AMERICAN DIGITAL COMMUNICATIONS, INC.
745 Fifth Avenue, Suite 900
New York, New York 10151
-----------------------------------------------------
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
-----------------------------------------------------
The Annual Meeting of Shareholders (the "Meeting") of American Digital
Communications, Inc., a Wyoming corporation (the "Company"), will be held on
Wednesday, August 25, 1999 at 10:00 a.m., New York City time, at The St. Regis
Hotel, Fifth Avenue at 55th Street, New York, New York, for the following
purposes:
1. To elect seven (7) directors, each to hold office until the Annual
Meeting of Shareholders in 2000 and until their respective
successors are duly elected and qualified;
2. To ratify the appointment of Pannell Kerr Forster PC as the
Company's independent public auditors for the Company's fiscal
year ending February 28, 2000;
3. To act upon a proposal to change the name of the Company to
TrackPower, Inc.; and
4. To transact such other business as may properly come before the
meeting and any and all adjournments and postponements thereof.
The Board of Directors has fixed the close of business on July 19, 1999
as the record date for annual meeting. Only shareholders of record at that time
are entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the
Company. Reference is made to the accompanying Proxy Statement for further
information with respect to the business to be transacted at the meeting.
The Board of Directors urges you to date, sign and return the enclosed
proxy promptly. The return of the enclosed proxy will not affect your right to
vote in person if you do attend the meeting.
By Order of the Board of Directors,
July 23, 1999 Carrie J. Weiler
Secretary
<PAGE>
AMERICAN DIGITAL COMMUNICATIONS, INC.
745 Fifth Avenue, Suite 900
New York, New York 10151
-----------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
AUGUST 25, 1999
-----------------------------------------------------
INTRODUCTION
This Proxy Statement is being furnished to shareholders by the Board of
Directors of American Digital Communications, Inc., a Wyoming corporation (the
"Company"), in connection with the solicitation of the accompanying form of
proxy (each a "Proxy" and collectively, "Proxies") for use at the Company's
Annual Meeting of Shareholders (the "Meeting") which is scheduled to be held at
The St. Regis Hotel, Fifth Avenue at 55th Street, New York, New York at 10:00
a.m., New York City time, for the purposes set forth in the foregoing Notice of
1999 Annual Meeting of Shareholders (the "Notice") or any adjournment thereof.
The mailing address of the principal executive offices of the Company is 745
Fifth Avenue, Suite 900, New York, New York 10151. This Proxy Statement and the
accompanying Proxy and the Annual Report to Shareholders, containing financial
statements of the Company as of February 28, 1999, and for the year then ended,
will first be sent or given to shareholders on or about July 23, 1999. The
information contained in the Annual Report to Shareholders is incorporated by
reference herein.
A list of Shareholders entitled to vote at the Meeting will be available for
examination by Shareholders during ordinary business hours beginning on July 26,
1999 at the executive offices of the Company. A Shareholder list will also be
available for examination at the Meeting.
2
<PAGE>
VOTING SECURITIES AND SECURITY OWNERSHIP
Record Date and Voting Securities
At the close of business on July 19, 1999, the record date fixed for the
determination of shareholders entitled to notice of and to vote at the Meeting
(the "Record Date"), there were outstanding 27,911,578 shares of the Company's
Common Stock, $.0001 par value per share (the "Common Stock"). Holders of Common
Stock have one vote per share on each matter to be acted upon. Only holders of
Common Stock (the "Shareholders") of record at the close of business on the
Record Date will be entitled to vote at the Meeting and at any adjournment
thereof. Each share of Common Stock entitles the record holder thereof to one
vote on all matters properly brought before the Meeting and any adjournment or
postponement thereof, with no cumulative voting. The presence, in person or by
proxy, of Shareholders entitled to cast at least a majority of the votes that
all Shareholders are entitled to cast at the Meeting shall constitute a quorum
for the Meeting.
Voting of Proxies
Shares of Common Stock represent by Proxies, which are properly executed, duly
returned and not revoked, will be voted in accordance with the directions
contained therein. If no direction is given in the Proxy, the shares of Common
Stock represented thereby will be voted: (i) FOR the election of each of the
seven (7) nominees of the Board of Directors in the election of directors; (ii)
FOR the ratification of the appointment of Pannell Kerr Forster PC as
independent public auditors for the Company's fiscal year ending February 28,
2000, and (iii) in the discretion of the proxies named on the Proxy card with
respect to any other matter properly brought before the Meeting other than the
proposal to change the name of the Company.
The Company's Board of Directors has unanimously voted to recommend (i) the
nominees for election to the Board of Directors listed below under the caption
"Election of Directors", (ii) the ratification of the appointment of Pannell
Kerr Forster PC as the independent public auditors for the Company for the
fiscal year ending February 28, 2000, and (iii) the change of the Company's name
to TrackPower, Inc.
The execution of a Proxy will in no way affect a Shareholder's right to attend
the Meeting and to vote in person. Any Proxy executed and returned by a
Shareholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Meeting, or by execution of a subsequent proxy that is presented
before the Meeting, or if the Shareholder attends the Meeting and votes by
ballot, except as to any matter or matters upon which a vote shall have cast
pursuant to the authority conferred by such Proxy prior to such revocation. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, abstentions and nominee "non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
3
<PAGE>
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which brokers or nominees do not have discretionary power) will
be treated as shares that are present but have not been voted.
The holders of a majority of the outstanding shares entitled to vote, present in
person or represented by proxy, will constitute a quorum for the transaction of
business. Shares represented by proxies that are marked "abstain" will be
counted as shares present for purposes of determining the presence of a quorum
on all matters. Brokers holding shares for beneficial owners in "street name"
must vote those shares according to specific instructions they receive from the
owners of such shares. If instructions are not received, brokers may vote the
shares, in their discretion, depending on the type of proposals involved. Broker
non-votes result when brokers are precluded from exercising their discretion on
certain types of proposals. Brokers have discretionary authority to vote on the
election of directors, the ratification of the appointment of Pannell Kerr
Forster PC and the proposal to change the name of the Company. Shares that are
voted by brokers on some but not all of the matters will be treated as shares
present for purposes of determining the presence of a quorum on all matters, but
will not be treated as shares entitled to vote at the Meeting on those matters
as to which authority to vote is withheld from the broker.
The election of each nominee for director requires a plurality of votes cast.
Accordingly, abstentions and broker non-votes will not affect the outcome of the
election. The affirmative vote of a majority of the votes cast is required for
the ratification of the appointment of the independent public auditors and for
the approval of the proposal to change the name of the Company. On these
matters, abstentions will have the same effect as a negative vote. Because
broker non-votes will not be treated as shares that are present and entitled to
vote with respect to a specific proposal, broker non-votes will have no effect
on the outcome of this matter.
As of the Record Date, members of the Board of Directors and certain officers of
the Company held an aggregate of 6,319,928 shares of Common Stock, representing
22.6% of the Company's issued and outstanding Common Stock. Each of these
Shareholders has indicated that they intend to vote in favor of each of the
proposals discussed above.
The Company will appoint an inspector to act at the Meeting who will: (1)
ascertain the number of shares outstanding; (2) determine the shares represented
at the Meeting and the validity of the proxies and ballots; (3) count all votes
and ballots; (4) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determinations by such inspector; and
(5) certify his or her determination of the number of shares represented at the
Meeting and his or her count of all votes and ballots.
Solicitation of Proxies
Following the original mailing of proxy solicitation material, executive or
other employees of the Company and professional proxy solicitors may solicit
proxies by mail, telephone, telegraph and
4
<PAGE>
personal interview. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries which are record holders of the
Company's Common Stock to forward proxy solicitation material to the beneficial
owners of such stock. Although it has entered into no formal agreements to do
so, the Company may reimburse such record holders for their reasonable expenses
incurred in such forwarding. The cost of soliciting proxies in the enclosed form
will be borne by the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The tables below sets forth certain information as of June 29, 1999 regarding
the beneficial ownership, as defined in regulations of the Securities and
Exchange Commission, of Common Stock of (i) each person who is known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
the Company's Common Stock, (ii) each director and nominee for director of the
Company and each executive officer of the Company named in the Summary
Compensation Table below, and (iii) all directors and executive officers as a
group. Unless otherwise specified, the named beneficial owner has sole voting
and investment power. The information in the table below was furnished by the
persons listed.
Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
============================================== =========================================== =========================
Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial of Common Stock
Ownership
============================================== =========================================== =========================
<S> <C> <C>
Simmonds Capital Limited (1) 7,377,558 (1) 23.4% (1)
580 Granite Court
Pickering, Ontario Canada
L1W 3Z4
============================================== =========================================== =========================
John G. Simmonds 1,965,422 (3) 7.0% (2)
580 Granite Court
Pickering, Ontario L1W 3Z4
============================================== =========================================== =========================
</TABLE>
(1) Simmonds Capital Limited ("SCL"), owns an aggregate of 3,727,558 shares
of common stock of ADC, representing 13.4% of the aggregate shares of
common stock of ADC outstanding. See footnote 3 under Security Ownership
of Management. In addition, SCL owns (i) 1,000,000 shares of preferred
stock of the Company, which are convertible into an aggregate of
1,000,000 shares of common stock of the Company, and (ii) warrants to
purchase 1,250,000 shares, of the common stock of the Company at an
exercise prices of $2.00, and 1,200,000 shares of the common stock of
the Company at an exercise price of $2.50; (iii) $250,000 of debentures
convertible into 200,000 shares of common stock of the Company; assuming
the conversion of such preferred stock, "debenture" and the exercise of
such warrants, SCL owns 23.4% of the outstanding common stock of ADC.
5
<PAGE>
This does not include any securities of the Company owned by certain
directors and/or officers of SCL who are also directors and/or officers
of the Company.
(2) Based on 27,911,578 shares outstanding at June 29, 1999.
(3) Includes 800,000 options to purchase ADC common stock from SCL, also
shown in footnote 1 above.
Security Ownership of Management
The following table sets forth the beneficial ownership of Common Stock
of the Company as of June 29, 1999, by each director, each executive officer
named in the Summary Compensation Table, and by all directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
================================= ============================== ====================
Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial of Common Stock (2)
Ownership (1)
================================= ============================== ====================
<S> <C> <C>
John G. Simmonds (3)(8) 1,965,422 7.0%
580 Granite Court
Pickering, Ontario, Canada L1W
324
================================= ============================== ====================
Kenneth J. Adelberg (4) 924,195 3.3%
1001 Sussex Blvd.
Broomall, Pennsylvania 29008
================================= ============================== ====================
Charles Cernansky (5) 394,625 1.4%
WestCap Partners, Inc.
745 Fifth Avenue
New York, New York 10151
================================= ============================== ====================
J. Harry Dunstan (6)(8) 1,076,936 3.8%
6 Damascus Drive
Caledon East, Ontario Canada
LON 1E0
================================= ============================== ====================
Ian Macdonald (7) 858,750 3.1%
TriCapital Management Limited
36 Toronto Street
Toronto, Ontario, Canada M5C 164
================================= ============================== ====================
All Executive Officers and 6,319,928 22.6%
Directors as a group, including
those named above (9 persons)
(8)
================================= ============================== ====================
</TABLE>
(1) Except as otherwise indicated below, each named person has voting and
investment power with respect to the securities owned by such persons.
(2) Based on 27,911,578 shares outstanding at June 29, 1999.
(3) Represents (a) 120,191 shares of the Company's common stock (b) 250,000
options to acquire the Company's common stock granted under the Stock
Option Plan effective
6
<PAGE>
September 8, 1997, at an exercise price of $.40 per share, all of which
are fully exercisable; (c) 250,000 options to acquire the Company's
common stock granted under the Stock Option Plan effective March 18,
1999, at an exercise price of $.15 per share, all of which are fully
exercisable (d) 400,000 options to acquire the Company's common stock
granted by SCL on January 12, 1998 at an exercise price of $.01 per
share, all of which are currently exercisable, subject to certain
conditions regarding the minimum trading price of the Company's stock
for a specified period; (e) 400,000 options to acquire the Company's
common stock granted by SCL on January 28, 1998 at an exercise price of
$.25 per share, all of which are currently exercisable, subject to
certain conditions regarding the minimum trading price of the Company's
stock for a specified period; (f) 7,500 warrants to purchase the
Company's common stock at an exercise price of $.30 per share issued on
April 17, 1998, all of which are currently exercisable; (g) 40,473
warrants to purchase the Company's common stock at an exercise price of
$.15 per share issued on March 31, 1999, all of which are currently
exercisable; (h) $125,000 of the Company's convertible debenture
convertible into 100,000 shares of the Company's common stock issued on
June 10,1999 ; (i) 100,000 warrants to purchase the Company's common
stock at an exercise price of $2.50 issued upon conversion of the
Company's convertible debenture described in (i) ; (j) 99,285 shares of
the Company's common stock owned by Mr. Simmonds' wife; (k) 7,500
warrants to purchase the Company's common stock at any exercise price of
$.30 per share issued on April 17, 1998 owned by Mr. Simmonds' wife; (l)
40,473 warrants to purchase the Company's common stock at an exercise
price of $.15 issued on March 31, 1999 owned by Mr. Simmonds' wife; (m)
$62,500 of the Company's convertible debenture convertible into 50,000
shares of the Company's common stock issued on June 10, 1999 owned by
Mr. Simmonds' wife; (n) 50,000 warrants to purchase the Company's common
stock at an exercise price of $2.50 issued upon conversion of the
Company's convertible debenture described in (m) owned by Mr. Simmonds'
wife; and (o) 50,000 shares of the Company's common stock held in trust
by Mr. Simmonds' wife for Mr. Simmonds' son Jack Simmonds.
(4) Represents (a) 414,285 shares of the Company's common stock; (b) options
to acquire 250,000 shares of the Company's common stock granted under
the Stock Option Plan on March 18, 1999 at an exercise price of $.15 per
share, all of which are fully exercisable; (c) 25,000 warrants to
purchase the Company's common stock at an exercise price of $.30 per
share issued on April 17, 1998, all of which are currently exercisable;
(d) 134,910 warrants to purchase the Company's common stock at an
exercise price of $.15 per share issued on March 31, 1999, all of which
are currently exercisable; (e) $62,500 of the Company's convertible
debenture convertible into 50,000 shares of the Company's common stock
issued on June 10, 1999 ; and (f) 50,000 warrants to purchase the
Company's common stock at an exercise price of $2.50 issued upon
conversion of the Company's convertible debenture described in (e).
(5) Represents (a) 17,625 shares of the Company's common stock owned by an
affiliate; and (b) 15,000 warrants owned by an affiliate to purchase the
Company's common stock at an exercise price of $.30 per share issued on
April 17, 1998, all of which are currently exercisable; (c) 350,000
options to acquire the Company's common stock granted under
7
<PAGE>
the Stock Option Plan effective March 18, 1999, at an exercise price of
$.15, all of which are fully exercisable; (d) $7,500 of the Company's
convertible debenture, owned by an affiliate, convertible into 6,000
shares of the Company's common stock issued on June 10, 1999 ; (e) 6,000
warrants to purchase the Company's common stock at an exercise price of
$2.50 issued upon conversion of the Company's convertible debenture
described in (f). .
(6) Represents (a) 200,000 options to acquire the Company's common stock
granted under the Stock Option Plan effective September 8, 1997, at an
exercise price of $.40 per share, all of which are fully exercisable;
(b) 250,000 options to acquire the Company's common stock granted under
the Stock Option Plan effective March 18, 1999, at an exercise price of
$.15 per share, all of which are fully exercisable; (c) 200,000 options
to acquire the Company's common stock granted by SCL on January 12, 1998
at an exercise price of $.01 per share, all of which are currently
exercisable, subject to certain conditions regarding the minimum trading
price of the Company's stock for a specified period; (d) 200,000 options
to acquire the Company's common stock granted by SCL on January 28, 1998
at an exercise price of $.25 per share, all of which are currently
exercisable, subject to certain conditions regarding the minimum trading
price of the Company's stock for a specified period; (e) 17,500 warrants
to purchase the Company's common stock at an exercise price of $.30 per
share issued on April 17, 1998, all of which are currently exercisable;
(f) 114,999 shares of the Company's common stock; (g) 94,437 warrants to
purchase the Company's common stock at an exercise price of $.15 per
share issued on March 31, 1999, all of which are currently exercisable.
(7) Represents (a) options to acquire 250,000 shares of the Company's common
stock granted under the Stock Option Plan on March 18, 1999 at an
exercise price of $.15 per share, all of which are fully exercisable;
(b) 50,000 warrants owned by an affiliate to purchase the Company's
common stock at an exercise price of $.30 per share issued on April 17,
1998, all of which are currently exercisable; (c) 300,000 shares of the
Company's common stock; (d) 58,750 shares of the Company's common stock
owned by an affiliate; (e) $125,000 of the Company's convertible
debenture convertible into 100,000 shares of the Company's common stock
issued on June 10, 1999 ; (f) 100,000 warrants to purchase the Company's
common stock at an exercise price of $2.50 issued upon conversion of the
Company's convertible debenture described in (e) .
(8) Does not include securities owned by SCL, other than with respect to
options to purchase the Company's stock granted by SCL, as described
above. The relationship of such person to SCL is described below under
"Certain Relationships and Related Transactions."
EXECUTIVE COMPENSATION
Summary Compensation Table
8
<PAGE>
The following table sets forth information concerning the compensation
for services in all capacities for the fiscal years ended February 28, 1999,
February 28, 1998 and February 28, 1997 of those persons who were, during all or
part of the fiscal year ended February 28, 1998, the chief executive officer. No
other executive officers of the Company received compensation in excess of
$100,000 in fiscal year ended February 28, 1999.
<TABLE>
<CAPTION>
============================ ================================================= ======================================
Long Term Compensation
Annual Compensation
------------------- ------------------------ -------------
Awards Payouts
-------- ------------ ----------- --------------- ------------ ----------- -------------
Name and Principal Year Salary Bonus Other Restricted LTIP
Position Annual Stock Options/ Payouts
Compensation Awards SARs(#)
- ---------------------------- -------- ------------ ----------- --------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John G. Simmonds, 1999 (1) (1) (1) None 250,000 None
Chairman of the Board, 1998 (1) (1) (1) N/A 250,000 N/A
Chief Executive Officer 1997 N/A N/A N/A N/A N/A N/A
and President
- ---------------------------- -------- ------------ ----------- --------------- ------------ ----------- -------------
Gary N. Hokkanen, 1999 (1) (1) (1) None 100,000 None
1998 (1) (1) (1) N/A 100,000 N/A
Chief Financial Officer 1997 N/A N/A N/A N/A N/A N/A
- ---------------------------- -------- ------------ ----------- --------------- ------------ ----------- -------------
Carrie J. Weiler,
Vice President and 1999 (1) (1) (1) None 200,000 None
Corporate Secretary 1998 (1) (1) (1) N/A 100,000 N/A
1997 N/A N/A N/A N/A N/A N/A
- ---------------------------- -------- ------------ ----------- --------------- ------------ ----------- -------------
</TABLE>
(1) In connection with the acquisition of certain assets of SCL in January
1998, the Company agreed to pay to SCL an aggregate of $25,000 per month
commencing February 1998 and terminating at the end of July 1999, for
the services of Mr. Simmonds, Mr. Dunstan, Ms. Weiler and Mr. Hokkanen.
The Company has no long-term incentive plan.
Option Grants Table for Fiscal 1999
The following table sets forth information concerning stock option
grants made during the fiscal year ended February 28, 1999 under the Company's
1993 Compensatory Stock Option Plan (the "Stock Option Plan") to the executive
officers named in the Summary Compensation table.(1) These grants are also
reflected in the Summary Compensation Table. The Company has not granted any
stock appreciation rights. The Company has not granted any options under any of
its other stock options plans.
9
<PAGE>
<TABLE>
<CAPTION>
=========================== =============================================================
Individual Grants
------------- ------------- ----------- ---------------------
Name Options % of Total Exercise Expiration
Granted(#) Options Price Date
Granted to ($/Share)
Employees
in Fiscal
1999
<S> <C> <C> <C> <C>
- --------------------------- ------------- ------------- ----------- ---------------------
John G. Simmonds 250,000 N/A $.15 November 30, 2003
- --------------------------- ------------- ------------- ----------- ---------------------
Gary N. Hokkanen 100,000 N/A $.15 November 30, 2003
- --------------------------- ------------- ------------- ----------- ---------------------
Carrie J. Weiler 200,000 N/A $.15 November 30, 2003
=========================== ============= ============= =========== =====================
</TABLE>
(1) The Company has adopted the Stock Option Plan for officers, key
employees, potential key employees, non-employee directors and advisors.
The Company has reserved a maximum of 4,000,000 Common Shares to be
issued upon the exercise of options granted under the Stock Option Plan.
The Stock Option Plan will not qualify as an "incentive stock option"
plan under Section 422A of the Internal Revenue Code of 1986, as
amended. Options are granted under the Stock Option Plan at exercise
prices to be determined by the Board of Directors or stock option
committee. With respect to options granted pursuant to the Stock Option
Plan, optionees will not recognize taxable income upon the grant of
options, but will realize income (or capital loss) at the time the
options are exercised to purchase common stock. The amount of income
will be equal to the difference between the exercise price and the fair
market value of the common stock on the date of exercise. The Company
will be entitled to a compensating deduction in an amount equal to the
taxable income realized by an optionee as a result of exercising the
option. The Stock Option Plan is currently administered by the Board of
Directors. The Company maintains three other stock option plans, no
options under which have been granted.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth information regarding the exercise of
stock options during the last fiscal year by the executives named in the Summary
Compensation Table and the fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
============================== ===================== =============== ======================== ======================
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Acquired Value Options at Options at
Name on Exercise Realized February 28, 1999 February 28, 1999
---- ----------- -------- -----------------
exercisable/
unexercisable(1)
<S> <C> <C> <C> <C>
- ------------------------------ --------------------- --------------- ------------------------ ----------------------
John G. Simmonds None N/A 500,000 $17,500
- ------------------------------ --------------------- --------------- ------------------------ ----------------------
Gary N. Hokkanen None N/A 200,000 $7,000
- ------------------------------ --------------------- --------------- ------------------------ ----------------------
Carrie J. Weiler None N/A 300,000 $14,000
============================== ===================== =============== ======================== ======================
</TABLE>
10
<PAGE>
(1) Represents the difference between the fair market value of the
securities underlying the options and the exercise price of the options
at fiscal year-end.
STOCK PERFORMANCE GRAPH
The graph below compares the five-year cumulative total shareholder return of
the Company's Common Stock with the five-year return of the Nasdaq Stock Index,
U.S. ("Nasdaq").
[CHART OMITTED]
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Ace of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
(the "Commission") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Reporting
persons are required by Commission regulations to furnish the Company with
copies of all forms they file pursuant to Section 16(a).
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company, the following persons failed to file, on a timely
basis, reports required by Section 16(a) of the Exchange Act, for the
transactions indicated, during the year ended February 27, 1999.
Messrs. Simmonds, Adelberg, Macdonald, Cernansky, Dunstan, Hokkanen and Ms.
Weiler each failed to file on a timely basis the reports required to be filed on
Forms 3, 4 and 5.
The Company understands that all reporting persons discussed immediately above
have filed the required reporting forms prior to the date of this proxy.
11
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees for Election
The Board of Directors proposes the election of a Board of seven directors for
the upcoming year and until their respective successors are duly elected and
qualified. Unless contrary instructions are given, the shares represented by a
properly executed proxy will be voted "FOR" the election of the following
nominees: John G. Simmonds, Ian Macdonald, Kenneth J. Adelberg, Charles J.
Cernansky, J. Harry Dunstan, Lawrence Aziz and Arnold Smolen. All of the
nominees with the exception of Lawrence Aziz and Arnold Smolen are currently
members of the Board of Directors of the Company. While management has no reason
to believe that any of the nominees will not be available as a candidate, should
such a situation arise, no other person will be nominated at the Meeting, and
such position on the Board of Directors will not be filled at the Meeting.
Directors and Executive Officers
Set forth below is certain information concerning the nominees for election as
directors and the Company's executive officers:
Nominees
John G. Simmonds, 48, was appointed Chairman of the Board, a Director,
and Chief Executive Officer of the Company effective January 29, 1998. Mr.
Simmonds is the founder of Simmonds Capital Limited, (formerly Simmonds
Communications Ltd.), a Toronto Stock Exchange listed company ("SCL"). Since
1991, Mr. Simmonds has served as Chairman, President and Chief Executive Officer
of SCL. SCL is involved in the wireless communications business as a systems
integrator and in the electronics business as a manufacturer and distributor of
electronic components and related products. From 1994 to 1996, Mr. John Simmonds
served as Director and Chief Executive Officer of INTEK Global Corporation
(formerly Intek Diversified Corp.), a Nasdaq-listed (Small-Cap) company. Intek
is involved in the US Specialized Mobile Radio market which owns and manages SMR
licenses in the 200 MHz frequency. Between September 1995 and November 1997, Mr.
Simmonds served as the Chairman of Ventel Inc., a Vancouver Stock Exchange
listed company. Ventel provides secured loans to developing companies in the US
SMR market. Mr. Simmonds resigned from the Board of Directors of Intek during
1998 and has resigned from the Board of Directors of Ventel, subject to the
successful acquisition of Fifty-Plus.net.
Kenneth J. Adelberg, 46, has been a Director of the Company since April
1, 1996. Mr. Adelberg, who holds Bachelor of Science degrees in Biophysics and
Psychology from Pennsylvania State University, and studied for an MBA, is the
President and Chief Executive Officer of HiFi House Group of Companies; a
founding shareholder and currently a director of Republic First Bancorp; and a
founding shareholder and former director of U.S. Watts. Since 1995, Mr. Adelberg
has also been a director of Global Sports Inc., a Nasdaq-listed (Small-Cap)
company.
12
<PAGE>
Charles Cernansky, 45, has been a Director of the Company since August
1997. Mr. Cernansky is a principal of Pellinore Securities Corp., a New York
City-based broker-dealer, and since 1992, a principal of WestCap Partners, Inc.,
a Manhattan-based financial consulting and advisory services firm. Mr. Cernansky
is experienced in business development advice, consulting on overall corporate
financial functions, tax planning, corporate finance strategy, venture capital
activities and merger-acquisition assistance. Mr. Cernansky holds a B.S. from
SUNY College at Brockport, an M.B.A. from Rensselaer Polytechnic Institute and a
J.D. from Albany Law School of Union University. Mr. Cernansky is an attorney
and C.P.A. in the State of New York.
J. Harry Dunstan, 48, a Director of the Company since January 1998, is a
registered Professional engineer. He is currently on the board of directors for
the Canadian Wireless Telecommunications Association and serves on several other
Boards. Mr. Dunstan has been a senior executive and Director of SCL between 1991
and 1999. At SCL, Mr. Dunstan was responsible for the systems group which built
all of the large radio communication systems including: BC Hydro, Nova Scotia
Power Inc., the Toronto Transit Commission, and the Department of Customs and
Excise. Mr. Dunstan has served on various advisory and technical committees of
the Radio Advisory Board of Canada and the Federal Department of Communications.
A graduate of the University of Toronto, Mr.
Dunstan received his degree in electrical engineering in 1974.
Ian Macdonald, 44, has been a Director of the Company since June 1996.
Mr. Macdonald, who holds a Bachelor of Science degree in Economics, an MBA in
Marketing and is a C.A., is the Chairman and Chief Executive Officer of The
Versatech Group Inc. a Toronto Stock Exchange listed auto parts manufacturer.
Mr. Macdonald is also Managing Director of Tri-Capital Management Limited, a
Toronto based private merchant bank since 1989.
Lawrence P. Aziz, 52, has occupied several senior management positions
in the office furniture manufacturing industry, including four years as Vice
President of Sales for Biltrite Manufacturing. In 1988, Mr. Aziz founded PBI
Office Interiors, which to this day is a leading office furniture dealership
offering interior design and supplying products and services to major
corporations and financial institutions throughout the US and Canada. Today, Mr.
Aziz continues to own and operate PBI. Mr. Aziz is also a Private Pilot and
maintains an active role with the Canadian Cancer Society.
Arnold K. Smolen, 57, graduated from the Philadelphia College of
Pharmacy and Science with a Bachelor of Science degree in 1965. Until 1994, Mr.
Smolen owned and operated his own chain of Pharmaceutical stores. He is
presently a consultant of Northwest Tennis, Inc. and is Executive Vice President
and Principal of Percival Financial Partners. Mr. Smolen has been actively
involved as a breeder of thoroughbred racehorses in the Mid-Atlantic area for
over twenty-five years and is a licensed owner in Maryland, West Virginia,
Delaware, New Jersey, Pennsylvania and New York.
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Executive Officers and Significant Employees
Gary N. Hokkanen, 43, was appointed Chief Financial Officer of the
Company in February 1998. Mr. Hokkanen's principal occupation is an accountant
and he holds a Certified Management Accountant ("CMA") designation from Society
of Management Accountants of Ontario. Mr. Hokkanen also is Vice President,
Finance/Chief Financial Officer of SCL. He has held this position since July
1997. For the period, April 1996 to July 1997, Mr. Hokkanen was Treasurer of
SCL. For the period June 1994 to April 1996 he was Manager, Finance & Treasury.
Prior to June 1994, Mr. Hokkanen was Manager, Financial Planning & Analysis,
with CUC Broadcasting Limited ("CUC"). CUC, prior to being acquired by Shaw
Communications Inc., was a privately owned Canadian cable TV multiple system
operator.
Carrie J. Weiler, 40, Secretary of the Company since February 1998,
joined the Simmonds group of companies in 1979. Promoted to Vice President of
Corporate Development for SCL and its divisions in 1994, Mrs. Weiler continues
to serve in this capacity and is a key liaison between the compensation and
audit committees and the Board of Directors.
The Company's directors will serve until the next annual meeting of
shareholders and until their respective successors are duly elected and shall
have qualified. The By-laws of the Company provide that the number of directors
of the Company shall be fixed by the shareholders or the Board of Directors and
shall be not less than three or more than 15. The number has been fixed by the
Board of Directors at seven. There are currently two vacancies on the Board of
Directors. The Company's Articles of Incorporation provides that directors may
be removed by the shareholders, with or without cause, upon the affirmative vote
of the holders of a majority of the votes cast and at a meeting called for the
purpose of such removal
There are no family relationships among any of the directors or
executive officers of the Company.
Meetings and Committees of the Board of Directors
The Board of Directors has a Compensation Committee and an Audit Committee. The
Company does not have an Executive Committee or Nominating Committee.
Messrs. Simmonds, Adelberg, Cernansky served as members of the Compensation
Committee during fiscal 1999. The primary function of the Compensation Committee
is compensation review with respect to the principal executive officers of the
Company. The members of the Compensation Committee provide advice and counsel to
the Board of Directors through their participation as directors in meetings of
the Board and as members of the Committee in meetings of the Committee held
separate and apart from the meetings of the Board. The Compensation Committee
also serves as the Committee that administers the Company's 1993 Compensatory
Stock Option Plan ("CSO"). The Compensation Committee held four meetings in
fiscal 1999.
Messrs. Cernansky, Macdonald and Dunstan served as members of the Audit
Committee during fiscal 1999. The primary function of the Audit Committee is to
meet with the Company's independent public accountants, counsel and management
to discuss the scope and results of the annual audit, internal accounting
procedures and certain other questions of accounting policy. The Audit Committee
held six meetings during fiscal 1999.
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The Board of Directors held 11 meetings in fiscal 1999. No member of the Board
of Directors attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which such director served.
Compensation of Directors
The Company pays to each of its directors meeting fees of $500.00 for attendance
at each Board meeting, an annual retainer fee of $4,000 and $500.00 for
attendance at each meeting of any committee of the Board of Directors which is
not held in conjunction with a meeting of the Board.
Employment Arrangements
None
Required Vote
The directors are to be elected by the affirmative vote of the holders of a
plurality of the shares entitled to vote and present in person or represented by
proxy at the Meeting. Nominee holders that do not receive instructions are
entitled to vote in the Election of Directors. Votes withheld from the Election
of Directors will have no effect, because they will not represent votes cast at
the Meeting for the purpose of electing directors.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES AS DIRECTORS.
PROPOSAL 2: RATIFICATION OF INDEPENDENT PUBLIC AUDITORS
On June 25, 1999, the Board of Directors decided to terminate Causey Demgen &
Moore ("CD&M") as its principal accountants. CD&M's reports on the financial
statements for the past two years contained no qualification, adverse or
disclaimer of opinion. Their report dated May 27, 1999, however, included a
paragraph regarding substantial doubt about the Company's ability to continue as
a going concern. Through the date of the change in accountants, there were no
disagreements with CD&M on any matter of accounting principles or
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practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of such accountants, would
have caused them to make reference to the subject matter of the disagreements in
connection with their reports.
On June 25, 1999, the Board of Directors also decided to engage Pannell
Kerr Forster PC ("PKF") of New York, New York as the Company's independent
accountants. The Company expects a representative of PKF to be present at the
Meeting and that such representative will have an opportunity to make a
statement if he or she desires to do so, and he or she will be available to
respond to appropriate questions. There will be no representative from CD&M at
the Meeting.
Vote Required
Ratification of the appointment of Pannell Kerr Forster requires the affirmative
vote of a majority of the shares of Common Stock present at the Meeting and
entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF PANNELL KERR
FORSTER.
PROPOSAL 3: NAME CHANGE
On June 25, 1999, the Board of Directors adopted, subject to shareholder
approval, an amendment of the Company's Certificate of Incorporation to change
the name of the Company to "TrackPower, Inc.". The current name of the Company
is American Digital Corporation, Inc.
The Company was incorporated under the name American Digital Corporation, Inc.
in Wyoming on June 30, 1993. At the time, the Company's name represented the
nature of the business which was two way radio distribution and the operation of
220 mHz systems. The Company has recently taken steps to develop a new business
called TrackPower.
The Company's trademark is "TrackPower" and its reputation in the industry is
associated with that name. The Board of Directors believes that changing the
name of the Company to TrackPower, Inc. will increase name recognition for the
Company.
There will be relatively little cost associated with the name change.
Advertising and marketing campaigns are just now being launched, therefore the
Company is in a position to capitalize on associating the Company's name with
the recognized brand TrackPower.
If the proposal to change the Company's name to TrackPower, Inc. is adopted by
the Shareholders, the Company will promptly file a certificate of amendment to
its certificate of incorporation with the State of Wyoming, the Company's state
of incorporation.
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Vote Required
Approval of the change of the Company's name requires the affirmative vote of a
majority of the outstanding shares of Common Stock of the Company entitled to
vote thereon at the Meeting. Proxies solicited by the Board of Directors will be
voted for the change of name unless Shareholders specify otherwise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE CHANGE OF THE COMPANY'S NAME.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SCL, either directly or through its wholly-owned subsidiary, Midland, owns as of
June 29, 1999 an aggregate of 3,727,558 shares of common stock of ADC,
representing 13.4% of the aggregate shares of common stock of ADC outstanding,
based on 27,911,578 shares outstanding. In addition, SCL owns (i) 1,000,000
shares of preferred stock of the Company, which are convertible into an
aggregate of 1,000,000 shares of common stock of the Company, (ii) warrants to
purchase 1,250,000 shares of common stock of the Company at an exercise price of
$2.00 per share; and 1,200,000 shares of common stock of the Company at $2.50
per share, and (iii) $250,000 debenture convertible into 200,000 shares of
common stock of the Company, assuming the conversion of such debenture,
preferred stock and the exercise of such warrants, SCL owns 23.4% of the
outstanding common stock of ADC. (The above figures do not include any
securities of the Company owned by officers and/or directors of SCL who are also
officers and/or directors of the Company.) Mr. John G. Simmonds, either directly
or through various affiliates, owns approximately 5% of the stock of SCL.
Certain of the stock of ADC owned by SCL was acquired in December 1995, in
connection with the grant to ADC of certain exclusive license rights and the
sale of assets. Additional shares were acquired in November 1996, in connection
with an exclusive distribution license granted to ADC. In addition, in January
1998, SCL completed the sale to ADC of certain intellectual property and other
assets. As consideration for these assets, SCL received 1,000,000 shares of
convertible preferred stock of ADC, which are convertible at the option of the
holder into 1,000,000 shares of common stock of ADC, and a warrant exercisable
until January 31, 2001 to purchase 500,000 common shares of ADC at a purchase
price of $2.00 per share. In connection with these transactions, the Company
agreed to pay to SCL an aggregate of $25,000 per month commencing February 1998
and terminating at the end of July 1999, for the services of Mr. Simmonds, Mr.
Dunstan, Ms. Weiler and Mr. Hokkanen.
On October 16, 1998, SCL transferred ownership of 4,230,906 shares of common
stock of ADC, owned Midland International Corporation ("MIC"), a wholly owned
subsidiary, to Mees Pierson ICS Limited ("Mees") under a debt settlement
agreement between SCL, MIC and Mees. On May 4, 1999, Mr. Simmonds and a group of
close business associates and investors familiar with the
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Company, acquired the block of 4,230,906 shares from Mees. Mr. Simmonds and his
immediate family acquired 170,906 of the shares.
Effective June 4, 1999, ADC issued to SCL 1,000,000 warrants to purchase the
Company's common stock at any time over the next four years, at an exercise
price of $2.50 per share and 750,000 warrants to purchase the Company's common
stock at any time of the next four years, at an exercise price of $2.00 per
share, in consideration for guaranteeing the Company's obligations under a
contract with a subsidiary of EchoStar Satellite Communications Inc. and a
general guarantee of all the obligations of the Company until March 1, 2000. As
part of this transaction the $1,500,000 earnout issued to SCL in January 1998 is
linked to the 750,000 warrants issued in that SCL has the option to be paid in
shares of the Company's common stocks..
Mr. Simmonds, Chairman of the Board, President and Chief Executive Officer of
ADC, serves SCL in the same capacities. In addition, Mr. Hokkanen, Chief
Financial Officer of the Company, is Vice President, Finance/Chief Financial
Officer of SCL. Mr. Dunstan and Mr. Macdonald directors of the Company, are also
directors of SCL.
SHAREHOLDER PROPOSALS
The deadline for submitting stockholder proposals for inclusion in the
Company's proxy statement and form of proxy for the Company's next annual
meeting is March 27, 2000. To be properly submitted, the proposal must be
received at the Company's principal executive offices, 745 Fifth Avenue, Suite
900, New York, New York 10151, no later than the deadline. In order to avoid
controversy, stockholders should submit any proposals by means, including
electronic means, that permit them to prove the date of delivery.
If a stockholder submits notice of a proposal not in compliance with
the procedures set forth above (and more fully described in Rule 14a-8 of the
Exchange Act), such a notice of proposal must be received by the Company at its
principal executive offices, described above, by June 9, 2000. If notice of a
stockholder proposal is received after this date, the Company may have the
discretionary authority to refuse to allow the proposal to be brought before the
next annual meeting.
The deadlines described above are calculated by reference to the date
the proxy materials for this year's Meeting were first mailed to stockholders.
If the Board of Directors changes the date of next year's annual meeting by more
than 30 days, the Board will, in a timely manner, inform the stockholders of
such a change and the effect of such a change on the deadlines given above by
including a notice under Item 5 in the Company's earliest possible quarterly
report on Form 10-Q, or if that is impracticable, then by any means reasonably
calculated to inform the stockholders.
OTHER MATTERS
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As of the date of this Proxy Statement, the Board of Directors knows of no
matters that will be presented for formal action at the Meeting. If any other
matter or matters are properly brought before the Meeting or any adjournment
thereof, the persons named in the accompanying Proxy will have discretionary
authority to vote, or otherwise act, with respect to such matters in accordance
with their judgment.
OTHER INFORMATION
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOUR EXPECT TO ATTEND THE MEETING, THE BOARD URGES YOU TO COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID REPLY ENVELOPE. YOUR
COOPERATION AS A SHAREHOLDER, REGARDLESS OF THE NUMBER OF SHARES OF STOCK YOU
OWN, WILL REDUCE THE EXPENSES INCIDENT TO A FOLLOW-UP SOLICITATION OF PROXIES.
IF YOU HAVE QUESTIONS ABOUT VOTING YOUR SHARES, PLEASE TELEPHONE THE COMPANY
COLLECT AT (905) 837-1430.
Sincerely yours,
John G. Simmonds
Chairman of the Board
New York, New York
July 23, 1999
<PAGE>
AMERICAN DIGITAL CORPORATION, INC.
Annual Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints __________ and ____________, or if only
one is present, then that individual, with full power of substitution, to vote
all shares of AMERICAN DIGITAL CORPORATION, INC. (the "Company"), which the
undersigned is entitled to vote at the Annual Meeting of the Company's
Shareholders to be held at the Sheraton St. Regis Hotel, Fifth Avenue at 55th
Street, New York, New York, on the 25th day of August, 1999, at 10:00 a.m. New
York City time, and at any adjournment or postponement thereof, hereby ratifying
all that said proxies or their substitutes may do by virtue hereof, and the
undersigned authorizes and instructs said proxies to vote as follows:
1. ELECTION OF DIRECTORS: To elect the nominees for director below for a
term of one year;
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees listed
contrary below) below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.)
John G. Simmonds Kenneth J. Adelberg
Charles Cernansky J. Harry Dunstan
Ian Macdonald Arnold Smolen
Lawrence P. Aziz
2. APPROVAL OF AUDITORS: To ratify and approve the appointment of Pannell
Kerr Forster PC as independent public auditors for the fiscal year
ending February 28, 2000;
FOR AGAINST ABSTAIN
3. APPROVAL OF CHANGE OF NAME: To approve the change of the name of the
Company to TrackPower, Inc.
FOR AGAINST ABSTAIN
and in their discretion, upon any other matters that may properly come before
the meeting or any adjournment or postponement thereof.
(Continued and to be dated and signed on the other side.)
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDERS. IF NO OTHER DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2
AND 3.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Receipt of the Notice of Annual Meeting of Shareholders and of the
Proxy Statement and Annual Report of the Company accompanying the same is hereby
acknowledged.
Dated: _____________________________, 1999
------------------------------------------------
(Signature of Stockholder)
------------------------------------------------
(Signature of Stockholder)
Your signature should appear the same as your
name appears herein. If signing as attorney,
executor, administrator, trustee or guardian,
please indicate the capacity in which signing.
When signing as joint tenants, all parties to the
joint tenancy must sign. When the proxy is given
by a corporation, it should be signed by an
authorized officer.
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