SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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(as permitted by Rule 4a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.241.14a-11(c) or ss.240.14a-12
Atec Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
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1) Title of each class of securities to which transaction applies:
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<PAGE>
ATEC GROUP, INC.
90 Adams Avenue
Hauppauge, New York 11788
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 1997
To the Stockholders of ATEC Group, Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders of
ATEC Group, Inc. ("Company"), a Delaware corporation, to be held at the
Huntington Hilton, Melville, New York on Tuesday, November 18, 1997, at 10:00
a.m. local time, for the following purposes:
1. To elect five members to the Board of Directors of the Company to
serve until their respective successors are elected and qualified;
2. To ratify the selection by the Company of Weinick Sanders Leventhal
& Co., LLP, independent public accountants, to audit the financial
statements of the Company for the year ending June 30, 1998;
3. To ratify and approve an amendment to the Company's Certificate of
Incorporation effecting a 1 for 5 reverse stock split of the Company's
outstanding Common Stock; and
4. To transact such other matters as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on September 26, 1997
(the "Record Date"), are entitled to notice of and to vote at the meeting.
A proxy statement and proxy are enclosed herewith. If you are unable to
attend the meeting in person you are urged to sign, date and return the enclosed
proxy promptly in the enclosed addressed envelope which requires no postage if
mailed within the United States. If you attend the meeting in person, you may
withdraw your proxy and vote your shares. Also enclosed herewith is the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997.
By Order of the Board
of Directors
/s/ Ashok Rametra
---------------------------------
Ashok Rametra, Secretary
East Northport, New York
October 7, 1997
<PAGE>
PROXY STATEMENT
ATEC GROUP, INC.
90 Adams Avenue
Hauppauge, New York 11788
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of
proxies for use at the annual meeting (the "Annual Meeting") of stockholders of
ATEC Group, Inc. ("Company"), to be held on Tuesday, November 18, 1997, and at
any adjournments thereof. The accompanying proxy is solicited by the Board of
Directors of the Company and is revocable by the stockholder by notifying the
Company's secretary at any time before it is voted, or by voting in person at
the Annual Meeting. This proxy statement and accompanying proxy will be
distributed to stockholders beginning on or about October 10, 1997. The
principal executive offices of the Company are located at 90 Adams Avenue,
Hauppauge, New York 11788, telephone (516) 231-2831.
OUTSTANDING SHARES AND VOTING RIGHTS
Only stockholders of record at the close of business on September 26, 1997,
are entitled to receive notice of, and vote at the Annual Meeting. As of
September 26, 1997, the number and class of stock outstanding and entitled to
vote at the meeting was 29,887,677 shares of Common Stock, par value $.01 per
share ("Common Stock"), 29,231 shares of Series A Preferred Stock, 1,458 shares
of Series B Preferred Stock and 338,790 shares of Series C Preferred Stock. The
Company's Common Stock and Preferred Stock are hereinafter collectively referred
to as the Shares. Each share of Common Stock and each share of Preferred Stock
is entitled to one vote on all matters. Accordingly, as of the record date the
Company has securities representing 29,918,366 votes outstanding. No other class
of securities will be entitled to vote at the meeting. There are no cumulative
voting rights.
The nominees receiving the highest number of votes cast by the holders of
the Shares will be elected as the Company's directors and constitute the entire
Board of Directors of the Company. The affirmative vote of at least a majority
of the Shares represented and voting at the Annual Meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a majority
of the required quorum) is necessary for approval of Proposal Nos. 2 and 3. A
quorum is representation in person or by proxy at the Annual Meeting of a
majority of the outstanding Shares of the Company.
<PAGE>
PROPOSALS TO SHAREHOLDERS
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Each nominee to the Board of Directors will serve until the next Annual
Meeting of stockholders, or until his earlier resignation, removal from office,
death or incapacity.
Unless otherwise specified, the enclosed proxy will be voted in favor of
the election of Surinder Rametra, Ashok Rametra, Balwinder Singh Bathla, George
D. Eagan and David C. Reback. Information is furnished below with respect to all
nominees.
The following information with respect to the principal occupation or
employment of the nominees, the name and principal business of the corporation
or other organization in which such occupation or employment is carried on and
other affiliations and business experience during the past five years has been
furnished to the Company by the respective nominees:
SURINDER RAMETRA was appointed the Chief Executive Officer and Chairman of the
Board of the Company in June 1994. From 1982 to June 1994, Mr. Rametra has been
the chief executive officer of one of the Company's subsidiaries, engaged in the
sale of computer hardware and software primarily to business users. Mr. Rametra
received a Bachelor of Science Degree from the Punjab Engineering College, India
and a Masters of Science Degree in Engineering from the University of I.I.T.,
India in 1965 and 1969 respectively. In 1976 Mr. Rametra received a Masters of
Business Administration Degree in Finance from New York University. Mr. Rametra
and Ashok Rametra are brothers.
ASHOK RAMETRA was appointed Treasurer, Chief Financial Officer and Director of
the Company in June 1994. From June 1994 to March 1995 Mr. Rametra also served
as the Company's president. From 1987 to the present, Mr. Rametra has been the
president of a subidiary of the Company, engaged in the retail sale of computer
hardware and software primarily to business users. Mr. Rametra received a
Bachelor of Science Degree from St. Johns University in accounting in 1980. Mr.
Rametra and Surinder Rametra are brothers.
BALWINDER SINGH BATHLA was appointed as the President and a Director of the
Company in March, 1995. Since 1988, Mr. Bathla was the principal operating
officer of a subidiary of the Company. Mr. Bathla received a Masters Degree in
Statistics from Punjab University, Chandigar, India in 1979.
GEORGE D. EAGAN has been nominated as a Director by the Board of Directors.
Since 1996, Mr. Eagan has been President of Eagan Associates, Ltd. and a Vice
President of Sales for Bluestone Capital Partners, both venture capital firms.
From 1995 to 1996, Mr. Eagan served as Director of Sales at Mosaic Information
Technologies. From 1994 to 1995, Mr. Eagan was Vice President at Fidelity
Investments in Boston, Massachusetts. From 1991 to 1994, Mr. Eagan was an
investment representative with Alex, Brown & Sons, and from 1981 to 1991 he was
assistant vice president at Merrill Lynch Pierce Fenner & Smith. Mr. Eagan
graduated with a Bachelor of Science in Business Administration/Management from
Alfred University, and an MBA in Finance from McGill University.
DAVID C. REBACK has been nominated as a Director by the Board of Directors.
Since 1969, Mr. Reback is a partner with Reback & Potash, LLP, a law firm
specializing in litigation, appellate matters
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<PAGE>
and real estate. In 1963, Mr. Reback received a B.A. from Syracuse University,
and in 1965 he received a law degree from Syracuse University College of Law.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 1 TO BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" ALL FIVE OF THE
ABOVE-NAMED NOMINEE DIRECTORS OF THE COMPANY.
3
<PAGE>
MANAGEMENT
The following table sets forth the names and ages of all current and
nominated officers and directors of the Company and the position in the Company
held or to be held by them:
Name Age Position
- ---- --- --------
Surinder Rametra 57 Chairman of the Board and
Chief Executive Officer
Ashok Rametra 43 Treasurer, Chief Financial
Officer and Director
Balwinder Singh Bathla 41 President and Director
George Eagan 40 Director
David C. Reback 55 Director
SURINDER RAMETRA was appointed the Chief Executive Officer and Chairman of the
Board of the Company in June 1994. From 1982 to June 1994, Mr. Rametra has been
the chief executive officer of one of the Company's subsidiaries, engaged in the
sale of computer hardware and software primarily to business users. Mr. Rametra
received a Bachelor of Science Degree from the Punjab Engineering College, India
and a Masters of Science Degree in Engineering from the University of I.I.T.,
India in 1965 and 1969 respectively. In 1976 Mr. Rametra received a Masters of
Business Administration Degree in Finance from New York University. Mr. Rametra
and Ashok Rametra are brothers.
ASHOK RAMETRA was appointed Treasurer, Chief Financial Officer and Director of
the Company in June 1994. From June 1994 to March 1995 Mr. Rametra also served
as the Company's president. From 1987 to the present, Mr. Rametra has been the
president of a subidiary of the Company, engaged in the retail sale of computer
hardware and software primarily to business users. Mr. Rametra received a
Bachelor of Science Degree from St. Johns University in accounting in 1980. Mr.
Rametra and Surinder Rametra are brothers.
BALWINDER SINGH BATHLA was appointed as the President and a Director of the
Company in March, 1995. Since 1988, Mr. Bathla was the principal operating
officer of a subidiary of the Company. Mr. Bathla received a Masters Degree in
Statistics from Punjab University, Chandigar, India in 1979.
GEORGE D. EAGAN has been nominated as a Director by the Board of Directors.
Since 1996, Mr. Eagan has been President of Eagan Associates, Ltd. and Vice
President of Sales for Bluestone Capital Partners, both venture capital firms.
From 1995 to 1996, Mr. Eagan served as Director of Sales at Mosaic Information
Technologies. From 1994 to 1995, Mr. Eagan was Vice President at Fidelity
Investments in Boston, Massachusetts. From 1991 to 1994, Mr. Eagan was an
investment representative with Alex, Brown & Sons, and from 1981 to 1991 he was
assistant vice president at Merrill Lynch Pierce Fenner & Smith. Mr. Eagan
graduated with a Bachelor of Science in Business Administration/Management from
Alfred University, and an MBA in Finance from McGill University.
DAVID C. REBACK has been nominated as a Director by the Board of Directors.
Since 1969, Mr. Reback is a partner with Reback & Potash, LLP, a law firm
specializing in litigation, appellate matters
4
<PAGE>
and real estate. In 1963, Mr. Reback received a B.A. from Syracuse University,
and in 1965 he received a law degree from Syracuse University College of Law.
5
<PAGE>
INFORMATION CONCERNING BOARD MEETINGS
The Board of Directors met six times during the last fiscal year. All of
the incumbent directors attended at least 75% of such meetings.
INFORMATION CONCERNING COMMITTEES OF THE BOARD
The Board of Directors has established an Internal Audit Committee, an
Operation and Control Committee, an Acquisitions Evaluation Committee and a
Stock Option Committee. Ashok Rametra chairs the Internal Audit Committee and
has appointed a company employee, Seema Wasil (Surinder Rametra's daughter) and
a company consultant, James Charles, to assist Mr. Rametra in reviewing internal
accounting compliance and audit procedures. The Operations Control Committee is
comprised of Ashok Rametra and Balwinder Singh Bathla. Messrs Rametra and Bathla
have appointed Irwin Gulati to assist them in improving existing operations on
behalf of the Company. The Acquisition Evaluation Committee consists of Surinder
Rametra, James Charles and Seema Wasil. The committee reviews potential
acquisition candidates. The Stock Option Committee is comprised of Ashok Rametra
and Balwinder Singh Bathla. James Charles provides advisory services to this
committee. The committee formulates stock option programs.
The above mentioned committees met six times during the last fiscal year.
All of the committee members attended at least 75% of such meetings.
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<PAGE>
EXECUTIVE COMPENSATION
The Company's Summary Compensation Table for the years ended June 30, 1997,
1996 and 1995 is provided herein. This table provides compensation information
on behalf of the Company's existing officers and directors.
SUMMARY COMPENSATION TABLE
For the Years Ended June 30, 1997, 1996 and 1995
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f)
Other
Name Annual
and Compen- Compen
Principal Year sation sation Options/
Position Ended Salary Bonus ($) ($) SARs
- -------- ----- ------- --------- --- ----
Surinder Rametra 6/30/97 $160,680 6,737(1)
6/30/96 $156,000 5,680(7)
6/30/95 $150,580 21,624(2)
Ashok Rametra 6/30/97 $150,020 19,372(3)
6/30/96 $150,020 6,508(8)
6/30/95 $180,520 8,113(4)
Balwinder Singh
Bathla 6/30/97 $158,216 20,806(3) 500,000(10)
6/30/96 $135,000 51,723(9)
6/30/95 $58,650 86,470(5) 14,177(6)
(1) Major Medical $6,737
(2) Major Medical $4,727, Leased Auto $4,645, Interest Income $10,000
(3) Major Medical $4,776, Life Insurance $6,600, Rent Income $5,400, Interest
Income $4,030
(4) Major Medical $1,129, Leased Auto $6,984
(5) Represents 70,768 shares of Common Stock issued pursuant to Mr. Bathla's
employment agreement.
(6) Major Medical $2,185, Interest Income $11,992.
(7) Major Medical $5,680
(8) Major Medical $3,799, Leased Auto $2,710.
(9) Major Medical $4,465
(10) In December 1996, the Company issued options to Mr. Bathla for the purchase
of an aggregate of 500,000 shares of Common Stock exercisable at $.75 per
share through December 2006.
7
<PAGE>
Year End Option Table. The following table sets forth certain
information regarding the stock options held as of June 30, 1997 by the
individuals named in the above Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money-Options
Fiscal Year End(#) at Fiscal Year End($)(2)
------------------ ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Balwinder Singh
Bathla (1) 500,000 0 0 0
(1) Represents an option to acquire 500,000 shares at $.75 per share
exercisable through December 19, 2006.
(2) Computation based on $.625 which was the June 30, 1997 closing price of the
Common Stock
Option Grant Table. The following table sets forth certain information
regarding options granted during the fiscal year ended June 30, 1997 by the
Company to the individuals named in the above Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
% of Total
Options
Options Granted to
Granted Employees in Exercise Price Expiration
Name (#) Fiscal Year ($/Share) Date
- ---- --- ----------- --------- ----
Balwinder Singh
Bathla 500,000 62.5 $.75 December 19, 2006
(1) Represents an option to acquire 500,000 shares of Common Stock at $.75 per
share exercisable though December 19, 2006.
8
<PAGE>
Compensation of Directors
Directors do not receive compensation for attendance at meetings of the
Board of Directors. All directors are entitled to reimbursement of reasonable
travel and lodging expenses related to attending meetings of the Board of
Directors.
401(K) Plan
The Company has a 401(k) deferred compensation plan to which the Company
may make discretionary contributions. The Company made a contribution to its
plan amounting to approximately $7,000 for the year ended June 30, 1997.
9
<PAGE>
PERFORMANCE GRAPH
Total Shareholder Returns - Dividends Reinvested
Annual Return Percentages
Years Ending
Company/Index Name June 93 June 94 June 95 June 96 June 97
================================================================================
ATEC GROUP INC. -44.83 -77.35 -86.20 -8.72 -46.63
S&P SMALLCAP 600 INDEX 2.54 1.87 20.36 26.01 21.69
PEER GROUP -7.38 2.83 69.26 48.27 -18.16
Indexed\Cumulative Returns
Years Ending
Base
Period Return Return Return Return Return
Company/Index Name 2/12/93 June 93 June 94 June 95 June 96 June 97
================================================================================
ATEC GROUP INC. 100 55.17 12.50 1.72 1.57 0.84
S&P SMALLCAP 600 INDEX 100 102.54 104.45 125.72 158.43 192.79
COMPUTER (SOFTWARE & 100 92.62 95.24 161.20 239.02 195.62
SVCE) - SMALL
Please note that S&P has added a history to the Computer (Software & Services)
Small Index starting in 1995. The periods ending 1993 and 1994 are calculated
using the peer group population.
================================================================================
10
<PAGE>
[THE FOLLOWING TABLE REPRESENTS A LINE CHART IN THE PRINTED MATERIAL]
Base
Period Return Return Return Return Return
Company/Index Name 2/12/93 June 93 June 94 June 95 June 96 June 97
================================================================================
ATEC GROUP INC. 100 55.17 12.50 1.72 1.57 0.84
S&P SMALLCAP 600 INDEX 100 102.54 104.45 125.72 158.43 192.79
COMPUTER (SOFTWARE & 100 92.62 95.24 161.20 239.02 195.62
SVCE) - SMALL
11
<PAGE>
Security Ownership of
Certain Beneficial Owners and Management
The following table sets forth as of September 26, 1997 certain information
with respect to the beneficial ownership of the Company's voting securities by
(i) any person (including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934 ("Exchange Act") known by the Company to
be the beneficial owner of more than 5% of the Company's voting securities, (ii)
each director of the Company, (iii) each executive officer named in the Summary
Compensation table appearing herein, and (iv) all executive officers and
directors of the Company as a group. The table also sets forth the respective
general voting power of such persons taking into account the voting power of the
Common Stock and the Preferred Stock combined.
Amount and Nature
Name and Address of Beneficial Percentage of
Beneficial Ownership of Voting Stock
Owner Common Stock Outstanding(1)
- ----- ------------ --------------
Ashok Rametra(2) 3,490,220 11.5%
1762 Central Avenue
Albany, NY 12205
Surinder Rametra(3) 3,955,307 13.1%
90 Adams Avenue
Hauppauge, NY 11788
E. Northport,
NY 11731
Balwinder Singh
Bathla(4) 3,214,527 10.4%
143 West 29th Street
New York, NY 10001
Rajnish Rametra(5) 2,470,941 8.3%
90 Adams Avenue
Hauppauge, NY 11716
All directors and
executive/officers
as a group (3 persons) 10,660,054 34.3%
(1) Computed based upon a total of 29,887,677 shares of Common Stock, 29,232
shares of Series A Preferred Stock, 1,458 shares of Series B Preferred
Stock and 338,790 Series C Preferred Stock. Each share of Common Stock and
Preferred Stock possess one vote per share. Accordingly, the foregoing
represents an aggregate of 30,257,157 votes.
(2) The foregoing figure reflects the ownership of an aggregate of 1,400,379
shares of Common Stock by Mr. Rametra and 2,039,184 shares of Common Stock
owned by Mr. Rametra's spouse and
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<PAGE>
children. The foregoing amount assumes the exercise of options to acquire
50,000 shares of Common Stock. Mr. Rametra disclaims beneficial ownership
of share of the Company's Common Stock owned by other members of the
Rametra family.
(3) The foregoing figure reflects the ownership of 2,134,947 shares of Common
Stock by Mr. Rametra and 1,770,360 shares by Mr. Rametra's wife and minor
son. In addition, the foregoing assumes the the exercise of options to
acquire 50,000 shares of Common Stock. Mr. Rametra disclaims beneficial
ownership of shares of the Company's securities owned by other members of
the Rametra family including independent children.
(4) The foregoing figure assumes the exercise by Mr. Bathla of options to
acquire 620,000 shares of Common Stock. Mr. Bathla disclaims beneficial
ownership of shares of Common Stock owned by other members of his family.
(5) The foregoing figures reflect the ownership by Mr. Rametra of 812,286
shares of Common Stock and an aggregate of 1,528,615 shares by his spouse
and children. The figure also assumes the exercise by Mr. Rametra of
130,000 options. Mr. Rametra disclaims beneficial ownership of shares of
the Company owned by other members of the Rametra family.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June, 1996, the Company acquired 100% of the outstanding capital stock
of Innovative Business Micros, Inc. ("Innovative"), a computer integrator
located in Long Island. Innovative was formerly owned by Surinder Rametra and
Ashok Rametra, the Company's principal executive officer and principal financial
officer respectively, and Rajnish Rametra the brother of Surinder and Ashok. The
consideration for the acquisition was the issuance by the Company of an
aggregate of 4,900,000 shares of the Company's Common Stock to the former
shareholders of Innovative. The terms of the acquisition were not negotiated in
an arms-length manner and there can be no assurance that an unaffiliated company
would have paid less consideration for Innovative than paid by the Company. The
Acquisition was accounted for as a pooling of interest.
In January 1997, the Company issued options to purchase 700,000 shares of
Common Stock to the former shareholders of Cony Computer Systems, Inc. and
American Computer Systems, Inc., both wholly owned subsidiaries of the Company,
in consideration for amending certain purchase and employment agreements,
thereby eliminating any future performance payments.
All transactions between the Company and its subsidiaries were eliminated
through inter-company elimination on the Company's financial statements.
LOANS
6/30/97 6/30/96 6/30/95 Interest Maturity
Lender Amount Amount Amount Rate Rate
- ------ ------ ------ ------ ---- ----
Balwinder Singh
Bathla $2,967 $228,322 $396,246 10% 6/30/98
Rajnish Rametra $ -- $500,000 $230,000 10% 6/30/98
Ashok Rametra $ -- $150,000 $ -- 10% 6/30/98
During the year ended June 30, 1997, Balwinder Singh Bathla advanced the
Company $2,967. The advance bears interest at the rate of 10% per annum.
Micro Computer Systems, Inc.'s ("MCS") office, located in Albany, New York,
is leased pursuant to a lease expiring in June 2003. The lease requires annual
rental payments of approximately $96,600 through 1998 and $108,192 thereafter,
plus all expenses and taxes attributable to the operation of the premises. This
facility is leased from 1762 Central Avenue Realty Associates (a partnership)
controlled by former stockholders of MCS and Sun Computer and Software, Inc.
("SCSI"). MCS and SCSI are wholly owned subsidiaries of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company
during its most recent fiscal year, the Company believes that there were no
Section 16(a) reports filed untimely during the Company's year ended June 30,
1997, other than Forms 4 for Surinder Rametra, Rajnish Rametra, Ashok Rametra
and Balwinder Singh. All such Forms 4 have since been filed.
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<PAGE>
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed the firm of Weinick Sanders Leventhal
& Co., LLP ("WSL") as independent auditors of the Company for fiscal year 1998
subject to ratification by the stockholders. WSL has served as the Company's
independent auditors since April 18, 1996.
Audit services expected to be performed by WSL during fiscal year 1998 will
consist of the audit of financial statements of the Company and its wholly owned
subsidiaries. It is anticipated that a representative of WSL will be present at
the Annual Meeting and will be given an opportunity to make a statement if he so
desires and to respond to appropriate questions.
The accounting firm of Yohalem Gillman & Company, ("Yohalem"), which served
as the Company's independent auditor for the fiscal year ended June 30, 1995 was
dismissed by the Company on April 17, 1996. On June 28, 1995, the Company's
independent auditor for the fiscal year ended June 30, 1994, Bianculli, Pascale
& Company, P.C. ("B&P"), was dismissed by the Company. Yohalem's and B&P's
services for each such year included the audit of the Company's consolidated
financial statements and other services related to filings with the Securities
and Exchange Commission. During the Company's two most recent fiscal years and
the interim periods up until the date of dismissal of Yohalem, the Company had
no disagreement with Yohalem and/or B&P and there were no "reportable events",
as defined in Items 304(a)(1)(iv) and (v) of Regulation S-K involving the
Company, Yohalem and/or B&P on matters of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of such auditors, would have caused them to make
reference to such matters in their respective reports, with the exception of a
disagreement with Yohalem on the proposed accounting method to be applied to the
Company's proposed acquisition of Innovative. The proposed acquisition of
Innovative (the "Acquisition") contemplated the payment to Innovative
Shareholders of shares of the Company's Common Stock over a three year period
depending upon performance criteria ("Initial Acquisition Terms"). Innovative
was owned by Surinder Rametra and Ashok Rametra, the Company's principal
executive officer and principal financial officer, respectively, and their
brother, Rajnish Rametra. Surinder and Ashok Rametra owned 25% of the Common
Stock and Rajnish Rametra owned 75%. Surinder Rametra gave direction and
guidance to Rajnish Rametra for the operations of Innovative. A member of the
Company's board of directors discussed the matter with Yohalem. The Company
authorized Yohalem to respond fully to the inquiries of WSL concerning the
subject matter of the disagreement. The accountant's reports on the Company's
financial statements for the years ended June 30, 1995 and 1994 did not contain
an adverse opinion or a disclaimer of opinion nor were they qualified or
modified as to uncertainty, audit scope or accounting principles.
Management was of the opinion that APB 16 did not apply to the Initial
Acquisition Terms. APB 16, paragraph 5 excludes transfers and exchanges between
companies under common control, and assets and liabilities would be accounted
for at historical cost in a manner similar to that in pooling of interest
accounting (AIN ASPB 16.#39). Management also consulted with the AICPA's
technical hotline prior to formulating their opinion on the appropriate
accounting.
Yohalem, the Company's former independent accountants expressed
reservations concerning the accounting method applied in the pro forma financial
presentations included in the Company's Current Report on Form 8-K dated April
1, 1996 based on the Initial Acquisition Terms and the application of this
method to the pro forma financial statements. Yohalem believed, based on a
literal reading on the
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applicable authoritative accounting standards, that the proposed accounting for
Innovative based on the Initial Acquisition Terms was not in accordance with
those accounting standards, as currently written, inasmuch as the Rametra family
did not own a majority of the voting shares of the Company before the
Acquisition. Yohalem is aware the Financial Accounting Standards Board is
reconsidering the requirements for consolidations and, accordingly suggested
that the Company discuss this matter with the staff of the SEC.
The Company requested WSL's views on the proposed accounting for the
Innovative transaction based on the Initial Acquisition Terms. Based on the
facts as they existed at that point in time, it was their view that APB 16 did
not apply and the appropriate accounting would be the carryover of Innovative's
cost.
In June 1996, the Company negotiated new acquisition terms "New Acquisition
Terms" with the Rametras, pursuant to which the Company would acquire 100% of
Innovative's shares in exchange for 4,900,000 shares of the Company's Common
Stock all of which shares were payable at the Closing of the Acquisition. The
New Acquisition Terms did not involve the payment of any future consideration to
the Innovative Shareholders. In June 1996, the Acquisition was consummated based
on the New Acquisition Terms. The Company, in concurrence with WSL accounted for
the Acquisition as a pooling of interests.
The affirmative vote of at least a majority of the shares represented and
voting at the Annual Meeting at which a quorum is present (which shares voting
affirmatively also constitute at least a majority of the required quorum) is
necessary for approval of Proposal No. 2. Under Delaware law, there are no
rights of appraisal or dissenter's rights which arise as a result of a vote to
ratify the selection of auditor's.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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PROPOSAL NO. 3
RATIFICATION OF AN AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION EFFECTING A
REVERSE STOCK SPLIT
Background
The Company's Board of Directors unanimously authorized a reverse stock
split of the Company's outstanding shares of Common Stock ("Reverse Stock
Split") pursuant to which each five (5) outstanding shares of Common Stock will
be automatically converted into one (1) share of Common Stock. The Company
currently has 29,887,677 shares of Common Stock issued and outstanding. After
giving effect to the Reverse Stock Split, the Company will have 5,977,535 shares
of Common Stock issued and outstanding. The Reverse Stock Split will not change
the par value of any outstanding shares of the Company's Common Stock. The
Company's unissued authorized shares of Common will increase from 40,112,323 to
64,002,465. The Company has no plans to issue any of the unissued authorized
shares of Common Stock in connection with the Reverse Split.
Reasons for the Reverse Stock Split
The primary reason for the Reverse Stock Split is to increase the per share
stock price of the Common Stock in order for the Company to be in a position to
obtain a listing on the National Association of Securities Dealers, Inc.
("Nadaq") National Market System ("NMS"), thus providing the Company with
greater market exposure. NMS requires a minimum bid price of $5.00 per share for
an initial listing. There can be no assurance that the Company will successfully
obtain a NMS listing.
In addition, an increased share price will help assure future compliance
with recently instituted Nasdaq SmallCap Market minimum maintenance
requirements. The new requirements include a minimum $1.00 bid price for listed
securities. The Company believes that the Reverse Stock Split will increase the
per share price of the Common Stock above the required $1.00 minimum bid price.
At September 25, 1997, the Company's Common Stock had a bid price of $1.00 per
share.
The Reverse Stock Split will not alter the percentage interest in the
Company of any shareholder, except to the extent that the Reverse Stock Split
results in a shareholder of the Company owning a fractional share. In lieu of
issuing fractional shares, the Company will issue to any shareholder who
otherwise would have been entitled to receive a fractional share as a result of
the Reverse Stock Split an additional full share of Common Stock.
No Right of Appraisal
Under the General Corporation Law of the State of Delaware, the state in
which the Company is incorporated, the Reverse Stock Split does not require the
Company to provide dissenting shareholders with the right of appraisal and the
Company will not provide shareholders with such right.
Outstanding Warrants, Options and Preferred Stock
Upon effectiveness of the Reverse Stock Split, all holders of outstanding
warrants, options, preferred stock, and rights calling for the issuance of
Common Stock will, upon exercise or conversion of their
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warrants, rights, options, and/or preferred stock, will receive one fifth
(1/5th) of the number of shares of Common Stock which such holders would have
received prior to the Reverse Stock Split. In addition, the exercise and
conversion price of all outstanding warrants, rights, options and/or preferred
stock will be increased five fold.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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STOCKHOLDERS' PROPOSALS
It is anticipated that the Company's 1998 Annual Meeting of Stockholders
will be held in November 1998. Stockholders who seek to present proposals at the
Company's next Annual Meeting of Stockholders must submit their proposals to the
Secretary of the Company on or before June 1, 1998.
GENERAL
Unless contrary instructions are indicated on the proxy, all shares of
Common Stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted FOR Proposal Nos. 1, 2 and
3.
The Board of Directors knows of no business other than that set forth above
to be transacted at the meeting, but if other matters requiring a vote of the
stockholders arise, the persons designated as proxies will vote the shares of
Common Stock represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on the proxy, his or
her shares of Common Stock will be voted in accordance with the specification so
made.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN, SIGN
AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED, NO
MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
By Order of the Board of Directors,
/s/ Ashok Rametra
------------------------------
Ashok Rametra, Secretary
Hauppauge, New York
October 7, 1997
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ATEC GROUP, INC.
Annual Meeting of Stockholders -- Tuesday, November 18, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Surinder Rametra with power of
substitution, as proxy to represent the undersigned at the Annual Meeting of
Stockholders to be held at the Huntington Hilton, Melville, New York, on
Tuesday, November 18, 1997 at 10:00 a.m. local time and at any adjournment
thereof, and to vote the shares of stock the undersigned would be entitled to
vote if personally present, as indicted on the reverse side hereof.
The shares represented by the proxy will be voted as directed. If no
contrary instruction is given, the shares will be voted FOR Proposal Nos. 2, 3
and for the election of Surinder Rametra, Ashok Rametra, Balwinder Singh Bathla,
George Egan and David C. Reback as directors.
Please mark boxes in blue or black ink.
1. Proposal No. 1 - Election of Directors.
Nominees: Surinder Rametra, Ashok Rametra, Balwinder Singh Bathla, George
Egan, and David C. Reback.
AUTHORITY
FOR withheld
all as to all
nominees nominees
----- -----
| | | |
----- -----
For, except authority withheld as to the following nominee(s):
____________________________________________________
2. Proposal No. 2 for ratification of the selection of Weinick Sanders
Leventhal & Co., LLP as the independent auditors of the Company.
FOR AGAINST ABSTAIN
----- ----- -----
| | | | | |
----- ----- -----
3. Proposal No. 3 for the ratification of the Company's Reverse Stock Split.
FOR AGAINST ABSTAIN
----- ----- -----
| | | | | |
----- ----- -----
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Please date, sign as name appears at left, and return promptly. If the stock is
registered in the name of two or more persons, each should sign. When signing as
Corporate Officer, Partner, Executor, Administrator, Trustee, or Guardian,
please give full title. Please note any change in your address alongside the
address as it appears in the Proxy.
<PAGE>
Dated:______________________________
___________________________________
(Signature)
___________________________________
(Print Name)
SIGN, DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
