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:
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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 2000 Annual Meeting
of Shareholders (the "Annual Meeting") of Micros-to-Mainframes,
Inc. (the "Company"), a New York corporation, will be held on
Tuesday, October 31, 2000, at 614 Corporate Way, Valley Cottage,
New York at the hour of 9:30 a.m., for the following purposes:
1. To elect six (6) Directors of the Company to serve for
the ensuing year and/or until their successors are
elected and qualify;
2. To approve and adopt the Micros-to-Mainframes, Inc. 2000
Long-Term Performance Plan;
3. 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, 2001; and
4. 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
September 15, 2000 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 25, 2000
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 2000 Annual Meeting of the
Shareholders (the "Annual Meeting") to be held at 614 Corporate
Way, Valley Cottage, New York on Tuesday, October 31, 2000 at
9:30 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 25, 2000 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
September 15, 2000. At the close of business on September 15,
2000, there were issued and outstanding and entitled to vote
4,895,569 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 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 is
required to approve the Micros-to-Mainframes, Inc. 2000 Long-
Term Performance Plan and 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 the election of each nominee for
Director, "FOR" the approval of the Micros-to-Mainframes, Inc.
2000 Long-Term Performance Plan and "FOR" the ratification of
Goldstein Golub Kessler LLP as independent auditors for the
fiscal year ending March 31, 2001 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 SIX (6) NOMINEES AS DIRECTORS
At the Annual Meeting, six (6) 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 six Directors
at the Annual Meeting.
Proxies not marked to the contrary will be voted "FOR" the
election of the following six persons:
Name Age Position with the Company Director Since
---- ---- ------------------------- --------------
Howard Pavony 49 Chairman of the Board of 1986
Directors
Steven H. Rothman 51 Chief Executive Officer, 1986
President and a Director
William Lerner* 67 Director 1995
Arnold J. Wasserman*62 Director 1998
Alvin E. Nashman* 73 Director 1998
James W. Davis* 52 Director 2000
_______________________
* Member of the Audit Committee and Compensation Committee.
Howard Pavony has served as Chairman of the Board of
Directors of the Company since September 1996. He served as Co-
Chief Executive Officer and President of the Company from May
1986 to August 1996. He has been a Director 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 has served as Chief Executive Officer and
President of the Company since September 1996. He served as Co-
Chief Executive Officer and Vice President of the Company from
May 1986 to August 1996. He has been a Director 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 the Chairman of the Compensation
Committee. Mr. Lerner has been engaged in the private practice
<PAGE>
of corporate and securities law in New York since 1960 and
Pennsylvania since 1991. His career included 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 service company that
owns the largest seismic data library in North America), Rent-
way, Inc. (a NYSE listed company that is the second largest in
the rental-purchase industry), Cortland Trust, Inc. (a money
market mutual fund company that is marketed primarily through
brokerage firms and regional commercial banks), and Helm
Resources, Inc. (an OTC Bulletin Board company that provides
financing and management services to middle market public
companies).
Arnold J. Wasserman has served as a Director of the Company
since March 1998 and is the Chairman of the Audit Committee. Mr.
Wasserman has, for the past 25 years, 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 and the chairman of the
Audit Committee of Stratasys, Inc. (a manufacturer of rapid
prototyping systems whose common stock is quoted on the Nasdaq
National Market).
Alvin E. Nashman has served as a Director of the Company
since August 1998. 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 President of its Systems Group.
James W. Davis became a Director of the Company in June
2000. Since January 1999, he has been Senior Partner at Key West
Technologies, LLC, a business consulting partnership advising a
number of firms with regard to technology, e-commerce, the
Internet and business management. From January 1997 through
January 1999, he served as the President and Chief Executive
Officer of MRT micro, ASA/Inc. (a communications software
company). From September 1996 to January 1997, Mr. Davis was a
Visiting Research Scholar at the Communications Technology
Center at Florida Atlantic University. In March 1995, Mr. Davis
founded Key West Technologies, Inc., a computer hardware and
software company. In February 1996, Key West Technologies, Inc.
was acquired by Interaxx Television Network, Inc. Mr. Davis
served as Chief of Executive Officer of Interaxx Television
Network, Inc. from February 1996 until January 1997. Mr. Davis
has also served as Director for Intel Corp.'s Home Computing
Laboratory, which was responsible for developing a consumer-
focused Pentium platform strategy, and as Senior Technical Staff
Member at International Business Machines Corp., where he worked
for twenty-five years. While at IBM, he was also a member of
IBM's Academy of Science and Technology and Chief Technical
Officer of the IBM PC Company Premium Brand. He is currently a
director of American Vantage Companies (a company engaged in the
<PAGE>
information technology personnel placement and restaurant
industries whose common stock is quoted on the Nasdaq SmallCap
Market).
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 of the Audit
Committee and the Compensation Committee are Messrs. Lerner,
Wasserman, Nashman and Davis. The chairman of the Audit
Committee is Mr. Wasserman, and the chairman of the Compensation
Committee is Mr. Lerner. 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 three meetings during the year
ended March 31, 2000 (Fiscal 2000). The Compensation Committee
and the Audit Committee each held one meeting during Fiscal 2000.
Each incumbent Director attended at least 75% of the total number
of Board of Directors meetings and meetings of committees on which
he 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:
Name Age Position with the Company Officer Since
---- --- ------------------------- -------------
Frank T. Wong 53 Vice President-Finance 1992
and Secretary
Anthony R. Travaglini 47 Chief Technology Officer 1999
Frank T. 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,
<PAGE>
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. ("Pivot"). Mr. Travaglini founded Pivot in
August 1997 and served as its President until Pivot was acquired
by the Company. From 1992 until 1997, Mr. Travaglini was
responsible for network, systems and administration management
for multiple divisions of PepsiCo. 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 1988 to 1992 and a senior UNIX systems
administrator at Salomon Brothers from 1982 to 1988.
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. In recognition of the
increased responsibilities of members of the Audit Committee,
the Chairman of the Audit Committee will receive $3,500 per year
and each other member of the Audit Committee will receive $2,500
per year, payable quarterly in advance, commencing October 1, 2000.
Directors who are also officers of the Company currently
receive no cash compensation for serving on the Board of
Directors, other than reimbursement of reasonable expenses
incurred in attending meetings. For serving as a director, the
Company's independent directors each received in October
1999 options to purchase 25,500 shares of Common Stock
that may be exercised immediately as to 8,500 shares, after
October 12, 2000 as to 17,000 shares and after October 12, 2001
as to all 25,500 shares. See "Stock Option Plans" below.
Security Ownership Of Certain Beneficial Owners And Management
The following table sets forth, as of September 15, 2000,
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 by (i) each person known by the Company to be the owner of
more than 5% of the outstanding Common 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) 997,403 (3)(4) 20.4%
Howard Pavony (2) 989,056 (3)(5) 20.2%
Anthony R. Travaglini (2) 238,565 (6) 4.9%
William Lerner
423 East Beau Street
Washington, PA 15301 32,000 (7) *
Arnold Wasserman
1 Brookwood Drive
West Caldwell, NJ 07006 27,000 (7) *
Alvin E. Nashman
3609 Ridgeway Terrace
Falls Church, VA 22044 27,000 (7) *
James W. Davis
17300 Boca Club Blvd.
Boca Raton, FL 33487 8,500 (7) *
All Directors and
executive officers
as a group (8 persons) 2,328,279 (8) 47.6%
_________________________
* Represents less than 1%.
(1) Based on 4,895,569 shares of Common Stock issued and
outstanding as of September 15, 2000.
(2) The address of this person is c/o the Company, 614
Corporate Way, Valley Cottage, New York 10989.
(3) Includes 134,000 shares that he may acquire upon
exercise of currently exercisable options.
(4) Includes 1,125 shares held by his spouse. Does not
include an aggregate of 55,544 shares held in trust
for his three children, as to which he disclaims
beneficial ownership.
<PAGE>
(5) Does not include an aggregate of 52,444 shares held in
trust for his children, as to which he disclaims
beneficial ownership.
(6) Includes 50,000 shares that he may acquire upon
exercise of a warrant and 188,565 shares subject to a
lock-up agreement that restricts the resale of 47,142
shares until June 2, 2000 and 141,423 shares until
June 2, 2001. The Company has the right to purchase
shares released from the lock-up agreement if Mr.
Travaglini elects to sell them in a private
transaction.
(7) Represents shares that he may acquire upon exercise of
currently exercisable options.
(8) Includes 417,500 shares that may be acquired upon
exercise of currently exercisable options.
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, 2000 by certain
executive officers of the Company. No other executive officers
received compensation in excess of $100,000 during such years.
Long-Term
Annual Compensation Compensation
--------------------- ------------
Shares
Name and Principal Underlying
Position Year Salary($) Bonus($) Other(1) Options(#)
------------------- ----- --------- -------- ------- ------------
Howard Pavony 2000 $237,500 $20,000 $41,488 24,000
Chairman of the Board 1999 $227,500 $40,000 - 50,000
1998 $213,334 - - -
Steven H. Rothman 2000 $237,500 $20,000 $40,916 24,000
Chief Executive Officer 1999 $227,500 $40,000 - 50,000
and President 1998 $213,334 - - -
Anthony R. Travaglini 2000 $128,654 - - -
Chief Technology Officer
--------------------
(1) Other compensation primarily represents amounts paid
by the Company for life insurance premiums and leased
automobiles that are used in business by the
executives. In prior years, these amounts were below
the reportable threshold.
<PAGE>
Option Grants In Last Fiscal Year
The table below includes the number of stock options
granted to the executive officers named in the Summary
Compensation Table during the year ended March 31, 2000,
exercise information and potential realizable value.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Annual Rates of Stock
Underlying Granted to Price Appreciation
Options Employees in Exercise Expiration for Option Term
Granted(#) Fiscal Year Price($/sh) Date 5% 10%
---------- ------------ ----------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Howard Pavony 5,200 1.5% $2.6875 10/11/09 $8,789 $22,273
18,800 5.3% $2.9563 10/11/04 $15,355 $33,931
Steven H. Rothman 5,200 1.5% $2.6875 10/11/09 $8,789 $22,273
18,800 5.3% $2.9563 10/11/04 $15,355 $33,931
Anthony R. Travaglini - - - - - -
</TABLE>
Aggregated Option Exercises In Last Fiscal Year And FY-End Option Values
The table below includes information regarding the value
realized on option exercises and the market value of unexercised
options held by the executive officers named in the Summary
Compensation Table during the year ended March 31, 2000.
Value of
Number of Unexercised
Unexercised In-The-Money
Shares Options Options
Acquired at FY-End(#) at FY-End($)
on Value Exercisable/ Exercisable/
Name Exercise (#) Realized Unexercisable Unexercisable
---------------- ------------ ------------ ------------- -------------
Howard Pavony 0 0 124,000/10,000 381,753/44,300
Steven H. Rothman 0 0 124,000/10,000 381,753/44,300
Anthony R. Travaglini - - - -
Employment Agreements
On September 1, 1996, Howard Pavony and Steven H. Rothman,
the Chairman of the Board of Directors and the Chief Executive
Officer of the Company, respectively, 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, 2000 was at the rate of $237,500. Under
each agreement, the executive receives annual increases in
salary equal to the greater of (i) the percentage increase in
<PAGE>
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. Each executive also is entitled to an automobile.
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.
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 per month car allowance.
Stock Option Plans
The Company has adopted the following stock plans: the 1993
Stock Option Plan, which provides for the grant of options to
purchase 250,000 shares of Common Stock; the 1996 Stock Option
Plan, which provides for the grant of options to purchase
350,000 shares of Common Stock; the 1998 Stock Option Plan,
which provides for the grant of options to purchase 250,000
shares of Common Stock, and the 2000 Long Term Performance Plan,
which provides for stock awards of up to 350,000 shares of
Common Stock. Employees (including officers), directors and
others who provide services to the Company and its subsidiaries
are eligible to participate in the plans. The plans are
administered by the Board of Directors or the Compensation
Committee.
Options granted under the plans may be incentive stock
options or ISOs (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended), or non-qualified stock
options. Non-qualified stock options may be granted in tandem
with stock appreciation rights. The exercise price of options
may not be less than 100% of the fair market value of the Common
Stock as of the date of grant, except that this limitation does
not apply to options granted under the 1998 Stock Option Plan
and the exercise price of ISOs granted to an employee who owns
more than ten percent of the outstanding Common Stock may not be
less than 110% of the fair market value as of the date of grant.
Options may not be exercised more than 10 years after the date
of grant, or five years in the case of ISOs granted to an
employee who owns more than 10% of the outstanding Common Stock.
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. The number of shares that may be acquired upon exercise
of an option and the exercise price of an option are subject to
adjustment in the event of a merger, recapitalization, stock
split or stock dividend. The 2000 Long Term Performance
Plan permits the grant of any form of award, including stock
options, stock appreciation rights, and stock or cash awards.
Awards under the 2000 Long Term Performance Plan may be in stock
or denominated in units of stock, which may be subject to
restrictions on transfer and include forfeiture provisions.
<PAGE>
As of March 31, 2000, options to purchase 647,534 shares
were outstanding, options to purchase 158,666 shares had been
exercised and options to purchase 43,800 shares were available
for future grants. No options have been granted under the 2000
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 shares of Common Stock at $2.25 per share,
non-qualified stock options expiring on October 11, 2009 to
purchase up to 5,200 shares of Common Stock at $2.6875 per
share, incentive stock options expiring on August 31, 2001 to
purchase up to 50,000 shares of Common Stock at $4.43 per share
and incentive stock options expiring on October 11, 2004 to
purchase up to 18,800 shares of Common Stock at $2.9563 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, options
expiring on March 31, 2008 to purchase up to 10,000 shares of
Common Stock at $2.75 per share and options expiring on October
11, 2009 to purchase up to 25,500 shares of Common Stock at
$2.6875 per share; Messrs. Wasserman and Nashman each hold
options expiring on March 31, 2008 to purchase up to 10,000
shares of Common Stock at $2.75 per share, options expiring on
October 15, 2008 to purchase up to 10,000 shares of Common Stock
at $1.625 per share and options expiring on October 11, 2009 to
purchase up to 25,500 shares of Common Stock at $2.6875 per
share; and Mr. Davis holds options expiring on June 7, 2010 to
purchase up to 25,500 shares of Common Stock at $6.50 per share.
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 compensation for executive officers and management
is designed to be competitive, reward exceptional performance
and align the interest of executive officers with the interests
of shareholders.
<PAGE>
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 Howard Pavony, the Chairman of the Board of
Directors, Steven H. Rothman, the Chief Executive Officer and
President, and Anthony R. Travaglini, the Chief Technology
Officer, salary is determined pursuant to the terms of their
respective employment contracts with the Company. The salary of
Frank Wong, Vice President-Finance for Fiscal 2000 was 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 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 2000 to
the (i) Chairman of the Board and (ii) the Chief Executive Officer and
President in the amount of $20,000 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
<PAGE>
Company, the value of which depends upon stock performance, the
policy seeks to further align management and shareholder
interests.
Respectfully Submitted,
The Compensation Committee:
William Lerner, Chairman
Alvin E. Nashman
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, 1995.
Cumulative return data presented assumes reinvestment of
dividends. The stock performance shown on the graph below is not
necessarily indicative of future price performance.
Comparison of Five-Year Cumulative Total Return*
Micros-To-Mainframes, Inc., Standard & Poor's SmallCap And Peer Group
(Performance Results Through 3/31/00)
<TABLE>
Indexed Returns
Company/Index At March 31:
--------------------------------------
1995 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C> <C>
MICROS-TO-MAINFRAMES, INC 100 131.03 86.19 75.88 93.09 396.50
STANDARD & POORS SMALLCAP 100 131.19 141.60 208.67 168.48 218.68
PEER GROUP 100 121.15 168.02 182.33 81.52 248.99
</TABLE>
Assumes $100 invested at the close of trading on 3/95 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.
<PAGE>
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. APPROVAL AND ADOPTION OF THE MICROS-TO-MAINFRAMES,
INC. 2000 LONG-TERM PERFORMANCE PLAN
Description of 2000 Plan
The Board of Directors has adopted the Micros-to-
Mainframes, Inc. 2000 Long-Term Performance Plan (the "2000
Plan"), and joins with the Company's management in asking for
your support of this proposal. Competition for key employees is
very intense. To secure top talent, we need to have competitive
compensation programs, including equity based awards. The use of
stock options and other stock awards is widely prevalent and
continues to increase, and we must also do so. The 2000 Plan is
integral to our compensation strategies and programs, and with
stockholder approval of the 2000 Plan, we expect to continue our
efforts to use stock options to incent and retain executive
employees with critical skills.
The 2000 Plan provides for stock awards of up to 350,000
shares. The 2000 Plan permits the grant of any form of award,
including, but not limited to, stock options, stock appreciation
rights ("SAR's") and stock and cash awards, whether granted
singly, in combination or in tandem. Stock options will be
granted at an exercise price of not less than 100% of fair
market value (as defined in the 2000 Plan) on the date of grant
and it is expected that options and SAR's will typically be
granted for periods of 10 years or less. The 2000 Plan also
permits the grant of other awards in stock or denominated in
units of stock, which may be subject to restrictions or transfer
and/or forfeiture provisions.
For purposes of determining the number of shares of common
stock issued under the 2000 Plan, no shares will be deemed
issued until they are actually delivered to a participant, or
such other person in accordance with Section 10 of the 2000
Plan. Shares covered by awards that either wholly or in part are
not earned, or that expire or are forfeited, terminated,
canceled, settled in cash, payable solely in cash or exchanged
for other awards shall be available for future issuance under
the 2000 Plan. Further, shares tendered to or withheld by us in
connection with the exercise of stock options, or the payment of
tax withholding on any award, will also be available for future
issuance under the 2000 Plan.
We intend that the 2000 Plan will be administered by the
Compensation Committee (or any successor committee), which is
constituted in compliance with the rules and regulations issued
<PAGE>
under the federal securities laws and the Internal Revenue Code.
In administering the 2000 Plan, the Committee has the full power
to select participants, to interpret the provisions of the plan,
to grant waivers of award restrictions, to continue or
accelerate the exercisability, vesting or payment of an award
and to adopt such rules, regulations and guidelines for carrying
out the 2000 Plan as it may deem necessary or proper. The
Committee may delegate certain of its duties, power and
authority to officers of the Company, pursuant to such
conditions and limitations as the Committee may establish. The
2000 Plan may not be amended to increase the maximum number of
shares that may be issued under the 2000 Plan (except for
adjustments pursuant to Section 14 of the 2000 Plan) or to
permit the granting of stock options or SAR's with exercise or
grant prices lower than those specified in Section 6 of the 2000
Plan without stockholder approval.
Awards under the 2000 Plan may be made to employees of, and
other individuals providing services to Micros-to-Mainframes or
its subsidiaries. Participants in the 2000 Plan will be
recommended by their management, and the Committee intends to
review and act on all 2000 Plan grants and awards for officers
and certain other senior management positions.
The 2000 Plan has been designed to meet the requirements of
section 162(m) of the Internal Revenue Code for stock options
and SAR's. In addition, the 2000 Plan contains performance
criteria for future long-term incentive awards to qualify those
awards for tax deductibility under section 162(m). Those
criteria consist of objective tests based on one or more of the
following: earnings, cash flow, customer satisfaction, revenues,
financial return ratios, market performance, shareholder return
and/or value, operating profits, net profits, earnings per
share, profit return and margins, stock price and working
capital.
The formula for any such award may include or exclude items
to measure the specific objectives, such as losses from
discontinued operations, extraordinary gains and losses, the
cumulative effect of accounting changes, acquisitions or
divestitures, foreign exchange impacts and any unusual,
nonrecurring gain or loss. These terms apply to "covered
employees" as defined in section 162(m), which include the
Company's chief executive officer and the four other most highly
compensated executive officers of the Company.
The foregoing summary of the terms and features of the 2000
Plan is qualified by reference to the 2000 Plan itself.
Federal Income Tax Consequences
The Company has been advised by counsel that in general,
under the Internal Revenue Code as presently in effect, a
Participant (as defined in the 2000 Plan) will not be deemed to
recognize any income for Federal Income Tax purposes at the time
an option or stock appreciation right ("SAR") is granted or a
restricted stock award is made, nor will the Company be entitled
to a tax deduction at that time. However, when any part of an
option or SAR is exercised, when restrictions on restricted
stock lapse, or when an unrestricted stock award is made, the
federal income tax consequences may be summarized as follows:
<PAGE>
1. In the case of an exercise of a stock option other
than an ISO, the Participant will generally recognize
ordinary income in an amount equal to the excess of
the fair market value of the shares on the exercise
date over the option price.
2. In the case of an exercise of an SAR, the Participant
will generally recognize ordinary income on the
exercise date in an amount equal to any cash and the
fair market value of any unrestricted shares received.
3. In the case of an exercise of an option or SAR payable
in restricted stock, or in the case of an award of
restricted stock, the immediate federal income tax
effect for the Participant will depend on the nature
of the restrictions. Generally, the fair market value
of the stock will not be taxable as ordinary income
until the year in which the Participant's interest in
the stock is freely transferable or is no longer
subject to a substantial risk of forfeiture. However,
the Participant may elect to recognize income when the
stock is received, rather than when the interest in
the stock is received, the stock is freely
transferable or is no longer subject to a substantial
risk of forfeiture. If the Participant makes this
election, the amount taxed to the Participant as
ordinary income is determined as of the date of
receipt of the restricted stock.
4. In the case of ISO's, there is generally no tax
liability at time of exercise. However, the excess of
the fair market value of the stock on the exercise
date of over the option price is included in the
Participant's income for purposes of the alternative
minimum tax. If no disposition of the ISO stock is
made before the later of one year from the date of
exercise and two years from the date of grant, the
Participant will realize a capital gain or loss upon a
sale of the stock, equal to the difference between the
option price and the sale price, if the stock is not
held for the required period, ordinary income tax
treatment will generally apply to the excess of the
fair market value of the stock on the date of exercise
(or, if less, the amount of gain realized on the
disposition of the stock) over the option price, and
the balance of any gain or any loss will be treated as
capital gain or loss. In order for ISO's to be treated
as described above, the Participant must remain
employed by the Company (or a subsidiary in which the
Company holds at least 50 percent of the voting power)
from the ISO grant date until three months before the
ISO is exercised. The three-month period is extended
to one year if the Participant's employment terminates
on account of disability. If the Participant does not
meet the employment requirement, the option will be
treated for federal income tax purposes as an option
as described in paragraph 5 below. A Participant who
exercises an ISO might also be subject to an
alternative minimum tax.
5. Upon the exercise of a stock option other than an ISO,
the exercise of a SAR, the award of stock, or the
recognition of Income on restricted stock, the Company
will generally be allowed an income tax deduction
equal to the ordinary income recognized by a
Participant. The Company will not receive an income
tax deduction as a result of the exercise of an ISO,
provided that the ISO stock is held for the required
period as described above. When a cash payment is made
<PAGE>
pursuant to the Award, the recipient will recognize
the amount of the cash payment as ordinary income, and
the Company will generally be entitled to a deduction
in the same amount.
6. Pursuant to section 162(m) of the Code, the Company
may not deduct compensation of more than $1,000,000
that is paid in a taxable year to an individual who,
on the last day of the taxable year, is the Company's
chief executive officer or among one of its four other
highest compensated officers for that year. The
deduction limit, however, does not apply to certain
types of compensation, including qualified
performance-based compensation. The Company believes
that compensation attributable to stock options and
stock appreciation rights granted under the Plan will
be treated as qualified performance-based compensation
and therefore will not be subject to the deduction
limit. The Plan also authorizes the grant of long-term
performance incentive awards utilizing the performance
criteria set forth in the Plan that may likewise be
treated as qualified performance-based awards.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL AND ADOPTION OF THE MICROS-TO-MAINFRAMES, INC. 2000
LONG-TERM PERFORMANCE PLAN (PROPOSAL 2).
PROPOSAL 3. 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 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
Goldstein Golub Kessler LLP.
In connection with the audits of the fiscal year ended
March 31, 1998 ("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 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.
<PAGE>
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 3.
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 the time period from
April 1, 1999 to March 31, 2000, all filing requirements
applicable to its Officers, Directors and greater than ten
percent beneficial owners were complied with.
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 May 28, 2001 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 25, 2000
Copies of the Company's Annual Report on Form 10-K for the year
ended March 31, 2000, 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.
