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 (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MVSI, INC.
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(Name of Registrant as Specified in Its Charter)
N/A
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(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)(1) and 0-11.
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applies:
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(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):
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<PAGE> 2
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[ ] 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
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<PAGE> 3
[MVSI, INC. LETTERHEAD]
TO THE STOCKHOLDERS OF MVSI, INC.
April 24, 1998
Dear MVSI Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders (the "Annual Meeting") of MVSI, Inc. The Annual Meeting will
be held at Socrates Technologies, Inc., a wholly owned subsidiary of MVSI,
Inc., located at 9301 Peppercorn Place, Largo, Maryland 20774, on Friday,
May 29, 1998 at 11:00 a.m., local time.
If you plan to attend the Annual Meeting, please mark the appropriate
box on the last page of the enclosed proxy so that the Company may make
appropriate seating arrangements at the Annual Meeting. Further, only
Stockholders bearing an admission slip will be permitted to attend the
Annual Meeting. The admission slip is on the last page of the enclosed
Proxy Statement. If your shares are not registered in your own name,
please advise your bank or broker or other nominee that you wishs to
attend the Annual Meeting and they will request an admission card for you.
Please carefully read the Proxy Statement before completing, signing
and returning the accompanying proxy card in the postage paid self-
addressed envelope provided for that purpose. It is very important to
obtain a quorum at the Annual Meeting. We thank you for your prompt
attention to these important matters.
Very truly yours,
EDWARD RATKOVICH
Chairman of the Board
and Chief Executive Officer
<PAGE> 4
MVSI, INC.
8133 Leesburg Pike, Suite 750
Vienna, Virginia 22182
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of
stockholders (the "Annual Meeting") of MVSI, Inc., a Delaware
corporation (the "Company"), will be held at 11:00 a.m., local
time, on Friday, May 29, 1998, at the executive offices of
Socrates Technologies, Inc., a wholly owned subsidiary of MVSI,
Inc., located at 9301 Peppercorn Place, Largo, Maryland 20774,
for the following purposes:
1. To elect a Board of Directors consisting of five directors
to serve until the next annual meeting of stockholders or until
their successors are duly elected and qualified; and
2. To approve an amendment to the Company's 1997 Stock Option
Plan to increase the shares available for issuance under said
plan from 1,000,000 to 3,000,000; and
3. To ratify the appointment of Grant Thornton, LLP as the
Company's independent auditors for the fiscal ending September
30, 1998.
The foregoing items of business are more fully described in
the Proxy Statement accompanying this Notice. Only stockholders of
record at the close of business on April 15, 1998 are entitled to
receive notice of, to attend, and to vote at, the Annual Meeting or
any adjournments thereof.
You are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the Annual
Meeting, please mark, sign, date and return the accompanying proxy
as promptly as possible in the enclosed postage-prepaid envelope. If
you attend the Annual Meeting you may, if you wish, withdraw your
proxy and vote in person. THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS OF MVSI, INC.
By Order of the Board of Directors,
MARK J. MCKNIGHT
Chief Financial Officer and
Corporate Secretary
Vienna, Virginia
April 24, 1998
<PAGE> 5
MVSI, Inc.
8133 Leesburg Pike, Suite 750
Vienna, Virginia 22182
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1998
-----------------------
The accompanying proxy is solicited on behalf of the Board of
Directors of MVSI, Inc. (the "Company") for use at the Company's
1998 Annual Meeting of Stockholders to be held Friday, May 29,
1998 at 11:00 a.m., local time, at the executive offices of
Socrates Technologies, Inc., a wholly-owned subsidiary of the
Company, located at 9301 Peppercorn Place, Largo, Maryland 20774,
and at any adjournments or postponements thereof (the "Annual
Meeting"), for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders. These proxy solicitation
materials were first sent or given to the Company's stockholders
on or about April 24, 1998.
As used herein, and unless the context otherwise indicates,
the "Company" means "MVSI, Inc.", including its wholly owned
subsidiaries. The "Subsidiaries" collectively means Socrates
Technologies, Inc., Expert, Inc., JMR Distributors, Inc., Technet
Computer Services, Inc. and MVS Modular Vision Systems, Inc., and
"shares" means shares of Common Stock, $.01 par value, of the
Company.
INFORMATION CONCERNING SOLICITATION AND VOTING
PURPOSE OF THE ANNUAL MEETING
The purpose of the Annual Meeting is to (i) to elect five(5)
directors to serve until the next annual meeting of stockholders
or until their successors are duly elected and qualified, (ii) to
approve an amendment to the Company's 1997 Stock Option Plan to
increase the number of shares available for issuance under said
plan from 1,000,000 to 3,000,000, (iii) to ratify the appointment of Grant
Thornton LLP as independent auditors of the Company for the fiscal year
ending September 30, 1998, and (iv) to transact such other business as may
properly come before the meeting or at any and all continuation(s) or
adjournment(s) thereof.
RECORD DATE AND SHARES OUTSTANDING
Only stockholders of record at the close of business on April 15, 1998
(the "Record Date") are entitled to notice of, and to vote at the Annual
Meeting. At the Record Date, 15,792,466 shares of the Company's Common
Stock were issued and outstanding. For information regarding security
ownership by management and 5% shareholders, see "OTHER INFORMATION-Security
Ownership of Certain Beneficial Owners and Management."
<PAGE> 6
REVOCABILITY OF PROXIES
Any proxy duly given pursuant to this solicitation may be
revoked by the person or entity giving it at any time before it
is voted by delivering a written notice of revocation to the
Secretary of the Company, by executing a later-dated proxy and
delivering it to the Secretary of the Company or by attending the
Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute a revocation
of the proxy).
VOTING AND SOLICITATION
On all matters, each share has one (1) vote. All shares
represented by each properly executed, unrevoked proxy received
in time for the Annual Meeting will be voted as directed by the
stockholder. If no specific voting instructions are given, the
proxy will be voted FOR (i) the election of the five nominees for
election to the Board of Directors listed in the proxy, (ii) the
approval of the amendment to the 1997 Stock Option Plan to
increase the authorized number of shares of Common Stock
available for issuance thereunder from 1,000,000 to 3,000,000;
and (iii) the ratification of the appointment of Grant Thornton,
LLP, as the Company's independent auditors for the fiscal year
ending September 30, 1998.
If any other matters properly come before the Annual Meeting,
including, among other things, consideration of a motion to
adjourn the Annual Meeting to another time or place, the persons
named in the accompanying proxy will vote on such matters in
accordance with their best judgment.
The Company will bear the cost of solicitation of proxies.
Expenses include reimbursement paid to brokerage firms and others
for their expenses incurred in forwarding solicitation material
regarding the Annual Meeting to beneficial owners of the
Company's voting stock. Solicitation of proxies will be made by
mail. Further solicitation of proxies may be made by telephone
or oral communication by the Company's regular employees, who
will not receive additional compensation for such solicitation.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
In order to constitute a quorum for the conduct of business
at the Annual Meeting, a majority of the issued and outstanding
shares of the Common Stock entitled to vote at the Annual Meeting
must be represented, either in person or by proxy, at the Annual
Meeting. Under Delaware law, shares represented by proxies that
reflect abstentions or "broker non-votes" (i.e., shares held by a
broker or nominee which are represented at the Annual Meeting,
<PAGE> 7
but with respect to which such broker or nominee is not empowered
to vote on a particular proposal) will be counted as shares that
are present and entitled to vote for purposes of determining the
presence of a quorum.
FISCAL YEAR END
The Company's fiscal year ends on September 30th. Fiscal 1997
ended September 30, 1997 and is referred to herein as the "Last
Fiscal Year".
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS
Directors are elected at each Annual Meeting of Stockholders
and hold office until their successors are duly elected and
qualified at the next Annual Meeting of Stockholders. The
Company's Bylaws provide that the Board of Directors will consist of a
minimum of five and a maximum of eleven directors, with the exact
number of directors being designated by the Board of Directors. During
1997, James E. Ewan, Barry J. Hatfield and Bojko Vodanovic resigned as
members of the Board of Directors. Mr. Jeffrey Rubin resigned as a member
of the Board, effective February 7, 1998. Mr. Paul W. Richter filled the
vacancy left by the resignation of Mr. Ewan, who had filled the
vacancy created by Mr. Hatfield's resignation. As a result of
these vacancies, the Board of Directors has currently fixed the
authorized number of directors at five with the understanding that the
Board of Directors shall endeavor to seek two (2) additional persons who
are qualified and willing to serve as independent members of the Board
of Directors.
Each of the five nominees for election to the Board of
Directors is currently serving as a director of the Company and
was elected to his or her present term of office by the
stockholders of the Company. Set forth below are the names and a
brief description of the background of each of the five nominees
for election as directors of the Company.
Each of the nominees first became a director of the Company in
the year set forth in his or her background description herein and has
continually served as a director of the Company since that date.
<PAGE> 8
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Directors will be elected by a favorable vote of a plurality
of the shares of voting stock present and entitled to vote, in
person or by proxy, at the Annual Meeting. Abstentions or broker
non-votes as to the election of directors will not affect the
election of the candidates receiving the plurality of votes.
Unless instructed to the contrary, the shares represented by
proxies will be voted FOR the election of the five nominees
named below as directors. Although it is anticipated that each
nominee will be able to serve as a director, should any nominee
become unavailable to serve, proxies will be voted for such other
person or persons as may be designated by the Company's Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
FIVE NOMINEES (LISTED BELOW) TO THE COMPANY'S BOARD OF DIRECTORS.
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE POSITION WITH COMPANY
- --------------------- ------ --------------------------
<S> <C> <C>
Edward Ratkovich(1) 73 Chairman of the Board and
Chief Executive Officer
Paul W. Richter 42 President, Chief
Operating Officer and
Director
Abbas Fathi 42 Director, Chief Executive
Officer and President of
Socrates Technologies, Inc.
E. Paul Roberts(1)(2)(3) 81 Director
Clive G. Whittenbury(2)(3) 64 Director
</TABLE>
- ---------------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
<PAGE> 9
Edward Ratkovich, Major General, United States Air Force
(ret.), age 73, has served as Chairman of the Board and Chief
Executive Officer since the Company's inception in April 1994. He
was appointed President of the Company on August 1, 1996 and held
that position until February 7, 1998. He has also served as the
Chief Financial Officer until June 1996. General Ratkovich is a
highly decorated air combat command pilot and a veteran of World
War II, the Korean War, the Cuban Missile Crisis and the Vietnam
War. General Ratkovich has substantial senior management,
operations and consulting experience. He retired from the U.S.
Air Force in 1975 after 33 years of active duty service. From
1975 to 1994, he served as a management consultant to numerous
systems engineering and technology firms in the United States.
Since November 1994, General Ratkovich has been devoted on a
full-time basis to the management and operations of the Company.
Paul W. Richter, age 42, is being nominated for the first
time as a Director of the Company. Mr. Richter served as General
Counsel and Secretary of the Company since January 1997. On
February 7, 1998, General Ratkovich nominated and the Company's
Board of Directors appointed Mr. Richter as President, Chief
Operating Officer and a director of the Company. Mr. Richter
continues to oversee the legal affairs and administration of the
Company. Chairman Ratkovich resigned as President of the Company
on February 7, 1998. Prior to joining the Company, Mr. Richter
practiced law in Northern Virginia from 1991 through 1996. Prior
to 1991, Mr. Richter was President of a joint venture owned by
West Publishing Company, General Manager of a subsidiary of
Thomson Publishing Company, Vice President of Operations at a
subsidiary of Gulf & Western Industries, Inc. and General Manager
of a subsidiary of Commerce Clearing House, Inc. Mr. Richter has
an L.LM. in Securities Law from Georgetown University Law Center,
a J.D. from George Mason University Law School, and a B.A. with
honors from Knox College. He is also the originator and author
of The Proxy Contest Handbook (Clark Boardman Co., New York City,
1990) and Corporate Anti-Takeover Devices: The Poison Pill
Defense (Clark Boardman Co., New York City, 1988-1989).
Abbas Fathi, age 42, has been a Director since 1997. In
1989, Mr. Fathi founded Socrates Technologies, Inc. (formerly
"Socrates, Inc."), a Maryland corporation, and since July 1,
1996, a wholly owned subsidiary of the Company. Since 1989, Mr.
Fathi has served as the Chief Executive Officer and President of
Socrates Technologies, Inc. Mr. Fathi holds a B.A. degree from
Texas Tech University and a Masters in Urban Planning from
Rutgers University.
<PAGE> 10
Edward Paul Roberts, Lieutenant Colonel, United States Air
Force (retired), age 81, has served as a Director of the Company
since 1994. Colonel Roberts has substantial senior management,
operations and technical advisory experience. He retired from
the United States Air Force in 1964 after 22 years of active duty
service. Since 1975, Colonel has served as a technical and
operations consultant to numerous major systems engineering and
technology firms in the United States. Colonel Roberts holds
B.S. and M.S. degrees from Jackson College and attended post-
graduate school at The College of William and Mary.
Clive Whittenbury, age 64, has been Director of the Company
since 1994. Dr. Whittenbury has substantial senior management,
operations, and technical advisory experience. From 1972 to
1979, Dr. Whittenbury was a Senior Vice President and from 1976
to 1986 was a director of Scientific Applications International
Corporation, a San Diego, California-based international systems
engineering firm. Since 1979, Dr. Whittenbury has been Executive
Vice President and then a director of the Erickson Group, Inc.,
an international diversified products and aircraft services firm.
Dr. Whittenbury is a member of the International Advisory Board
for the British Columbia Advanced Systems Institute, which
manages commercialization programs in technology at the three
major Vancouver/Victoria universities, and a member of the
Advisory Board of Compass Technology Partners, an investment
fund. He is Chairman of the Laser Directorate Advisory Board for
the Lawrence Livermore National Laboratory. Dr. Whittenbury
served as an advisor to three U.S. Congressional Committees and
with the Grace Commission. Dr. Whittenbury holds a B.S. honors
degree in physics (Manchester, England) and a Ph.D. degree
(Aeronautical Engineering) from the University of Illinois.
The Company is not aware of any family relationships among
any director, executive officer or person nominated to become a
director. The Certificate of Incorporation of the Company
contains provisions eliminating or limiting the personal
liability of directors or violations of a director's fiduciary
duty to the extent permitted by the Delaware General Corporation
Law.
BOARD OF DIRECTOR'S MEETINGS AND COMMITTEES
The Board of Directors held nine (9) meetings during the last
fiscal year. Each director attended at least 75% of the aggregate
of all meetings of the Board of Directors held during such period and
the total number of meetings held during such period by all committees
of the Board of Directors on which that director served.
<PAGE> 11
The Company has standing Audit, Compensation and Executive
Committees, but has not established a Nominating Committee. The
Audit Committee members are E. Paul Roberts and Clive
Whittenbury, the Company's independent directors. The Chairman of
the Audit Committee is E. Paul Roberts. The Audit Committee's
responsibilities include, among other things, recommending the
selection of the Company's independent public accountants to the
Board of Directors, reviewing the activities and the reports of
the independent public accountants, reviewing the independence
of the independent public accountants and examining the adequacy
of the Company's internal controls and internal auditing methods
and procedures. The Audit Committee met on February 7, 1998 to
review the annual audit and related issues for the fiscal year
ending September 30, 1997 but did not meet during the last fiscal
year.
The Compensation Committee members are E. Paul Roberts and
Clive Whittenbury. E. Paul Roberts is the Chairman of the
Compensation Committee. The Compensation Committee's
responsibilities include, among other things, making
recommendations to the Board of Directors regarding the salaries,
bonuses and other compensation to be paid to the Company's
officers and administering the 1997 Stock Option Plan. The
Compensation Committee met two times during the last fiscal year
ending September 30, 1997.
The Executive Committee members are Edward Ratkovich and E.
Paul Roberts. Edward Ratkovich is the Chairman of the Executive
Committee. The duties of the Executive Committee are, to the
extent authorized by the Board of Directors, to exercise all the
powers and authority of the Board of Directors with respect to
the management of the business and affairs of the Company. The
Executive Committee met eleven times during the last fiscal year.
DIRECTOR COMPENSATION
Each director who does not receive compensation as an officer
or employee of the Company or its Subsidiaries, is entitled to
receive a $1,500 per calendar month, or $18,000 per year, for
services rendered as a Director. Each director may be reimbursed
for certain expenses incurred in attending Board of Directors and
committee meetings.
Directors who are officers of the Company or its Subsidiaries
may be granted options or stock bonus awards under the 1997 Stock
Option Plan. As of the date of this proxy statement, the non-employee
directors of the Company are not eligible for stock option grants under
the existing plans.
<PAGE> 12
PROPOSAL NO. 2
AMENDMENT OF 1997 STOCK OPTION PLAN TO
INCREASE AUTHORIZED SHARES
The Board of Directors of the Company has unanimously
adopted, subject to stockholder approval, an amendment to Section
4 of the Company's 1997 Stock Option Plan to increase the
authorized number of shares available for issuance under the 1997
Stock Option Plan from 1,000,000 to 3,000,000 shares of Common
stock. As of April 15, 1998, the Company had granted stock
options under the 1997 Stock Option Plan which would, if fully
exercised, result in the net issuance of 904,000 of the 1,000,000
currently authorized shares. Since the Company is engaged in
highly competitive industries where incentive compensation is
often necessary to attract or retain qualified professionals and
to allow the Company to compete for such professionals with
larger, better funded competitors, the Company's Board of
Directors anticipates the granting of additional stock options in
fiscal year 1998 to attract and retain key employees and
professional staff and to provide an incentive for other
employees to continue their efforts to increase the Company's
productivity and profitability. The stockholders are asked to
approve this amendment to Section 4 of the 1997 Stock Option
Plan. As amended, Section 4 of the 1997 Stock Option Plan would
read as follows:
Section 4. The stock subject to Options shall be
be authorized but unissued shares of Common Stock, $.01
par value, ("Common Stock"), or shares of Common
Stock reacquired by the Company in any manner. The
aggregate number of shares of Common Stock which may
be issued pursuant to the Plan (including shares issued
pursuant to the Initial Plan) is 3,000,000, subject to
adjustment as provided in Section 13. Any such shares
may be issued as ISO's or Non-Qualified Options so long
as the number of shares so issued does not exceed such
number, as adjusted. If any Option granted under the
Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any
reason to be exercisable in whole or in part, or if the
Company shall re-acquire any unvested shares issued
pursuant to Options, the unpurchased shares subject to
such Options and any unvested shares so re-acquired by
the Company shall again be available for grants of
Options under the Plan.
<PAGE> 13
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the voting power of
the outstanding shares of the Company's Common Stock present and
entitled to vote, either in person or by proxy, at the Annual
Meeting is required to approve the proposed amendment to the
1997 Stock Option Plan. Abstentions as to this Proposal 2 will
have the same effect as votes against Proposal 2. Broker non-
votes, however, will be treated as unvoted for purposes of
determining approval of Proposal 2 and will not be counted as
votes for or against Proposal 2. Properly executed, unrevoked
proxies will be voted FOR Proposal 2 unless a vote against
Proposal 2 or abstention is specifically indicated in the proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE PROPOSED AMENDMENT TO THE COMPANY'S 1997
STOCK OPTION PLAN.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Grant Thornton, LLP,
independent auditors, to audit the consolidated financial
statements of the Company for the fiscal year ending September
30, 1998 and seeks ratification of such appointment.
Grant Thornton, LLP, has acted as the Company's independent
auditors since 1995. Representatives of Grant Thornton, LLP are
expected to be present at the Annual Meeting and will have the
opportunity to make a statement if they so decide and will be
available to respond to appropriate questions.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the voting power of
the outstanding shares of the Company's Common Stock present and
entitled to vote, either in person or by proxy, at the Annual
Meeting is required to ratify the selection of the Company's
independent auditors. Abstentions as to this Proposal 3 will
have the same effect as votes against Proposal 3. Broker non-
votes, however, will be treated as unvoted for purposes of
determining approval of Proposal 3 and will not be counted as
votes for or against Proposal 3. Properly executed, unrevoked
proxies will be voted FOR Proposal 3 unless a vote against
Proposal 3 or abstention is specifically indicated in the proxy.
<PAGE> 14
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON, LLP AS
THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
SEPTEMBER 30,1998.
OTHER INFORMATION
EXECUTIVE OFFICERS AND KEY MANAGEMENT OF SUBSIDIARIES
The Board of Directors elects the executive officers of the
Company annually at its first meeting following the Annual
Meeting. Certain information concerning the Company's executive
officers and key managers of the Company's Subsidiaries, except
information regarding Mssrs. Ratkovich, Richter and Fathi,
previously included above, is set forth below.
Mark J. McKnight, age 32, has been the Chief Financial Officer and
Controller since June 1996 and the Assistant Secretary since August 1996.
On February 7, 1998, Mr. McKnight was nominated and appointed by the
Board of Directors as Secretary of the Company. Prior to joining the
Company, Mr. McKnight held a similar position for three years with a
privately held corporate services company. Mr. McKnight also has seven
years of public accounting experience with Ernst & Young, LLP and most
recently Grant Thornton, LLP. Mr. McKnight holds a B.S.M. degree
(accounting) from Tulane University and is a certified public accountant.
Gana Govind, age 47, has been an executive officer of an MVSI
Subsidiary since 1997. In 1989, Mr. Govind founded Technet Computer
Services, Inc. ("Technet"), a Virginia corporation, and since July
1, 1997, a wholly owned subsidiary of the Company. Since 1989,
Mr. Govind has served as President and Chief Executive Officer of
Technet. Mr. Govind holds a Masters Degree in Physics and B.A.
Degrees in Physics and Education from the Madras University in
India.
Eric Ma, age 40, has been an executive officer of an MVSI
Subsidiary since 1997. In 1991, Mr. Ma founded Expert, Inc., a
New York corporation, and since April 1, 1997, a wholly owned
subsidiary of the Company. Since 1991, Mr. Ma has served as the
President and Chief Executive Officer of Expert, Inc. Mr. Ma holds a
Masters Degree in Computer Science and Information Science from
the New Jersey Institute of Technology and a B.A. Degree in Power
Mechanical Engineering from Tsing Hua University in Taiwan.
<PAGE> 15
Jeffrey Rubin, age 43, has served as a Director of the
Company since 1997. Mr. Rubin is not standing for re-election as
a Director at the upcoming Annual Meeting. Mr. Rubin founded
JMR Distributors, Inc. ("JMR"), a Virginia corporation and, since
October 1, 1995, a wholly owned subsidiary of the Company. Since
1990, he has also served as the President and Chief Executive
Officer of JMR. Mr. Rubin holds B.S. and A.S. degrees from
Embry-Riddle Aeronautical University.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934
Requires the Company's officers and directors, and persons who
own beneficially more than ten percent of a registered class of
the Company's equity securities, to file certain reports
regarding ownership of, and transactions in, the Company's
securities with the Securities and Exchange Commission and with
The Nasdaq Stock Market. Such officers, directors, and 10%
stockholders are also required to furnish the Company with copies
of all Section 16(a) forms that they file.
Based solely upon a review of the copies of such reports
furnished to the Company or written representations that no other
reports were required, the Company believes that during the last
fiscal year, the Company's officers, directors and greater than
ten percent beneficial owners complied with all applicable
Section 16(a) filing requirements.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 15, 1998, certain
information regarding the beneficial ownership of the Company's
Common Stock, including the shares of Common Stock as to which
a right to acquire ownership within sixty days exists, of (i)
each person (or group of affiliated persons) who is known by the
Company to own beneficially more than 5% of the outstanding
shares of the Common Stock, (ii) each of the Company's directors,
(iii) each of the Company's "Named Executive Officers" (as
defined under "Executive Compensation"), and (iv) all executive
officers and directors and director nominees of the Company as a
group. A total of 15,792,466 shares of the Company's Common
stock were issued and outstanding as of April 15, 1998.
<PAGE> 16
<TABLE>
<CAPTION>
DIRECTORS, NAMED SHARES BENEFICIALLY OWNED
EXECUTIVE OFFICERS AND -----------------------------
5% SHAREHOLDERS(1)(8) NUMBER PERCENT(1)
- -----------------------------------------------------------------
<S> <C> <C>
Edward Ratkovich (2) 1,939,467 12.17%
Hirata Corporation USA (3) 1,000,000 6.27%
Abbas Fathi(4) 375,000 2.35%
Paul W. Richter(5) 12,500 *
E. Paul Roberts(6) 184,000 1.15%
Clive G. Whittenbury(7) 100,000 *
All Directors, nominees and
executives officers as a group(9) 3,528,169 22.14%
</TABLE>
- -----------------------------------------------------------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission. In
computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares
of Common Stock subject to Options held by that person that
are currently exercisable or exercisable within sixty days
of April 15, 1998 are deemed outstanding. As a result, the
above share numbers and percentages have been calculated
based on a total of 15,937,466 shares outstanding,
representing the current shares outstanding of 15,792,466
plus 145,000 shares subject to options that are exercisable
within sixty days of April 15, 1998.
To the Company's knowledge, and unless otherwise indicated,
each party named in the table has sole voting and investment
power with respect to the shares beneficially owned. Except
as otherwise indicated, the address of each of the parties
in this table is c/o MVSI, Inc., 8133 Leesburg Pike, Suite
750, Vienna, Virginia 22182.
(2) Includes 57,000 shares jointly owned by Mr. Ratkovich and
his spouse, as well as, 75,000 shares owned by Mr. Ratkovich
in the form of options exercisable as of April 15, 1998.
(3) Hirata Corporation, Toyko, Japan, became a beneficial owner
of more than 5% of the Company's Common Stock on December 15, 1997,
when Hirata exercised and converted 1,000,000 MVSI Class B Warrants
<PAGE> 17
which Hirata had acquired for investment purposes, into MVSI Common
Stock at a cost of $4,200,000. Subsequent to the transaction, Hirata
Corporation filed a Schedule 13D with the Securities and Exchange
Commission as a Reporting Person(Entity).
(4) Includes 25,000 shares held by Mr. Fathi in the form of
options exercisable as of April 15, 1998.
(5) Includes 12,500 shares held by Mr. Richter in the form of
options exercisable as of April 15, 1998.
(6) Edward Paul Roberts disclaims ownership of 50,000 shares
owned by O'Connell Technologies, Inc. Mr. Roberts is a
principal stockholder of O'Connell Technologies, Inc. On
July 17 and September 1, 1997, respectively, Mr. Roberts
purchased 50,000 and 35,000 shares, respectively, of Common
Stock from the Company, which shares are "restricted
securities" under Rule 144 of the Securities Act of 1933, as
amended.
(7) On July 17, 1997, Clive Whittenbury purchased 50,000 shares
of Common Stock from the Company. The shares are "restricted
securities" under Rule 144 of the Securities Act of 1933, as
amended.
(8) Includes 145,000 shares (in total) owned by the Group (9 persons)
in the form of options exercisable as of April 15, 1998.
The above summary of stock ownership does not include 1,969,154
treasury shares held by the Company as of April 15, 1998.
<PAGE> 18
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth
certain information concerning all cash compensation awarded to,
earned by, or paid for all services rendered to the Company,
for the Company's Chief Executive Officer and all other executive
officers of the Company or its Subsidiaries whose total cash
compensation exceeded $100,000 for the last completed fiscal year
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND PRINCIPAL FISCAL ------------------- STOCK OPTIONS
POSITION YEAR SALARY BONUS (# OF SHARES)
- ------------------ ------ -------- --------- -------------
<S> <C> <C> <C> <C>
Edward Ratkovich
Chairman, CEO 1997 $102,000 $ - 300,000
1996 $195,000 $97,500 -
1995 $130,000 $65,000 -
Abbas Fathi 1997 $150,000 $75,000 100,000
President, Socrates 1996 - - -
Technologies, Inc. 1995 - - -
</TABLE>
___________________________
EMPLOYMENT AGREEMENTS
Mr. Ratkovich entered into an employment agreement, dated
February 1, 1995, with the Company, which employment agreement
expires on January 31, 2000. Under his employment agreement, he
is entitled to receive a base annual salary of $195,000 (as
adjusted by any increases granted by the Compensation
Committee) plus an annual bonus equal to 50% of his then current
base annual salary. Under Mr. Ratkovich's current employment
agreement, if the employment agreement is terminated without
cause by the Company or with good reason by Mr. Ratkovich, then
the Company would be obligated to pay Mr. Ratkovich's base
annual salary through the remaining term of the employment
agreement plus the sum of the annual bonus plus the maximum
amount that could have been paid under any performance bonus plan
multiplied by the number of years remaining in the term of the
employment agreement. Effective October 1, 1996, Mr. Ratkovich
voluntarily agreed to adjust his annual base salary to $102,000
<PAGE> 19
and to amend his annual bonus so that the amount of the bonus
would be determined by the Compensation Committee and would be
conditioned upon and based on the financial performance of the
Company.
Mr. Richter entered into an employment agreement, dated
February 1, 1998, with the Company, which employment agreement
expires on February 1, 1999. Under his employment agreement, Mr.
Richter is entitled to receive a base salary of $139,600 plus an
annual bonus to be determined by the Compensation Committee and
conditioned upon and based on the financial performance of the
Company. Under Mr. Richter's current employment agreement, if the
employment agreement is terminated without cause by the Company
or with good reason by Mr. Richter, then the Company would be
obligated to pay Mr. Richter's base annual salary through the
remaining term of the employment agreement plus the sum of the
annual bonus plus the maximum amount that could have been paid
under any performance bonus plan.
Each of the Presidents of the Subsidiaries, except Mr.
Rubin of JMR Distributors, Inc., currently has an employment
agreement providing for a base salary and an annual bonus. Mr.
McKnight does not have an employment agreement with the Company.
OPTION GRANTS IN LAST FISCAL YEAR
All options granted under the Company's 1997 Stock Option Plan have
been granted at an exercise price equal to or exceeding the fair market
value on the date of grant. All options granted to-date vest over a
two-year period and expire in 10 years from the date of grant. The 1997
Stock Option Plan is currently administered by the Compensation
Committee of the Board of Directors.
The following table provides information with respect to options
granted in the Last Fiscal Year to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------- VALUE AT ASSUMED
SHARES OF PERCENT OF ANNUAL RATES OF STOCK
COMMON STOCK TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED(#)(1) FISCAL YEAR(2) ($/SH) DATE 5 ($) 10 ($)
- ---------------- ------------- -------------- -------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Edward Ratkovich 150,000 16.23% 3.23 April 2007 304,500 772,168
150,000 16.23% 4.54 July 2007 429,000 1,084,995
Abbas Fathi 50,000 5.41% 2.94 April 2007 92,500 233,666
50,000 5.41% 4.13 July 2007 130,000 329,000
</TABLE>
- ----------------
<PAGE> 20
(1) Based on 924,000 shares of Common Stock underlying options
granted to employees during the Last Fiscal Year.
(2) The 5% and 10% assumed rates of appreciation are mandated by
the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of the
future common stock price.
No options granted under the Company's 1997 Stock Option Plan
were eligible to be exercised during the Last Fiscal Year.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding anything to the contrary set forth in any of
the previous filings made by the Company under the Securities Act
of 1933, as amended, or the Securities Act of 1934, as amended,
which might incorporate future filings, including, but not
limited to, this Proxy Statement, in whole or in part, the
following Compensation Committee Report and the performance
graph appearing herein shall not be deemed to be incorporated by
reference into any such future filings.
This Compensation Committee Report discusses the Company's
executive compensation policies and the basis for the
compensation paid to the Company's executive officers during
fiscal year 1997.
Compensation Policy. The Company's policy with respect to
executive compensation has been designed to:
o Adequately and fairly compensate executive officers in
relation to their responsibilities, capabilities and contributions
to the Company and in a manner that is commensurate with compensation
paid by companies of comparable size or within the Company's industry;
o Reward executive officers for the achievement of short-term
operating goals and for the enhancement of the long-term value of the
Company; and
<PAGE> 21
o Align the interests of the executive officers with those
of the Company's stockholders with respect to short-term operating
goals and long-term increases in the price of the Company's Common
Stock.
The components of compensation paid to certain executive officers
consist of (a) base salary, (b) incentive compensation in the form of
discretionary annual bonus payments (through the Compensation Committee)
and stock option grants under the Company's 1997 Stock Option Plan, and
(c) certain other benefits provided to the Company's executive officers.
The Compensation Committee has been responsible for reviewing and
approving cash compensation paid by the Company to its executive officers
and members of the Company's senior management team, including bonuses
and awards made under the aforementioned incentive plans, selecting the
individuals who will receive such bonuses and awards and determining the
timing, pricing and amount of all such bonuses and awards granted.
The compensation plan for the executive officers of the Company and
its Subsidiaries rewards those individuals when the Company and its
stockholders have benefited from achieving the Company's goals and
targeted objectives, all of which the Compensation Committee feels will
dictate, in large part, the Company's future operating results. The
Compensation Committee believes that its policy of compensating certain
of its executive officers with incentive-based compensation fairly and
adequately compensates those individuals in relation to their
responsibilities, capabilities and contribution to the Company, and in
a manner that is commensurate with compensation paid by companies of
comparable size or within the Company's industry.
Components of Compensation. The primary components of compensation
paid by the Company to its executive officers and senior management
personnel, and the relationship of such components of compensation to
the Company's performance, are discussed below:
Base Salary. Compensation Committee reviews and approves the
base salary paid by the Company to its executive officers and the
Presidents of its Subsidiaries. Annual adjustments to base
salaries are determined based upon a number of factors, including
the Company's performance (to the extent such performance can
fairly be attributed or related to each executive's officer's
performance), as well as the nature of each executive officer's
responsibilities, capabilities and contributions. The Compensation
Committee reviews the base salaries of its executive officers in an
attempt to ascertain whether those salaries fairly reflect job
responsibilities and prevailing market conditions and rates of pay.
The Compensation Committee believes that base salaries for the
<PAGE> 22
Company's executive officers have been reasonable in relation to the
Company's size and performance in comparison with the compensation
paid by similarly sized companies or companies within the Company's
industry.
Incentive Compensation. The Compensation Committee has the
authority, within the terms of the 1997 Stock Option Plan, to
select the executive officers and employees who will be granted
stock options.
Other Benefits. The Company maintains certain other plans
and arrangements for the benefit of its executive officers. The
Company believes these benefits are reasonable in relation to the
executive compensation practices of other similarly sized
companies or companies within the Company's industry.
Conclusion. The Compensation Committee believes that the
concepts discussed above further the stockholders' interests and
that officer compensation encourages responsible management of
the Company. The Compensation Committee regularly considers the
effect of management compensation on stockholder interests. In
the past, the Board of Directors based its review in part on the
experience of its own members and on information requested from
management personnel.
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
Edward Paul Roberts
Clive G. Whittenbury
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total
stockholder return, calculated on a dividend reinvested basis,
from the effective date of the initial public offering of the
Company's Common Stock (August 14, 1995) through the end of the
Last Fiscal Year (September 30, 1997) for the Company, the
Nasdaq Stock Market-U.S. Index (the "Nasdaq Index") and the
Russell 2000 Index, a broad-market index, showing the total
return of 2,000 publicly-traded small and mid-capitalization
companies. The graph assumes that $100 was invested in the
Company's Common Stock on August 15, 1995, and in each of the two
indices on September 30, 1995. Note that historic stock price
performance is not necessarily indicative of future stock price
performance.
<PAGE> 23
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MVSI NASDAQ STOCK RUSSELL
(FISCAL YEAR COVERED) INC. MARKET-US 2000 INDEX
- --------------------- -------- ------------- ------------
<S> <C> <C> <C>
08/15/95(1) $100 - -
09/30/95 $214 $100 $100
09/30/96 $279 $186 $191
09/30/97 $211 $256 $254
<FN>
<F1>
(1) Date represents first trading day of the Company's Common Stock.
</FN>
</TABLE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of
Directors knows of no other matters to be brought before the
Annual Meeting. If other matters are properly brought before the
Annual Meeting or any adjournment of postponement thereof, it is
intended that the persons named in the enclosed proxy will have
discretionary authority to vote on such matters in accordance
with their best judgment acting together or separately.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR THE ANNUAL
All proposals of stockholders intended-to-be presented at the
Company's 1999 Annual Meeting of Stockholders should be directed
to the attention of the Secretary of the Company, at the address
of the Company set forth on the first page of this Proxy Statement,
by November 1, 1998, if they are to be considered for possible
inclusion in the Proxy Statement and form of proxy used in connection
with such meeting.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders, as amended, concerning
the operation of the Company for the fiscal year ending September
30, 1997, including financial statements, is enclosed herewith.
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
A copy of the Company's Annual Report on Form 10-K, as
amended, for the fiscal year ended September 30, 1997, as filed
with the Securities and Exchange Commission, without exhibits may
<PAGE> 24
be obtained by stockholders without charge by written request to
Mark McKnight, Secretary, MVSI, Inc., 8133 Leesburg Pike, Suite 750,
Vienna, Virginia 22182, telephone (703) 356-5353, facsimile
(703) 356-5354, or e-mail: [email protected]. Exhibits will be provided
upon written request and payment of an appropriate processing fee.
It is important that your shares be represented at the Annual
Meeting, regardless of the number of shares that you hold. You
are, therefore, urged to execute and return the accompanying
Proxy in the envelope which has been enclosed, at your earliest
convenience.
By Order of the
Chairman of the Board
Edward Ratkovich
DATED: April 24, 1998
<PAGE> 25
ADMISSION SLIP
The Stockholder bearing this slip is entitled to attend the 1998
Annual Meeting of Stockholders of MVSI, Inc.
DATE: May 29, 1998
TIME: 11:00 A.M.
LOCATION: Socrates Technologies, Inc. (a wholly owned subsidiary
of MVSI)
9301 Peppercorn Place
Largo, Maryland 20774
<PAGE 26>
PROXY
MVSI, INC.
PROXY FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of MVSI, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement, each dated April 24, 1998, and hereby appoints Paul
Richter and Mark McKnight, and each of them, his or her proxy, with
full power of substitution, to vote all stock of the undersigned at the
1998 Annual Meeting of Stockholders of MVSI, Inc. to be held on Friday,
May 29, 1998 at 11:00 a.m., local time, at the executive offices of Socrates
Technologies, Inc., a wholly owned subsidiary of MVSI, Inc., located at
9301 Peppercorn Place, Largo, Maryland 20774, and at any and all
continuation(s) or adjournment(s) thereof, hereby revoking any proxy
previously given and ratifying all that said proxy or proxies may do
pursuant hereto. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting.
Abstentions are not counted as votes cast with respect to Proposal No.1.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" ALL NOMINEES IN PROPOSAL NO.1
1. Election of the following: For All Withheld
Nominees as Directors Nominees For All
Abbas Fathi [ ] [ ]
Edward Ratkovich
Paul W. Richter
E. Paul Roberts
Clive G. Whittenbury
Withheld for the following only (Write name of Nominee(s) in the
space below):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
<PAGE> 27
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSAL NO.2
2. Approval of Amendment of the 1997 Stock Option Plan to Increase the
Number of Authorized Shares Available for Issuance under the Plan.
(Check One Box Only)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSAL NO.3
3. Proposal to Ratify the Appointment of Grant Thornton, LLP as
Independent Auditors for the Company for the Fiscal Year Ending
September 30, 1998.
(Check One Box Only)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
- ----------------------------------------------------------------------------
Signature (required): ____________________ Print Name:_____________________
Signature (required): ____________________ Print Name:_____________________
Date: _______________________
THIS PROXY SHOULD BE COMPLETED, DATED AND SIGNED BY THE STOCKHOLDER(S)
EXACTLY AS HIS OR HER NAME APPEARS HEREIN, AND RETURNED PROMPTLY IN THE
ENCLOSED ENVELOPE. PERSONS SIGNING IN A FIDUCIARY CAPACITY SHOULD SO
INDICATE. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY AN
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AN AUTHORIZED PERSON. IF SHARES ARE HELD BY JOINT TENANTS OR AS COMMUNITY
PROPERTY, BOTH SHOULD SIGN.
DO YOU PLAN TO ATTEND THE ANNUAL MEETING?
IF YES, PLEASE CHECK THE BOX: [ ]
