<PAGE>
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[ X ]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Addition Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
HEARTSOFT, INC.
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(Name of Registrant as specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)
of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing party:
4) Date Filed:
<PAGE>
HEARTSOFT, INC.
NOTICE OF
ANNUAL MEETING
AUGUST 28, 1996
AND
PROXY STATEMENT
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 28, 1996
Notice is hereby given that the Annual Meeting of Stockholders of
Heartsoft, Inc. (the "Company"), will be held at the Company's offices, 3101
Hemlock Circle, Broken Arrow, Oklahoma, on Wednesday, August 28, 1996, at 10:00
A.M. (Local Time), for the following purposes:
1. To elect three directors of the Company for the ensuing year; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
We hope that you will be able to attend this meeting. Even though you may
now plan to attend the Annual Meeting in person, please complete, date, sign and
promptly return the enclosed Proxy as promptly as possible. If you attend the
meeting and desire to withdraw your Proxy and vote in person, you may do so.
Only stockholders of record at the close of business on July 1, 1996 will
be entitled to vote at the Annual Meeting.
By Order of the Board of Directors
/s/ Jimmy L. Butler
-------------------
Jimmy L. Butler
Secretary
Broken Arrow, Oklahoma
August 5, 1996
<PAGE>
HEARTSOFT, INC.
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of Heartsoft, Inc., for proxies to be used at the Annual
Meeting of Stockholders of the Company to be held on August 28, 1996, at the
time and place, and for the purposes set forth in the Notice of Annual Meeting
accompanying this Proxy Statement. The only matters which management intends to
present are those set forth in such Notice, and management knows of no matters
which will be presented by others. Should any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
Proxy to act upon them according to their best judgment.
The enclosed Proxy may be revoked at any time prior to the voting thereof,
either by giving notice to the Secretary of the Company or by personal
attendance at the meeting. All shares represented by valid proxies received in
advance of the meeting will be voted, unless the Proxy is revoked prior to
exercise.
Pursuant to provisions of the Bylaws of the Company and action of its Board
of Directors, the close of business on July 1, 1996, has been established as the
time and record date for determining the stockholders entitled to notice of and
to vote at this Annual Meeting. The stock transfer books will not be closed.
This Proxy Statement, Notice of Annual Meeting and accompanying Proxy, as
well as the Company's 1995 Annual Report, will be first mailed to stockholders
approximately August 5, 1996.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of July 1, 1996 (the record date), the Company had issued a total of
5,089,608 shares of $.0005 par value Common Stock. Each share of Common Stock
is entitled to one vote on all matters submitted to a vote by stockholders.
While the Company also had issued and outstanding as of the record date
1,058,500 shares of 12% Convertible Preferred Stock, $.01 par value, none of
such shares are entitled to vote.
The following table sets forth, as of July 1, 1996, the aggregate number of
shares of Common Stock of the Company owned of record or beneficially by the
only persons who owned of record, or are known by the Company to own
beneficially, more than 5% of the Company's Common Stock, each officer whose
1995 salary and bonus exceeded $100,000 ("Executive Officers"), and the name and
shareholdings of each other director and such officers and all directors as a
group:
<TABLE>
<CAPTION>
Name and address of the 5% Percent
shareholders and each Executive Officer Number of shares of
and names of other directors owned (1) class
- ---------------------------------------- ---------------- -------
<S> <C> <C>
Benjamin P. Shell (2) 987,762 19.41
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
Jimmy L. Butler (2) 962,124 18.90
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
Charles R. Carlson (3) 600,000/(4)/ 11.56 /(4)/
5151 Beltline Road
Dallas, Texas 75240
Executive Officers and all directors
as a group (3 persons) 2,549,886/(4)/ 49.13 /(4)/
</TABLE>
- ------------------------------------------
(1) All shares are held beneficially and of record and the owner has sole
voting and investment power with respect thereto, except as otherwise
noted.
(2) Messrs. Shell and Butler are also directors.
(3) Mr. Carlson is an Executive Officer of the Company.
(4) Includes 100,000 shares held under presently exercisable stock options.
2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
The number of directors has been set at three and the nominees to serve
during 1996-1997 are:
<TABLE>
<CAPTION>
Name Age Position with the Company in 1995-1996
- ---------------------------- --- --------------------------------------
<S> <C> <C>
Benjamin P. Shell 33 Chairman of the Board
and Director
Jimmy L. Butler 32 Vice President,
New Product Development,
Secretary, and Director
Charles R. Carlson 59 Chief Executive Officer
</TABLE>
Mr. Shell, a co-founder of the Company, has also been a director of the
Company since its inception in July of 1983. From 1983 until 1995 Mr. Shell
served as President of the Company. In 1995 he was appointed Chairman of the
Board of Directors. Mr. Shell has overseen the development of over 60 software
titles and is personally responsible for programming 50 of those titles. As
Chairman of the Board, Mr. Shell is responsible for establishing the Company's
goals, and in specifically identifying the perceived needs for and uses of
educational software by children, and to implement these conceptual perceptions
into the Company's new product development utilizing Heartsoft's unique product
style. Effective July 1, 1996, upon Charles Carlson informing the Board that he
no longer desired to retain the position of Chief Executive Officer, Mr. Shell
also assumed the position of President and Chief Executive Officer.
Mr. Butler, a co-founder of the Company, has been a director and served as
an executive officer since its inception in 1983. Mr. Butler is currently Vice
President, New Product Development, in which capacity he oversees the full
spectrum of new product development from conceptualization to final release.
His diverse exposure to the education and software industry includes market
analysis, direct sales to school administrators, content design and hosting
dozens of national trade shows.
Mr. Carlson has been nominated to stand for election as a director for the
first time at the Annual Meeting. Mr. Carlson served as Chief Executive Officer
of the Company from June of 1995, until he informed the Board that effective
July 15, 1996, he desired to no longer hold such position, to allow him
additional time to build the Dallas sales office. On such date the Board of
Directors appointed Mr. Carlson as Executive Vice President, Sales. Mr. Carlson
is responsible for advanced technology sales through the Company's Dallas sales
office. Immediately prior to joining Heartsoft, Mr. Carlson was Director, Sales
and Marketing, for the Edison Project. Prior to that time he served as Senior
Vice President, Sales and Marketing for Computer Curriculum Corporation, and was
Group Vice President for Development and Technology with Jostens Learning from
1897 until 1993, and with Simon & Shuster in 1993 with its educational
publishing division.
3
<PAGE>
All director-nominees, if elected, will hold office until the next annual
meeting of stockholders scheduled to be held on August 27, 1997.
The Board of Directors of the Company had ten meetings during 1995 and Mr.
Shell and Mr. Butler attended each of those meetings.
The Company does not have an audit, nominating or compensation committee.
EXECUTIVE OFFICERS
In addition to Mr. Shell and Mr. Butler, who served as both officers and
directors and Mr. Carlson, who served as an executive officer of the Company in
1995, the following individuals also served as executive officers during 1995:
<TABLE>
<CAPTION>
Name Age Position with Company Since
- -------------------- --- ------------------------- -------------
<S> <C> <C> <C>
Steven W. Williams 32 Vice President, Marketing January, 1993
Dana Swift 41 Director, Programming June 1995
Bryan J. Reusser 34 Director, Finance March, 1996
</TABLE>
Mr. Williams joined Heartsoft in January of 1993, when Heartsoft began its
new strategic plan. For the two years prior to that time Mr. Williams worked
for MPSI, Inc. in Tulsa, Oklahoma, where he developed retail marketing
strategies for various client applications.
Mr. Swift joined the Company in June of 1995, and has worked with the
Company through the last two product conversions. From 1987 until joining the
Company, Mr. Swift was employed by Areomet, Inc. Mr. Swift will play a key role
in developing new product and upgrading existing product. Mr. Swift is a
software engineer with 20 years experience, including projects for NASA, the Jet
Propulsion Laboratory and the Strategic Defense Initiative.
Mr. Reusser joined Heartsoft in March of 1996 as the Company was placing
additional capital through the offering of its Convertible Preferred Stock. Mr.
Reusser has over 11 years of investment management and securities industry
experience. For the three years prior to joining the Company, he was with Bank
IV's Investment Division, and served as Regional Manager of that division when
he joined the Company. During the two years prior to this Mr. Reusser was
Manager of the Capital Markets Department of First City Bank of Dallas.
While all officers serve at the pleasure of the Board of Directors, their
current terms of office extend through August, 1996.
4
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF BOARD OF DIRECTORS
The Board of Directors sets the compensation of the full-time executive
officers/employees of the Company.
Effective March of 1995, Mr. Shell's salary was set (and remains) at an
annual rate of $80,000. Factors considered in determining Mr. Shell's base
compensation include having responsibility for establishing overall corporate
philosophy and goals, organizing and staffing Company personnel, overseeing
implementation of Board directives, financial budgets, marketing strategies,
engineering projects and manufacturing methods. His compensation is measured
both by progress toward long-term goals and current financial results.
Pursuant to Mr. Carlson's employment agreement discussed below, his annual
rate of salary was set at $100,000 effective June 1, 1995. The salary was
predicated on Mr. Carlson's previous experience in the industry and his efforts
in establishing the Company's Dallas sales and marketing office, as well as his
overall job performance.
The following table sets forth information as to the compensation of the
Executive Officers of the Company whose annual salary and bonus has exceeded
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
---------------------------- ----------------------- -------
Name and Other Restricted Securities All Other
principal Annual Stock Underlying LTIP Compen-
position Year Salary Bonus Compensation Awards Options/SARs Payouts sation
- ------------------------- ---- -------- ----- ------------ ---------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Benjamin P. Shell 1995 $ 80,000 -0- -0- N/A N/A N/A -0-
Chairman 1994 $ 60,000 -0- -0- N/A N/A N/A -0-
1993 $ 50,000 -0- -0- N/A N/A N/A -0-
Charles R. Carlson 1995(1) $100,000 -0- -0- N/A 997,000 N/A -0-
Chief Executive Officer
</TABLE>
- --------------------
(1) Mr. Carlson was not with the Company prior to June of 1995; therefore, no
information is provided for fiscal years 1994 and 1993.
Pursuant to Mr. Carlson's employment agreement with the Company entered
into in June of 1995, he was entitled to a salary of $100,000 to be paid on a
semi-monthly basis. The agreement is terminable at will by either party;
provided, if the Company terminates the agreement for any reason other than for
"just cause", it is required to pay Mr. Carlson an amount equal to one month's
salary, and continue, during the same period, coverage under the Company's
various insurance coverage.
5
<PAGE>
Under the employment agreement, Mr. Carlson and the Company could agree to
defer portions of his salary, and from June 1995 until July, 1996, Mr. Carlson
elected to defer his entire salary. In addition, during such time, Mr. Carlson
incurred certain expenses for the benefit of the Company, which expenses the
Company is currently reviewing. The Company and Mr. Carlson are currently
negotiating the terms of a new employment agreement that will determine the
terms of repayment of the deferred salary, reimbursement of certain agreed upon
expenses, and establish Mr. Carlson's salary and other benefits during the 1996
fiscal year.
Under Mr. Carlson employment agreement he was granted an option to purchase
500,000 shares of the Company's common stock within thirty days of the
commencement of his employment at $.001 per share (which option was exercised),
and was also granted a second option to acquire an additional 497,000 shares (at
the rate of not more than 100,000 shares per year commencing on the first
anniversary of employment) at the same option price. As of June 1, 1996, options
for 100,000 shares have vested under this second option, but to date such option
remains unexercised by Mr. Carlson.
The following table provides information with respect to the option grants
made during 1995 by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
-------------------------------------------------------
<TABLE>
<CAPTION>
Number of % of Total Market
Securities Options Granted Price
Underlying to Employees in Exercise at Date of Expiration
Name Options Granted Fiscal Year Price ($/Sh) Grant Date
--------------- --------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Charles R. Carlson 997,000 100% $.001 $0.875 7/1/2000
Chief Executive
Officer
</TABLE>
No other options were granted to or exercised by any Executive Officer or
director during the fiscal year ended March 31, 1996, nor were any options
held by such persons "repriced" during that period.
The Company has no long-term incentive plan ("LTIP") or "defined benefit"
(pension) plan.
With the exception of Mr. Carlson, the Company has no employment contracts
with any of its officers, directors or employees, nor any compensatory plan or
arrangement concerning any person's termination of employment or respecting any
"change in control".
COMPENSATION OF DIRECTORS
The Company does not pay any directors' fees or fees for attendance at Board
meetings.
6
<PAGE>
BENEFICIAL OWNERSHIP REPORTING
Based solely upon a review of Forms 3 and 4 furnished to the Company during
its most recent fiscal year and Forms 5 furnished to the Company with respect to
its most recent fiscal year and/or written representations made to the Company
by its directors and officers and by the only beneficial owner of more than ten
percent of its Common Stock, the Company knows of no director, officer or
beneficial owner of more than ten percent of the Company's Common Stock who has
failed to file on a timely basis reports of beneficial ownership of the
Company's Common Stock as required by Section 16(a) of the Securities Exchange
Act of 1934, as amended.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANT
Cross & Robinson has been selected as the principal accountant of the
Company for the current year. Representatives of Cross & Robinson are expected
to be present at the 1996 Annual Meeting of Stockholders with the opportunity to
make a statement if they desire to do so and to respond to appropriate
questions.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 Annual Meeting
must be received at the Company's executive offices, 3101 Hemlock Circle, Broken
Arrow, Oklahoma 74012, no later than May 28, 1997, for inclusion in the
Company's Proxy Statement and form of Proxy relating to that meeting.
OTHER MATTERS
Management knows of no business which will be presented at the 1996 Annual
Meeting other than to elect directors for the ensuing year.
Thirty-three and one-third percent (33-1/3%) of the issued and outstanding
Common Stock entitled to vote shall constitute a quorum at the meeting.
The cost of preparing, assembling and mailing all proxy solicitation
materials will be paid by the Company. It is contemplated that the solicitation
will be conducted only by use of the mails. The Company will, upon request,
reimburse brokers for the costs incurred by them in forwarding solicitation
materials to such of their customers as are the beneficial holders of Common
Stock of the Company registered in the names of such brokers.
By Order of the Board of Directors
/s/ Benjamin P. Shell
Benjamin P. Shell
Chairman of the Board
August 5, 1996
7
<PAGE>
HEARTSOFT, INC.
3101 HEMLOCK CIRCLE
BROKEN ARROW, OKLAHOMA 74012 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Heartsoft, Inc., a Delaware corporation,
hereby constitutes and appoints Benjamin P. Shell and Jimmy L. Butler, and
each of them, with full power of substitution, as attorneys and proxies to
appear and vote all shares of stock of the Company standing in the name of
the undersigned, at the Annual Meeting of Stockholders of the Company to be
held at 3101 Hemlock Circle, Broken Arrow, Oklahoma, on Wednesday, August
28, 1996 at 10:00 a.m. (Local Time), and at any adjournment thereof, with
all powers that the undersigned would possess if personally present, hereby
revoking all previous proxies.
1. ELECTION OF DIRECTORS:
FOR all nominees listed below [_] WITHHOLD AUTHORITY [_]
(except as shown to the contrary
below)
Benjamin P. Shell, Jimmy L. Butler and Charles R. Carlson
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
2. In their discretion, upon any other matters as may properly come before the
meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES FOR DIRECTOR.
The undersigned hereby acknowledge(s) receipt of the Notice of the aforesaid
Annual Meeting and Proxy Statement accompanying the same, both dated August 5,
1996.
Dated: , 1996
---------------------------- -----------------------------
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(Please sign exactly as your name appears at left. When
shares are held in the names of two or more persons, all
should sign individually. Executors, administrators,
trustees, etc., should so indicate when signing. When
[Mailing label] shares are held in the name of a corporation, the name
of the corporation should be written first and then an
authorized officer should sign on behalf of the
corporation, showing the office held.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
