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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MICROS-TO-MAINFRAMES, INC.
(Name of Registrant as Specified In Its Quarter)
MICROS-TO-MAINFRAMES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] 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:
<PAGE>
MICROS-TO-MAINFRAMES, INC.
614 Corporate Way
Valley Cottage, New York 10989
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of MICROS-TO-MAINFRAMES, INC.:
Notice is hereby given that the Fiscal 1999 Annual Meeting of
Shareholders (the "Annual Meeting") of Micros-to-Mainframes, Inc. (the
"Company"), a New York corporation, will be held on October 12, 1999,
at 614 Corporate Way, Valley Cottage, New York at the hour of 9:00
a.m., for the following purposes:
1. To elect five (5) Directors of the Company to serve for the
ensuing year and/or until their successors are elected and
qualify;
2. To ratify the appointment of Goldstein Golub Kessler LLP as
independent auditors of the Company's financial statements
for the fiscal year ending March 31, 2000; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed the close of business on August
23, 1999 as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Frank T. Wong, Secretary
Valley Cottage, New York
September 3, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD, AND RETURN IT TO THE
COMPANY. THE PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED, AND
SHAREHOLDERS EXECUTING PROXIES MAY ATTEND THE MEETING AND VOTE THERE
IN PERSON SHOULD THEY SO DESIRE.
<PAGE>
MICROS-TO-MAINFRAMES, INC.
614 Corporate Way
Valley Cottage, New York 10989
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the
solicitation of proxies by Micros-To-Mainframes, Inc. (the "Company")
to be voted at the Fiscal 1999 Annual Meeting of the Shareholders (the
"Annual Meeting") to be held at 614 Corporate Way, Valley Cottage, New
York on October 12, 1999 at 9:00 a.m., and at any and all adjournments
thereof. This Proxy Statement and accompanying Notice of Meeting and
form of proxy are to be first mailed on or about September 9, 1999 to
the holders of record of the Company's common stock, $.001 par value
per share (the "Common Stock") as of the close of business on August
23, 1999. At the close of business on August 23, 1999, there were
issued and outstanding and entitled to vote 4,827,569 shares of Common
Stock. Each share of Common Stock is entitled to one vote on each
matter which may properly come before the Annual Meeting. All
expenses of this solicitation will be paid for by the Company, which
solicitation will be made by use of the mails or by personal contacts
by the officers of the Company. The affirmative vote of the plurality
of the votes cast by the holders of Common Stock present in person or
by proxy at the Annual Meeting and entitled to vote, voting together
as a single class, is required for the election of Directors. The
affirmative vote of the majority of the votes cast by the holders of
Common Stock present in person or by proxy at the Annual Meeting and
entitled to vote, voting together as a single class, is required to
ratify the appointment of Goldstein Golub Kessler LLP as independent
auditors of the Company.
Common Stock represented by a valid unrevoked proxy will be voted
at the Annual Meeting and any adjournment thereof as specified therein
by the person giving the proxy. If no specification is made, the
Common Stock represented by such proxy will be voted in favor of each
Director for re-election, "FOR" Proposal 2 and at the discretion of
the proxy agents upon any other matters which may properly come before
the Annual Meeting. Shares represented by proxies which are marked
"Abstain" for any matter, and proxies which are marked to deny
discretionary authority on all other matters will not be included in
the vote totals and therefore will have no effect on the vote. In
addition, where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not provided voting
instructions (commonly referred to as "broker non-votes"), those
shares will not be included in the vote totals. A proxy may be
revoked by the person executing the same at any time before the
authority thereby granted is exercised, upon written notice of
revocation received by the Company's Secretary, by executing and
delivering a later dated proxy or by attending the Annual Meeting and
voting in person.
A list of shareholders entitled to vote at the Annual Meeting
will be open to examination by any shareholder, for any purpose
germane to the Annual Meeting, at the offices of the Company, 614
Corporate Way, Valley Cottage, New York 10989, during ordinary
business hours for ten (10) days prior to the Annual Meeting. Such
list shall also be available during the Annual Meeting.
<PAGE>
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING
Proposal 1. Election of Five (5) Nominees As Directors
At the Annual Meeting, five (5) Directors are to be elected for
the ensuing year and until their successors are duly elected and
qualify. If, at the time of election, any of the nominees should be
unavailable for election, a circumstance which is not expected by the
Company, it is intended that the proxies will be voted for such
substitute nominee as may be selected by the Company. The proxies
cannot be voted for more than five Directors at the Annual Meeting.
Proxies not marked to the contrary will be voted "FOR" the
election of the following five persons, all of whom are standing for
re-election to the Board of Directors:
Name Age Position(s) Year First Became a Director
Howard Pavony 48 Chairman of the Board of 1986
Directors
Steven H. Rothman 50 Chief Executive Officer, 1986
President and a Director
William Lerner* 66 Director 1995
Arnold J. Wasserman* 61 Director 1998
Alvin E. Nashman* 72 Director 1998
* Member of the Audit Committee and Compensation Committee.
Howard Pavony served as the Company's Co-Chief Executive Officer,
President and a Director from the Company's inception in May 1986 to
August 1996 and has served as Chairman of the Board of Directors since
September 1996. He has also served as Vice President of MTM Advanced
Technology, Inc. since 1986. From 1977 until 1986, Mr. Pavony was
employed by Data Research Associates ("DRA"), a computer hardware and
accessories company, rising to the positions of Vice President of
Sales and member of the Executive Board of DRA.
Steven H. Rothman served as the Company's Co-Chief Executive
Officer, Vice President, and a Director from the Company's inception
in May 1986 to August 1996 and has served as Chief Executive Officer,
President and Director since September 1996. Mr. Rothman was the
Company's Secretary from May 1986 to September 1995. He has also
served as President of MTM Advanced Technology, Inc. since 1986.
From 1976 until 1986, Mr. Rothman was employed by DRA, rising to the
positions of Director of Marketing and member of the Executive Board.
William Lerner has served as a Director of the Company since
September 1995 and is a member of the Audit and Compensation
Committees. Mr. Lerner has been engaged in the private practice of
corporate and securities law in New York and Pennsylvania since 1991.
His career includes service with the U.S. Securities and Exchange
Commission, the American Stock Exchange, and as counsel to a major
investment banking/securities brokerage firm. Mr. Lerner is a director
of Seitel, Inc. (a NYSE listed oil and gas producing company that owns
one of the largest seismic data libraries in North America), Rent-way,
Inc. (a NYSE listed company that is the 2nd largest company in the
diversified rental-purchase industry), and Helm Resources, Inc. (an
OTC-Bulletin Board company that provides financing and management
services to middle market public companies). Mr. Lerner also provides
<PAGE>
corporate secretarial services to a number of other public companies,
including Computer Research, Inc. (an OTC-Bulletin Board company that
is a leading provider of computer accounting services to the brokerage
and banking industries).
Arnold J. Wasserman has served as a Director of the Company since
March 1998 and is the Chairman of the Audit Committee and a member of
the Compensation Committee. For the past 31 years, he has been a
principal of P & A Associates, a leasing/consulting firm. Prior to
that, he held positions with IBM and Litton Industries. Mr. Wasserman
has consulted with major corporations in the areas of marketing,
advertising and sales. He is a director of Stratasys, Inc., a
publicly traded company.
Alvin E. Nashman has served as a Director of the Company since
August 1998 and is the Chairman of the Compensation Committee and a
member of the Audit Committee. He has been an independent consultant
for major corporations in the field of computer service for the past
seven years. Prior to that, Dr. Nashman was a Director of Computer
Sciences Corporation and the President of its System Group. He is a
Director and consultant to several computer services companies,
including Halifax Corporation, an American Stock Exchange listed
company, Andruilis Corporation, Spaceworks, Unitech Inc., Trawick
Associates and Performance Engineering Corporation, all privately held
companies.
All directors hold office until the next annual meeting of
shareholders or until their successors are elected and qualify.
The Company has two standing committees, the Audit Committee and
the Compensation Committee. The members of each the Audit Committee
and the Compensation Committee are Messrs. Lerner, Wasserman and
Nashman. The duties of the Audit Committee include recommending the
engagement of independent public accountants, reviewing and
considering actions of Management in matters relating to audit
functions, reviewing with independent public accountants the scope and
results of their audit engagement, reviewing reports from various
regulatory authorities, reviewing the system of internal controls and
procedures of the Company and reviewing the effectiveness of
procedures intended to prevent violations of law and regulations.
Among the duties of the Compensation Committee are to recommend to the
Board of Directors remuneration for officers of the Company, to
determine the number and issuance of options for executive officers of
the Company, to review any compensation and incentive program for
executive officers of the Company and to monitor the performance of
any pension or profit sharing programs of the Company.
The Board of Directors held 3 meetings during the year ended
March 31, 1999 (Fiscal 1998). The Compensation Committee held one
meeting, and the Audit Committee held one meeting during Fiscal 1999.
Each incumbent Director attended at least 75% of the Board of
Directors meetings held by the Company during the time he served on
the Board of Directors and of the meetings of Committees on which such
Director served.
Executive Officers
Officers of the Company are elected annually by, and serve at the
discretion of the Board of Directors. The names and business
backgrounds of Executive Officers of the Company who are not Directors
of the Company are:
<PAGE>
Positions with Year First
Name Age the Company Became Officer
Frank T. Wong 51 Vice President-Finance 1992
and Secretary
Anthony R. Travaglini 46 Chief Technology Officer 1999
Frank Wong has served as the Company's Vice President-Finance
since February 1992, as a Director from June 1993 to March 1998 and as
Secretary since September 1995. Prior thereto, from 1975 to 1991, he
served as Chief Accountant of the Carvel Corporation, a franchise ice
cream distributor.
Anthony R. Travaglini became the Company's Chief Technology
Officer in June 1999 when the Company acquired Pivot Technologies,
Inc. Mr. Travaglini founded Pivot in August 1997 and served as its
President until Pivot was acquired by the Company. Prior to founding
Pivot, Mr. Travaglini was responsible for network, systems and
administration management for multiple divisions of PepsiCo. from
April 1992 until August 1997. While at PepsiCo., he supervised the
design, development and implementation of PepsiCo.'s enterprise
management system. Mr. Travaglini also served as Vice President of
Trading Technologies at Shearson-Lehman Brothers from February 1988 to
April 1992 and a senior UNIX systems administrator at Salomon Brothers
from December 1982 to February 1987.
DIRECTOR FEES
The Company's independent directors receive an annual fee of
$9,000 payable quarterly in advance. In addition, each independent
director receives $1,500 for attendance in person at each Board
meeting and $250 for participation in each telephonic board meeting
held. Members of the Audit Committee and Compensation Committee are
appointed annually and serve at the discretion of the Board of
Directors. Each member of each committee will receive $1,000 for each
meeting attended in excess of five committee meetings of such
committee per year.
Management-Directors currently receive no cash compensation for
serving on the Board of Directors other than reimbursement of
reasonable expenses incurred in attending meetings. Certain of the
Company's directors have received stock options from the Company. The
Company's independent directors each received 10,000 stock options
last year, and the Company expects to continue to grant up to 10,000
stock options per year to each independent director. See "Stock
Option Plans" below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 23, 1999, certain
information concerning those persons known to the Company, based on
information obtained from such persons, with respect to the beneficial
ownership (as such term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of Common Stock and Preferred Stock by (i) each
person known by the Company to be the owner of more than 5% of the
outstanding Common Stock and Preferred Stock, (ii) each Director,
(iii) each executive officer named in the Summary Compensation Table
and (iv) all Directors and executive officers as a group.
<PAGE>
Amount and Nature
Name and Address of Beneficial Ownership Percent of Class (1)
of Beneficial Owner Common Stock Common Stock
Steven H. Rothman (2) 1,055,625 (3)(4) 21.4%
Howard Pavony (2) 1,044,500 (3)(5) 21.2%
William Lerner
423 East Beau Street
Washington, PA 15301 15,000 (6) *
Arnold Wasserman
1 Brookwood Drive
West Caldwell, NJ 07006 10,000 (7) *
Alvin E. Nashman
3609 Ridgeway Terrace
Falls Church, VA 22044 10,000 (8) *
All Directors and
executive officers
as a group (9 persons) (9) 2,377,445(3)(4)(5)(6)(7)(8) 46.8%
__________________________
* Represents less than 1%.
(1) Based on 4,827,569 shares of Common Stock issued and
outstanding as of August 23, 1999.
(2) The address of this person is c/o the Company, 614
Corporate Way, Valley Cottage, New York 10989.
(3) Includes options held by Steven Rothman and Howard Pavony
to each purchase 100,000 shares of Common Stock which are
currently exercisable or become exercisable within 60 days
after August 23, 1999. Does not include options held by
each of Messrs. Pavony and Rothman to purchase 10,000
shares which are not currently exercisable or do not become
exercisable within 60 days after August 23, 1999.
(4) Includes 1,125 shares held by the wife of Mr. Rothman.
Also includes an aggregate of 169,139 shares of Common
Stock held in trust for Mr. Rothman's three children. Mr.
Rothman disclaims beneficial ownership of all of such
shares.
(5) Includes an aggregate of 164,044 shares held in trust for
Mr. Pavony's two children. Mr. Pavony disclaims beneficial
ownership of all of such shares.
(6) Includes options to purchase 15,000 shares of Common Stock
held by Mr. Lerner which are currently exercisable or
become exercisable within 60 days of August 23, 1999.
<PAGE>
(7) Includes options to purchase 10,000 shares of Common Stock
held by Mr. Wasserman which are currently exercisable or
become exercisable within 60 days of August 23, 1999.
(8) Includes options to purchase 10,000 shares of Common Stock
held by Mr. Nashman which are currently exercisable or
become exercisable within 60 days of August 23, 1999.
(9) Includes the individuals set forth above in this table and
two executive officers not listed in such table, one of
whom is Anthony Travaglini who beneficially owns 238,565
shares of Common Stock (which includes (a) 188,565 shares
subject to a Lock-Up Agreement which restricts the resale
of 47,142 shares for one year and 141,423 shares for two
years and grants the Company a right of first offer should
Mr. Travaglini elect to sell such Common Stock in a private
transaction; and (b) a five-year warrant to purchase 50,000
shares of Common Stock of the Company at $2.916767 per
share), and the other executive officer is Frank Wong who
beneficially owns 3,755 shares of Common Stock, including
1,000 shares held by Mr. Wong's wife. In addition, it
includes Ramon Mota, a former executive officer of the
Company whose employment terminated on December 31, 1998,
who did not own any shares of the Company's Common Stock.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to,
earned by, or paid for all services rendered to the Company during the
three fiscal years ended March 31, 1999 by certain executive officers
of the Company. No other executive officers received compensation in
excess of $100,000 during such years.
Long-Term
Annual Compensation(1) Compensation
--------------------- ------------
Shares
Name and Principal Underlying
Position Year Salary($) Bonus($) Options(#)
- ------------------ ---- --------- -------- ------------
Howard Pavony 1999 $227,501 $ 40,000 50,000
Chairman of the Board 1998 $213,334 - -
1997 $185,417 $ 20,000 50,000
Steven H. Rothman 1999 $227,501 $ 40,000 50,000
President and CEO 1998 $213,334 - -
1997 $185,417 $ 20,000 50,000
Robert Fries (2) 1998 $139,992 - -
1997 $103,326 - -
Ramon Mota (3) 1999 $125,126 $ 5,000 5,000
1998 $110,333 - 5,000
1997 $100,033 $ 9,000 5,000
_________________
(1) The compensation figures shown do not include the cost to
the Company of benefits, including the use of automobiles
<PAGE>
leased or car allowances paid by the Company, premiums for
life and health insurance and any other personal benefits
provided by the Company to such persons, which are, in the
aggregate, below reportable thresholds.
(2) Mr. Fries was an executive officer of the Company through
March 31, 1998.
(3) Mr. Mota voluntarily terminated his agreement with the
Company on December 31, 1998. Mr. Mota was also paid a
consulting fee of $10,000 for services rendered in January
1999.
OPTION GRANTS IN LAST FISCAL YEAR
The table below includes the number of stock options granted to
the executive officers named in the Summary Compensation Table during
the year ended March 31, 1999, exercise information and potential
realizable value.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Annual Rates of Stock
Underlying Granted to Price Appreciation
Options Employees in Exercise Expiration for Option Term
Granted(#) Fiscal Year Price($/sh) Date 5%($) 10%($)
---------- ------------ ----------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Steven H. Rothman 50,000 25.0% 2.25 7/13/08 $118,125.00 $123,750
Howard Pavony 50,000 25.0% 2.25 7/13/08 $118,125.00 $123,750
Robert Fries - - - - - -
Ramon Mota 5,000 (1) 2.5% 2.25 (1) $ 11,812.50 $12,375
</TABLE>
________________
(1) Mr. Mota voluntarily terminated his agreement with the
Company on December 31, 1998, and the stock options were
*canceled.
REPORT ON REPRICING OF OPTIONS
On July 13, 1998, the Compensation Committee approved the
repricing of certain options to
purchase shares of Common Stock held by Messrs. Pavony and Rothman, as
shown in the table below, as
an additional performance incentive for said executive officers. (See
"STOCK OPTION PLANS".)
<TABLE>
<CAPTION>
Number Of Length Of
Securities Market Price Original Option
Underlying Of Stock At Exercise Price Term Remaining
Options Time Of At Time Of New At Date Of
Name Date Repriced Repricing Repricing Exercise Price Repricing
- ----- ----- -------- --------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven H. Rothman 7/13/98 10,000 $2.25 $6.125 $2.25 88 months
Howard Pavony 7/13/98 10,000 $2.25 $6.125 $2.25 88 months
</TABLE>
<PAGE>
EMPLOYMENT AGREEMENTS
On September 1, 1996, Steven H. Rothman and Howard Pavony,
respectively the Chief Executive Officer and Chairman of the Board of
Directors of the Company, each entered into a five year employment
agreement with the Company on the terms set forth below. Each
agreement renews annually after the term unless either party elects to
terminate. Salary for the fiscal year ending March 31, 1999 was at
the rate of $227,501. Under each agreement, the executive receives
annual increases in salary equal to the greater of (i) the percentage
increase in the Consumer Price Index; and (ii) $10,000. Each
executive is entitled to participate in the Company's stock option
plans and any incentive bonus program established from time to time,
as determined by the Compensation Committee of the Board of Directors.
Further, the Company will maintain a $1,000,000 life insurance policy
on each executive's life, payable to the beneficiaries named by him,
and maintain disability insurance for the benefit of each executive
which will pay $150,000 per annum to him in the event of his permanent
disability. In the event that there is a change in control of the
Company, the executive will be entitled, upon such change of control,
to terminate his employment and receive 2.9 times his annual salary as
then in effect.
On April 1, 1996, the Company and Mr. Mota entered into a three-
year employment agreement providing for a base salary of $98,000 in
the first year, $105,000 in the second year and $115,000 in the third
year (subsequently increased to $170,000 on May 15, 1998); a bonus
depending upon the earnings generated by the Advanced Technology
Group; grants of five-year options to purchase up to 5,000 shares of
Common Stock in each of the first two years of the term; and a $300 to
$400/month car allowance. The Company further agreed to use its best
efforts to designate Mr. Mota as a member of the Board of Directors
during the initial term of the agreement. Mr. Mota voluntarily left
the employ of the Company on December 31, 1998 and his employment
agreement was terminated. Mr. Mota received a consulting fee of
$10,000 for services performed in January 1999.
Simultaneously with the acquisition of Data.Com, on May 6, 1996,
the Company and Mr. Fries entered into a three-year employment
agreement providing for a base salary of $140,000; a bonus of 6% of
earnings of Data.Com, but in no event more than $60,000 with respect
to a fiscal year; grants of up to a total of 20,000 incentive stock
options over the three years, subject to Data.Com's earning certain
minimum amounts; and a $400/month car allowance. Mr. Fries' agreement
was automatically extended for an additional year through April 30,
2000.
Simultaneously with the acquisition of Pivot on June 2, 1999, the
Company and Mr. Travaglini entered into an employment agreement with a
term ending on March 31, 2002 providing for a base salary of $150,000
based on an April 1 to March 31 Fiscal Year; $175,000 for the second
year and $185,000 for the third year; bonus and stock options based on
the earnings of the Company's business with respect to which Mr.
Travaglini has management responsibility; and a $500/month car
allowance.
STOCK OPTION PLANS
The Company has established a 1993 Stock Option Plan (the "1993
Plan"), a 1996 Stock Option Plan (the "1996 Plan") and a 1998 Stock
Option Plan (the "1998 Plan")
Pursuant to the 1993 Plan, as of the date hereof, the Company has
granted an aggregate of 462,500 stock options. Of these, 155,000 are
currently exercisable, and 84,166 have been exercised to date.
220,000 options have been canceled to date or lapsed and made
available for regrant under the 1993 Plan. In addition, an aggregate
of 50,000 currently exercisable options, with exercise prices ranging
from $3.9375 to $7.00, were repriced to $2.25 per share on July 13,
1998.
<PAGE>
An aggregate of 313,000 options have been granted to date under
the 1996 Plan. Of these, 117,200 are exercisable and 14,000 have been
exercised to date. 21,300 options have been canceled to date and made
available for regrant under the 1996 Plan. No options have been
granted under the 1998 Plan.
As of the date hereof, Messrs. Pavony and Rothman each hold non-
qualified stock options expiring on October 19, 2005 to purchase up to
10,000 shares of Common Stock at $2.25 per share, non-qualified stock
options expiring on July 13, 2008 to purchase up to 50,000 share of
Common Stock at $2.25 per share and incentive stock options expiring
on August 31, 2001 to purchase up to 50,000 shares of Common Stock at
$4.43 per share; Mr. Lerner holds options expiring on September 14,
2005 to purchase up to 2,500 shares of Common Stock at $2.25 per
share, options expiring on August 19, 2006 to purchase up to 2,500
shares of Common Stock at $2.25 per share and options expiring on
March 31, 2008 to purchase up to 10,000 shares of Common Stock at
$2.75 per share; and Messrs. Wasserman and Nashman each hold options
expiring March 31, 2008 and October 15, 2008, respectively, to
purchase up to 10,000 shares of Common Stock at $2.75 per share and
$1.625, respectively.
SUMMARY OF THE PLANS
The 1993 Plan, the 1996 Plan, and the 1998 Plan (each, a "Plan"),
provide for the grant of options to qualified employees (including
officers and directors) of the Company, and its subsidiaries,
independent contractors, consultants and certain other individuals to
purchase shares of Common Stock. Each Plan must be administered by the
Board of Directors or a committee of at least two disinterested
members (and no interested members) of the Board of Directors (the
"Compensation Committee"). The Board or the Compensation Committee
has complete discretion to select the optionee and to establish the
terms and conditions of each option, subject to the provisions of the
respective Plan. The exercise price of options may not be less than
100% (no such limitation with respect to the 1998 Plan) of the fair
market value of the Common Stock as of the date of grant (110% of the
fair market value if the grant is an Incentive Option to an employee
who owns more than 10% of the outstanding Common Stock). Options may
not be exercised more than 10 years after the date of grant. An option
may be exercised by tendering payment of the purchase price to the
Company or, at the discretion of the Board of Directors or
Compensation Committee, by delivery of shares of Common Stock having a
fair market value equal to the exercise price or through a cashless
exercise involving the cancellation of a portion of the shares
underlying the options ("Option Shares") having a fair market value
equal to the exercise price of the Option Shares issued and with
respect to the 1998 Plan, by the cancellation of a number of options
having an "in-the-money" value equal to the average price of the
Options Shares issued. Options granted under the 1993 Plan and the
1996 Plan are not transferable and may be exercised only by the
respective grantees during their lifetimes or by their heirs,
executors or administrators in the event of death. Under the 1998
Plan, incentive stock options are as treated above, while non-
qualified stock options may at the options of the Board of Directors
or Compensation Committee, be transferable. Option Shares that are
canceled or terminated may later be re-granted. The number of options
outstanding and the exercise price thereof are subject to adjustment
in the case of certain transactions such as mergers,
recapitalizations, stock splits or stock dividends.
The 1993 Plan provides for the grant of options to purchase up to
an aggregate of 250,000 Option Shares. Options granted under the
1993 Plan may or may not be "incentive stock options" as defined in
Section 422 of the Code "ISOs"), and non-qualified stock options
("NQSOs") may be granted in tandem with Stock Appreciation Rights
("SARs") or Stock Depreciation Rights, depending upon the terms
established by the Board or the Compensation Committee at the time of
grant.
The 1996 Plan provides for the grant of options to purchase up to
an aggregate of 350,000 Option Shares. Options granted under the
<PAGE>
1996 Plan may be ISOs or NQSOs and may be granted in tandem with SARs,
depending upon the terms established by the Board or the Compensation
Committee at the time of grant.
The 1998 Plan provides for the grant of options to purchase up to
an aggregate of 250,000 Option Shares. Options granted under the 1998
Plan may be ISOs or NQSOs and may be granted in tandem with SARs,
depending upon the terms established by the Board or the Compensation
Committee at the time of grant.
COMPENSATION COMMITTEE REPORTS ON EXECUTIVE COMPENSATION
It is the responsibility of the Compensation Committee of the
Board of Directors to administer the Company's incentive plans, to
review the compensation levels and performance of management and to
recommend compensation changes to the Board of Directors.
REPORT BY COMPENSATION COMMITTEE
Philosophy.
The Compensation Committee believes that maximizing shareholder
value is the most important measure of success, and achieving this
depends on the coordinated efforts of individual employees working as
a team toward defined common performance goals. The objectives of the
Company's compensation program are to align executive compensation
with shareholder value, to reward individual and team effort and
performance furthering the Company's business goals and to attract,
retain and reward employees who will contribute to the long-term
success of the Company.
The total direct compensation package for the Company's
executives, including the Chairman of the Board of Directors and the
Chief Executive Officer and President, is made up of three elements:
(i) a competitive base salary; (ii) attractive short-term incentives
to executives to earn additional bonus income based on operating
results; and (iii) the grant of stock options, from time to time, to
executives in an effort to provide a closer identification of the
executives' interests with those of the Company and its shareholders
by giving them an opportunity to acquire a proprietary interest in the
Company by means of the purchase of Common Stock.
Salary
With respect to Steven H. Rothman, the Chief Executive Officer,
Howard Pavony, the Chairman of the Board of Directors, and Anthony R.
Travaglini, Chief Technology Officer, salary is determined pursuant to
the terms of their respective employment contracts with the Company.
With respect to Mr. Ramon Mota, the Company former Vice President-
Technology, who voluntarily terminated his employment with the Company
on December 31, 1998, salary was determined pursuant to the term of
his employment contract with the Company as amended. The salary of
Frank Wong, Vice President-Finance for Fiscal 1999 were fixed by the
Compensation Committee. The Compensation Committee believes that the
basic philosophy regarding salaries to be followed is to consider
increases based upon a favorable evaluation of individual performance
relative to individual goals, the functioning of the executive's team
within the corporate structure, success in furthering the corporate
strategy and goals, and individual management skills, responsibilities
and anticipated workload. The Compensation Committee will also
consider demonstrated loyalty and commitment to the Company and the
competitive salaries offered by similar companies to attract
executives. Merit increases for executives are to be subject to the
same budgetary guidelines as apply to an other employees of the
Company. In those cases where an executive has entered into an
employment agreement, the base salary is determined pursuant to the
<PAGE>
terms of the agreement, and renewals of contracts will be considered
on the basis of the performance of the individual, the performance of
the Company and the compensation philosophy of the Company.
Bonuses
Bonus incentives are structured so that if the Company achieves
its target goals, the incentive bonuses for the executives could be a
significant percentage of base salary. This policy is designed to
further motivate individuals to improve performance. Bonuses were
awarded during Fiscal 1999 to the (i) Chairman of and (ii) the Chief
Executive Officer and President in the amount of $40,000 each.
Stock Options
Executives are eligible for annual stock option grants under the
employee stock option plans applicable, from time to time, to
employees generally. The number of options granted to any individual
depends on individual performance, salary level and competitive data,
and the impact that such employee's productivity may make to
shareholder value over time. In addition, in determining the number
of stock options granted to each executive, the Compensation Committee
reviews the unvested options of each executive to determine the future
benefits potentially available to the executive. The number of
options granted will depend in part on the total number of unvested
options deemed necessary to provide an incentive to that individual to
make a long term commitment to remain with the Company. By giving to
executives an equity interest in the Company, the value of which
depends upon stock performance, the policy seeks to further align
management and shareholder interests. In July 13, 1998, the
Compensation Committee reviewed the unvested options held by the
executives officers and, based on the factors set forth above, elected
to reprice certain options which had an exercise price substantially
in excess of the then current market price.
Respectfully Submitted,
The Compensation Committee:
Alvin E. Nashman, Chairman
William Lerner
Arnold J. Wasserman
PERFORMANCE GRAPH
The graph below compares the cumulative shareholder return of the
Company with the cumulative return on the Standard & Poor's SmallCap
Index and a Peer Group Index and a Peer Group Index assuming a $100
investment made on March 31, 1994. Cumulative return data presented
assumes reinvestment of dividends. The stock performance shown on the
graph below is not necessarily indicative of future price performance.
<PAGE>
Comparison of Five-Year Cumulative Total Return*
Micros-To-Mainframes, Inc., Standard & Poor's SmallCap And Peer Group
(Performance Results Through 3/31/99)
<TABLE>
Indexed Returns
Company/Index At March 31:
--------------------------------------
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
MICROS-TO-MAINFRAMES, INC 100 131.82 172.73 113.62 100.02 122.71
STANDARD & POORS SMALLCAP 100 105.28 138.12 149.07 219.68 177.37
PEER GROUP 100 109.47 132.63 183.94 199.61 89.24
</TABLE>
Assumes $100 invested at the close of trading on 3/94 in Micros-To-
Mainframes, Inc. common stock, Standard & Poor's SmallCap and Peer
Group.
*Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but
the publisher is not responsible for any errors or omissions contained
herein.
The Company has constructed a Peer Group consisting of other
computer equipment resellers and packagers that also provide
consulting services to their clients, including Alphanet Solutions,
Inc., Applied Digital Solutions, Inc., Aztec Technology Partners,
Inc., BTG, Inc., Manchester Equipment Company, Inc., Pomeroy Computer
Resources, Inc. and Transnet Corp. The Company believes that these
companies most closely resemble the Company's business mix and that
their performance is representative of the industry.
The Board of Directors recommends that you vote "FOR" the
election of the Nominees named above (Proposal 1).
Proposal 2. Ratification of Independent Public Accountants
On March 19, 1999 the Company and Ernst & Young, LLP (The "Former
Accountants") mutually agreed that Ernst & Young, LLP would resign as
its principal accountants. On March 29, 1999, the company engaged
Goldstein Golub Kessler LLP, independent public accountants, as its
<PAGE>
principal accountants to audit the Company's financial statements for
Fiscal 1999. The Former Accountants had audited the Company's
financial statements since 1988. The Company's Board of Directors
approved the selection of Goldstien Golub Kessler LLP.
In connection with the audits of the two fiscal years ended March
31, 1997 and March 31, 1998 ("Fiscal 1997 and Fiscal 1998") and during
the subsequent interim period through March 19, 1999 there were no
disagreements with the Former Accountants on any matter of accounting
principles or practices, financial statement disclosure or auditing
scope or procedure if not satisfactorily resolved would have caused
the Former Accountants to make reference to such matter in its report.
The Former Accountants' report on the financial statements for
Fiscal 1997and 1998 did not contain an adverse opinion or disclaimer
of opinion, nor was it qualified as to uncertainty, audit scope, or
accounting principles.
Goldstein Golub Kessler LLP has been appointed by the Board of
Directors as the Company's auditors for the current year. Although
stockholder approval is not required, it is the policy of the board of
directors to request stockholder ratification of the appointment or
reappointment of auditors.
A representative of Goldstein Golub Kessler LLP will be present
at the Annual Meeting of Stockholders, will have an opportunity to
make a statement and will be available to respond to appropriate
questions.
The Board of Directors recommends that you vote "FOR" Proposal 2.
OTHER MATTERS
The Board of Directors is not aware of any business to be
presented at the Annual Meeting except for the matters set forth in
the Notice and as described in this Proxy Statement. Unless otherwise
directed, all shares represented by Board of Directors' proxies will
be voted in favor of the proposals of the Board of Directors described
in this Proxy Statement. If any other matters come before the Annual
Meeting, the person(s) named in the accompanying proxy will vote on
those matters according to their best judgment
EXPENSES
The entire cost of preparing, assembling, printing and mailing
this Proxy Statement the enclosed proxy and other materials, and the
cost of soliciting proxies with respect to the Annual Meeting will be
borne by the Company. The Company will request banks and brokers to
solicit their customers who beneficially own shares listed of record
in names of nominees and will reimburse those banks and brokers for
the reasonable out-of-pocket expenses of such solicitations. The
original solicitation of proxies by mail may be supplemented by
telephone and telegram by Officers and other regular employees of the
Company, but no additional compensation will be paid to such
individuals.
COMPLIANCE WITH 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Officers, Directors and persons who own more than ten
percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities
and Exchange Commission. Officers, Directors and ten percent
shareholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on the
Company's copies of such forms received or written representations
from certain reporting persons that no Form 5's were required for
those persons, the Company believes that, during Fiscal 1999, all
filing requirements applicable to its Officers, Directors and greater
than ten percent beneficial owners were complied with.
<PAGE>
INCORPORATION BY REFERENCE
The financial information required to be included in this Proxy
Statement by Item 13 of Schedule 14A of the Proxy Rules is hereby
incorporated by this reference from the Company's Annual Report to
Shareholders mailed to shareholders with this Proxy Statement.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of Shareholders of the Company that are intended to be
presented at the Company's next Annual Meeting must be received by the
Company no later than March 31, 2000 in order for them to be included
in the proxy Statement and form of proxy related to that meeting.
By Order of the Board of Directors
Frank T. Wong, Secretary
Valley Cottage, New York
September 3, 1999
Copies of the Company's Annual Report on Form 10-K for the year
ended March 31, 1999, as filed with the Securities and Exchange
Commission, including the financial statements, can be obtained
without charge by shareholders (including beneficial owners of Common
Stock) upon written request to Frank T. Wong, the Company's Secretary,
Micros-to-Mainframes, Inc., 614 Corporate Way, Valley Cottage, New
York, 10989. In addition, the Company's EDGAR filings may be found on
the Worldwide Web at www.sec.gov.
