<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SMART GAMES INTERACTIVE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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> 2
SMART GAMES INTERACTIVE, INC.
2075 CASE PARKWAY SOUTH
TWINSBURG, OHIO 44087
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 17, 1997
---------------
To the Shareholders of Smart Games Interactive, Inc.:
The Annual Meeting of Shareholders of Smart Games Interactive, Inc., a
Delaware corporation (the "Company"), will be held at the Holiday Inn, 240 Hines
Hill Road, Hudson, Ohio 44236, on Tuesday, June 17, 1997, at 8:30 a.m., for the
following purposes:
1. To elect five directors of the Company for the
ensuing year;
2. To approve the Board of Directors' selection of
independent auditors of the Company; and
3. To transact such other business as may properly come
before the meeting or any adjournments or
postponements thereof.
Only shareholders of record as of the close of business on April 30,
1997 will be entitled to notice of and to vote at the Annual Meeting and at any
adjournments or postponements thereof.
By Order of the Board of Directors
Nicholas J. Chuma
Secretary
May 1, 1997
KINDLY DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE
ENCLOSED STAMPED, ADDRESSED ENVELOPE.
<PAGE> 3
SMART GAMES INTERACTIVE, INC.
2075 CASE PARKWAY SOUTH
TWINSBURG, OHIO 44087
MAY 1, 1997
---------------
PROXY STATEMENT
---------------
This statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors (the "Board") of Smart Games
Interactive, Inc. (the "Company") for use at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held at 8:30 a.m. on Tuesday, June 17, 1997, and at
any adjournments or postponements thereof, at the Holiday Inn, 240 Hines Hill
Road, Hudson, Ohio 44236. Holders of record of the Company's common stock,
$.0002 par value ("Common Stock"), at the close of business on April 30, 1997
(the "Record Date"), will be entitled to vote at the Annual Meeting. On the
Record Date there were 12,648,244 shares of Common Stock outstanding and
eligible to vote. Each share of Common Stock entitles the holder thereof to one
vote on each matter scheduled to come before the Annual Meeting.
All votes represented by the enclosed proxy will be cast FOR the five
nominees for director named herein, unless authorization to do so is withheld by
a shareholder, and in the manner specified by that shareholder with respect to
the proposal to approve the Board of Directors' selection of independent
auditors of the Company, except that in the absence of such specification, the
votes will be cast FOR the adoption of such proposal. In the event that any
nominee refuses or is unable to serve as a director, which is not anticipated,
the persons named as proxies reserve full discretion to vote for any other
person who may be nominated.
At the meeting, votes will be tabulated by inspectors of election
appointed by the Chairman of the Board. The Company's by-laws provide that a
majority of the votes entitled to be cast by the holders of all shares of the
Common Stock issued and outstanding and entitled to vote, present in person or
by proxy, shall constitute a quorum at a meeting of the shareholders.
The five persons receiving the largest number of votes for director
will be elected. An abstention from voting will be tabulated as a vote withheld
in the election of directors and will have no influence on the voting results.
The adoption of the proposal to approve the Board of Directors' selection of
independent auditors of the Company requires the affirmative vote of the holders
of record of a majority of the shares of the Common Stock represented and voting
in person or by proxy at the Annual Meeting. If a shareholder abstains from
voting on this second proposal, his or her shares are considered present at the
meeting, but since they are not affirmative votes, they will have the same
practical effect as a vote against the second proposal. Broker non-votes will
not be counted for quorum or any other purpose but will have the same practical
effect as a vote against the second proposal.
<PAGE> 4
The Board does not know of any matters, other than those specified
herein, which will be presented for action at the Annual Meeting. In the event
that any other matters should properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote the proxy in
accordance with their best judgment on such matters. A proxy may be revoked by
delivery of a validly executed, later dated proxy, by notice in writing to the
Secretary of the Company at the above address, or in person at the Annual
Meeting, any time prior to its use.
ELECTION OF DIRECTORS
Five directors are to be elected for the ensuing year to hold office
until the next annual meeting of shareholders and until their successors are
elected and qualified.
INFORMATION AS TO NOMINEES
Set forth below is information about each nominee for election as a
director, based on information supplied by him, including his name, age and
principal occupations during the past five years, and certain directorships held
by him.
JOHN D. LIPPS, 59, has served as Chairman of the Board, President and
Chief Executive Officer of the Company since its inception in October 1991. From
June 1989 to October 1991 Mr. Lipps devoted his time to the development of a
prototype of "Pro Swing," the Company's indoor interactive golf simulator. From
February 1986 to June 1989 Mr. Lipps served as the President of Fibertel, Inc.,
a company engaged in the telecommunications business. Prior to February, 1986,
Mr. Lipps spent approximately thirteen years as an officer with MCI
Telecommunications, Inc., International Communications Sciences, Inc., and Litel
Communications. (1)
NICHOLAS J. CHUMA, 37, has served as a director and as Vice President,
Treasurer, Chief Financial Officer and Secretary of the Company since December
1991. In April 1995 Mr. Chuma was elevated from Vice President to Executive Vice
President of the Company. Prior thereto Mr. Chuma served as Manager for
Strategic Planning and Financial Analysis for AGA Gas, Inc., a regional
industrial gas company, from June 1990 to November 1991 where he assisted the
chief financial officer in strategic planning, budgeting and capital
expenditures allocation.
DONALD MILLER, 64, has served as a director of the Company since
December 1993. Mr. Miller retired in 1996 after five years as a director of
Founders Bank, New Haven, Connecticut. Mr. Miller is also a director of Raytech
Corporation, a manufacturer and supplier of automobile replacement parts, Saab
Financial Corp., an entity which finances vehicle purchasing, and Information
Management Associates, Inc., a provider of enterprise-wide software solutions
designed to support sales, marketing, telemarketing and customer service
management. (1)(3)
RICHARD GROBERG, 38, has served as a director of the Company since
November 1996. Since April 1996 Mr. Groberg has served as the President and
Chief Operating Officer of A.A.H. Management Corp., a company engaged in the
consolidation of veterinary hospitals in the New York City metropolitan area.
From March 1996 to September 1996 Mr. Groberg served in the corporate
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<PAGE> 5
finance department of the investment banking firm of Taglich Brothers, D'Amadeo,
Wagner & Company. From May 1994 to February 1996 he served as Chief Operating
Officer of Pets' RX, Inc., a chain of 19 veterinary hospitals in Northern
California and Las Vegas. From July 1992 to May 1994 Mr. Groberg was the
Executive Assistant to the Chief Executive Officer of Ferrofluidics Corporation,
a company engaged in the sale of silicon crystal growing systems for the
semiconductor industry, rotary seals and sealing subsystems and ferrofluids.
From May 1989 to July 1992 Mr. Groberg was the co-founding principal of The
International Harvest Group of Delaware, Ltd., a company that provided financing
services to middle market companies. (1)(3)
PETER WAITE, 51, has served as a director of the Company since October
1991. Mr. Waite has been President of P.C.C. Airfoils, a supplier of aircraft
engine parts, for more than the past five years. (2)(3)
- ----------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation and Stock Option Committee.
BOARD OF DIRECTORS AND CERTAIN COMMITTEE MATTERS
The Board held seven meetings during fiscal 1996. Messrs. Lipps, Chuma,
Miller and Waite attended not less than 75% of the total number of meetings of
the Board during fiscal 1996, and all meetings of each committee of the Board on
which he served. Mr. Groberg attended all meetings of the Board held since his
appointment as a Director in November 1996.
During fiscal 1996, directors received no cash compensation from the
Company for service on the Board or any committee. All directors were reimbursed
by the Company for out-of-pocket expenses incurred by them in connection with
their service on the Board and any committee thereof. In 1996 non-employee
directors (Messrs. Groberg, Miller and Waite) received options to acquire 25,000
shares of the Common Stock at an exercise price of $.09 per share as non-cash
compensation for their services as non-employee Directors. The exercise price of
such options was the equivalent of the fair market value of a share of the
Common Stock (i.e., the closing price of the Common Price on the OTC Bulletin
Board on the date of grant). In December 1996 the Board of Directors also
approved the grant of options to acquire shares of the Common Stock to
non-employee directors as follows: options to acquire (i) 5,000 shares for each
Board committee appointment, (ii) 1,000 shares for each Board meeting attended
in person and (iii) 500 shares for each Board meeting attended by conference
telephone. These option awards to non-employee directors will be granted
annually commencing January 1, 1997 with an exercise price equal to fair market
value on the date of grants.
As of the date of this Proxy Statement, Messrs. Groberg, Miller and
Waite have each been granted options to acquire 75,000 shares of the Common
Stock at a per share exercise price of $.09 for services rendered as
non-employee directors in 1997.
3
<PAGE> 6
The Board has (1) an Executive Committee, which has the authority to
exercise all the power of the Board when the latter is not in session; (2) an
Audit Committee, whose functions are to assist the Board with respect to
internal control, accounting and reporting practices of the Company and to
maintain communication with the independent auditors of the Company; and (3) a
Compensation and Stock Option Committee, whose functions are to review and
approve the compensation and benefits of the corporate officers, to review and
advise management regarding the benefits, including bonuses, and other terms and
conditions of employment of other employees of the Company, to administer the
1993 Non-Qualified and Incentive Stock Option Plan of Sports Sciences, Inc. (the
"Stock Option Plan") and to award employee stock options. During fiscal 1996,
the Compensation and Stock Option Committee met once. The other committees did
not hold any formal meetings, but members of each of those committees informally
conferred from time to time.
INFORMATION AS TO EXECUTIVE OFFICERS
Set forth below is certain information about the executive officers of
the Company who are not directors of the Company, based on information supplied
by them, including name, age and principal occupations during the past five
years. Executive officers of the Company are elected by the Board to serve until
the next annual meeting of the Board and until their successors are elected and
qualified.
STEPHEN J. SZCZECINSKI, 34, has served as Vice President-Engineering of
the Company since December 1991. In April 1995 Mr. Szczecinski was elected
Senior Vice President--Engineering of the Company. From January 1989 through
November 1991, Mr. Szczecinski was a design engineer for Neundorfer, Inc., a
company engaged in the manufacture of industrial controls and equipment. In that
capacity, he served as product development team leader for hardware, software
and firmware design projects. From June 1985 through December 1988, Mr.
Szczecinski was a design engineer for Allen-Bradley Company, Inc., where he
designed computer hardware and firmware components.
J. BARTON BALE, 45, has served as Vice President of Sales and Marketing
of the Company since January 1997. From 1994 to 1996 Mr. Bale served as Vice
President, Marketing and Sales of the Coffee Works, Inc., a specialty coffees
marketer. From 1993 to 1994 Mr. Bale was the Vice President of Marketing for
J.B. Williams Company, a health and beauty aid marketer. From 1991 to 1993 Mr.
Bale was the Vice President of Marketing for Evenflo Products Company, an infant
feeding equipment marketer.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Each of Messrs. Lipps, Chuma and Szczecinski inadvertently failed to
timely file a Form 4 for the period ending March 31, 1996. The option grants
that were to be reported for such period were included in Forms 4 filed for the
period ended November 30, 1996 (Mr. Lipps) and for the period ended December 31,
1996 (Messrs. Chuma and Szczecinski).
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following tables set forth (i) the total compensation paid or
accrued by the Company for services rendered during the fiscal year ended
December 31, 1996 to Mr. Lipps, the Company's Chairman of the Board, President
and Chief Executive Officer; and (ii) the grant of stock options to Mr. Lipps
during such fiscal year. No other executive officer of the Company received an
annual salary and bonus during the fiscal year ended December 31, 1996 which
exceeded $100,000 in the aggregate.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
AWARDS
Securities
Underlying
Options/
Name and Principal Salary Bonus SARs
Position Year ($) ($) (#)
<S> <C> <C> <C> <C>
John D. Lipps, 1996 120,000 20,000 350,000 shares (1)
Chairman of the 1995 120,000 --- 40,000 shares
Board, President, 1994 123,170 ---
and Chief Executive
Officer
</TABLE>
- ---------------
(1) Includes 40,000 options granted to Mr. Lipps in 1995, the exercise
price of which was lowered from $2.25 to $.50 per share in March 1996.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS)
Number of Securities Percent of Total Options/
Underlying SARs Granted to
Options/SARs Granted Employees in Fiscal Year Exercise or Base Price
Name (#) ($/Sh) Expiration Date
<S> <C> <C> <C> <C>
John D. Lipps, Chairman (i) 40,000 3.9% $.50(1) November 15, 2003
of the Board, President (ii) 60,000 5.8% $.50 March 20, 2006
and Chief Executive (iii) 250,000 24.3% $.09 December 2, 2006
Officer Total 350,000 34.0%
</TABLE>
- ---------------
(1) The 1993 Option Plan permits the Compensation and Stock Option
Committee to adjust the exercise price of previously granted options
(but not to a price less than the fair market value of the Common Stock
on the date of adjustment). In March 1996 the Compensation and Stock
Option Committee lowered the exercise price of all previously granted
options under the 1993 Option Plan to $.50 per share, which consisted
of 40,000 options granted to Mr. Lipps in 1995. The original exercise
price of Mr. Lipps' options was $2.25 per share. The basis for the
Committee's repricing of these options was that the decline in the
price of
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<PAGE> 8
the Common Stock (as quoted on the OTC Bulletin Board) had lessened the
incentive value of the 40,000 options granted to Mr. Lipps in 1995 and
that repricing these options to the then-current price of the Common
Stock would restore such incentive value.
In the aggregate, Mr. Lipps has been granted stock options to acquire
350,000 shares of the Common Stock, all of which are currently exercisable, none
of which have been exercised, and 250,000 of which are in the money as of the
date of this Proxy Statement.
Employment Contracts
Mr. Lipps entered into an employment contract with the Company on
January 1, 1993 for a term of seven years. The term is automatically renewable
from year to year thereafter unless either party terminates the contract with
written notice ninety (90) days prior to the end of the seventh year or any
subsequent year. The agreement provides for a base monthly salary of $10,000
which can only be increased with Board approval. Mr. Lipps has agreed to a
covenant-not-to-compete for two years subsequent to his termination or
resignation from the Company, unless such termination is in breach of the
agreement.
In December 1996 the Board of Directors approved bonus payments to Mr.
Lipps. Mr. Lipps received a $20,000 bonus in December 1996. In addition, Mr.
Lipps will receive a $20,000 bonus in July 1997 but only if the Company is
profitable during the first six months of 1997 and a $20,000 bonus in January
1998 but only if the Company is profitable during fiscal year 1997.
In July 1995, the Company and Mr. Lipps executed an Agreement with
Respect to Patentable Inventions pursuant to which the Company agreed to make
severance payments to Mr. Lipps with respect to four patents owned by Mr. Lipps
and assigned to the Company. These severance payments become payable to Mr.
Lipps upon termination of his employment with the Company for any reason, and
are equal in amount to three percent (3%) of annual gross revenues received by
the Company from the sale of products which rely on any of the four patents
(maximum $360,000 per annum; minimum $90,000 per annum), and are payable only
for the life of each of the four patents. The Agreement also provides that
ownership of the four patents reverts to Mr. Lipps upon the occurrence of (i)
the Company's breach of the Agreement if the breach continues unremedied for
more than 60 days after the Company receives notice thereof from Mr. Lipps, (ii)
the Company's insolvency or assignment for the benefit of creditors, (iii) the
Company's dissolution or other termination of existence, or (iv) sale of the
Company's assets outside the Company's ordinary course of business such that the
Company ceases as a going concern.
Mr. Chuma has an employment contract with the Company commencing
January 1, 1993 for a term of two years and which is automatically renewable
from year to year thereafter unless either party terminates the contract with
written notice ninety (90) days prior to the end of the second year or any
subsequent year. In 1996 the employment contract was not terminated and, hence,
was automatically extended without modification for a one-year term ended
December 31, 1997. The contract provides for a base monthly salary of $6,250
which can only be increased with Board
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<PAGE> 9
approval. The agreement includes a covenant-not-to-compete for two years
subsequent to termination or resignation, unless such termination is due to
breach by the Company of the agreement.
1997 Bonus Program
The 1997 Bonus Plan was adopted by the Board of Directors in December
1996. The 1997 Bonus Plan is intended to provide management and key employees
with additional incentives to promote the success of the Company. The Bonus Plan
provides that no bonuses may be paid until such time as the Company has achieved
earnings per share of at least $.05. After attaining earnings per share of $.05,
fifty percent (50%) of the Company's net profits (but no more than $350,000)
will be made available for payment to management and certain key employees in an
amount which cannot, in any one case, exceed 100% of the bonus recipient's
annual salary. Bonus awards will be made by the Compensation and Stock Option
Committee of the Board of Directors. No bonus payments were made under the 1997
Bonus Plan during the fiscal year ended December 31, 1996.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth information as of April 23, 1997 as to
the beneficial ownership of shares of the Common Stock by (i) each director of
the Company, including Mr. Lipps, the Company's Chairman of the Board, President
and Chief Executive Officer and the only executive officer of the Company named
in "Executive Compensation," (ii) each person who, to the knowledge of the
Company at such date, was a beneficial owner of 5% or more of the outstanding
shares of the Common Stock, and (iii) all officers and directors of the Company
as a group. The Company has no voting securities other than the Common Stock.
7
<PAGE> 10
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Beneficial Percent
Owner Ownership of Class
------------------------------ --------- --------
<S> <C> <C>
Nicholas J. Chuma
2075 Case Parkway South
Twinsburg, Ohio 44087 235,000 (1) 1.83%
John D. Lipps
2075 Case Parkway South
Twinsburg, Ohio 44087 848,750 (2) 6.53%
Donald Miller
530 Highfield Drive
Orange, CT 06477 31,250 (3) *
Richard Groberg
15 Helaine Court
Orangeburg, New York 10962 169,400 (4) 1.33%
Peter Waite
25201 Chagrin Boulevard,
Suite 290
Beachwood, Ohio 44122 469,995 (5) 3.71%
All Directors and Executive Officers 2,073,995 (6) 15.17%
as a group (7 persons)
</TABLE>
- --------------------
* less than 1%
(1) Includes 212,500 shares of Common Stock which are issuable to Mr. Chuma
upon the exercise of immediately exercisable stock options granted
under the Stock Option Plan.
(2) Includes 350,000 shares of Common Stock which are issuable to Mr. Lipps
upon the exercise of immediately exercisable options granted under the
Stock Option Plan.
(3) Includes 25,000 shares of Common Stock which are issuable to Mr. Miller
upon the exercise of immediately exercisable stock options.
(4) Includes 25,000 shares of Common Stock which are issuable to Mr.
Groberg upon the exercise of immediately exercisable stock options, and
80,000 shares of Common Stock which are issuable to Mr. Groberg upon
the exercise of immediately exercisable common stock purchase warrants.
(5) Includes 25,000 shares of Common Stock which are issuable to Mr. Waite
upon the exercise of immediately exercisable stock options.
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<PAGE> 11
(6) Includes a total of (i) 942,500 shares of the Common Stock which are
issuable to certain directors and/or executive officers of the Company
upon the exercise of stock options granted under the Stock Option Plan,
and (ii) 80,000 warrants which are issuable to Mr. Groberg, all of
which stock options and warrants are exercisable immediately or within
60 days of this Proxy Statement.
CERTAIN TRANSACTIONS
In November 1993, Mr. Lipps and Mr. Szczecinski, also an executive
officer of the Company, assigned to the Company all of their proprietary rights
in the pending patent application for Pro Swing enhancements. Mr. Lipps has
executed an agreement whereby he is obligated to assign to the Company any
rights he may receive during his employment for any new products or inventions
related to the Company's business. Mr. Szczecinski also executed a similar
agreement.
In July 1995, the Company and Mr. Lipps executed an Agreement with
Respect to Patentable Inventions pursuant to which the Company agreed to make
severance payments to Mr. Lipps with respect to four patents owned or filed by
Mr. Lipps and assigned to the Company. These severance payments become payable
to Mr. Lipps upon termination of his employment with the Company for any reason,
and are equal in amount to three percent (3%) of annual gross revenues received
by the Company from the sale of products which rely on any of the four patents
(maximum $360,000 per annum; minimum $90,000 per annum), and are payable only
for the life of each of the four patents. The Agreement also provides that
ownership of the four patents reverts to Mr. Lipps upon the occurrence of (i)
the Company's breach of the Agreement if the breach continues unremedied for
more than 60 days after the Company receives notice thereof from Mr. Lipps, (ii)
the Company's insolvency or assignment for the benefit of creditors, (iii) the
Company's dissolution or other termination of existence, or (iv) sale of the
Company's assets outside of the Company's ordinary course of business such that
the Company ceases as a going concern.
In June 1995, Peter Waite, a director of the Company, loaned $75,000 to
the Company in exchange for its execution and delivery of its $75,000 principal
amount promissory note (the "Note"). The Note carried interest at a rate of ten
percent (10%) per annum and was paid in full on December 8, 1995.
The Company believes that the terms of each of the foregoing
transactions were or are no less favorable to the Company than would have been
obtained from a nonaffiliated third party for similar transactions.
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
On December 20, 1995 the Company was informed that Ernst & Young LLP
had resigned as auditors of the Company effective immediately. The reports of
Ernst & Young LLP on the Company's financial statement for the past two fiscal
years did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting
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<PAGE> 12
principles, except that the report of Ernst & Young LLP on the Company's
financial statements for the year ended December 31, 1994 included an
explanatory paragraph relating to an uncertainty about the Company's ability to
continue as a going concern.
In connection with the audits of the Company's financial statements for
each of the two fiscal years ended December 31, 1994 and 1993, and in the
subsequent interim period, there were no disagreements with Ernst & Young LLP on
any matters of accounting principles or practices, financial statement
disclosure or auditing scope and procedures, which if not resolved to the
satisfaction of Ernst & Young LLP would have caused Ernst & Young LLP to make
reference to the matter in their report.
The Company has received from Ernst & Young LLP a copy of a letter
addressed to the Securities and Exchange Commission dated December 26, 1995 in
which it stated that it agreed with the above statements.
The firm of Saltz, Shamis & Goldfarb, Inc. firm of public accountants,
has audited the annual financial statements of the Company since 1995. The Board
considers them to be well qualified and will ask the shareholders at the Annual
Meeting to approve the designation of this firm as independent public
accountants for the Company for the year ending December 31, 1997.
Representatives of Saltz, Shamis & Goldfarb are expected to be present
at the Annual Meeting and they will have an opportunity to make a statement,
should they desire to do so, and to respond to appropriate questions.
VOTE REQUIRED AND BOARD RECOMMENDATION
The ratification of the Board's selection of Saltz, Shamis & Goldfarb,
Inc. as the Company's independent public accountants requires the affirmative
vote of the holders of record of a majority of the shares of Common Stock
represented and voting in person or by proxy at the Annual Meeting.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE RATIFICATION OF
THE BOARD'S SELECTION OF SALTZ, SHAMIS & GOLDFARB, INC. AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER MATTERS
To the extent that information contained in this Proxy Statement is
peculiarly within the knowledge of persons other than the management of the
Company, it has relied upon such persons for the accuracy and completeness
thereof.
The cost of soliciting these proxies will be borne by the Company. In
addition to the use of the mail, proxies may be solicited by directors, officers
or employees of the Company, in person or by telephone or fax. The Company will
also reimburse brokerage firms and others for forwarding proxy material to
beneficiary owners of the Common Stock.
10
<PAGE> 13
The Company presently intends to disseminate proxy materials in
connection with its annual meeting for fiscal 1997 on or about May 1, 1998.
Accordingly, any stockholder who wishes to submit a proposal for inclusion in
the proxy material to be disseminated by the Company in connection with its
annual meeting for fiscal 1997 must do so no later than January 1, 1998 and such
proposal must conform to the requirements set forth in Regulation 14A under the
Securities Exchange Act of 1934, as amended. It is suggested, but not required,
that proposals be submitted to the Company by Certified Mail - Return Receipt
Requested.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1996 (the "Annual Report") will simultaneously herewith be
furnished to shareholders of record on the Record Date. The following
information is incorporated in this Proxy Statement by reference to the Annual
Report: (i) the Company's financial statements for the years ended December 31,
1996 and 1995, and (ii) Management's Discussion and Analysis of Financial
Condition and Results of Operation.
THE ANNUAL REPORT ON FORM 10-KSB OF THE COMPANY, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES, MAY BE OBTAINED BY ANY PERSON WITHOUT CHARGE ON
WRITTEN REQUEST TO: SMART GAMES INTERACTIVE, INC., 2075 CASE PARKWAY SOUTH,
TWINSBURG, OHIO 44087, ATTENTION: NICHOLAS J. CHUMA, EXECUTIVE VICE PRESIDENT,
TREASURER, CHIEF FINANCIAL OFFICER AND SECRETARY.
By Order of the Board of Directors
Nicholas J. Chuma
Secretary
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SMART GAMES INTERACTIVE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS -- JUNE 17, 1997
The undersigned appoints each of John D. Lipps and Nicholas J. Chuma,
each with the power to appoint his substitute, as proxies of the undersigned,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of Common Stock, $.0002 par value, of Smart Games Interactive, Inc.
held of record by the undersigned on April 30, 1997, at the Annual Meeting of
Shareholders of Smart Games Interactive, Inc. to be held on June 17, 1997, and
at any adjournments or postponements thereof.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors
FOR all nominees listed below (except) WITHOUT AUTHORITY to vote
as marked to the contrary below [ ] for all nominees below [ ]
Nicholas J. Chuma, John D. Lipps, Donald Miller,
Richard Groberg, Peter Waite
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
2. Proposal to approve the appointment of Saltz, Shamis & Goldfarb as independent accountants
for the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the proxies are authorized to vote on such other business as may properly
come before the meeting.
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTORS
LISTED ABOVE AND FOR PROPOSAL 2.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. When Shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
(Continued on the reverse side)
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(Continued from other side)
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by the President or
other authorized officer. If a
Partnership, please sign in
partnership name by authorized
person.
DATED: , 1997
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Signature
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Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
