SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[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
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Diversifax,
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:
<PAGE>
PRELIMINARY COPY
DIVERSIFAX, INC.
4274 Independent Court
Sarasota, FL 34234-2109
___________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on November 18, 1998
____________________
To the Stockholders of
DIVERSIFAX, INC.:
Notice is hereby given that the Annual Meeting of
Stockholders of Diversifax, Inc. will be held at the principal
office of the Company, 4274 Independent Court, Sarasota, FL
34234-2109, on November 18, 1998, at 2:00 p.m., Eastern
Standard time, for the following purposes:
1. To elect the Board of Directors to serve until the next
Annual Meeting of Stockholders and until their suc-
cessors are duly elected and qualified;
2. To approve a proposed amendment to the Company's
Certificate of Incorporation to increase the number of
authorized shares of Common Stock (the "Share
Increase") from 40,000,000 to 70,000,000;
3. To ratify the selection by the Board of Directors of
Hoberman, Miller, Goldstein & Lesser, P.C. to serve as
independent auditors for the year ending November 30,
1998; and
4. To transact such other business as may properly be
presented for action at the Annual Meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on
October __, 1998 as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournments thereof.
Holders of a majority of the outstanding shares must be
present in person or by proxy in order for the Annual Meeting
to be held. WHETHER OR NOT YOU EXPECT TO ATTEND
THE ANNUAL MEETING, YOUR PROXY VOTE IS
IMPORTANT. ACCORDINGLY, YOU ARE REQUESTED
TO MARK, SIGN, AND DATE THE ENCLOSED PROXY
FORM AND RETURN IT IN THE ACCOMPANYING
STAMPED ENVELOPE. The giving of such proxy will not
affect your right to revoke such proxy before it is exercised or
to vote in person should you later decide to attend the Annual
Meeting.
All stockholders are cordially invited to attend the Annual
Meeting.
By Order of the Board of Directors
Kenneth Ross Wolfe, Secretary
Dated: October __, 1998
IT IS IMPORTANT THAT THE ENCLOSED PROXY
FORM BE
COMPLETED AND RETURNED PROMPTLY.<PAGE>
PRELIMINARY COPY
DIVERSIFAX, INC.
4274 Independent Court
Sarasota, FL 34234-2109
_______________
PROXY STATEMENT
_______________
ANNUAL MEETING OF STOCKHOLDERS
November 18, 1998
SOLICITATION OF PROXIES
___________________
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Diversifax, Inc., a
Delaware corporation (the "Company"), of proxies to be voted
at the Annual Meeting of Stockholders of the Company (the
"Meeting") to be held at the principal office of the Company,
4274 Independent Court, Sarasota, FL 34234-2109, on
November 18, 1998, at 2:00 p.m., Eastern Standard time, and
any adjournments thereof.
A form of proxy is enclosed for use at the Meeting. The
proxy may be revoked by a stockholder at any time before it is
voted by execution of a proxy bearing a later date or by written
notice to the Secretary of the Company before the Meeting, and
any stockholder present at the Meeting may revoke his or her
proxy thereat and vote in person if he or she so desires. When
such proxy is properly executed and returned, the shares it
represents will be voted at the Meeting in accordance with any
instructions noted thereon. If no direction is indicated, all shares
represented by valid proxies received pursuant to this solicitation
(and not revoked prior to exercise) will be voted FOR the
election of the nominees for directors herein, FOR the proposed
amendment to the Company's Certificate of Incorporation to
effect the increase (the "Share Increase") in the number of
authorized shares of common stock, par value $.001 per share,
of the Company ("Common Stock") from 40,000,000 to
70,000,000 and FOR ratification of the appointment of
Hoberman, Miller, Goldstein & Lesser, P.C. as independent
auditors.
Only recordholders of Common Stock on the close of
business on October __, 1998 will be entitled to notice of, and
to vote at, the Meeting. At the close of business on such date,
the Company had issued and outstanding __________ shares of
Common Stock. Each share entitles the holder thereof to one
vote on each matter to be presented at the Meeting. Nominees
for directors shall be elected by stockholders holding a plurality
of the shares of Common Stock present, or represented, and
entitled to vote at the Meeting. Adoption of the proposed
amendment to the Company's Certificate of Incorporation to
effect the Share Increase requires the affirmative vote of the
holders of shares of Common Stock representing a majority of
the votes entitled to be cast at the Meeting. Approval of each
other proposal to be acted upon at the Meeting requires a vote of
a majority of the shares present, or represented, and entitled to
vote at the Meeting. Abstentions will be counted towards the
tabulation of votes cast on each proposal and will have the same
effect as negative votes. Broker non-votes are counted towards
a quorum, but are not counted for any purpose in determining
whether a proposal has been approved.
The cost of soliciting proxies on behalf of the Board of
Directors will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by directors,
officers, or other personnel of the Company (who will receive no
extra compensation for these services) in person or by telephone,
telefax, or telegraph. The Company also will request brokerage
houses, custodians, nominees, fiduciaries, or other persons
holding shares of Common Stock in their names or in the names
of their nominees to forward these proxy materials to the
beneficial owners of the Common Stock and will reimburse such
persons for their reasonable expenses in connection therewith.
The approximate date of mailing of this Proxy Statement and
accompanying proxy is October __, 1998.
NOMINATION AND ELECTION OF DIRECTORS
Three directors, all of whom are members of the present
Board of Directors, are nominees for election to hold office until
the next annual meeting and until their respective successors are
elected and qualified. Unless authority to vote for the election
of directors shall have been withheld, it is intended that proxies
in the accompanying form will be voted at the Meeting for the
election of the nominees named below. If any nominee, for any
reason presently unknown to the Company, should refuse or be
unable to serve, the shares represented by proxy will be voted
for such person as shall be designated by the Board of Directors
to replace any such nominee.
The nominees for the Board of Directors of the Company are
as follows:
<TABLE>
<CAPTION>
<S>
Name<PAGE>
<C>
Age<PAGE>
<C>
Office
<PAGE>
Irwin A. Horowitz 61 Chairman of the Board,
Chief Executive Officer and President<PAGE>
Kenneth Ross Wolfe<PAGE>
52 Secretary and Director<PAGE>
Judd Rothman<PAGE>
55 Director
</TABLE>
Irwin A. Horowitz has been the Chairman of the Board,
Chief Executive Officer, and President of the Company since
November 1, 1993. From July through October 1993, he served
as Chief Operating Officer of the Company. For more than the
past five years, Dr. Horowitz has been Chairman of the Board
and President of IMSG Systems, Inc. and certain affiliated
companies which were acquired by the Company effective
November 1, 1993. Dr. Horowitz is a director of Dynamics
Imaging, Inc., a company which is primarily engaged in the
development of advanced medical technologies, and International
Industries, Inc., a company which is primarily engaged in the
manufacture and distribution of cigars and automated cigar
vending machines.
Kenneth Ross Wolfe has been a director of the Company
since November 1, 1993 and was Secretary of the Company
from November 1994 to January 1996, and has served as
Secretary of the Company from May 1996 to present. Mr.
Wolfe is an attorney who has maintained a private law practice
since 1976 and, since January 1, 1998, has been the senior
partner of Wolfe, Romano & Joyce, LLP. From 1969 to 1976,
he was a prosecuting attorney in New York, including two years
as a Special Assistant Attorney General in the Office of The
Special State Prosecutor, investigating corruption in the criminal
justice system. Mr. Wolfe received his JD degree from
Brooklyn Law School in 1969, where he served as a member of
the law review. He is admitted to practice in New York, as well
as various federal courts, including the United States Supreme
Court.
Judd Rothman has been a director of the Company since
February 5, 1998. Mr. Rothman is one of the Company's
original founders and the former Treasurer and Chief Financial
Officer from 1989 to 1993. Since 1994, Mr. Rothman has been
President of ProTect Business Management Corp., a management
consulting firm. Since 1992, Mr. Rothman has also been
President of Rothman & Rothman P.C., Certified Public
Accountants. Mr. Rothman received a BS degree from the
University of Louisville.
No family relationship exists between any director or
executive officer and any other director or executive officer.
The Board of Directors recommends that the stockholders
vote for the election of all of the above-named nominees to
the Board of Directors.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held two meetings during the year
ended November 30, 1997, each of which were attended by all
of the then directors of the Company, and the Board of Directors
acted by unanimous consent on four occasions.
The Company's audit committee, which was formed to
review the adequacy of the Company's internal controls and meet
periodically with management and the Company's independent
auditors, is comprised of Messrs. Kenneth Wolfe and Judd
Rothman. Such committee held no meetings during fiscal 1997.
The Company has no standing compensation or nominating
committee.
COMPENSATION OF DIRECTORS
The directors of the Company are not currently compensated,
nor were they during the last fiscal year, for their services as
such, except through the issuance of stock options. In
September 1995, options to purchase 100,000 shares of Common
Stock at an exercise price of $4.125 were granted to Mr. Wolfe.
Such options vest at the rate of 20,000 per year (the first 20,000
vested upon grant) and terminate 90 days after Mr. Wolfe ceases
to serve as a director. In December 1996, Mr. Wolfe received
additional options to purchase 100,000 shares of Common Stock
at an exercise price of $2.375 per share. Such options vested as
to 40,000 shares upon grant and as to 20,000 shares on each
September 5 in 1997, 1998 and 1999. In connection with such
grant, Mr. Wolfe agreed to cancel the unvested portion (for
60,000 shares) of his original options. In February 1998, the
exercise price of all options held by Mr. Wolfe was reduced to
$.375 per share and in April 1998 the exercise price of such
options was further reduced to $.1875 per share. In February,
1998, Mr. Rothman received options to purchase 100,000 shares
of Common Stock at an exercise price of $.3125 per share.
Such options vest as to 20,000 shares on each February 5 in
1998, 1999, 2000, 2001 and 2002.
BENEFICIAL OWNERSHIP OF THE COMPANY'S
SECURITIES
The following table sets forth, as of September __, 1998,
certain information (based on publicly available filings) regarding
beneficial ownership of the Common Stock by (a) each
stockholder known by the Company to be the beneficial owner
of more than 5% of the outstanding shares of Common Stock,
(b) each director of the Company, (c) the named Executive
Officer (as defined below), and (d) all of the Company's
executive officers and directors as a group.
<TABLE>
<CAPTION>
<S>
Name and Address of
Beneficial Holder
<C>
<PAGE>
Number of Shares
Beneficially Owned(1)<PAGE>
<C>
Percentage of Class<PAGE>
Dr. Irwin A. Horowitz
111 Ocean Place
Sarasota, Florida 24242<PAGE>
9,623,097 (2) 50.5%<PAGE>
Kenneth Ross Wolfe
532 Broad Hollow Road
Melville, New York 11747<PAGE>
120,000 (3) *
Judd Rothman
31 Oak Street
Patchogue, New York<PAGE>
217,850 (4) 1.4%<PAGE>
All officers and directors as a
group (3 persons)<PAGE>
9,960,947 (5) 51.9%
* less than 1%.
</TABLE>
(1) Unless otherwise indicated below, all shares are owned
beneficially and of record.
(2) Includes 1,150,000 shares of Common Stock underlying
options exercisable within 60 days and 2,163,097 shares
of Common Stock underlying warrants exercisable
within 60 days.
(3) Includes 120,000 shares of Common Stock underlying
options exercisable within 60 days.
(4) Includes 20,000 shares of Common Stock underlying
options exercisable within 60 days.
(5) Includes an aggregate of 1,290,000 shares of Common
Stock underlying options exercisable within 60 days and
an aggregate of 2,163,097 shares of Common Stock
underlying warrants exercisable within 60 days.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the
compensation paid by the Company in the fiscal years ended
November 30, 1997, 1996, and 1995 to the Company's Chief
Executive Officer (the "Named Executive Officer"). No other
executive officer of the Company (or a subsidiary of the
Company) received salary and bonus payments in excess of
$100,000 in the fiscal year ended November 30, 1997. For the
purposes of this table, warrants are deemed to be equivalent to
stock options.
<TABLE>
<CAPTION>
S
<PAGE>
Annual Compensation Long Term
Compensation
<C>
<PAGE>
Name and Principal <C> <C> <C> <C> <C>
Position <PAGE>
Year Salary ($) Bonus ($) Other ($)(1) Securities Underlying
Options (#) <PAGE>
Dr. Irwin A. Horowitz
Chairman of the Board
of Directors, Chief
Executive Officer,
and President<PAGE>
1997 125,000(2) -- 88,724 2,485,577 1996 126,142 -- 67,200 1,277,520 1995 201,923 -- 65,155 -- <PAGE>
</TABLE>
(1) Represents the fair market value of benefits and
perquisites afforded by the Company to Dr. Horowitz.
(2) Includes accruals of $91,896 for amounts that were
deferred.<PAGE>
Option Grants in Fiscal 1997
(Individual Grants)
The following table sets forth certain information for the
Named Executive Officer with respect to grants of options (for
the purposes of this table, warrants are deemed to be equivalent
to stock options) to purchase Common Stock made during the
fiscal year ended November 30, 1997.
<TABLE>
<CAPTION>
<S>
Name<PAGE>
<C>
No. of
Securities
Underlying
Options
Granted (#)
<C>
<PAGE>
% of Total
Options
Granted to
Employees
in Year
<C>
<PAGE>
Exercise Price
($/Sh)
C
<PAGE>
Expiration
Date <PAGE>
Irwin A. Horowitz 38,270
711,730
350,000
1,100,000
285,577<PAGE>
1.4%
25.2%
12.9%
38.9%
10.1%<PAGE>
2.613(1)
2.375(2)
1.9375(2)
.84375(2)
.6875(2)<PAGE>
12/16/01
12/16/01
5/5/02
9/3/00
10/27/00
</TABLE>
(1) The exercise price of these options was lowered to $.4125 on
February 19, 1998 in partial consideration of the interest free
extension of Dr. Horowitz's loans to the Company. Such
exercise price was further lowered to $.20625 on April 1,
1998 in partial consideration of the further interest free
extension of Dr. Horowitz's loans to the Company. See
"Certain Relationships and Related Transactions."
(2) The exercise price of these options and warrants was lowered
to $.375 on February 19, 1998 in partial consideration of the
interest free extension of Dr. Horowitz's loans to the
Company. Such exercise price was further lowered to
$.1875 on April 1, 1998 in partial consideration of the
further interest free extension of Dr. Horowitz's loans to the
Company. See "Certain Relationships and Related
Transactions."
Aggregated Option Exercises During Fiscal 1997 and Year
End Option Values
The following table provides information related to options
exercised by the Named Executive Officer during 1997 and the
number and value of options held at November 30, 1997. The
Company does not have any outstanding stock appreciation rights
(for the purposes of this table, warrants are deemed to be
equivalent to stock options).
<TABLE>
<CAPTION>
<S>
Name<PAGE>
<C>
Shares
Acquired on
Exercise(#)
<C>
<PAGE>
Value
Realized
<C>
($) <PAGE>
Number of Unexercised
Options at Year End(#)
Exercisable Unexercisable<PAGE>
<C>
Value of Unexercised In-
the-Money Options at Year
End ($)
Exercisable Unexercisable
<PAGE>
Irwin A. Horowitz -- -- 3,313,097 450,000 0 0
</TABLE>
Employment Agreement
During fiscal 1997, Dr. Horowitz divided his business time
primarily between New York (the location of the Company's
then principal office and significant customers) and Florida
(where the Company also has significant business). On October
29, 1996, the Company entered into a renewable one year
Employment Agreement with Dr. Horowitz, pursuant to which
the Company agreed to pay Dr. Horowitz a salary of $125,000,
together with an annual incentive bonus equal to a percentage of
the Company's pre-tax profits. Such incentive bonus ranges
from 6% to 18% of the Company's pre-tax profits, based on the
level of such pre-tax profits. In addition, upon execution of the
agreement, Dr. Horowitz received options to purchase 750,000
shares of Common Stock, which options vest as to 150,000
shares on the date of grant and upon each of the next four
anniversary dates thereof. The Company further agreed to grant
Dr. Horowitz options to purchase an additional 100,000 shares
of Common Stock in consideration of Dr. Horowitz' prior
guaranty of the Company's payments under a certain bank loan
agreement. The Company pays or reimburses Dr. Horowitz for
the travel expense between New York and Florida and the rental
of cars in both locations. During fiscal 1997, 1996, and 1995,
these expenses aggregated $88,724, $67,200, and $65,155,
respectively. The Employment Agreement was not renewed in
October 1997.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Mr. Kenneth Ross Wolfe, a director of the Company,
provides legal services to the Company. Mr. Wolfe has received
approximately $89,000 in legal fees in fiscal year 1997 and
approximately $33,000 in fiscal year 1996.
From June 1994 to November 1995, Dr. Irwin A. Horowitz,
the Chairman of the Board, Chief Executive Officer, and
President of the Company, guaranteed the Company's payments
under certain bank loan agreements. Such loans were in the
aggregate principal amount of $1,185,000, and as of December
1995, were paid in full, at which time the total balance was
$1,007,459. In consideration for such guaranty, in August 1996,
Dr. Horowitz received options to purchase 100,000 shares of
Common Stock at an exercise price of $3.25 per share. Such
exercise price was lowered to $.375 in February 1998 and to
$.1875 in April 1998.
From time to time, Dr. Horowitz has loaned the Company
funds to cover its working capital needs. On August 16, 1996,
the Company delivered to Dr. Horowitz a promissory note in the
amount of $668,000 (the principal balance on that date), payable
on demand after June 1, 1997, and five-year warrants to
purchase 427,520 shares of Common Stock at an exercise price
of $3.125 per share in consideration of such loan and for Dr.
Horowitz's agreement that such loan would not bear interest.
On December 17, 1996, Dr. Horowitz agreed to extend to
December 2, 1997 the due date of the loans made on or before
August 16, 1996, as well as all subsequent loans, in the net
aggregate principal amount of $1,034,013. In consideration
thereof and for Dr. Horowitz's agreement that such loans would
be interest free, the Company agreed that the per share exercise
price of the warrants granted in August 1996 as well as of the
options granted to him in October 1996 pursuant to his
Employment Agreement with the Company, would be reduced
to $2.375 per share, the then current fair market value of the
Common Stock. In addition, the Company granted to Dr.
Horowitz additional incentive and non-incentive options to
purchase an aggregate of 750,000 shares of Common Stock, of
which the incentive options (for 38,270 shares) were exercisable
at $2.613 per share and the non-incentive options (for 711,730
shares) were exercisable at $2.375 per share. On May 6, 1997,
in consideration for additional interest-free loans (which amount
includes reduced salary payments), made by Dr. Horowitz, the
Company granted to Dr. Horowitz additional three-year warrants
to purchase 350,000 shares of Common Stock, at an exercise
price of $1.9375 per share, all of which warrants are
immediately exercisable. On September 4, 1997, as
compensation to Dr. Horowitz for having made a one year
interest-free loan to the Company in the amount of $500,000, the
Company issued to Dr. Horowitz a three year warrant to
purchase 1,100,000 shares of Common Stock at an exercise price
of $.84375 per share. On October 28, 1997, as compensation to
Dr. Horowitz for having deferred salary payments totalling
$129,808, the Company issued to Dr. Horowitz a three year
warrant to purchase 285,577 shares of Common Stock at an
exercise price of $.6875 per share. At November 30, 1997, the
Company was indebted to Dr. Horowitz in the amount of
$1,781,308.
On February 19, 1998, the exercise price of all of the options
and warrants held by Dr. Horowitz was lowered to $.375 per
share (except for incentive stock options, which were lowered to
$.4125 per share), the then current market price of the Common
Stock, in consideration of his agreement to extend on an interest
free basis the due date of all of his loans to the Company to
February 19, 1999. On April 1, 1998, the exercise price of all
of such options and warrants was further lowered to $.1875 per
share (except for incentive stock options, which were lowered to
$.206 per share) in consideration of Dr. Horowitz's agreement
to extend on an interest free basis the due date of all of his loans
to the Company until April 19, 1999.
PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO
EFFECT THE SHARE INCREASE
On _______, 1998, the Board of Directors of the Company
approved an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Common Stock from 40,000,000 to 70,000,000, and directed
that such amendment (a copy of which is attached hereto as
Exhibit A) be submitted for ratification and approval by the
stockholders of the Company at the Meeting.
Reasons for Increasing the Number of Authorized Shares of
Common Stock
The proposed Share Increase will enhance the Company's
flexibility in connection with possible future actions, such as
acquisitions, financing transactions, employee benefit plan
issuances, stock splits, stock dividends, and such other corporate
purposes that may arise. Having such authorized Common Stock
available for issuance in the future would allow additional shares
of Common Stock to be issued without the expense and delay of
a special stockholders' meeting. Such a delay might deny the
Company the flexibility the Board views as important in
facilitating the effective use of the Common Stock. The
Company is not presently engaged in any negotiations with
respect to the use of any shares of the additional authorized
Common Stock, nor are there currently any commitments,
arrangements, or understandings with respect to the issuance of
such shares.
Effect of the Increase
The Share Increase will not alter the par value of the
Common Stock or the rights of stockholders.
No Right of Appraisal
Under the Delaware General Corporation Law, the State in
which the Company is incorporated, dissenting stockholders are
not entitled to appraisal rights with respect to the Company's
proposed amendment to its Certificate of Incorporation to effect
the Share Increase and the Company will not provide
stockholders with any such right.
Voting Requirement
Approval of the proposal to effect the Share Increase requires
the affirmative vote of the holders of stock representing a
majority of the votes entitled to be cast at the Meeting.
The Board of Directors recommends that the stockholders
vote FOR the proposed amendment to the Company's
Certificate of Incorporation to effect the Share Increase.
Method of Effecting the Share Increase
The Share Increase shall become effective automatically and
without further action by the stockholders upon the filing with
the Delaware Secretary of State of an appropriate certificate of
amendment to the Certificate of Incorporation of the Company
(the "Share Increase Filing"). The complete text of such
amendment is set forth in Exhibit A hereto. At any time prior
to the effectiveness of the Share Increase Filing (or, if no Share
Increase Filing has been made, prior to the Share Increase
Filing), the Board of Directors may abandon such amendment
without further action by the stockholders.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected the accounting firm of
Hoberman, Miller, Goldstein & Lesser, P.C. to serve as
independent auditors of the Company to perform the annual audit
for the year ending November 30, 1998 and proposes the
ratification of such decision. A representative of Hoberman,
Miller, Goldstein & Lesser, P.C. is expected to be present at the
Meeting. He or she will have the opportunity to make a
statement if he or she so desires to do so and will be available to
respond to appropriate stockholder questions.
The Board of Directors recommends a vote FOR
ratification of the selection of Hoberman, Miller, Goldstein
& Lesser, P.C. as independent auditors for the Company for
the year ending November 30, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's officers and directors, and
persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and
changes in ownership with the SEC and NASDAQ. Officers,
directors and greater than 10% beneficial owners are required by
SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished
to the Company, the Company believes that during the year
ended November 30, 1997, its officers, directors, and greater
than 10% beneficial owners complied with all applicable Section
16(a) filing requirements, except with respect to Mr. Eugene
Bilotti, a former director, for whom there was one late filing (for
a sale of Common Stock).
STOCKHOLDERS PROPOSALS
Stockholders who wish to present proposals for action at the
1999 Annual Meeting of Stockholders should submit their
proposals in writing to the Secretary of the Company at the
address of the Company set forth on the first page of this Proxy
Statement. Proposals must be received by the Secretary of the
Company no later than June __, 1999 for inclusion in next year's
proxy materials.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders of the Company for the
year ended November 30, 1997, including audited financial
statements, has been mailed to the stockholders concurrently
herewith, but such report is not incorporated in this Proxy
Statement and is not deemed to be a part of the proxy solicitation
material.
<PAGE>
OTHER MATTERS
The Board of Directors of the Company does not know of
any other matters that are to be presented for action at the
Meeting. If any other matters are properly brought before the
Meeting or any adjournments thereof, the persons named in the
enclosed proxy will have the discretionary authority to vote all
proxies received with respect to such matters in accordance with
their best judgments.
By Order of the Board of Directors
/s/ Kenneth Ross Wolfe
Kenneth Ross Wolfe, Secretary
Sarasota, Florida
October __, 1998
STOCKHOLDERS ARE URGED TO SPECIFY THEIR
CHOICES, DATE, SIGN, AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE.
PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.<PAGE>
PRELIMINARY COPY
PROXY
DIVERSIFAX, INC.
4274 Independent Court
Sarasota, FL 34234-2109
This Proxy is solicited on behalf of the Board of Directors
The undersigned, acknowledging receipt of the proxy
statement dated October __, 1998 of Diversifax, Inc., hereby
constitutes and appoints Irwin A. Horowitz and Kenneth Ross
Wolfe, and each or any of them, attorney, agent, and proxy of
the undersigned, with full power of substitution to each of them,
for and in the name, place, and stead of the undersigned, to
appear and vote all the shares of stock of Diversifax, Inc.,
standing in the name of the undersigned on the books of said
corporation on October __, 1998 at the Annual Meeting of
Stockholders of Diversifax, Inc., to be held at the principal
office of the Company, 4274 Independent Court, Sarasota,
Florida 34234-2109, on November 18, 1998, at 2:00 p.m., New
York City time, and all adjournments thereof.
When properly executed, this proxy will be voted as
designated by the undersigned.
If no choice is specified, this proxy will be voted (i)
FOR the election of the nominees for directors herein, (ii) FOR
the proposed amendment to the Company's Certificate of
Incorporation to effect the increase (the "Share Increase") in the
number of authorized shares of common stock, par value $.001
per share, of the Company from 40,000,000 to 70,000,000 and
(iii) FOR ratification of the appointment of Hoberman, Miller,
Goldstein & Lesser, P.C. as independent auditors.
1. ELECTION OF DIRECTORS
( ) FOR all nominees listed below (except as written
in on the line below)
Irwin A. Horowitz, Judd Rothman, Kenneth Ross
Wolfe.
( ) WITHHOLD AUTHORITY
( ) For ALL Nominees
( ) For the individual(s) listed below
(Instruction: To withhold authority to vote for any
individual nominee, please write in name on line below)
2. PROPOSAL TO RATIFY AND APPROVE THE
AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO EFFECT
THE SHARE INCREASE.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF
HOBERMAN, MILLER, GOLDSTEIN & LESSER,
P.C. AS INDEPENDENT AUDITORS.
( ) FOR ( ) AGAINST ( ) ABSTAIN
4. FOR SUCH OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENTS THEREOF.
Date
Print Name
Signature
Signature, if held jointly
When shares are held by joint tenants, both
should sign. When signing as attorney,
administrator, trustee, or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
DIVERSIFAX, INC.
(Pursuant to Section 242 of the General Corporation Law of
the State of Delaware)
Diversifax, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the
State of Delaware (the "GCL"), certifies as follows:
1. The present name of the Corporation is
Diversifax, Inc. The name under which the Corporation was
originally incorporated was Berkeley Commodities Corp.
2. The date of filing of the Corporation's certificate
of incorporation (the "Certificate of Incorporation") with the
Secretary of State of the State of Delaware was February 28,
1989. The Certificate of Incorporation was restated on January
30, 1992.
3. Article 4 of the Certificate of Incorporation is
hereby amended and substituted in its entirety so that it shall now
read as follows:
"4. The aggregate number of shares of all
classes of the capital stock which the Corporation shall
have the authority to issue is seventy one million
(71,000,000), of which seventy million (70,000,000)
shares shall be Common Stock, par value $.001 per
share, and one million (1,000,000) shares shall be Open
Stock, par value $.001 per share. Shares of Open Stock
may be issued from time to time in one or more classes
or one or more series within any class thereof, in any
manner permitted by law, as determined from time to
time by the board of directors and stated in the
resolution or resolutions providing for the issuance of
such shares adopted by the board of directors pursuant
to authority hereby vested in it, each class or series to
be appropriately designated, prior to the issuance of any
shares thereof, by some distinguishing letter, number,
designation or title. All shares of stock in such classes
or series may be issued for such consideration and have
such voting powers, full or limited, or no voting
powers, and shall have such designations, preferences
and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions
thereof, permitted by law, as shall be stated and
expressed in the resolution or resolutions providing for
the issuance of such shares adopted by the board of
directors pursuant to authority hereby vested in it. The
number of shares of stock of any series, as set forth in
such resolution or resolutions, may be increased (but not
above the total number of authorized shares) by
resolutions adopted by the board of directors pursuant to
authority hereby vested in it.
4. This Certificate of Amendment to the Certificate
of Incorporation was authorized by the affirmative vote of the
holders of a majority of the outstanding shares entitled to vote
thereon at a meeting of stockholders pursuant to Section 222 and
242 of the GCL.
IN WITNESS WHEREOF, I hereunto sign my name and
affirm that the statements made herein are true under penalties
of perjury this ___ day of _________, 1998.
DIVERSIFAX, INC.
By
Irwin A. Horowitz, President
