Intellectual Technology, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Intellectual Technology, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Intellectual Technology, Inc. (the "Company"), a Delaware corporation,
will be held on Friday, June 9, 2000, at 10:30 a.m., local time, at the
Holiday Inn Express, 621 South Highway 101, Solana Beach, California, for
the following purposes:
1. To elect five (5) directors to serve for the ensuing year and
until their successors are duly elected and qualified.
2. To ratify the appointment of Comiskey & Company P.C. as
independent accountants of the Company for the fiscal year ending
December 31, 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice. Only shareholders of record at
the close of business on May 22, 2000 are entitled to notice of and to
vote at the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in
person. However, to assure your representation at the meeting, you are
urged to mark, sign and return the enclosed proxy card as promptly as
possible in the postage-paid envelope enclosed for that purpose. Any
shareholder attending the meeting may vote in person even if he or she
has already returned a proxy.
Sincerely,
Janice L. Welch
Secretary
Carlsbad, California
May 26, 2000
Intellectual Technology, Inc.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Intellectual
Technology, Inc. (the "Company"), for use at the Annual Meeting of
Shareholders to be held on Friday, June 9, 2000, at 10:30 a.m., local
time, or at any adjournment or postponement thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at the Holiday Inn Express,
621 South Highway 101, Solana Beach, California 92075. The Company's
telephone number is (760) 929-9789.
These proxy solicitation materials were mailed on or about May 26,
2000 to all shareholders of record at the close of business on May 22,
2000 (the "Record Date"). A copy of the Company's Annual Report to
Shareholders for the year ended December 31, 1999 ("fiscal 1999"),
including financial statements, was sent to the Shareholders prior to or
concurrently with this Proxy Statement.
RECORD DATE; OUTSTANDING SHARES
Shareholders of record at the close of business on the Record Date
are entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof. At the Record Date, 10,000,000 shares of the
Company's Common Stock were issued and outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company
(Attention: Janice L. Welch, Secretary) a written notice of revocation or
a duly executed proxy bearing a later date, or by attending the meeting
and voting in person.
VOTING AND SOLICITATION
On all matters each share has one vote.
The cost of soliciting proxies will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for expenses incurred in
forwarding solicitation materials to such beneficial owners. Proxies may
be solicited by certain of the Company's directors, officers and regular
employees, without additional compensation, personally or by telephone,
telegraph or letter.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR ANNUAL MEETING FOR
FISCAL YEAR 2000
Proposals of shareholders of the Company which are to be presented
by such shareholders at the Company's Annual Meeting for the year ended
December 31, 2000 ("fiscal 2000") must be received by the Company no
later than September 30, 2000 in order that they may be included in the
Proxy Statement and form of proxy relating to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A Board of five (5) directors is to be elected at this meeting.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's nominees named below. All of the
nominees are presently directors of the Company. In the event any nominee
of the Company is unable or declines to serve as a director at the time
of the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the
vacancy. In the event additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them
in such a manner as will ensure the election of as many of the nominees
listed below as possible, and, in such event, the specific nominees to be
voted for will be determined by the proxy holders. The Company is not
aware of any nominee who will be unable or will decline to serve as a
director. The term of office of each person elected as a director will
continue until the next Annual Meeting of Shareholders or until his
successor has been elected and qualified.
The names of the nominees, and certain information about them, are
set forth below:
NAME OF NOMINEE AGE PRINCIPAL DIRECTOR
OCCUPATION SINCE
Nicholas J. Denice 59 President, Chief Executive Officer,
Director of the Company 1999
Nicholas Litchen 73 Retired Investor 1991
Walter G. Fuller 59 President, M&S Steel Co., Inc. 1997
Robert Neece 52 Attorney, Burns, Wall, Smith &
Mueller 1998
Christopher M. Welch 31 Executive Council Agent, New
York Life 1999
Except as set forth below, each of the nominees has been engaged in
his or her principal occupation set forth above during the past five (5)
years.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four (4)
regular meetings during fiscal 1999. During fiscal 1999, each director
attended one hundred percent (100%) of the meetings of the Board of
Directors held during the time each was serving as a director. During
fiscal 1999 the Company did not have any committees of the Board of
Directors.
DIRECTOR COMPENSATION
Directors are paid $250 for each Board meeting attended in fiscal
1999. Effective with the 2000 fiscal year, all directors will be
considered to be employees for purposes of the Company's Incentive Stock
Option Plan, if adopted by the shareholders later this year. Directors
may also receive consulting fees for projects completed at the request of
management.
REQUIRED VOTE
Each shareholder voting in the election of directors may cast one
vote for each share held (for or against each director). Votes withheld
from any director are counted for purposes of determining the presence or
absence of a quorum but have no legal effect under Delaware law.
Abstentions and shares held by brokers that are present but not voted,
because the brokers were prohibited from exercising discretionary
authority ("broker non-votes"), will be counted as present for purposes
of determining the presence or absence of a quorum.
MANAGEMENT RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Comiskey & Company, P.C.
("Comiskey"), independent public accountants, to audit the financial
statements of the Company for fiscal 2000. Comiskey has audited the
Company's financial statements for several years. Representatives of
Comiskey are expected to be present at the meeting with the opportunity
to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions. Ratification of the
appointment of Comiskey requires the affirmative vote of a majority of
the Votes Cast. "Votes Cast" is the number of shares of the Company's
common Stock represented and "voting" at the Annual Meeting. The
affirmative votes must constitute at least a majority of the required
quorum, which quorum is a majority of the shares outstanding on the
Record Date. Votes that are cast against the proposal will be counted for
purposes of determining (I) the presence or absence of a quorum and (ii)
the total number of Votes Cast with respect to the proposal. While there
is no definitive statutory authority in Delaware as to the proper
treatment of abstentions in the counting of votes with respect to a
proposal such as the ratification of auditors, the Company believes that
abstentions and broker non-votes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business. The Company further believes that neither abstentions nor
broker non-votes should be counted as having been "voted" with respect to
the proposal for purposes of determining whether the requisite majority
of votes cast has been obtained. In the absence of controlling precedent
to the contrary, the Company intends to treat abstentions and broker non-
votes in this manner.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF COMISKEY AS INDEPENDENT ACCOUNTANTS.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors, and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission.
Based solely on its review of the copies of such forms received by
the Company, or on written representations from certain reporting persons
that no other reports were required for such persons, the Company
believes that, during fiscal 1999, all filing requirements applicable to
its executive officers and directors were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into indemnification agreements with its
executive officers, directors and certain significant employees
containing provisions which are in some respects broader than the
specific indemnification provisions contained in the Delaware General
Corporation Law. These agreements provide, among other things, for
indemnification of the executive officers, directors and certain
significant employees in proceedings brought by third parties and in
shareholder derivative suits. Each agreement also provides for
advancement of expenses to the indemnified party. The agreements have
been approved by the majority vote of the disinterested shareholders of
the Company.
As of September 1999, the Company entered into an agreement with
ARS, a related party, for the purchase of a patent for $130,000. For the
year ended December 31, 1999, $10,000 of this amount had been repaid, and
$40,810 had been charged to interest expense. The remainder of the
payable is due in quarterly installments of $5,000, inclusive of interest
of 6.61%.
From time to time, the Company has obtained temporary financing
from its directors and officers. A total of $135,000 and $21,000 was
repaid at an interest rate of 8% in 1999 and 1998. Interest expense
recognized in 1999 and 1998 as payable to directors and officers totaled
$1,314 and $0, respectively.
The Company also obtained certain temporary financing from
shareholders or parties related to shareholders. The average interest
rate on these obligations was 8%. At December 31, 1999 and 1998,
principal amounts owed to shareholders totaled $5,801 and $16,200, and
accrued interest was $32 and $12,593. The amount of interest expense on
these notes in 1999 and 1998 totaled $1,769 and $2,785.
The Company leases service vehicles from a company owned by a
relative of one of ITI's Directors. The lease calls for monthly payments
of $2,233.
For the year ended December 31, 1999, the Company has two related
party receivables totaling $37,212. Both of these notes are non-recourse
and are secured by shares of stock of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of May 23, 2000, other than certain of its officers and directors, no
person was known by the Company to own or control beneficially more than
five percent of its outstanding voting stock. The table below sets forth
the total number of shares of the Company's outstanding voting stock
owned by each director and officer of the Company, and by all officers
and directors as a group.
Name and Address of Title of Class Number of Shares Percent of
Beneficial Owner and of Record Owned Beneficially Class(5)
Nicholas Denice Common Stock 180,000(3) 1.6%
6353 Constitution Ave.
Ft. Wayne, IN 46804
Janice L. Welch(1) Common Stock 4,115,040 35.7%
c/o 1945 Camino Vida
Roble Suite O
Carlsbad, CA 92008
Walter G. Fuller Common Stock 2,904,880(4) 25.2%
217 E. Railroad
P.O. Box 299
Garrett, IN 46738
Nicholas Litchin(2) Common Stock 1,524,760(4) 13.2%
6353 Constitution Ave.
Ft. Wayne, IN 46804
Robert Neece Common Stock 458,000(4) 4.0%
c/o 303 East 17th Ave.
Denver, Colorado 80202
Christopher M. Welch
c/o 1945 Camino Vida
Roble Suite O
Carlsbad, CA 92008 n/a none 0.0%
All Officers and Common Stock 9,182,680 79.7%
Directors as a Group
(5 persons)
(1) Includes 3,345,000 shares held of record by Ms. Welch as the Trustee
of the J&S Trust.
(2) Includes 214,920 shares held of record by L&R Realty, an Indiana
general partnership, of which Mr. Litchin is a partner, 699,840 shares
held of record by the Litchin Family Partnership, of which Mr. Litchin
is a general partner, and 360,000 shares held of record by Mercer
Beverage Co., an Ohio corporation, of which Mr. Litchin is the
President and of which Mrs. Litchin is a principal shareholder. Mr.
Litchin disclaims beneficial ownership of these shares.
(3) Includes options to purchase 180,000 common shares under the Company's
incentive stock option plan
(4) Includes options to purchase 250,000 common shares under the Company's
incentive stock option plan
(5) Adjusted for the effect of 1,525,000 shares issuable upon exercise of
outstanding incentive stock options
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
Annual Compensation Long-term Compensation Awards
Restricted Options
Stock and
Name and Position Year Salary Bonus Awards Sar's
Nicholas Denice 1997 $ - $ - $ - $ -
CEO, Director 1998 $ - $ - $ - $ -
1999 $104,083 $ - $ - $ (1)
John F. Grim (2) 1997 $125,000 $ - $ - $ -
VP Marketing 1998 $125,000 $ - $ - $ -
and Director 1999 $126,602 $ - $ - $ -
(1) Options to purchase 180,000 shares of common stock were granted in
August 1999
(2) Mr. Grim was an officer and director at December 31, 1999 but is
no longer employed by the Company.
(3) Perquisites are not included since the aggregate amount is less
than the lesser of $50,000 or 10% of salary and bonus, in accordance
with regulations promulgated by the Securities and Exchange Commission
(the "SEC"); therefore, the Other Annual Compensation has not been
included in this table.
(4) The Company has not granted any stock appreciation rights or
restricted stock awards and does not have any Long-Term Incentive
Plans as that term is defined in regulations promulgated by the SEC.
STOCK OPTION GRANTS AND EXERCISES
The following tables set forth, for the executive officers named in
the Summary Compensation Table, the stock options granted under the
Company's stock option plans and the options exercised by such
executive officers during fiscal 1999.
STOCK OPTION GRANTS IN FISCAL 1999
OPTION/SAR GRANTS DURING THE LAST FISCAL YEAR
Name Number of % of Total Options/SARS Exercise
Securities Granted to All Employees Price per Expiration
Underlying For the year 12/31/99 Share Date
Options
Nicholas Denice 60,000 $0.38 8/25/2002
CEO 60,000 11.8% $0.38 8/25/2003
60,000 $0.38 8/25/2004
- ----------------
(1) These options become exercisable as to sixty thousand shares on
each of the first three anniversaries from the date of grant.
OTHER MATTERS
The Company knows of no other matters to be submitted at the
meeting. If any other matters properly come before the meeting, it is
the intention of the persons named in the enclosed form of Proxy to
vote the shares they represent as the Company may recommend.
THE BOARD OF DIRECTORS
Dated: May 26, 2000
PROXY INTELLECTUAL TECHNOLOGY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Nicholas J. Denice with full power of
substitution, to represent the undersigned and to vote all of the
shares of stock in Intellectual Technology, Inc. (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of the
Stockholders of the Company to be held at The Holiday Inn Express, 621
South Highway 101, Solana Beach, California on Friday, June 9, 2000 at
10:30 a.m. Pacific Time, and at any adjournment thereof (1) as
hereinafter specified upon the proposals listed on the reverse side
and as more particularly described in the Proxy Statement of the
Company dated May 26, 2000 (the "Proxy Statement"), receipt of which
is hereby acknowledged, and (2) in their discretion, upon such other
matters as may properly come before the meeting. The undersigned
hereby acknowledges receipt of the Company's Annual Report for the
year ended December 31, 1999.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1
AND 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
/ X / PLEASE MARK VOTES AS IN THIS EXAMPLE
1. ELECTION OF DIRECTORS.
Nominees:
FOR WITHHELD
Nicholas J. Denice / / / /
Nicholas Litchen / / / /
Walter G. Fuller / / / /
Robert Neece / / / /
Christopher M. Welch / / / /
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW / /
2. PROPOSAL TO RATIFY THE APPOINTMENT OF COMISKEY & COMPANY P.C. AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER
31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
AND IN THEIR DISCRETION, UPON SUCH OTHER MATTER, OR MATTERS, WHICH MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS
THEREOF.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED
TO SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT
YOUR STOCK MAY BE REPRESENTED AT THE MEETING.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE
ADOPTION OF THE COMPANY'S INCENTIVE STOCK OPTION PLAN, FOR THE
RATIFICATION OF THE APPOINTMENT OF COMISKEY & COMPANY AS INDEPENDENT
ACCOUNTANTS AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING.
Signature: ________________________________ Date ____________
Signature: ________________________________ Date ____________
