida.
5
<PAGE>
LEON S. EPLAN has been the Commissioner of Planning and Development of the
City of Atlanta since October, 1991 and assisted in the preparations of the 1996
Summer Olympic Games. In addition, Mr. Eplan is a part-time professor at the
Graduate School of Planning at the Georgia Institute of Technology. For over 13
years prior to October, 1991, Mr. Eplan had been employed by Leon S. Eplan &
Associates, an urban planning consulting firm of which he is the principal. Mr.
Eplan is a member of Board's Audit Committee.
DR. CHARLES C. EVANS joined the Company as Chairman of the Board of
Directors in January, 1993. Until March, 1995, Dr. Evans served as the President
and Chief Executive Officer of the Company and also as the President of Evans
Environmental, a subsidiary of the Company. Since 1986 and until March 1995 Dr.
Evans had been employed as president of one or more of the Company's
subsidiaries.
JOHN B. MCCRACKEN is a shareholder of Jones, Foster, Johnston & Stubbs,
P.A., a law firm in West Palm Beach, Florida, with which he has been associated
since 1970. His areas of practice are corporate, real estate, and estate
planning. Mr. McCracken has served as president of the Palm Beach County Bar
Association and as president of the Young Lawyers Section of the Palm Beach
County Bar Association. He has also twice served as chairman of the Florida Bar
Grievance Committee and as a member of the Board of Governors of the Young
Lawyers Section of the Florida Bar. He has served as commissioner of the Port of
Palm Beach, chairman of the Young Friends of St. Mary's Hospital, and as Senior
Warden of Holy Trinity Episcopal Church. He is a graduate of Tufts University
and Vanderbilt University School of Law.
JOSEPH F. STARTARI from December, 1995 has been president and CEO of
Biotechna Environmental Limited, an environmental technology company, traded on
the stock exchange in Alberta, Canada since December 1995. From June, 1978 until
December, 1995 Mr. Startari worked in a variety of positions in the Ordinance
Division of Olin Corporation, a defense contractor. Most recently, from
February, 1995 until he left Olin Corporation, he was Vice President-Recovery
Systems and Executive Vice President of Olin Services, Inc.
MICHAEL S. KLEIN from 1987 to 1995 was chairman and chief executive officer
of ViTel International, a company specializing in network facsimile services.
Since January, 1995 Mr. Klein has devoted his time to a variety of public
service and environmental conservation activities.
ENRIQUE A. TOMEU became a member of the board in July, 1996, at which time
he was elected President and Chief Executive Officer. Mr. Tomeu has over 15
years of experience in construction and environmental industries. From 1980 to
the present, he has been president of Siboney Contracting Co., a trucking and
waste hauling company. Mr. Tomeu attended the University of Florida and General
Motors Institute.
Directors are elected annually at the Company's annual shareholders'
meeting. Each director of the Company serves until his successor is elected and
qualified or until the earlier of death, resignation, removal or
disqualification of the director. The officers of the Company serve at the
pleasure of the Board of Directors.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During the Company's fiscal year ended March 31, 1997 the Board of
Directors held eight meetings. Each director attended at least 75% of the
combined number of meetings of the Board and any committee of which he or she
was a member.
COMMITTEES OF THE BOARD OF DIRECTORS
Mr. Michael Klein and Dr. Charles Evans are members of the Compensation
Committee. The functions of the Compensation Committee are to review and approve
annual salaries and bonuses for all executive officers and review, approve and
recommend to the Board of Directors the terms and conditions of all employee
benefit plans or changes thereto, including the granting of stock options
pursuant to the Company's stock option plans. The chairman of the Compensation
Committee is Mr. Michael Klein. There has been one meeting of the Compensation
Committee. The Audit Committee consists of Mr. Carlos Vergara, Mr. Tony
Contreras, and Mr. Joseph F. Startari. The functions of the Audit Committee are
to oversee the Company's Chief Financial Officer, meet periodically with the
Company's outside auditors, and generally be responsible for the Company's
financial and accounting policies. There has been one meeting of the Audit
Committee. The Executive Committee is comprised of Enrique A. Tomeu, Chairman,
Dr. Charles C. Evans and Mr. John B. McCracken. The responsibilities of the
Executive Committee are to assist management on behalf of the Board in the
evaluation
6
<PAGE>
and decisions of any agreements, contracts, loans, debentures or transactions
for any amounts less than $3,000,000, which would otherwise require Board
approval. There have been six meetings of the Executive Committee in the past
year.
COMPENSATION OF DIRECTORS
The Board of Directors has temporarily postponed any compensation for
directors subject to a study of equitable and comparable director compensation
packages among the Company's industry.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE SIX NOMINEES.
PROPOSAL 2.
TO APPROVE AN UP TO ONE-FOR-EIGHT REVERSE SPLIT OF THE COMPANY'S COMMON STOCK,
PAR VALUE $0.012 PER SHARE, THE DATE OF THE SPLIT AND THE DIVISOR TO BE
EXERCISED AT THE DISCRETION OF THE BOARD OF DIRECTORS.
The Company proposes to amend the second sentence of Article FOURTH of its
Articles of Incorporation to read:
"The total number of shares of common stock authorized to be issued shall
be 9,375,000(1), $.096(1) par value per share, and the total number of
shares of preferred stock authorized to be issued shall be 2,500,000, $.001
par value per share."
The only change from the existing Article FOURTH is to reduce the currently
authorized 75,000,000 shares of common stock, par value $.012 per share, to
9,375,000(1) shares of common stock, par value $.096(1) per share. Such a
change, if adopted by the shareholders, will have the effect of creating a
one-for-eight(1) reverse split of the Company's issued and authorized common
stock (the "Reverse Split"). Accordingly, the Board of Directors will be
empowered without further shareholder approval to effect the Reverse Split on
the date and subject to the final terms and conditions it determines in its sole
discretion.
As a result of the Reverse Split every shareholder of the Company would own
up to one-eighth(1) as many shares as before the Reverse Split is effected.
Those shareholders who would own a fractional number of shares as a result of
the Reverse Split would have the number of shares they own rounded up to the
nearest whole share.
IT IS IMPORTANT THAT EACH SHAREHOLDER UNDERSTAND THAT NO SHAREHOLDER'S
INTEREST IN THE COMPANY WOULD BE MATERIALLY REDUCED AS A RESULT OF THE REVERSE
SPLIT SINCE THE TOTAL NUMBER OF ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF
THE COMPANY WOULD BE REDUCED IN THE SAME RATIO OF ONE-FOR-EIGHT(1) (APART FOR
NON-MATERIAL EFFECTS OF ROUNDING UP OF FRACTIONAL SHARES). Prior to the Reverse
Split the number of issued and outstanding shares will be 17,600,026 and after
the Reverse Split, the number would be 2,200,003 (apart from a non-material
additional number of shares from the rounding up of fractional shares). The
increase of the per share par value from $.012 to $0.096(1) will preserve the
Company's balance sheet stated value of paid-in capital at $243,878 (apart from
a non-material increase from the rounding up of fractional shares).
The Company knows of no other effects that would arise from the Reverse
Split which would have a material effect on shareholders of the Company.
The Board of Directors has proposed the potential Reverse Split for the
Company to maintain its listing on the NASDAQ Small Cap Market and believes the
resulting split stock would subsequently trade in the public market at a bid
price acceptable to NASDAQ. The Company has been notified of a potential
delisting effective December 30, 1997 since it does not currently meet NASDAQ
Small Cap Market listing requirements. The Company's shares of Common Stock have
traded for less than $1.00 for ten consecutive days and the Company does not
presently meet the $2 million dollar total capital and surplus requirement.. The
Company is working to increase the total capital and surplus of the Company and
will continue to pursue appropriate strategies to do so.
- ------------------
(1) Please note that all calculations assume a one-for-eight Reverse Split. If
the Board of Directors elect to use a lesser divisor for the Reverse Split
all calculations as to number of issued and outstanding shares, fraction of
original shares owned and par value described herein will be adjusted
accordingly.
7
<PAGE>
Effective February 23, 1998 the new NASDAQ Small Cap Market listing
requirements are that each listed company maintain a minimum of $1.00 per share
trading price and $2 million dollars in net tangible assets. At present, the
Company does not meet the requirements and is pursuing opportunities to enable
compliance with this requirement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
PROPOSAL 3.
TO APPROVE AN INCREASE IN THE AUTHORIZED NUMBER OF POST-SPLIT SHARES FROM
9,375,000(1) TO 75,000,000
If, and only if, the Reverse Split is approved by the shareholders, the
Company proposes to simultaneously increase its authorized shares of Common
Stock from 9,375,000(1) (after the Reverse Split) to 75,000,000. The par value
would remain at $0.096(1) per share and the number of issued and outstanding
shares would remain at 2,200,003(1) (apart from a non-material additional number
of shares from the rounding up of fractional shares in the Reverse Split).
The increase in authorized shares will permit the Company to have
additional authorized but unissued shares available for sale to raise additional
capital, for issuance to acquire other companies, or for other corporate
purposes. The Company from time to time in the past has offered and sold shares
to raise additional capital but has no identified use for the proposed increase
in authorized shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand, L.L.P., Miami, Florida, served as the Company's
independent public accountants for the fiscal year ended March 31, 1997. The
Board of Directors of the Company anticipates selecting Coopers & Lybrand,
L.L.P. to serve as independent public accountants for the current fiscal year
ending March 31, 1998. A representative of Coopers & Lybrand, L.L.P. is expected
to be present at the Annual Meeting and to be available to respond to
appropriate questions. Its representative will have the opportunity to make a
statement if he desires to do so.
FUTURE PROPOSALS OF SECURITY HOLDERS
Any shareholder who intends to submit a proposal for consideration at the
1998 Annual Meeting of Shareholders pursuant to the applicable rules of the
Securities and Exchange Commission must send the proposal to reach the Company's
Secretary by May 1, 1998. All proposals should be addressed to the Secretary.
OTHER MATTERS
No other business is expected to come before the Annual Meeting; however,
if additional matters come before the meeting, proxies will be voted at the
discretion of the proxy holders.
BY ORDER OF THE BOARD OF DIRECTORS
November 27, 1997
West Palm Beach, Florida
Michael Baker, Secretary
8
<PAGE>
PROXY ECOS GROUP, INC. PROXY
1000 SOUTHERN BLVD. SUITE 200, WEST PALM BEACH, FLORIDA 33405
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Enrique A. Tomeu and Charles C. Evans, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
Common Stock of Ecos Group, Incorporated held of record by the undersigned on
October 10, 1997, at the Annual Meeting of Shareholders to be held on December
8, 1997, or any adjournment or postponement thereof.
<TABLE>
<S> <C> <C>
1. TO ELECT THE FOLLOWING DIRECTORS: / / FOR all Nominees Listed Below / / WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary nominees listed below
below)
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
Wendell R. Anderson, Luis De La Cruz, Leon S. Eplan, Charles C. Evans, John B.
McCracken, Joseph F. Startari
2. To approve an up to one-for-eight reverse split of the Company's Common Stock
the date and final divisor to be at the discretion of the Board of Directors;
and
/ / FOR / / AGAINST / / ABSTAIN
3. To approve an increase in the authorized post-split shares of Common Stock to
75,000,000.
/ / FOR / / AGAINST / / ABSTAIN
PLEASE DATE AND SIGN ON THE REVERSE SIDE
<PAGE>
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 the proposals listed and FOR the directors listed.
When shares are held by joint tenants, both should sign. When signing as
attorney, personal representative, 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.
Dated: _____________________ , 1997
___________________________________
Signature
___________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
