Proxy Statement
Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant (x)
Filed by a Party other than the Registrant( )
Check the appropriate box:
( )Preliminary Proxy Statement
( )Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
( X ) Definitive Proxy Statement
( )Definitive Additional Materials
( )Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule
240.14a-12
Network Systems International, Inc.
(Name of Registrant as Specified In Its Charter)
____________________________________________________________
Name of Person(s) Filing Proxy Statement, if other than the Registrant
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(x ) No fee required.
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and 0-11.
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statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid _________________________
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3) Filing Party ____________________________________
4) Date Filed: _____________________________________
NETWORK SYSTEMS INTERNATIONAL, INC.
200 North Elm Street
Greensboro, North Carolina 27401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 20, 1998
TO THE STOCKHOLDERS OF NETWORK SYSTEMS INTERNATIONAL, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Network Systems International, Inc., a Nevada corporation (the
"Company"), will be held on February 20, 1998, at 11:00 A.M. local
time at 200 North Elm Street, Greensboro, North Carolina for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected and has qualified, or until such director's
earlier death, resignation or removal.
2. To ratify the selection of Pender Newkirk & Company as independent
auditors of the Company for its fiscal year ending September 30, 1998.
3. To authorize the issuance of up to 2,500,000 shares of common stock of
the Company at a secondary offering upon further approval of the Board
of Directors.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on
January 15, 1998, as the record date for the determination of
stockholders entitled to notice of and to vote at this Annual Meeting
and at any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ William C. Ray
William C. Ray
Secretary
Greensboro, North Carolina
January 20, 1998
Greensboro, North Carolina
January 20, 1998
ALL STOCKHOLDERS are cordially invited to attend the meeting in
person. Whether or not you expect to attend the meeting, please
complete, date, sign and return the enclosed proxy as promptly as
possible in order to ensure your representation at the meeting. A
return envelope (which is postage prepaid if mailed in the United
States) is enclosed for that purpose. Even if you have given your
proxy, you may still vote in person if you attend the meeting. Please
note, however, that if your shares are held of record by a broker,
bank or other nominee and you wish to vote at the meeting, you must
obtain from the record holder a proxy issued in your name.
NETWORK SYSTEMS INTERNATIONAL, INC.
200 North Elm Street
Greensboro, North Carolina 27401
(336) 271-8400
___________________________
PROXY STATEMENT
___________________________
For Annual Meeting of Stockholders
February 20, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of
Directors of Network Systems International, Inc., a Nevada
corporation, (the "Company"), for use at the Annual Meeting of
Stockholders to be held on February 20, 1998, at 11:00 A.M. local time
(the "Annual Meeting"), or at any adjournment or postponement thereof,
for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at 200 North Elm
Street, Greensboro, North Carolina 27401. The Company intends to
mail this proxy statement and accompanying proxy card on or about
January 20, 1998, to all stockholders entitled to vote at the Annual
Meeting. Holders of the Company's common stock, par value $.001 per
share (the "Common Stock") are entitled to one vote per share on the
matters to be considered at this Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of
proxies, including preparation, assembly, printing and mailing of this
proxy statement, the proxy and any additional information furnished to
stockholders. Copies of solicitation materials will be furnished to
banks, brokerage houses, fiduciaries and custodians holding in their
names shares of Common Stock beneficially owned by others to forward
to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone,
telegram or personal solicitation by directors, officers or other
regular employees of the Company. No additional compensation will be
paid to directors, officers or other regular employees for such
services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business
on January 15, 1998 will be entitled to notice of and to vote at the
Annual Meeting. At the close of business on January 15, 1998 the
Company had outstanding and entitled to vote 5,851,176 shares of
Common Stock.
Each holder of record of Common Stock on such date will be
entitled to one vote for each share held on all matters to be voted
upon at the Annual Meeting.
All votes will be tabulated by the inspector of election
appointed for the meeting, who will separately tabulate affirmative
and negative votes, abstentions and broker non-votes. Abstentions
will be counted towards the votes cast on proposals presented to the
stockholders and will have the same effect as negative votes.
Abstentions and broker non-votes are counted towards a quorum, but are
not counted for any purpose in determining whether a matter has been
approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the
power to revoke it at any time before it is voted. It may be revoked
by filing with the Secretary of the Company at the Company's principal
executive office, 200 North Elm Street, Greensboro, North Carolina
27401, a written notice of revocation or a duly executed proxy bearing
a later date, or it may be revoked by attending the meeting and voting
in person. Attendance at the meeting will not, by itself, revoke a
proxy.
STOCKHOLDER PROPOSAL
Proposals of stockholders that are intended to be presented at
the Company's 1998 Annual Meeting of Stockholders must be received by
the Secretary of the Company not later than February 10, 1998 in order
to be included in the proposals presented at the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
There are seven nominees for the ten Board positions presently
authorized in the Company's Bylaws, subject to confirmation by the
Company. Each director to be elected will hold office until the next
annual meeting of stockholders and until his successor is elected and
has qualified, or until such director's earlier death, resignation or
removal.
Shares represented by executed proxies will be voted, if
authority to do so has not been withheld, for the election of the
seven nominees listed below. In the event any nominee should be
unavailable for election as a result of an unexpected occurrence, such
shares will be voted for the election of such substitute nominee as
management may propose. Each person nominated for election has agreed
to serve if elected, and management has no reason to believe that any
nominee will be unable to serve.
Directors are elected by a plurality of the votes present in
person or represented by proxy and entitled to vote.
NOMINEES
Each of the nominees named below except Rick King, is currently
a director of the Company and was elected at the annual meeting of
shareholders held on March 4, 1997.
At the time of the annual meeting, if any of the nominees named
below is not available to serve as a director (an event which the
Board of Directors does not now anticipate), the proxies will be voted
for the election as directors of such other person or persons as the
Board of Directors may designate, unless the Board of Directors, in
its discretion, adopts a resolution reducing the number of directors.
Set forth below are the names and ages of the nominees, the
principal occupation of each, the year in which first elected a
director of the Company, the business experience of each for at least
the past five years and certain other information concerning each of
the nominees.
Director
Name of Nominee Age Principal Occupation Since
Robbie M. Efird 34 Chairman of the Board, 1986
President and Chief
Executive Officer,
Network Systems
International, Inc.
E.W. "Sonny" Miller, Jr. 55 Senior Vice President- 1985
Marketing/Sales
Network Systems
International, Inc.
David F. Christian 43 Director Business Systems 1990
Network Systems
International, Inc.
James W. Moseley 52 Director Customer 1992
Relations
Network Systems
International, Inc.
David P. Reynolds 49 Independent Consultant 1997
Rick Tuberosa 34 Chairman of the Board, 1997
President and Chief
Executive Officer,
Palm State Equities, Inc.
Richard R. King 36 Director Manufacturing Nominee
Execution Systems
Network Systems
International, Inc.
Robbie M. Efird has served as a director of the Company and its
predecessors since March, 1986. In addition, Mr. Efird has served as
Chairman of the Board, President and Chief Executive Officer of the
Company since June, 1994. Mr. Efird created the original design
module for the Company's proprietary software in 1986 and has
continuously directed design activities of the Company since that
time. Mr. Efird is a magna cum laude graduate of the DeVry Institute.
E.W. "Sonny" Miller, Jr. has served as a director of the
Company and its predecessors since 1985 and has held various positions
as a member of the executive staff of the Company since that time.
Currently, Mr. Miller serves as Senior Vice President and directs the
Company's marketing and sales efforts.
David F. Christian has served as a director of the Company
since 1990. Mr. Christian has served in several positions as a member
of the executive staff of the Company and currently serves as Director
of Business Systems under the Company's recent corporate
reorganization structure.
James W. Moseley has served as a director of the Company since
1993. Mr. Moseley currently serves as Director of Customer Relations.
Prior to joining Network, Mr. Moseley served as MIS Director of the
Automotive Business Unit of Guilford Mills, Inc. and as a
programmer/analyst at the Navy's Commander-in-Chief Atlantic Fleet
Headquarters.
David P. Reynolds: Mr. Reynolds served as President of the
automotive group with Collins and Aikman from 1973 until 1991 and
thereafter as President of worldwide automotive operations and Senior
Vice President of corporate affairs for Guilford Mills, Inc. from 1991
through 1993. Since that time, Mr. Reynolds has owned and operated an
independent consulting service providing management and manufacturing
advisory reports to Boards of Directors of major manufacturing
entities and to IBM's customer focus groups.
Rick Tuberosa: From 1989 to present, Mr. Tuberosa has been
employed by Palm State Equities, Inc. He currently serves as
President, CEO and Chairman of the Board. Prior to 1989 Mr. Tuberosa
represented E.F. Hutton, Shearson Lehman Hutton, Raymond James
Financial and First Investors Corporation. Mr. Tuberosa has extensive
knowledge of the financial markets. In 1996 Mr. Tuberosa was selected
as an Honored Member of the Cambridge Who's Who Registry of Business
Leaders.
Richard R. King: Mr. King joined the Company in 1990 and
currently serves as Director of Manufacturing Execution Systems and is
responsible for research and development of new technologies in both
software and hardware areas.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended September 30, 1997 the Board held
three meetings. The Board has an Audit Committee, Compensation
Committee and an Executive Committee.
The Audit Committee meets with the Company's independent
auditors at least annually to review the results of the annual audit
and discuss financial statements; reviews financial and auditing
issues of the Company; recommends to the Board that the independent
auditors be retained; receives and considers the accountant's comments
as to controls, adequacy of staff and management performance and
procedures in connection with audit and financial controls and makes
recommendations to the Board. The Audit Committee consists of three
members.
The Board's Compensation Committee meets annually to review the
annual compensation of officers and other key associates of the
Company, bonuses for associates and other remuneration considerations,
and makes recommendations to the Board. The Compensation Committee
consists of three members and met at the conclusion of the Company's
fiscal year end.
The Board's Executive Committee meets at least semi-annually to
discuss the Company's progress in meeting the goals of its published
business plan and makes recommendations to the Board as to actions
deemed appropriate and necessary to fulfill the established goals.
The Committee consists of five members of the Board and the Company's
General Counsel and Secretary. The Committee met on four occasions
during the Company's 1997 fiscal year.
The Board of Directors recommends a vote FOR proposal 1
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Pender Newkirk & Company as
the Company's independent auditors for the fiscal year ended September
30, 1998 and has further directed that management submit the selection
of independent auditors for ratification by the stockholders at the
Annual Meeting. Pender Newkirk & Company has audited the Company's
books and records since the Company went public in April of 1996. A
representative of Pender Newkirk is expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR proposal 2
PROPOSAL 3
Secondary Offering of Common Stock
The Board of Directors has under consideration a plan to
initiate a secondary offering of up to 2,500,000 shares of common
stock of the Company. Such offering, if initiated and successful,
would allow the Company to raise capital for acquisitions, mergers and
other purposes in order to rapidly grow the Company. This proposal
would allow the Board of Directors to undertake the potential offering
without further action on the part of shareholders.
The Board of Directors recommends a vote FOR proposal 3
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
the ownership of the Company's common stock as of January 15, 1998 by:
(1) each nominee for director; (2) each of the executive officers
named in the summary compensation table; (3) all executive officers
and directors of the Company as a group; and (4) all those known by
the Company to be beneficial owners of more than five percent of its
Common Stock.
Beneficial Ownership (1)
Beneficial Owner Number of Shares Percent of Total
Robbie M. Efird (2) 2,179,293 37.24
E.W. "Sonny" Miller, Jr.(3) 1,233,547 21.08
David F. Christian 715,698 12.23
James W. Moseley 475,698 8.13
William C. Ray 332,385 5.68
Richard R. King 111,483 1.90
Tony A. Lee 79,311 1.36
Rick Tuberosa (4) 45,000 0.77
David P. Reynolds 5,019 0.09
All Executive Officers and Directors
as a Group (9 persons) 5,177,434 88.48
(1) This table is based upon information supplied by officers,
directors and principal stockholders. Unless otherwise noted and
subject to community property laws where applicable, the Company
believes that each of the stockholders named in this table has sole
voting and investment power with respect to the shares indicated as
beneficially owned. Applicable percentages are based on 5,851,176
shares outstanding as of January 15, 1998, adjusted as required by
rules promulgated by the Securities and Exchange Commission (SEC).
(2) Mr. Efird beneficially holds 10,000 shares of common stock of the
Company on behalf of his minor son.
(3) Includes 1,250 shares of common stock of the Company held by Mr.
Miller's wife.
(4) Mr. Tuberosa is the owner-operator and majority shareholder of Palm
State Equities, Inc. and holds the stock as beneficial owner of such
shares.
Compliance with the Reporting Requirements of Section 16(a)
Section 16(a) of the Securities and Exchange Act of 1934 (the
"1934 Act") requires the Company's directors and executive officers,
and persons who own more than ten percent of a registered class of the
Company's equity securities, to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors and
greater than ten percent stockholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they
file. All such forms required to be filed by the SEC were timely
filed.
EXECUTIVE COMPENSATION
Compensation of Directors
The current directors of the Company receive no remuneration
for their services as members of the Board of Directors or for their
service on various committees of the Board. However, it is
anticipated that as additional and outside directors are elected, a
remuneration program will be developed whereby both cash consideration
is paid and stock options are awarded.
Compensation of Executive Officers
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ended 1995, 1996
and 1997, compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and its other most highly compensated
executive officer at September 30, 1997 (the "Named Executive
Officers"):
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<CAPTION>
Securities
Name and Principal Other Annual Restricted Underlying LTIP All
Position Year Salary Bonus($) Compensation Stock Options/ Payouts Other
Awards ($) SARs ($) Compen-
(#) sation
<S> <C> <C> <C>
Robbie M. Efird 1997 $152,500 $2,493.34(3)
(1)(2) 1996 1,038.00(3)
Chairman of the 1995 63,541(4) N/A
Board
President and Chief N/A(5)
Executive Officer
Acting CFO
E.W. "Sonny" 1997 $100,000 $4,418.76(3)
Miller, Jr. (1)(2) 1996 2,125.00(3)
Senior Vice 1995 58,500(4) N/A
President
Marketing/Sales N/A(5)
</TABLE>
(1) The salary figures presented represent the salary
compensation of the named executives for the period
October 1, 1996 through September 30, 1997 since the
Company changed its fiscal year end. No other executive
officers would meet the reporting requirements.
(2) The named executive officers have entered into long term
employment contracts with the Company for a period of
five years with three, five-year renewable options. The
contracts provide that if the named executive is
wrongfully terminated, then, and in that event, the
Company would provide salary continuation to the named
executive through the term of the contract.
(3) Represents the value of estimated personal use of Company
owned vehicles and the value of disability insurance
premiums paid by the Company under a salary continuation
program.
(4) The salary figures presented represent the salary
compensation of the named executives for the period May,
1996 through September 30, 1996 since the Company
operated as a private company reporting as a SubChapter S
corporation prior to that time. No other executive
officers would meet the reporting requirements.
(5) No information provided since the Company was a
SubChapter S corporation at the time.
CERTAIN TRANSACTIONS
On April 18, 1997, Robbie M. Efird, Chairman of the Board and
CEO of the Company borrowed $60,278 for purposes of paying taxes on
undistributed income while the Company was a SubChapter S corporation.
Mr. Efird signed a note to the Company for the funds borrowed which
bears interest at a rate of 5% per annum and is secured by common
stock in the Company individually owned by Mr. Efird. Additionally,
two other directors/executive officers of the Company borrowed funds
under the same terms and conditions as Mr. Efird.
The Company's policy is to enter into agreements with each of
its directors and executive officers providing for the indemnification
of such persons to the fullest extent permitted by law for any
liability they may incur by reason of their service as officers and/or
directors of the Company.
The Company entered into twenty year employment agreements with
five of its executives calling for annual salaries totaling no less
than $195,000.
In December, 1996, the Company entered into an agreement with
Palm State Equities, Inc. ("Palm State") to promote the sale of a
private placement preferred stock offering. Upon completion of the
offering, the Company entered into a stock promotion agreement with
Palm State whereby the Company awarded Palm State 45,000 shares of the
Company's common stock upon completion of certain terms and
conditions. Additionally, Palm State has earned 30,000 shares of the
Company's common stock for promotion. The additional shares are
payable upon the Company applying for and being accepted for the
NASDAQ's Small Cap Market. Mr. Tuberosa, a Director of the Company,
is the Chairman of the Board and majority shareholder of Palm State.
OTHER MATTERS
The Board of Directors knows of no other matters that will be
presented for consideration at the Annual Meeting. If any other
matters are properly brought before the meeting, it is the intention
of the persons named in the accompanying proxy to vote on such matters
in accordance with their best judgment.
By Order of the Board of Directors
/s/ William C. Ray
William C. Ray
Secretary
January 20, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-KSB FOR THE FISCAL YEAR ENDED SEPTEMBER
30, 1997 IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO:
CORPORATE SECRETARY, NETWORK SYSTEMS INTERNATIONAL, INC., 200 NORTH
ELM STREET, GREENSBORO, NORTH CAROLINA 27401.
PROXY CARD
Please mark votes
As in this sample
(A box is drawn with an X inside the square)
________________________________
NETWORK SYSTEMS
INTERNATIONAL, INC.
________________________________
RECORD DATE SHARES
Please be sure to sign Date
and date this Proxy.
__________________________ __________________
Stockholder sign here Co-owner sign here
This proxy is solicited by the Board of Directors. If no
specification is made, this Proxy will be voted FOR Proposals 1, 2,
and 3.
1. Election of Directors With- For All
For Hold Except
Robbie M. Efird E. W. Miller,
David Christian Jr.
Richard King James Moseley
Rick Tuberosa David
Reynolds
INSTRUCTION: To withhold authority to vote for any
nominee, mark the "For All Except" box and strike a line
through the nominee's name in the list above.
For Against Abstain
2. Proposal to approve the
appointment of Pender Newkirk &
Company as independent auditors
3. Proposal to approve
secondary offering of common
stock
Discretion will be used with respect to such other matters
as may properly come before the meeting or at any
adjournments thereof.
Mark box at right if an address change has been
noted on the bottom of this card.
Please sign name as it appears on stock certificate. Only
one of several joint owners need sign. Fiduciaries should
give full title.
____________________________________________________________
NETWORK SYSTEMS INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 20, 1998
Proxy Solicited by the Board of Directors
The undersigned hereby appoints Robbie M. Efird and William C. Ray, or
either of them, with full power of substitution in each, proxies (and
if the undersigned is a proxy, substitute proxies) to vote all Common
Stock of the undersigned in Network Systems International, Inc. at the
Annual Meeting of Stockholders of such Company to be held on February
20, 1998, and at any and all adjournments thereof, with authority to
vote such stock on the matters set forth above and upon such other
matters as may properly come before the meeting.
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
Has Your Address Changed?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
