<PAGE> 1
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
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 14a-11(c) or Rule 14a-12
MOBINETIX SYSTEMS, 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.
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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<PAGE> 2
MOBINETIX SYSTEMS, INC.
-------------------------
Notice of Annual Meeting of Stockholders
To Be Held on December 11, 1998
at 9:30 a.m.
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of MobiNetix Systems, Inc., a Delaware corporation (the "Company"),
will be held on December 11, 1998 at 9:30 a.m., local time, at the Sunnyvale
Hilton Hotel, located at 1250 Lakeside Drive, Sunnyvale California for the
following purposes:
1. To elect five directors to serve until the next Annual Meeting and
until their successors are duly elected and qualified.
2. To ratify the appointment by the Board of Directors of Arthur Andersen
LLP as independent accountants of the Company for the fiscal year
ending June 30, 1999.
3. To transact such other business an may properly come before the Annual
Meeting or any adjournment therefore.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on October 21, 1998
are entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the meeting, you are urged to
mark, sign date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Any stockholder
attending the Annual Meeting may vote in person even if such stockholder has
returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Aziz Valliani
President and Chief Executive Officer
Sunnyvale, California
November 6, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE.
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<PAGE> 3
MOBINETIX SYSTEMS, INC.
----------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
MobiNetix Systems, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held Friday,
December 11, 1998 at 9:30 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 Stockholders. The Annual Meeting will be held at the
Sunnyvale Hilton Hotel, located at 1250 Lakeside Drive, Sunnyvale, California
94806.
The principal executive offices of the Company are located at 500 Oakmead
Parkway, Sunnyvale, California 94806.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended June 30, 1998, including financial statements,
were mailed on or about November 6, 1998 to all stockholders entitled to vote at
the Annual Meeting.
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:
David M. Licurse, Sr., Chief Financial Officer and Vice President of Operations)
a written notice of revocation or a duly executed proxy bearing a later date or
by attending the Annual Meeting and voting in person.
QUORUM; REQUIRED VOTE
A majority of the shares entitled to vote, present in person or represented
by proxy, shall constitute a quorum at the Annual Meeting. If a quorum is
present, in all matters other than the election of directors, the affirmative
vote on the subject matter shall be required to approve any matter presented at
the Annual Meeting. One director (the "Series D Preferred Director") shall be
elected by the holder of the Series D Preferred Stock (the "Series D
Preferred"). The remaining four directors (the "Common/Preferred Directors")
shall be elected by a plurality of the votes of the outstanding shares of Common
and Preferred Stock present in person or represented by proxy.
Under the General Corporation Law of the State of Delaware, an abstaining
vote and a broker "non-vote" are counted as present and entitled to vote and
are, therefore, included for purposes of determining whether a quorum of shares
is present at a meeting. However, broker "non-votes" are not deemed to be "votes
cast." As a result, broker "non-votes" are not included in the tabulation of the
voting results on the election of directors or issues requiring approval of a
majority of the votes cast and, therefore, do not have the effect of votes in
opposition in such tabulations. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner.
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PROXIES
All shares entitled to vote and represented by properly executed, unrevoked
proxies received prior to the Annual Meeting will be voted at the Annual Meeting
in accordance with the instructions indicated on those proxies. If no
instructions are indicated on a properly executed proxy, the shares represented
by that proxy will be voted as recommended by the Board of Directors. If any
other matters are properly presented for consideration at the Annual Meeting,
including, among other things, consideration of a motion to adjourn the Annual
Meeting to another time or place (including, without limitation, for the purpose
of soliciting additional proxies), the persons named in the enclosed proxy and
acting thereunder will have discretion to vote on those matters in accordance
with their best judgment. The Company does not currently anticipate that any
other matters will be raised at the Annual Meeting.
VOTING AND SOLICITATION
The stockholder holding Series D Preferred may elect the Series D Preferred
Director. For the Common/Preferred Directors, each stockholder voting for the
election of directors may cumulate such stockholder's votes and give one
candidate a number of votes equal to the number of Common/Preferred directors to
be elected multiplied by the number of shares held by such stockholder, or may
distribute such stockholder's votes on the same principle among as many
candidates as the stockholder may select, provided that votes cannot be cast for
more than four directors. However, no stockholder will be entitled to cumulate
votes unless the candidate's name has been placed in nomination prior to the
voting, and the stockholder, or any other stockholder, has given notice at the
meeting prior to the voting of the intention to cumulate votes. If any
stockholder gives such notice, all stockholders may cumulate their votes for the
candidates in nomination. In the event that cumulative voting is invoked, the
proxy holders will have the discretionary authority to vote all proxies received
by them in such a manner as to ensure the election of as many of the Board of
Directors' nominees as possible. See "Proposal 1--Election of Directors." On all
other matters, each share has one vote.
The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Solicitation of proxies by mail may be supplemented by one or
more of telephone, telegram, facsimile or personal solicitation by directors,
officers or regular employees of the Company. No additional compensation will be
paid to such persons for such services.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 1999 Annual Meeting must be received by
the Company no later than June 30, 1999 in order that they may be included in
the proxy statement and form of proxy relating to that meeting.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on October 21, 1998
(the "Record Date") are entitled to notice of and to vote at the meeting. As of
the Record Date, 1,920,124 shares of the Company's Common Stock were issued and
outstanding, no shares of the Company's Series A Preferred Stock were issued and
outstanding, 710,818 shares of the Company's Series B Preferred Stock were
issued and outstanding, 28,125 shares of the Company's Series C Preferred Stock
were issued and outstanding and 1,273,149 shares of the Company's Series D
Preferred Stock were issued and outstanding. Based on the average of the bid and
ask price on the OTC Bulletin Board on October 21, 1998, the market value of one
share of the Company's Common Stock was $2.50. For the election of the Series D
Preferred Director, the holder of the Series D Preferred Stock is entitled to
one vote. For all matters except for the election of the Series D Preferred
Director, each share of Common Stock is entitled to one vote, each share of
Series B
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Preferred Stock is entitled to approximately 2.03 votes, each share of Series C
Preferred Stock is entitled to approximately 40.90 votes and each share of
Series D Preferred Stock is entitled to one vote. Fractional votes shall be
rounded to the nearest whole number (with one-half being rounded upward).
PROPOSAL 1 -- ELECTION OF DIRECTORS
NOMINEES
The Company's Bylaws currently provide for a board of five directors.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Company's five nominees named below, all of whom are currently
directors of the Company. In the event that any Common/Preferred Director
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 substitute nominee who
shall be designated by the current Board of Directors to fill the vacancy. In
the event that the Series D Preferred Director nominee is unable or declines to
serve as a director at the time of the Annual Meeting, the proxy of the holder
of the Series D Preferred will be voted for a substitute nominee who shall be
designated by the holder of the Series D Preferred to fill the vacancy. It is
not expected that any nominee listed below will be unable or will decline to
serve as a director. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner in accordance with cumulative voting 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 proxy
holders. In any event, the proxy holders cannot vote for more than five persons.
The term of office each person elected as a director will continue until the
next Annual Meeting or until his or her successor has been duly elected and
qualified.
The names of the nominees, and certain information about them, are set
forth below.
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ------------------------ ---------- ----------------------------------- --------------
<S> <C> <C> <C>
Aziz Valliani 44 President and CEO of the Company 1996
Paul C. Dali 55 Chairman of the Board of the 1992
Company; Managing Partner of
Convergence Partners
Kevin Jost 44 Vice-President and General 1998
Manager of the Data Collection
Division of Welch Allyn, Inc.
William L. Powar 52 Management Consultant 1997
Vivian M. Stephenson 61 Senior Vice President and CIO of 1997
Dayton Hudson Corporation
- ------------------------ ---------- ----------------------------------- --------------
</TABLE>
There are no family relationships among the Company's directors and
executive officers.
AZIZ VALLIANI has been the President, CEO and a director of the Company
since January 1996. Mr. Valliani, a 19 year veteran in the industry, served as
President and CEO of Inforite Corporation from April 1995 to December 1995. Mr.
Valliani was COO and executive vice president at Wyse Technology from March 1993
to February 1995. From April 1983 to April 1993, Mr. Valliani served as Vice
President and General Manager for the Altos Computer Systems, a business unit of
Acer America Corporation. From
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<PAGE> 6
April 1973 to April 1978, Mr. Valliani was an engineering manager at Intel
Corporation. Mr. Valliani earned his BSEE from Pratt Institute, Brooklyn, NY.
PAUL DALI is the Chairman of the Company's Board. Mr. Dali has been the
Managing Partner of Convergence Partners, a venture capital firm, since April
1997. From January 1991 to April 1997, he was a General Partner of Nazem &
Company, responsible for managing the firm's California office. Prior to joining
Nazem & Company, Mr. Dali was a General Partner with the venture capital firm of
3i Ventures from 1988 until 1991. From 1983 to 1988, Mr. Dali served as
President and CEO of Regis McKenna Inc. from 1983 until 1988, one of the largest
electronics industry marketing and communications firms in the U.S. Prior to
joining Regis McKenna, Mr. Dali was the General Manager of the Personal Computer
Systems Division at Apple Computer Corporation where he was responsible for all
phases of the Apple II and Apple III product lines. Mr. Dali received a B.S.
degree from the University of California at Northridge. Mr. Dali has been a
director of the Company since May 1992. Mr. Dali is also a director of
Graphixzone, Inc.
KEVIN JOST, director of the Company, joined Welch Allyn, Inc., a data
collection device manufacturer, in 1972, and has held the position of Vice
President of the Data Collection Division since 1985. In addition to his
operational responsibilities for the Data Collection Division, he is also
actively involved in the company's quality improvement initiatives. Mr. Jost
obtained a B.S. degrees in operations management from Syracuse University. Mr.
Jost has been a director of the Company since June 1998.
WILLIAM POWAR, director of the Company, is Principal and Founder of Venture
Architects, a management consulting firm specializing in electronic commerce,
transaction processing and retail banking. Mr. Powar has more than twenty years
of experience in the electronic payment systems industry. Prior to starting his
Venture Architects in January 1997, Mr. Powar was a senior executive for 22
years at Visa USA and Visa International, where he played key roles in marketing
and technology development, most recently as Senior Vice President for emerging
markets and technology. He has a B.A. in Economics from Amherst College and an
M.A. and ABD in Economics from Stanford University. Mr. Powar has been a
director of the Company since January 1997.
VIVIAN STEPHENSON, director of the Company, has served as Senior Vice
President and Chief Information Officer at the Dayton Hudson Corporation, a
general merchandise retailer, since March 1995. Previously, Ms. Stephenson held
the positions of Vice President and Senior Vice President of Information
Services for Mervyn's Department Stores. Prior to joining Mervyn's Department
Stores in 1989, she was Director of Systems Development and Maintenance for
Tenneco Gas Corporation. Ms. Stephenson currently serves on the Board of
Directors for the National Retail Federation Information Systems and the
California Chamber of Commerce. She has a B.S. in Mathematics from New York
University and an MBA from the University of Havana. Ms. Stephenson has been a
director of the Company since January 1997.
VOTE REQUIRED AND RECOMMENDATION OF BOARD OF DIRECTORS
The holder of the Series D Preferred may elect the Series D Preferred
Director, provided that such person is reasonably acceptable to the Company's
Board of Directors. The holder of the Series D Preferred has nominated Kevin
Jost for the position.
Aside from Mr. Jost, the four nominees receiving the highest number of
affirmative votes of the shares entitled to be voted shall be elected as the
Common/Preferred Directors. Votes withheld will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the meeting, but have no other legal effect upon election of directors.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
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PROPOSAL TWO -- RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP, independent
accountants, to audit the financial statements of the Company for the year
ending June 30, 1999, and recommends that the stockholders vote for ratification
of such appointment. In the event of a negative vote on such ratification, the
Board of Directors will reconsider its selection. Arthur Andersen LLP has
audited the Company's financial statements since the fiscal year ended June 30,
1994. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting of Stockholders and will have the opportunity to make a statement
if they so desire. The representatives also are expected to be available to
respond to appropriate questions from stockholders.
VOTE REQUIRED AND RECOMMENDATION OF BOARD OF DIRECTORS
Although stockholder approval is not required for the appointment of Arthur
Andersen LLP (as the Board of Directors has the responsibility for selecting
auditors), the Board of Directors has conditioned its appointment of the
Company's independent auditors upon the receipt of the affirmative vote of a
majority of the votes duly cast at the Annual Meeting. In the event that the
stockholders do not approve the selection of Arthur Andersen LLP, the Board of
Directors will reconsider its selection.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THIS
PROPOSAL.
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OTHER INFORMATION
REGARDING SECURITY OWNERSHIP,
DIRECTORS AND OFFICERS
EXECUTIVE OFFICERS
The following table lists the Company's executive officers (the "Named
Officers") as of the date of this Proxy Statement and certain information
concerning them.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ ------- --------------------------------------------------------
<S> <C> <C>
Aziz Valliani 44 President, Chief Executive Officer and Director
David M. Licurse, Sr. 60 Chief Financial Officer and Vice President of Operations
Llavan Fernando 46 Vice President, Hardware Development
Abbas Rafii 51 Vice President, Software Development
- ------------------------ ------- --------------------------------------------------------
</TABLE>
EXECUTIVE PROFILES
AZIZ VALLIANI has been the President, CEO and a director of the Company
since January 1996. Mr. Valliani, a 19 year veteran in the industry, served as
President and CEO of Inforite Corporation from April 1995 to December 1995. Mr.
Valliani was COO and executive vice president at Wyse Technology from March 1993
to February 1995. From April 1983 to April 1993, Mr. Valliani served as Vice
President and General Manager for the Altos Computer Systems, a business unit of
Acer America Corporation. From April 1978 to April 1973, Mr. Valliani was an
engineering manager at Intel Corporation. Mr. Valliani earned his BSEE from
Pratt Institute, Brooklyn, NY.
DAVID M. LICURSE, SR. has been the CFO and Vice President of Operations
since December 1995. From May 1995 to December 1995, he served as CFO and Vice
President of Operations at Inforite Corporation. From May 1972 to December 1994,
Mr. Licurse held various senior level managerial positions with Xerox
Corporation including Financial Planning and Analysis Manager for Xerox's
manufacturing division, Controller for its computer strategic business unit and
Manager of Finance and Operations for a high technology software division in
Palo Alto. Mr. Licurse earned an MBA from Simon Business School at the
University of Rochester.
LLAVANYA FERNANDO has been the Vice President of Hardware Development since
November 1996. From May 1995 to November 1995, Mr. Fernando served as vice
president of research and development at Inforite Corporation. Mr. Fernando has
over 21 years of direct research and development, mobile computing and
management experience. From March 1993 until May 1995, he held the position of
strategic business development manager at Wyse Technology. From September 1982
until September 1993, Mr. Fernando was the General Manager at a business unit of
TeleSensory Systems, Inc. in Mountain View, California. He has also worked at
Data Products, Graviner Ltd. and H. Tinsley & Co. Qualified in England, he
obtained M.S. and B.S. degrees in the field of electronics and systems
engineering.
ABBAS RAFII has been the Vice President of Software Development since May
1992 and managed the development and release of five commercial software
products. From April 1979 to May 1992, he was project lead and a senior software
engineer at Hewlett-Packard Laboratories. He has more than fifteen years of
experience in design and development of applications, operating systems
components, enterprise applications. Mr. Rafii earned his M.S. and Ph.D. degrees
from Stanford University.
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<PAGE> 9
None of the directors or officers of the Company have been involved in any
proceedings described in Item 401(d) of Regulation S-B promulgated under the
Exchange Act of 1934, as amended.
SECURITY OWNERSHIP
The following table sets forth certain information known to the Company
regarding the beneficial ownership of each class of the Company's voting
securities as of October 21, 1998, by (a) each beneficial owner of more than 5%
of the Company's Common Stock or Preferred Stock, (b) the Named Officers, (c)
each director of the Company and (d) all directors and executive officers of the
Company as a group. Except as otherwise indicated, each person has sole voting
and investment power with respect to all shares shown as beneficially owned,
subject to community property laws where applicable.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Title of Class Name and Address of Beneficial Owner Ownership(1)(2) of Class
- ---------------- ---------------------------------------------- ----------------- ----------
<S> <C> <C> <C>
Common Stock Aziz Valliani(3) 385,078 18.8%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock Nazim Kareemi(4) 289,099 14.8%
1885 Guinda Street
Palo Alto, CA 94303
Common Stock Llavan Fernando(5) 201,313 10.3%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock David M. Licurse, Sr.(6) 200,205 10.3%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock Abbas Rafii(7) 197,833 10.2%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock Wilmot Living Trust(8) 185,000 9.6%
13333 La Cresta Drive, Los Altos, CA 94022
Common Stock Paul Dali(10) 35,416 1.8%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock William Powar(9) 24,083 1.3%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common Stock Vivian Stevenson(11) 23,083 1.2%
c/o MobiNetix Systems, Inc.
500 Oakmead Parkway, Sunnyvale, CA 94086
Common All Directors and Officers as a group (seven 1,067,011 48.6%
Stock persons)(12)
</TABLE>
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<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Title of Class Name and Address of Beneficial Owner Ownership(1)(2) of Class
- ---------------- ---------------------------------------------- ----------------- ----------
<S> <C> <C> <C>
Series B Life Investors Insurance Company of America 352,942 14.3%
Preferred Stock 4333 Edgewood Rd NE,
Cedar Rapids, IA 52499
Series C Nazem & Company 28,125 22.9%
Preferred Stock 3000 Sand Hill Road, Building 2, Suite 205
Menlo Park, CA 94025
Series D Welch Allyn, Inc. (13) 1,273,149 25.4%
Preferred Stock 4619 Jordan Road
Skaneateles Falls, NY 13153
Preferred Stock All Directors and Officers as a group 1,273,149 25.4%
(one person)(14)
- ---------------- ----------------------------------------------- ------------- --------------
</TABLE>
(1) The Company effected a reverse stock split in October 1996, converting each
share of Series B Preferred into one-half share and increasing the
conversion ratio of Series B Preferred into Common Stock from 1:1 to
1:2.0286 and converting each share of Series C Preferred into one-fourth
share and increasing the conversion ratio of Series C Preferred into Common
Stock from 1:10 to 1:40.8998
(2) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any other purpose, Under
such rule, beneficial ownership includes any shares as to which the
individual or entity has voting power or investment power and any shares
that the individual has the right to acquired within 60 days of October 21,
1998 through the exercise of any stock option or other right. Unless
otherwise indicated in the footnotes, each person or entity has sole voting
and investment power (or shares such powers with his or her spouse) with
respect to the shares shown as beneficially owned.
(3) Includes 131,145 shares subject to currently exercisable options or options
exercisable within 60 days of October 21, 1998.
(4) Includes 35,166 shares subject to currently exercisable options or options
exercisable within 60 days of October 21, 1998.
(5) Includes 167,938 shares held by the Llavanya X. Fernando Trust as to which
Mr. Fernando claims voting and investment control and 33,375 shares subject
to currently exercisable options or options exercisable within 60 days of
October 21, 1998.
(6) Includes 162,428 shares held by the D. and P. Licurse Trust, for the
benefit of Mr. Licurse's wife, 37,777 shares subject to currently
exercisable options or options exercisable within 60 days of October 21,
1998 granted to Mr. Licurse.
(7) Includes 29,895 shares subject to currently exercisable options or options
exercisable within 60 days of October 21, 1998.
(8) Includes 10,000 shares subject to currently exercisable options or options
exercisable within 60 days of October 21, 1998 granted to Rob Wilmot. Mr.
Wilmot is a trustee of the Wilmot Living Trust and a former consultant of
the Company.
(9) Includes 2,083 shares subject to currently exercisable options or options
exercisable within 60 days of October 21, 1998.
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(10) Includes 35,416 shares subject to currently exercisable options or options
exercisable within 60 days of October 21, 1998.
(11) Includes 23,083 shares subject to currently exercisable options or options
exercisable within 60 days of October 21, 1998.
(12) Includes all shares described in notes (3), (5)-(7) and notes (9)-(11)
above.
(13) Kevin Jost, vice president of the Data Collection Division of Welch Allyn,
Inc., and a director of the Company, disclaims beneficial ownership of
these shares.
(14) Includes all shares described in note (13) above.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of eleven meetings
(including regularly scheduled and special meetings) during the fiscal year
ended June 30, 1998. No director attended fewer than 75% of the meetings of the
Board of Directors and its committees upon which such director served. Certain
matters approved by the Board of Directors were approved by unanimous written
consent.
The Board of Directors of the Company has a Compensation Committee, the
membership of which is formed by Paul Dali, Vivian Stephenson and William Powar.
The Compensation Committee determines annual cash compensation of officers, and
deals with issues relating to stock options and other incentive compensation.
The Compensation Committee held two meetings during the last fiscal year.
The Board of Directors of the Company also has an Audit Committee, the
membership of which is formed by Paul Dali, Vivian Stephenson and William Powar.
The Audit Committee reviews and monitors the corporate financial reporting and
the internal and external audits of the Company. The Audit Committee held one
meeting during the last fiscal year.
DIRECTOR COMPENSATION
On January 9, 1998 the Company granted a nonstatutory stock option to
purchase 25,000 shares of the Company's common stock to Paul Dali, as
compensation for his services as Chairman of the Board of Directors in the
upcoming year. The option vests over four years and has an exercise price of
$1.625.
On November 18, 1997 and February 17, 1998, the Company granted a
nonstatutory stock option to purchase 10,000 shares and 2,500 shares,
respectively, of the Company's common stock to William Powar, as compensation
for his services as Director in the upcoming year. The option vests over one
year and has an exercise price of $2.220 and $2.250, respectively.
On November 18, 1997 and February 17, 1998, the Company granted a
nonstatutory stock option to purchase 10,000 shares and 2,500 shares,
respectively, of the Company's common stock to Vivian Stephenson, as
compensation for his services as Director in the upcoming year. The option vests
over one year and has an exercise price of $2.220 and $2.250, respectively.
Other then the above-mentioned option grants, the Company has not paid any
annual retainer, per-meeting fee, or any other compensation to any director,
aside from fees payable to such directors for their services as officers or
employees of the Company.
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<PAGE> 12
RELATED PARTY TRANSACTIONS
In June 1998, the Company sold 1,273,149 shares of Series D Preferred Stock
to Welch Allyn, Inc. ("Welch Allyn") in a private placement, receiving gross
proceeds of approximately $6.85 million. Pursuant to the terms of that private
placement, Welch Allyn, as the sole holder of the Series D Preferred Stock, has
the right to elect one nominee to the Company's Board of Directors. Currently,
Kevin Jost is the member of the Company's Board of Directors at the request of
Welch Allyn.
During the year ended June 30, 1998, Robb Wilmot, a former consultant to
the Company's Board of Directors, exercised options to purchase 175,000 shares
of the Company's Common Stock, at exercise prices ranging from $1.375 to $3.875
per share. The aggregate exercise price of such options was $465,625.
During the year ended June 30, 1998, William Powar, a director of the
Company, exercised options to purchase 22,000 shares of the Company's Common
Stock, at exercise price ranging from $2.22 to $2.875 per share. The aggregate
exercise price of such options was $55,390.
Except for the foregoing, and certain employment agreements described in
"Employment Agreements" below, since July 1, 1997, there have been no other
transactions between the Company and any executive officer, director, beneficial
owner of 5% of more of the Company's Common Stock or Preferred Stock, or member
of the immediate family of the foregoing persons in which one of the foregoing
individuals or entities had an interest of more than $60,000.
EMPLOYMENT AGREEMENTS
On August 1, 1998, the Company entered into a Consulting Agreement (the
"Consulting Agreement') with Nazim Kareemi, the former executive vice president
of the Company. Mr. Kareemi terminated employment with the Company in August
1998. Under the terms of the Consulting Agreement, Mr. Kareemi will provide
consulting services to the Company and the Company will pay Mr. Kareemi $14,920
per month for such services until May 31, 1999. If Mr. Kareemi secures
comparable alternate employment prior to May 31, 1999, his obligation to provide
consulting services to the Company, and the Company obligation to pay for such
services will cease as of the date Mr. Kareemi secure such alternate employment.
Mr. Kareemi's stock options will vest until he ceases providing consulting
services to the Company.
On August 1, 1998, the Company entered into a Settlement Agreement and
Mutual Release ("Settlement Agreement") with Thomas Dorosewicz, former vice
president of marketing and sales of the Company. Mr. Dorosewicz terminated
employment with the Company on August 1, 1998. Under the terms of the Settlement
Agreement, Mr. Dorosewicz will release certain claims against the Company, and
the Company will pay Mr. Dorosewicz approximately $33,000 over a three month
period. In the event that Mr. Dorosewicz secures alternate employment prior to
October 31, 1998, the Company's obligation to pay Mr. Dorosewicz will be
proportionally reduced.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities ("10%
Stockholders"), to file reports of ownership on Form 3 and changes in ownership
on Form 4 or Form 5 with the Securities and Exchange Commission (the
"Commission"). Such executive officers, directors and 10% Stockholders are also
required by the Commission rules to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely upon its review of copies of such forms received by it, or
written representations from certain reporting persons that no Form 5 was
required for such persons, the Company believes that during
11
<PAGE> 13
the year ended June 30, 1998, its executive officers, directors, and 10%
Stockholders complied with all applicable Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities, for the last three fiscal years ended
June 30, 1998, by the Named Officers, as named below:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------------- ------------
Securities
Salary Bonus Underlying
Name and Principal Position Year ($) ($) Options(#)(1)
- --------------------------- ---- --- --- -------------
<S> <C> <C> <C> <C>
Aziz Valliani 1998 260,000 40,000 20,000
President and Chief 1997 250,000 -- 175,000
Executive Officer 1996 124,042 -- --
Nazim Kareemi (2) 1998 173,040 5,000 8,000
Executive Vice President 1997 168,000 -- 45,000
1996 136,101 -- --
David M. Licurse, Sr., 1998 145,125 22,500 24,000
Chief Financial Officer and 1997 135,000 -- 51,500
Vice President of Operations 1996 58,037 -- --
Llavan Fernando 1998 158,400 21,500 12,000
Vice President 1997 144,000 -- 50,000
Hardware Development 1996 68,440 -- --
Abbas Rafii 1998 154,800 20,500 10,000
Vice President 1997 144,000 -- 37,500
Software Development 1996 106,352 -- --
- --------------------------------------------------------------------------------------------
</TABLE>
(1) All figures in this column reflect options to purchase common stock.
(2) Nazim Kareemi is no longer an employee of the Company.
The Company has not entered into any employment contracts with any Named
Officer except for the consulting agreement with Nazim Kareemi executed on
August 1, 1998. See "Employment Agreements"
The Company did not issue any other annual compensation, or any other
long-term compensation awards or payouts, such as restricted stock awards,
long-term incentive plan compensation, or other compensation to its Named
Officers during the last three fiscal years ended June 30, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
The Option Grant Table sets forth hypothetical gains or "option spreads"
for the options at the end of their respective four-year terms, as calculated in
accordance with the rules of the Securities and Exchange Commission for each of
the Named Officers, for the year ended June 30, 1998. Each gain is based on an
12
<PAGE> 14
assumed annualized rate of compound appreciation of the market price at the date
of grant of five percent (5%) and ten percent (10%) from the date the option was
granted to the end of the option term. Actual gains, if any, on option exercises
are dependent on the future performance of the Company's Common Stock and
overall market conditions.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------
Percent Potential realizable
of Total Value at Assumed
Options Annual Rates of Stock
Granted to Price Appreciation for
Employees Exercise Option Term
Option in Fiscal Price Expiration -------------------------
Granted(1) Year ($/Share) Date 5% 10%
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aziz Valliani 10,000 1.8% $ 4.750 07/01/07 $29,872.49 $75,702.77
10,000 1.8% 2.250 02/17/08 14,150.13 35,859.21
Nazim Kareemi 4,000 .7% 4.750 07/01/07 11,949.00 30,281.11
4,000 .7% 2.250 02/17/08 5,660.05 14,343.68
David M. Licurse, Sr. 5,000 .9% 4.750 07/01/07 14,936.25 37,851.38
19,000 3.4% 2.250 02/17/08 26,885.25 68,132.49
Llavan Fernando 6,000 1.1% 4.750 07/01/07 17,923.5 45,421.66
6,000 1.1% 2.250 02/17/08 8,490.08 21,515.52
Abbas Rafii 5,000 .9% 4.750 07/01/07 14,936.25 37,851.38
5,000 .9% 2.250 02/17/08 7.075.06 17,929.60
----------------------------------------------------------------------------------
</TABLE>
(1) Represents number of shares granted under stock options. The Company did
not grant stock appreciation rights or restricted stock awards in the
fiscal year ended June 30, 1998.
OPTION EXERCISES AND HOLDINGS
The following table sets forth for each of the Named Officers certain
information concerning the number of shares subject to both exercisable and
unexercisable stock options as of June 30,1998. Also reported are values for
"in-the-money" options that represent the positive spread between the respective
exercise prices of outstanding stock options and the fair market value of the
Company's Common Stock as of June 30, 1998, as determined by the average of the
ask and bid price on the OTC market. There were no option exercises by the Named
Officers during the fiscal year ended June 30, 1998.
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND FISCAL 1998 YEAR-END VALUES
<TABLE>
<CAPTION>
Number of Unexercised Options Value of Unexercised
at 6/30/98 In-the-Money Option at 6/30/98(1)
-----------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Aziz Valliani 105,729 89,271 $317,187 $229,065
Nazim Kareemi 29,062 23,938 87,186 56,314
David M. Licurse, Sr. 31,328 44,172 80,859 72,016
Llavan Fernando 27,343 34,657 82,029 80,721
Abbas Rafii 24,218 23,282 72,654 50,471
-----------------------------------------------------------------
</TABLE>
(1) Calculated by determining the difference between the fair market value of
the securities underlying the option at 6/30/98 ($4.3750 per share as
determined by the average of the ask and bid price on the OTC market on
6/30/98) and the exercise price of the options.
13
<PAGE> 15
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend.
FORM 10-K
STOCKHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING MAY OBTAIN, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED JUNE 30, 1997 UPON WRITTEN REQUEST TO DAVID M. LICURSE, SR., CHIEF
FINANCIAL OFFICER AND VICE PRESIDENT OF OPERATIONS, MOBINETIX SYSTEMS, INC., 500
OAKMEAD PARKWAY, SUNNYVALE, CALIFORNIA 94086.
BY ORDER OF THE BOARD OF DIRECTORS
Dated: November 6, 1998
14
<PAGE> 16
MOBINETIX SYSTEMS, INC.
PROXY FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR HOLDERS OF THE COMPANY'S COMMON STOCK,
SERIES B PREFERRED STOCK
AND SERIES C PREFERRED STOCK
The undersigned stockholder of MobiNetix Systems, Inc., a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting and accompanying Proxy Statements, each dated November 6, 1998 and
hereby appoints Aziz Valliani and David M. Licurse, Sr., and each of them,
proxies and attorneys-in-fact, each with full power of substitution to represent
the undersigned and to vote all the shares of the Company which the undersigned
is entitled to vote, at the Annual Meeting of Stockholders of the Company to be
held on December 11, 1998, at 9:30 a.m., local time, at the Sunnyvale Hilton
Hotel, located at 1250 Lakeside Drive, Sunnyvale, California, or any adjournment
thereof (1) as hereinafter specified upon the proposals listed on the reverse
side and as more particularly described in Company's Proxy Statement, and (2) in
their discretion upon such other matters as may properly come before the
meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MOBINETIX
SYSTEMS, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS ON DECEMBER 11, 1998. IN
ORDER TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING OF STOCKHOLDERS,
PLEASE COMPLETE, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE
PROPOSALS BELOW AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THESE PROPOSALS.
(Continued, and to be signed, on reverse side).
15
<PAGE> 17
(Continued from other side)
[X] Please mark votes as in this example
1. Election Of Directors:
COMMON/PREFERRED DIRECTOR NOMINEES: Aziz Valliani, Paul C. Dali,
William L. Powar, Vivian M. Stephenson.
[ ] FOR [ ] WITHHELD
[ ]
-----------------------------------------------------------------
FOR all nominees except vote withheld from nominee(s) noted above
2. Proposal to confirm the appointment of Arthur Andersen, LLP as the
Company's independent accountants for the fiscal year ending June 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come before
the meeting or any adjournment thereof.
This Proxy will be voted as directed or, if no contrary direction is
indicated, will be voted FOR the election of the nominees indicated above, FOR
ratification of the appointment of Arthur Andersen, LLP, and in the discretion
of the proxy holders, on such other business as may properly come before the
meeting or any adjournment thereof.
This Proxy should be marked, dated and signed by the stockholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing as officers or in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as community property, both
should sign.
Signature Date
---------------------------------- ---------------------
Signature Date
---------------------------------- ---------------------
[ ] CHECK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT:
---------------------------
---------------------------
---------------------------
[ ] CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING
16
<PAGE> 18
MOBINETIX SYSTEMS, INC.
PROXY FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR HOLDERS OF THE COMPANY'S SERIES D PREFERRED STOCK
The undersigned stockholder of MobiNetix Systems, Inc., a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting and accompanying Proxy Statements, each dated November 6, 1998 and
hereby appoints Aziz Valliani and David M. Licurse, Sr., and each of them,
proxies and attorneys-in-fact, each with full power of substitution to represent
the undersigned and to vote all the shares of the Company which the undersigned
is entitled to vote, at the Annual Meeting of Stockholders of the Company to be
held on December 11, 1998, at 9:30 a.m., local time, at the Sunnyvale Hilton
Hotel, located at 1250 Lakeside Drive, Sunnyvale, California, or any adjournment
thereof (1) as hereinafter specified upon the proposals listed on the reverse
side and as more particularly described in Company's Proxy Statement, and (2) in
their discretion upon such other matters as may properly come before the
meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MOBINETIX
SYSTEMS, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS ON DECEMBER 11, 1998. IN
ORDER TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING OF STOCKHOLDERS,
PLEASE COMPLETE, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE
PROPOSALS BELOW AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THESE PROPOSALS.
(Continued, and to be signed, on reverse side).
17
<PAGE> 19
(Continued from other side)
[X] Please mark votes as in this example
1. Election Of Directors:
SERIES D PREFERRED DIRECTOR NOMINEES: Kevin Jost.
[ ] FOR [ ] WITHHELD
[ ]
------------------------------------------------------------------
FOR all nominees except vote withheld from nominee(s) noted above
COMMON/PREFERRED DIRECTOR NOMINEES: Aziz Valliani, Paul C. Dali,
William L. Powar, Vivian M. Stephenson.
[ ] FOR [ ] WITHHELD
[ ]
-----------------------------------------------------------------
FOR all nominees except vote withheld from nominee(s) noted above
2. Proposal to confirm the appointment of Arthur Andersen, LLP as the
Company's independent accountants for the fiscal year ending June 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come before
the meeting or any adjournment thereof.
This Proxy will be voted as directed or, if no contrary direction is
indicated, will be voted FOR the election of the nominees indicated above, FOR
ratification of the appointment of Arthur Andersen, LLP, and in the discretion
of the proxy holders, on such other business as may properly come before the
meeting or any adjournment thereof.
This Proxy should be marked, dated and signed by the stockholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing as officers or in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as community property, both
should sign.
Signature Date
---------------------------------- ---------------------
Signature Date
---------------------------------- ---------------------
[ ] CHECK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT:
---------------------------
---------------------------
---------------------------
[ ] CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING
18
