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
Payment of Filing Fee (Check the appropriate box):
( X ) No fee required.
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) 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: _____________________________________
NETWORK SYSTEMS INTERNATIONAL, INC.
200 North Elm Street
Greensboro, North Carolina 27401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD March 11, 1999
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 March 11, 1999, 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 have qualified,
or until such director's earlier death, resignation or
removal.
2. To ratify the selection of KPMG Peat Marwick LLP as
independent auditors of the Company for its fiscal year
ending September 30, 1999.
3. 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 8,
1999, 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 28, 1999
Greensboro, North Carolina
January 28, 1999
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
March 11, 1999
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 March 11, 1999, 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, in Greensboro, North
Carolina. The Company intends to mail this proxy statement and accompanying
proxy card on or about February 3, 1999, 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 8, 1999 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on January 8, 1999 the Company had
outstanding and entitled to vote 7,671,254 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 elections 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 1999 Annual Meeting of Stockholders must be received by
the Secretary of the Company not later than August 1, 1999 in order
to be included in the proposals presented at the 1999 Annual
Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
There are seven nominees for the ten Board positions presently
authorized in the Company's By-Laws, subject to confirmation by the
Company. Four of the nominees are presently directors of the Company.
Carlton Joseph Mertens, Christopher N. Baker and Michael T. Spohn shall
become members of the Board of Directors upon stockholders'
approval. 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
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 director 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.
Name of Nominee Age Principal Occupation Director Since
Robbie M. Efird 35 Chairman of the Board, President 1986
and Chief Executive Officer, Network
Systems International, Inc.
E.W. "Sonny" Miller, 56 Senior Vice President - Marketing/Sales 1985
Jr. Network Systems International, Inc.
David F. Christian 44 Director of Product Development 1990
Network Systems International, Inc.
Rick Tuberosa 35 Chairman of the Board, President 1997
and Chief Executive Officer,
Palm State Equities, Inc.
Christopher N. Baker 38 Independent Consultant Nominee
Carlton Joseph 33 Chief Executive Officer and President Nominee
Mertons Business Partners Solutions, Inc
Michael T. Spohn 30 Chief Financial Officer
Network Systems International, Inc. Nominee
Robbie M. Efird has served as a director of the Company and its
predecessors since August, 1986. In addition, Mr. Efird has served as
Chairman of the Board, President, Chief Executive Officer, and Chief
Financial Officer of the Company since June, 1994. From 1984 until 1985
he was employed by J.P. Stevens, Inc. in Greenville, S.C. as a programmer
analyst responsible for distributed manufacturing systems. In 1985, Mr.
Efird joined Texfi Industries in Rocky Mount, N.C. as a senior programmer
analyst responsible for design and rollout of new mid-range systems to replace
legacy mainframe systems. Mr. Efird joined Network Information Services,
Inc. in 1986 and immediately initiated the design and development of the
Textile Management System (TMS). Network sold TMS in the manufacturing
market space from 1986 until 1989. In 1990, he initiated the next generation
of proprietary software products and guided the analytical research, design,
development, quality assurance, packaging, and sales strategies for new
markets. This new product formed the foundation for the net collection(tm),
the company's current brand of software products. Mr. Efird is
a Magna Cum Laude graduate of DeVry Institute of Technology in Atlanta,
Georgia, and attended the Masters in Business Administration program at the
University of North Carolina in Greensboro, N.C.
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. From 1961 to 1966 Mr. Miller was employed as the Director
of Information Systems for the National Bank of Fort Benning, Fort Benning,
Georgia. In 1964, Mr. Miller took a position with Fieldcrest Mills, Inc.
as its Corporate Systems Coordinator where he served until 1968. Thereafter,
Mr. Miller was employed as Corporate Manager of In Plant Systems for
Burlington Industries, Inc. from 1968 until 1971. From 1971 until 1980
Mr. Miller served as Corporate Systems Manager for Texfi Industries in
Greensboro, North Carolina. In mid 1980 Mr. Miller was appointed Director
of Management Information Services for Flynt Fabrics, Inc. and thereafter,
in 1982, Mr. Miller held the same position with TiCaro, Inc. until 1985. In
early 1985 Mr. Miller established Sonny Miller and Associates as a free lance
contract programmer for the manufacturing industry. Later in the year,
Mr. Miller incorporated his business which has since operated under the name
of Network Information Services, Inc. Mr. Miller attended the University of
Georgia in Columbus, Georgia.
David F. Christian has served as a director of the Company and its
predecessors 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 Product Development. From 1972 until 1975, Mr. Christian was
employed by Spencer's, a children's clothing manufacturer located in Mount
Airy, North Carolina. Thereafter, from 1975 until 1979, Mr. Christian
served in various management positions for a local restaurant chain in
Greensboro, North Carolina and subsequently held a management position
with Davidson's, a multi-state wholesale distributor of sporting
goods until 1989. From 1989 until 1990 Mr. Christian served as manager of
CEW Imports, located in Winston Salem, North Carolina. Mr. Christian is a
graduate of the Electronic Computer Programming Institute in Greensboro,
North Carolina.
Rick Tuberosa has served as a director of the Company since 1996.
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. In 1996 Mr. Tuberosa
was selected as an Honored Member of the Cambridge Who's Who Registry of
Business Leaders.
Carlton Joseph Mertens is a Board nominee. Mr. Mertens, President and
Chief Executive Officer of Business Partner Solutions, received his B.B.A.
in Marketing from the University of Texas at Austin. Mr. Mertens'
professional background includes several years of sales experience with
Computerland and AmeriSource Business Centers. From 1984 to 1997,
Mr. Mertens held numerous sales and management positions with Star Data
Systems/Sirius Computer Solutions. In 1991, he purchased 49% of Star Data
Systems/Sirius Computer Solutions and was named as Executive Vice President
of the company, with primary responsibility for the wholesale and
distribution divisions. In 1997, after the sale of wholesale and distribution
divisions of the company, Mr. Mertens was named as President and Chief
Executive Officer of Business Partner Solutions. Mr. Mertens is member of the
Board of Directors for Savoir Technology Group, Inc., Business Partner
Solutions' parent company, and serves on the IBM Distributor Advisory Council.
Christopher N. Baker is a Board nominee. Mr. Baker has served in
various positions with Pillowtex Corporation until September 1998, most
recent of which was President of Operations. Mr. Baker was responsible for
all operating activities of the Company including manufacturing, distribution,
purchasing, quality control and engineering. Also, Mr. Baker served as a
Member of the Board of Directors and the Executive Committee from May 1995 -
September 1998. From April 1991 to January 1993, Mr. Baker served as Vice
President of Operations of The Company Store, responsible for all operating
aspects including purchasing, manufacturing, distribution, quality assurance
and engineering. From 1985 to 1991, Mr. Baker held various accounting and
manufacturing positions with Pillowtex, including Executive Vice President -
Manufacturing from 1998 to 1991. Mr. Baker is a Certified Public Accountant
and worked for Arthur Anderson & Company as a Senior Accountant
before originally joining Pillowtex. Mr. Baker holds a Bachelor of Science
in Accounting with High Honors from the University of Southern Mississippi.
Michael T. Spohn is a Board nominee. From 1993 until June 1998, Mr.
Spohn was an audit manager with BDO Seidman, LLP, a national accounting and
consulting organization and a member firm of BDO International. Mr. Spohn
specialized in the audit of private and publicly traded companies while at
BDO. Mr. Spohn received his Bachelor of Science in Finance from the
University of North Carolina at Greensboro and holds a Bachelor of Science
in Accounting from High Point University.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended September 30, 1998 the Board held 10
regularly scheduled and/or specially called 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 whether the independent auditors is
to 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. Current members of the Audit Committee are David P. Reynolds,
Rick Tuberosa, and William C. Ray the Company's General Counsel and
Secretary. The committee held one meeting during fiscal 1998.
The purpose of the Board's Compensation Committee is to meet annually
to review the annual cash and non-cash compensation of officers and other
key associates of the Company, bonuses for associates and other remuneration
considerations, and to make recommendations to the Board. Current members of
the Compensation Committee are Robbie M. Efird, David P. Reynolds, William C.
Ray. The committee held one meeting.
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
eleven members of the Company's management team. The Committee met on twelve
occasions during the Company's 1998 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 KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ended September 30, 1999
and has further directed that management submit the selection of independent
auditors for ratification by the stockholders at the Annual Meeting. The
Company utilized the services of Pender Newkirk & Company to audit the
Company's books and records since the Company went public in April of 1996
through the Company's current fiscal year-end September 30, 1998. A
representative of Pender Newkirk is expected to be available for the Annual
Meeting, and 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
<TABLE>
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 8, 1999 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)
<S> <C> <C>
Beneficial Owner Number of Percent of
Shares Total
Robbie M. Efird (2) 2,723,991 35.50
E.W. "Sonny" Miller, Jr.(3) 1,540,371 20.07
David F. Christian 894,622 11.66
James W. Moseley 594,622 7.75
William C. Ray 350,481 4.56
Richard R. King 139,353 1.81
Rick Tuberosa (4) 93,750 1.22
David P. Reynolds 23 0.00
Michael T. Spohn 0 0.00
Carlton Joseph Mertens 0 0.00
Christopher N. Baker 0 0.00
All Executive Officers and 6,337,213 82.57
Directors as a Group
(11 persons)
(1) This table is based upon information supplied by the
Company's stock transfer agent. 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 7,671,254 shares outstanding as of
January 8, 1999, adjusted as required by rules promulgated
by the Securities and Exchange Commission (SEC).
(2) Mr. Efird beneficially holds 14,500 shares of common
stock of the Company on behalf of his minor son.
(3) Includes 1,562 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.
</TABLE>
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.
Specific dates for such reporting have been established and the Company
is required to report in this Proxy Statement any failure to file by the
established dates during the last fiscal year. In the last fiscal year,
to the Company's knowledge, all of these filing requirements were satisfied
by the Company's directors, officers and greater than ten percent stockholders
except that Mr. Rick Tuberosa and Mr. David P. Reynolds each failed to file on
a timely basis their Forms 4 relating to the sale of the Company's common
stock.
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
The following table shows for the fiscal years ended 1996, 1997
and 1998, 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, 1998 (the "Named Executive Officers"):
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<S> <C> <C> <C> <C>
Name and Principal Year Salary Bonus($) Other Annual
Position Compensation (3)
Robbie M. Efird (1)(2) 1998 $150,000 $5,718 $3,220
Chairman of the Board 1997 152,500 None 2,493
President and Chief 1996 63,541 None 1,038
Executive Officer
E.W. "Sonny" Miller,Jr. 1998 $120,000 $1,324 $10,421
(1)(2) 1997 100,000 None 4,418
Senior Vice President, 1996 58,500 None 2,125
Marketing/Sales
(1) The salary figures presented represent the salary
compensation of the named executives for the period
October 1, 1997 through September 30, 1998 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
</TABLE>
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 Compan 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 (56,250 shares adjusted for 5
for 4 split) of the Company's common stock upon completion of certain
terms and conditions. Additionally, Palm State has earned 30,000 (37,500
shares adjusted for 5 for 4 split) shares of the Company's common stock for
promotion. 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 28, 1999
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, 1998 IS AVAILABLE WITHOUT CHARGE UPON
WRITTEN REQUEST TO: CORPORATE SECRETARY, NETWORK SYSTEMS
INTERNATIONAL, INC., 200 NORTH ELM STREET, GREENSBORO, NORTH
CAROLINA 27401.
