SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Solicitation Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
AVALON COMMUNITY SERVICES, INC.
--------------------------------------------
(Name of registrant as Specified in Charter)
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.
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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 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
AVALON COMMUNITY SERVICES, INC.
13401 Railway Drive
Oklahoma City, OK 73114
Telephone: (405) 752-8802
-------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1999
-------------------------------
To the Shareholders:
Notice is hereby given that the 1999 Annual Meeting of Shareholders of
Avalon Community Services, Inc. (The "Company") will be held at the Avalon
Correctional Center located at 302 W. Archer Street, Tulsa, Oklahoma 74103 on
Wednesday, May 26, 1999, at 10:00 A.M. local time, for the following purposes:
1. Approve an amendment to the articles of incorporation to
change the name of the Company to Avalon Correctional
Services, Inc.
2. To elect two directors to serve for three year terms and until
the election and qualification of their successors.
3. To ratify the appointment of Grant Thornton L.L.P.,
independent certified public accountants, as auditor to
examine the financial statements of the Company for the year
ending December 31, 1999.
4. To consider and transact such other business as may properly
be brought before the Annual Meeting or any adjournment
thereof.
The Board of Directors has fixed the close of business on April 9,
1999, as the record date for the determination of shareholders entitled to
notice and to vote. Such shareholders may vote in person or by proxy. A complete
list of the shareholders entitled to vote at the Annual Meeting will be
available for examination by shareholders, for any purpose germane to the
meeting, during ordinary business hours, during a 10-day period preceding the
date of the meeting, at the executive office of the Company, 13401 Railway
Drive, Oklahoma City, Oklahoma 73114.
Shareholders are invited to attend the meeting in person. Whether or
not you plan on attending the meeting in person, it is important that your
shares be represented and voted at the meeting in accordance with your
instructions. Therefore, you are urged to fill in, sign, date and return the
accompanying proxy in the enclosed envelope. No postage is required if mailed in
the United States.
/s/ Randall J. Wood
---------------------
April __, 1999 Randall J. Wood
Secretary
<PAGE>
AVALON COMMUNITY SERVICES, INC.
-------------------------------
PROXY STATEMENT
-------------------------------
GENERAL INFORMATION
This Proxy Statement together with the Annual Report on Form 10-KSB are
being furnished to Shareholders by the Board of Directors of Avalon Community
Services, Inc. (The "Company") for the Annual Meeting of Shareholders to be held
at the Avalon Correctional Center located at 302 W. Archer Street, Tulsa,
Oklahoma 74103 on May 26, 1999, at 10:00 a.m. local time. The Company's
Shareholders will consider and vote upon the proposals described herein and
referred to in the Notice of Annual Meeting accompanying this Proxy Statement.
The close of business on April 9, 1999, has been fixed as the record date
for the determination of the shareholders entitled to notice of, and to vote at,
the Annual Meeting. On March 31, 1999, there were outstanding and entitled to
vote 4,670,630 Shares of Common Stock. Each Share of Common Stock (the "Shares")
is entitled to one vote on each matter to be considered at the Annual Meeting.
For a description of the principal holders of such Shares, see "Voting
Securities and Principal Holders Thereof" below.
The Company's principal executive office is located at 13401 Railway Drive,
Oklahoma City, Oklahoma 73114. The company's website is
www.avaloncorrections.com.
This Proxy Statement is being furnished to Shareholders on or about April
23, 1999.
SOLICITATION OF PROXIES AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of one-third (1/3) of
the votes represented by the outstanding shares of the Corporation's common
stock is necessary to constitute a quorum at the Annual Meeting. Holders of
shares are entitled to one vote per share of common stock and are not allowed to
cumulate votes in the election of directors.
Subject to the rights of shareholders to revoke their proxies, the shares
represented by each proxy executed in the accompanying form of proxy will be
voted at the meeting in accordance with the instructions therein. Proxies on
which no voting instructions are indicated will be voted FOR ratifying the
amendment to the articles of incorporation to change the name of the Company to
Avalon Correctional Services, Inc., FOR the election of nominees for directors
and FOR the appointment of Grant Thornton, L.L.P. as auditors and in the best
judgment of proxy holders on any other matter that may properly come before the
Annual Meeting. If a broker indicates on a proxy that it does not have
discretionary authority to vote shares on a certain matter, those shares will
not be considered present and entitled to vote with respect to that matter. If a
shareholder indicates on a proxy card that such shareholder abstains from voting
with respect to a proposal, the shares will be considered as present and
entitled to vote with respect to that matter, and abstention will have the
effect of a vote AGAINST the proposal. In accordance
<PAGE>
with Nevada law, a shareholder entitled to vote for the election of directors
can withhold authority to vote for all nominees for directors or can withhold
authority to vote for certain nominees for directors.
Shareholders have the unconditional right to revoke their proxies at any
time prior to the voting of their proxies at the Annual Meeting by giving
written notice to the Secretary of the Corporation or by attending the Annual
Meeting and voting in person.
The expenses of the solicitation of the proxies for the meeting, including
the cost of preparing, assembling and mailing the notice, proxy, proxy statement
and return envelopes, the handling and tabulation of proxies received, and
charges of brokerage houses and other institutions, nominees or fiduciaries for
forwarding such documents to beneficial owners, will be paid by the Corporation.
The Corporation does not intend to solicit proxies other than the mailing of
proxy materials. All Proposals require the affirmative vote of a majority of
shares represented and voting at the Annual Meeting.
AMENDMENT TO THE THE ARTICLES OF INCORPORATION TO CHANGE THE NAME
(Proposal One)
The Board of Directors has voted affirmatively to change the name of the
Corporation to Avalon Correctional Services, Inc. In order to change the name,
the Articles of Incorporation have to be amended by an affirmative vot of both
the shareholders and the Board of Directors. The Corporation is now asking the
Shareholders to approve this amendment to the articles of incorporation. The
name change will more accurately reflect the Company's business in private
corrections. The Board of Directors recommends voting FOR this proposal to
ratify the amendment to the articles of incorporation to change the name of the
Corporation to Avalon Correctional Services, Inc.
ELECTION OF OFFICERS
(Proposal Two)
The by-laws of the Corporation provide that the number of directors who
shall constitute the whole board shall be such number as may be fixed from time
to time by the Board of Directors and vacancies in the Board may be filled by
the Board of Directors until the next annual meeting of the Shareholders. The
by-laws provide that the Board members are divided into three classes of
directors with the term of office of one class expiring each year. Staggered
terms for Directors are considered anti-takeover in nature, inhibiting a change
in control of the Corporation and so possibly reduce the value of the stock to
anyone attempting to acquire control of the Corporation. At present, the Board
of Directors consists of four members, Donald E. Smith, Jerry M. Sunderland,
Robert O. McDonald and Mark S. Cooley with an additional nominee, James Wilson,
which would increase the Board of Directors to five members. Since this is the
second year in which staggered terms would be voted on, only one director class
is to be voted on by the Shareholders.
1
<PAGE>
In the 1998 annual meeting, Messrs. Sunderland and McDonald were elected to
serve three year terms, Mr. Cooley was elected to serve a two year term and Mr.
Smith was elected to serve a one year term. Board members Messrs. Sunderland,
McDonald and Cooley are not being voted on at this year's meeting because their
terms extend beyond this year. Messrs. Smith and Wilson are nominated for three
year terms to fill the two remaining positions on the Board of Director. Should
any such nominee become unable to serve, proxies may be voted for another person
designated by management or the Board. All nominees have advised that they will
serve if elected.
Certain Information Regarding Nominees
The names of the nominees, their ages as of the date of the Annual Meeting,
the date each first became a director, their principal occupations during at
least the past five years, certain other directorships held and certain other
biographical information are as set forth below.
<TABLE>
<CAPTION>
Term nominated Director
Name of Nominee Age Current Position(s) to Serve Since
- --------------- --- ------------------- --------------- --------
<S> <C> <C> <C> <C>
Donald E. Smith 46 Chief Executive Officer, Director 3 Years 1992
James Wilson 40 Director Nominee 3 Years N/A
</TABLE>
<TABLE>
<CAPTION>
Directors
The Company's current directors and director nominees are:
Name Age Position(s) with the Company
---- --- ----------------------------
<S> <C> <C>
Donald E. Smith .....................................46 Chief Executive Officer, Director
Jerry M. Sunderland .................................62 President, Director
Robert O. McDonald ..................................60 Director
Mark S. Cooley .....................................40 Director
James Wilson.........................................40 Director Nominee
</TABLE>
The following is a brief description of the business experience during the
past five years of each of the above-name persons:
Donald E. Smith is the founder of the Company's corrections operations and
has served as the Chief Executive Officer of Avalon and its subsidiaries since
their inception. Mr. Smith has owned, managed and developed a number of private
corporations since 1985 to provide private corrections, health care and other
related services. Mr. Smith received a Bachelor of Science degree in 1974 from
Northwestern State College. Mr. Smith was employed by Arthur Andersen & Co. for
seven years prior to founding the Company.
2
<PAGE>
Jerry M. Sunderland joined the Company in 1988 and has served as President
of Avalon since June 1995. Mr. Sunderland also serves as a Director of Avalon
and its subsidiaries. Mr. Sunderland has in excess of 38 years of experience in
developing and operating quality programs and facilities for adult offenders.
Mr. Sunderland was employed by the Oklahoma Department or Corrections for
sixteen years including ten years as warden of maximum security prison. Mr.
Sunderland also served as an agent for the Oklahoma State Bureau of
Investigation for twelve years. Mr. Sunderland has a Bachelors degree in
Sociology and a Masters degree in Corrections.
Robert O. McDonald was appointed as a Director of Avalon in October, 1994.
Mr. McDonald is Chairman of the Board of Directors of Capital West Securities
and its parent holding company, Affinity Holding Corp. Mr. McDonald started his
investment career in 1961 with Allen and Company and left in 1967 to form
McDonald Bennahum and Co., which later joined with Ladenburg Thalmann and Co.
where Mr. McDonald was a Senior Partner. Mr. McDonald joined Planet Oil Mineral
Corporation in 1971 and became president in 1973. From 1975 until 1993, Mr.
McDonald was affiliated with Stifel Nicolaus & Company and headed its municipal
syndicated effort. Mr. McDonald received a Bachelor's Degree in Finance from the
University of Oklahoma in 1960. He also served as an Officer in the United
States Army and Army Reserve.
Mark S. Cooley was appointed as a Director of Avalon in January 1998. Mr.
Cooley is a Principal of Cooley & Company and Pro Trust Equity Partners. Mr.
Cooley was with Citicorp and Chemical Bank for twelve years in their Corporate
Finance Divisions in New York and Denver. Mr. Cooley received his Bachelors
degree in Economics from DePauw University and an MBA in Finance from Indiana
University.
James P. Wilson was appointed as a Director-elect of Avalon in September
1998, subject to shareholder approval at the 1999 annual meeting. Mr. Wilson is
a managing partner in the investment firm of Rice, Sangalis, Toole & Wilson.
Prior to founding Rice, Sangalis, Toole & Wilson, Mr. Wilson was a vice
president with First Texas Merchant Banking Group, and was also an audit manager
with Arthur Young & Co. Mr. Wilson received a BBA degree from Texas A&M
University, and is a Certified Public Accountant.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of March 31, 1999, information
concerning the beneficial ownership of the Company's Class A Common Stock by (i)
each person 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 of the
Company, (iii) each of the executive officers of the Company and (iv) all
directors and executive officers as a group. To the best of the Company's
knowledge, each of the persons named in the table has sole voting and investment
power with respect to all the shares of Common Stock beneficially owned by such
person as set forth opposite such person's name except as otherwise noted.
3
<PAGE>
Amount and
Nature of
Beneficial
Ownership of Total
Common Percent Voting
Name & Address Stock of Class Percentage
- -------------- ------------ -------- ----------
Donald E. Smith (2)
13401 Railway Drive 1,085,817 (1) 23.28% 23.28%
Oklahoma City, OK 73114
RSTW Partners III (3)
5847 San Felipe,Suite 4350
Houston, TX 77057 1,622,448 34.78% 34.78%
Jerry M. Sunderland (2)
13401 Railway Drive
Oklahoma City, OK 73114 86,588 1.86% 1.86%
Robert O. McDonald (2)
3316 Preston Drive
Oklahoma City, OK 73120 33,638 * *
Mark S. Cooley (2)
5575 DTC Pkwy, Suite320
Englewood, CO 80111 1,250 * *
Gary A. Parsons (2)
13401 Railway Drive
Oklahoma City, OK 73114 19,750 * *
Randall J. Wood (2)
13401 Railway Drive
Oklahoma City, OK 73114 9,500 * *
Tiffany Smith (2)
13401 Railway Drive
Oklahoma City, OK 73114 25,693 * *
Timothy E. West (2)
13401 Railway Drive
Oklahoma City, OK 73114 5,000 * *
Paul D. Voss (2)
13401 Railway Drive
Oklahoma City, OK 73114 1,875 * *
Shawn Sunderland (2)
13401 Railway Drive
Oklahoma City, OK 73114 1,875 * *
All executive officers and
directors as a group 1,270,986 27.25% 27.25%
( 6 persons) (1) (2)
4
<PAGE>
* Less than 1%.
(1) Includes 61,542 shares owned by Mr. Smith's children.
(2) Includes 61,588 shares to Mr. Smith, 86,588 shares to Mr. J.
Sunderland, 33,638 shares to Mr. McDonald, 1,250 shares to Mr. Cooley,
16,250 shares to Mr. Parsons, 9,500 shares to Mr. Wood,
25,693 shares to Ms. Smith, 5,000 shares to Mr. West, 1,875 shares to
Mr. Voss, and 1,875 to Mr. S. Sunderland issuable within 60 days upon
exercise of vested options granted pursuant to the Company's Stock
Option Plan.
(3) Mr. James Wilson, director-nominee is a principal in the firm of RSTW
Partners III and has a beneficial interest in 1,622,448 shares.
Mr. James Wilson is nominated to serve a three year term on the Board
of Directors.
Note: Under the rules of the Securities and Exchange Commission, a person is
deemed to be a beneficial owner of a security if he has or shares the powers to
vote or direct the voting of such security or the power to dispose of or to
direct the disposition of such security. Accordingly, more than one person may
be deemed to be a beneficial owner of the same securities. A person is also
deemed to be a beneficial owner of any securities of which that person has the
right to acquire beneficial ownership within 60 days. Unless otherwise indicated
by footnote, the named individuals have sole voting and investment power with
respect to the shares held by them.
DIRECTORS AND EXECUTIVE OFFICERS
The following individuals have been nominated to serve a three year
term as directors. Both nominees have advised that they will serve if elected.
Term
nominated
Name of Nominee Age Current Position(s) to serve Since
- --------------- --- ------------------------ --------- --------
Donald E. Smith 46 Chief Executive Officer, 3 Years 1992
Director
James Wilson 40 Director Nominee 3 Years N/A
Biographical information on Messrs. Smith and Wilson are included under
Certain Information Regarding Nominees above.
5
<PAGE>
Executive Officers
The Company's current officers are:
<TABLE>
<CAPTION>
Name Age Position(s) with the Company
---- --- ----------------------------
<S> <C> <C>
Donald E. Smith ........................... 46 Chief Executive Officer, Director
Jerry M. Sunderland ....................... 62 President, Director
Gary D. Parsons........................... 54 Senior Vice President of Operations
Tim West .................................. 50 Senior Vice President of Operations
Randall J. Wood .......................... 41 Corporate Secretary
Tiffany Smith ............................. 30 Vice President of Corporate
Communications, Asst Corp Secretary
Paul D. Voss.............................. 31 Vice President of Finance
Shawn Sunderland........................... 35 Vice President of Business Development
</TABLE>
Officers of the Company -
The following is a brief description of the business experience during the
past five years of each of the above-name officers who are not Directors or
Director nominees:
Gary D. Parsons joined Avalon as Vice President of Operations in December
1997 and was promoted to Senior Vice President of Operations in February 1999.
Mr. Parsons has in excess of 25 years of experience in developing and operating
quality programs and facilities for adult offenders. Mr. Parsons was employed by
the Oklahoma Department of Corrections for twenty four years. Mr. Parsons is
jointly responsible for Avalon's correctional operations, including recruitment
and training of personnel, maintaining accreditation by the American
Correctional Association, and compliance with contractual requirements. Mr.
Parsons received a Bachelors degree in Business Administration and a Masters
degree in Business Administration from the University of Central Oklahoma.
Tim West joined Avalon as Vice President of Operations in May 1998 and was
promoted to Senior Vice President of Operations in February 1999. Mr. West has
in excess of 25 years of experience designing, developing, and operating
correctional institutions. Mr. West is jointly responsible for Avalon's
correctional operations, including recruitment and training of personnel,
maintaining accreditation by the American Correctional Association, and
compliance with contractual requirements. Mr. West has served in numerous
capacities in the Texas criminal justice system, most recently as the Senior
Warden at the Mark W. Stiles Unit in Huntsville, Texas. Mr. West also served as
the project director for the "Michael Prototype" in the Texas prison system. Mr.
West received a Bachelors and Masters Degree in Contemporary Corrections from
the Institute for Contemporary Corrections and the Behavioral Sciences at Sam
Houston University.
6
<PAGE>
Randall J. Wood joined Avalon in 1995 and serves as Corporate Secretary and
General Counsel for the Company. Prior to joining the Company in 1996, Mr.
Wood's practice was focused primarily in the field of real property and
commercial litigation. Mr. Wood practiced with the firm of Stack & Barnes, P.C.
for ten years, and was with the firm of Hammons, Vaught & Conner prior to
joining the Company. Mr. Wood is a member of the Oklahoma Bar Association and is
authorized in Oklahoma Federal Courts and the Tenth Circuit Court of Appeals.
Mr. Wood is responsible for the duties of the Corporate Secretary, management of
legal matters, and compliance with government regulations for the Company and
subsidiaries. Mr. Wood received his law degree from the University of Oklahoma
in 1983.
Tiffany Smith joined the Company in 1994 as the Public Information Officer
and was promoted to Assistant Corporate Secretary for the Company in 1997 and to
Vice President of Corporate Communications in 1999. Ms. Smith served for four
years as marketing manager for Eagle Picher Industries, a New York Stock
Exchange listed company, prior to joining Avalon. Ms. Smith has developed and is
responsible for directing the Company's Corporate Communications and Public
Relations department and implementing marketing strategies. Ms. Smith is the
primary contact for the Company's shareholders and investors. Ms. Smith received
a Bachelors Degree in Business Administration, Marketing and Management from
Missouri Southern State College. Ms. Smith is the spouse of Donald Smith, Chief
Executive Officer.
Paul D. Voss joined the Company as Vice President of Finance in January
1998. Mr. Voss is primarily responsible for financial reporting and corporate
administration for the Company. Mr. Voss was Controller at Magic Circle Energy
from 1994 to 1996. Mr. Voss was a senior auditor for Grant Thornton for five
years and more recently an accounting manager for Finley & Cook, P.L.L.C. Mr.
Voss received a degree in Business Administration from Angelo State University
in 1989.
Shawn Sunderland joined the Company in 1997 and was promoted to Vice
President of Business Development in February 1999. Mr Sunderland has been
engaged in the corrections and law enforcement industry for more than 9 years.
Mr. Sunderland is responsible for project development including site
development, lease negotiation, proposal development, facility design, and
program implementation. Mr. Sunderland is the son of Jerry Sunderland,
President.
INFORMATION WITH RESPECT TO STANDING COMMITTEES OF THE
BOARD AND MEETINGS
Five meetings of the Board of Directors were held during the last fiscal
year, which were attended by all of the Directors. Attendance fees of $500 per
meeting were paid to Messrs. McDonald and Cooley in connection with said
meetings. The Board also took action by unanimous written consents in lieu of
meetings on six occasions. Board members do not receive directors fees for
serving in such capacities, and board members also serving as officers do not
receive attendance fees for attendance at meetings.
The Company does not utilize nominating or compensation committees.
However, the Board has appointed an audit committee consisting of Messrs. Smith,
McDonald and Cooley. Two of the members of the audit committee are outside board
members.
7
<PAGE>
Executive Compensation
The following table sets forth the compensation paid or accrued during each
of the years in the three years ended December 31, 1998, to the Company's Chief
Executive Officer, Donald E. Smith. No executive officer of the Company received
in excess of $100,000 in total compensation for the same period:
Other Annual Compensation
---------------------------
Year Salary Bonus Automobile Other
---- ------ ----- ---------- -----
1998 $60,000 $ --- $ --- $ ---
1997 60,000 --- --- ---
1996 60,000 --- 7,200 1,800
Other annual compensation includes the use of an automobile owned by the
Company and payment of monthly dues.
Employment Agreements
Donald E. Smith serves as the Company's Chief Executive Officer pursuant to
an employment agreement executed with the Company in August 1997. The employment
agreement specifies an initial annual compensation rate of $85,000; however,
compensation has been limited to $60,000 until the earlier sale or profitability
of an assisted living center. Any changes in compensation during the term of the
agreement are to be determined by the Board of Directors. Mr. Smith receives
vacation, insurance, and similar benefits together with the use of a car for
Company-related travel. Mr. Smith's employment agreement contains provisions for
severance pay and disability payments, as well as a non-compete agreement. The
term of the employment agreement is three years.
Jerry M. Sunderland serves as the Company's President pursuant to an
employment agreement executed with the Company in August 1997. The employment
agreement specifies an initial annual compensation rate of $85,000. Currently,
Mr. Sunderland's annual salary is $135,000. Any changes in compensation during
the term of the agreement are to be determined by the Board of Directors. Mr.
Sunderland receives vacation, insurance, and similar benefits together with the
use of a car for Company-related travel. Mr. Sunderland's employment agreement
contains provisions for severance pay and disability payments, as well as a
non-compete agreement. The term of the employment agreement is three years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The attention of the shareholders is directed to Financial Statement Note 8
on pages 21 and 22 and Financial Statement Note 14 on page 27 of the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1998 (copies of
which were mailed together with the Proxy Statements), describing in detail
certain relationships and transactions involving the Company and certain
officers and directors of the Company. Such matters pertain to the execution of
employment agreements as described hereinabove, guarantee the Company's
financial obligations, and other related party transactions.
8
<PAGE>
SECTION 16A FILINGS
Messrs. Smith, Sunderland, and McDonald are required to file pursuant to
16(a) of the Securities and Exchange Act of 1934, a statement of any changes in
ownership of the Company's securities within 10 days after the end of any month
in which a transaction took place and an annual statement of ownership of the
Company's securities within 45 days after the end of the Company's fiscal year.
All required filings for the annual statement of ownership on Form 5 with the
Securities and Exchange Commission have been made for 1998.
PROPOSAL TO RATIFY THE
ENGAGEMENT OF AUDITORS
(Proposal Three)
The Company's Board of Directors has selected Grant Thornton, L.L.P., as
the Company's independent public accountants and auditors for the fiscal year
ending December 31, 1999 and will ask the Shareholders to ratify that selection
at the Annual Meeting. Grant Thornton L.L.P., served as the Company's
independent certified accountants and auditors for the fiscal years ended
December 31, 1996, 1997 and 1998. A representative of Grant Thornton, L.L.P., is
expected to attend the Annual Meeting and will be provided an opportunity to
make a statement if desired, and/or to answer appropriate questions from
Shareholders, if any.
The Board recommends ratification and approval of the election of Grant
Thornton, LLP as the Company's independent public accountants and auditors for
fiscal year ended December 31, 1999.
SHAREHOLDER PROPOSALS
No Shareholder proposals have been submitted to the Company for
consideration at the Annual Meeting. Should a Shareholder wish to present a
proposal at the 2000 Annual Meeting of Shareholders, such proposal must be
received by the Company at its address shown on this Proxy Statement prior to
January 10, 2000. Any proposals received by that date will be reviewed by the
Board to determine whether it is a proper proposal to present to the 1999 Annual
Meeting.
VOTE REQUIRED
A one-third (1/3) of the Company's Shares of Common Stock issued and
outstanding as of April 9, 1999 shall constitute a quorum at the Annual Meeting.
The affirmative vote of at least a majority of the Shares represented at the
Annual Meeting is required for all proposals to come before the Meeting. The
Company anticipates that all proposals will be approved.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present a matter for action at the Annual Meeting other than as set
forth herein and in the Notice of Annual Meeting, nor has the Board been
informed that any other person intends to present any additional matter.
However, if any other matters are brought before the Meeting, the proxies served
in the enclosed form of proxy will vote in accordance with their judgment on
such matters.
9
<PAGE>
ANNUAL REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS
Copies of the Company's Annual Report as filed with the Securities and
Exchange Commission on Form 10-KSB, including consolidated financial statements
for the year ended December 31, 1998, are enclosed together with the Proxy
Statement. Additional copies may be obtained, upon payment of the reasonable
expenses involved, by writing to the Company at its address set forth in the
Proxy Statement.
By Order of the Board of Directors
April __, 1999 /s/ Randall J. Wood
---------------------
Randall J. Wood, Secretary
YOUR COOPERATION IN GIVING THIS MATTER YOUR IMMEDIATE
ATTENTION AND RETURNING YOUR PROXY PROMPTLY WILL BE
APPRECIATED
10
