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(2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Digital Data Networks, Inc.
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(Name of Registrant as Specified in Its Charter)
Registrant
- --------------------------------------------------------------------------------
(Name of Persons(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
Fee computed on table below per Exchange Act Rules 141-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction 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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(5) Total fee paid:
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Fee paid previously by written 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>
DIGITAL DATA NETWORKS, INC.
3102 Maple Avenue, Suite 230
Dallas, TX 75201
(214) 969-7200
Fax: (214) 969-7238
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 28, 2000
---------------------------
TO THE SHAREHOLDERS OF DIGITAL DATA NETWORKS, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of
Digital Data Networks, Inc. (the "Company") will be held at the Company's
principal office, 3102 Maple Avenue, Suite 230, Dallas, Texas 75201, at 10:00
a.m., local time, on Wednesday, June 28, 2000 for the following purposes:
1. To elect three (3) directors to serve until the next annual meeting
of shareholders or until their respective successors are elected and qualified;
2. To consider and vote upon a proposal to ratify the appointment of
BDO Seidman, LLP as independent public accountants to audit the financial
statements of the Company for the fiscal year ending December 31, 2000 and to
perform other appropriate accounting services; and
3. To transact such other business as may properly come before the
annual meeting or any adjournment thereof.
A proxy statement and proxy card, together with a copy of the
President's Letter to Shareholders and Form 10-KSB for the year ended December
31, 1999, accompanies this notice. The proxy statement attached to this notice
describes the nominees for election to the Board of Directors and information on
the independent public accountants recommended for selection by the Board of
Directors.
The Board of Directors has fixed the close of business on May 5, 2000
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting or any adjournment thereof. Only shareholders of
record at the close of business on the record date are entitled to notice of,
and to vote at, the meeting. A list of such shareholders will be available for
examination by any shareholder for any purpose germane to the meeting, during
normal business hours, at the principal office of the Company, 3102 Maple
Avenue, Suite 230, Dallas, Texas 75201, for a period of ten days prior to the
meeting.
All shareholders are cordially invited to attend the meeting in person.
Shareholders are urged, whether or not they plan to attend the meeting, to date
and sign the enclosed proxy and return it promptly in the enclosed postage
prepaid envelope. If a shareholder who has returned a proxy finds that they can
attend the meeting in person, they may revoke their proxy and vote in person on
all matters submitted to the meeting.
By Order of the Board of Directors,
JAMES F. BIAGI, JR.
Secretary
Dallas, Texas
May 22, 2000
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD
BE COMPLETED AND RETURNED PROMPTLY.
<PAGE>
DIGITAL DATA NETWORKS, INC.
ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 28, 2000
----------------------
PROXY STATEMENT
----------------------
This proxy statement and the accompanying proxy card are being mailed
beginning approximately May 22, 2000, to holders of Common Stock in connection
with the solicitation of proxies by the Board of Directors for the 2000 Annual
Meeting of Shareholders to be held in Dallas, Texas at 10:00 a.m., local time,
on Wednesday, June 28, 2000. In addition to the use of the mails, proxies may be
solicited by officers and employees of the Company, without remuneration, or by
other third parties for remuneration, by personal contact, telephone or
facsimile. Proxies are solicited to give all shareholders of record at the close
of business on May 5, 2000, an opportunity to vote on matters that come before
the meeting.
When your proxy card is returned properly signed, the shares
represented will be voted in accordance with your directions by the individuals
designated on the proxy card. You can specify your choices by marking the
appropriate boxes on the proxy card. Unless a proxy specifies otherwise, the
persons named in the proxy will vote the shares covered by the proxy for the
individuals nominated by the Board of Directors, and "FOR" ratification of
appointment of the independent public accountants. Abstentions on the proxy card
are voted neither "for" nor "against," but are counted in the determination of a
quorum.
If you wish to give your proxy to someone other than the persons named
on the proxy card, all the names appearing on the enclosed proxy card must be
crossed out and the name of another person or persons (not more than three)
inserted. The signed card must be presented at the meeting by the person or
persons representing you. You may revoke your proxy at any time before it is
voted at the meeting by giving written notice of revocation to the Company's
Secretary, by executing a later-dated proxy, or by attending the meeting and
voting in person.
Shareholders of record at the close of business on May 5, 2000, will be
entitled to notice of and to vote at the Annual Meeting. On May 5, 2000, the
Company had issued and outstanding 2,314,597 shares of no par value common stock
(the "Common Stock"), which is the only class of its capital stock outstanding.
The presence, in person or by proxy, of the holders of a majority of the issued
and outstanding shares of Common Stock is necessary to constitute a quorum at
the Annual Meeting. Each holder of Common Stock is entitled to one vote for each
share held.
YOUR VOTE IS IMPORTANT. Accordingly, you are urged to sign and return
the accompanying proxy card whether or not you plan to attend the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of May 5, 2000, by (i)
each person or entity known by the Company who beneficially owns 5% or more of
the Common Stock, (ii) each director, (iii) each individual listed under the
"Summary Compensation" table below, and (iv) all officers and directors of the
Company as a group. Unless otherwise noted, the persons and entities named below
have sole voting and investment power with respect to such shares. The address
for each beneficial owner is shown below.
<TABLE>
<CAPTION>
Name and Address of Total Beneficial Ownership Percent of Class Beneficially
Beneficial Owner (including options) Owned as of May 5, 2000
- ---------------- ------------------- -----------------------
<S> <C> <C>
Whiterock, Inc. (1) 258,500 11.2%
Donald B. Scott, Jr. (2) 188,001 (3) 8.1%
James F. Biagi, Jr. (2) 144,946 (4) 6.3%
Robert F. Hussey (2) 155,000 (5) 6.7%
Susan E. Hassel (2) 27,857 (6) 1.2%
All Executive Officers and Directors as a group (5 persons) 579,839 (7) 25.1%
</TABLE>
- -----------------------
(1) This beneficial owner's address is 7110 Brittmore, Suite 300, Houston,
Texas 77041.
(2) This beneficial owner's address is 3102 Maple Avenue, Suite 230,
Dallas, Texas 75201.
(3) Includes options to purchase 177,158 shares within 60 days of this
proxy statement.
(4) Includes options to purchase 119,133 shares within 60 days of this
proxy statement.
(5) Includes options to purchase 150,000 shares within 60 days of this
proxy statement.
(6) Includes options to purchase 26,738 shares within 60 days of this proxy
statement.
(7) Includes options to purchase 535,386 shares within 60 days of this
proxy statement.
PROPOSAL ONE: ELECTION OF DIRECTORS
The Board of Directors is composed of three members, Donald B. Scott,
Jr., James F. Biagi, Jr. and Robert F. Hussey. The terms of the directors will
expire in 2000 and all of those directors have been nominated for re-election.
If for any reason any of these nominees becomes unable or is unwilling to serve
at the time of the meeting, the persons named in the enclosed proxy card will
have discretionary authority to vote for a substitute nominee or nominees. It is
not anticipated that any nominee will be unavailable for election. Directors
elected at the meeting will hold office until the next annual meeting of
shareholders or until their respective successors are elected and qualified.
Nominees For Election as Directors
The names, a brief description of their principal occupation for at
least the past five years, other major affiliations and age of the nominees are
as follows:
Donald B. Scott, Jr., Chairman of the Board of Directors and President of the
Company. Mr. Scott has been a director and President of the Company since March
1993 and Chairman of the Board since July 1996. Mr. Scott was previously a
principal of Rutkowski, Erickson, Scott ("RES"), a consulting firm, from 1991 to
July 1995. Prior to his association with RES, Mr. Scott was with Paine Webber in
New York from 1987 to 1991. Age 45.
James F. Biagi, Jr., Secretary and a director of the Company since its inception
in 1988. Mr. Biagi is an attorney in Seattle, Washington, and has been a
principal of the law firm Monahan & Biagi since March 1996, where he has
specialized in tax, corporate and securities matters. Prior to Monahan & Biagi,
Mr. Biagi practiced law at the firm Monahan & Robinson since 1989. Age 43.
Robert F. Hussey, director of the Company since November 1997. Mr. Hussey was
President and CEO of MetroVision of North America, Inc., a niche cable
television company, from February 1991 until April 1997, when it merged with
York Hannover Health Care, Inc. Mr. Hussey has been a director of IVEX
Corporation since May 1993 and Nur Macroprinters Ltd. since December 1997, as
well as on the board of advisors for Kaufmann Fund since December 1996, Argentum
Capital Partners, I and II since June 1990, and Josephthal & Company, Inc. since
December 1997. Age 51.
The election of directors must be approved by a majority of the votes cast by
all holders of the Common Stock present, in person or by proxy, and entitled to
vote at the Annual Meeting.
The Board of Directors recommends a vote "FOR" election of the proposed
directors.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors approved one unanimous consent resolution in
1999, and also held two formal meetings. In addition, the Board of Directors
held one or two informal meetings per month. During 1999, all of the directors
attended 90% or more of the meetings of the Board of Directors.
From time to time, the Board may establish permanent standing
committees and special temporary committees to assist the Board in carrying out
its responsibilities. Currently the only Board committee is the Audit Committee.
The Audit Committee periodically reviews the adequacy and effectiveness of the
Company's internal system of accounting controls and financial reporting
procedures with representatives of the Company's independent public accountants.
The Audit Committee also examines the results of the annual audit of the
financial statements and the recommendations of the independent public
accountants pertaining to accounting practices, policies and procedures followed
by the Company. The Audit Committee consists of two directors, Donald B. Scott,
Jr. and Robert F. Hussey.
COMPENSATION OF DIRECTORS
Directors received the following compensation for serving as directors
in 1999: Mr. Hussey was awarded $35,000 (of which $25,000 was used to reduce his
note with the Company); Mr. Scott was awarded $20,000 (of which $10,000 was used
to reduce his note with the Company); and $10,000 was awarded to Mr. Biagi.
Directors are also reimbursed for expenses incurred in connection with
Company-related business.
EXECUTIVE OFFICERS OF THE COMPANY
Information regarding the executive officers of the Company is as
follows:
Name Age Position
Donald B. Scott, Jr. 45 President, Chairman of the
Board of Directors
James F. Biagi, Jr. 43 Secretary and Director
Robert F. Hussey 51 Director
Richard J. Boeglin 42 Vice President, Finance and
Operations and Chief
Financial Officer
Susan E. Hassel 53 Vice President, Sales
Donald B. Scott, Jr. has been President and a director of the Company since
March 1993 and Chairman of the Board since July 1996. Mr. Scott is a nominee for
reelection as a director. For additional background information see Proposal
One: Election of Directors.
James F. Biagi, Jr. has been Secretary and a director of the Company since its
inception in 1988, and is a nominee for reelection as a director. For additional
background information see Proposal One: Election of Directors.
Robert F. Hussey has been a director of the Company since November 1997, and is
a nominee for reelection as a director. For additional background information
see Proposal One: Election of Directors.
Richard J. Boeglin has been Vice President of Finance and Operations and the
Chief Financial Officer since April 1995. He has been with the Company since
1991. He has thirteen years of management experience, including direct
management of transit system design, development and installation. From 1987 to
1991, Mr. Boeglin worked in the outdoor advertising industry. He has a BS from
Indiana University, where he received a degree in Marketing and Management.
Susan E. Hassel has been Vice President of Sales since she started with the
Company in April 1992. She has fifteen years of sales and marketing experience.
From 1985 until 1991, Ms. Hassel was the Director of Sales and Marketing for The
Relocation Center, a relocation counseling company in Dallas, Texas. Ms. Hassel
has a BS in Education from the University of Cincinnati.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding cash and
non-cash compensation paid by the Company during each of the Company's last
three fiscal years to the Company's Chief Executive Officer and the most highly
compensated executive officers of the Company whose annual compensation exceeded
$100,000 (the "Named Persons").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards All
Name and Fiscal Securities Other
Executive Position Year Salary Bonus Underlying Options Compensation
- ------------------ ---- ------ ----- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Donald B. Scott, Jr. 1999 $ -0- $ 20,000 20,000 $ 0
President 1998 $ 38,000 $ -0- -0- $ 0
1997 $ 150,500 $ -0- -0- $ 0
Susan Hassel 1999 $125,561 $ -0- 11,179 $ 0
V.P. Sales 1998 $121,929 $ -0- -0- $ 0
1997 $115,641 $ -0- -0- $ 0
</TABLE>
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The following table sets forth information with respect to options
granted to the Named Persons during the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
Number of % of Total Options
Securities Granted to
Underlying Employees in Exercise or Base
Name Options Granted Fiscal Year Price Per Share Expiration Date
---- --------------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Donald B. Scott 20,000 16 $0.50 (1) February 9, 2009
President
Susan E. Hassel 11,179 9 $0.25 (2)
V.P., Sales (2)
</TABLE>
(1) The exercise price per share as of the end of fiscal 1999. On February 3,
2000, the board of directors determined that an exercise price of $0.50 was
not reflective of, and substantially higher than, the current market price,
and in order to compensate the Named Persons as originally intended, the
board of directors changed this exercise price to $0.30 per share, the
then-current market price.
(2) Ms. Hassel was granted options twice in 1999. One grant was in the amount
of 2,236 options, and has an expiration date of February 11, 2004. The
second grant was for 8,943 shares, and has an expiration date of June 15,
2004.
The following table sets forth information with respect to options
exercised by the Named Persons during 1999 and the value of unexercised options
held by the Named Persons at the end of fiscal 1999.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money Options
Options at At Fiscal Year-End
Fiscal Exercisable (1)
Shares Acquired Value Year-End
Name on Exercise Realized Exercisable
---- ----------- -------- -----------
<S> <C> <C> <C> <C>
Donald B. Scott 0 0 176,408 $ 7,820
President
Susan E. Hassel 0 0 26,738 $ 1,337
V.P., Sales
</TABLE>
(1) The value of unexercised in-the-money options is based on the market value
of the Company's Stock at fiscal year-end 1999, of $0.30 per share, as well as
the exercise price of options at fiscal year-end 1999.
CERTAIN TRANSACTIONS
During the period June 1996 through July 1997, as a result of advances
and the payment of personal expenses, the Company's president and CEO, Donald B.
Scott, owed the Company approximately $42,000. The Company has been accruing
interest at various rates on this amount over the years. The Company's Board of
Directors awarded Mr. Scott $20,000 for services performed as a director in
1999, of which $10,000 was used to reduce his note with the Company. As of
December 31, 1999, the balance of Mr. Scott's receivable was $39,000.
In April 1999 the Company advanced one of its directors, Robert F.
Hussey, $100,000 pursuant to a promissory note bearing interest at the rate of
8% per year. The original note was to mature in September 1999, and has been
extended to June 30, 2000. This note is collateralized by Mr. Hussey's 25,000
shares of Common Stock of Internet Sports Network, an internet-related company
whose stock trades on the Over-the-Counter Bulletin Board, as well as 150,000 of
Mr. Hussey's options to purchase the Company's Common Stock. The Company's Board
of Directors awarded Mr. Hussey $35,000 for services performed as a director in
1999, of which $25,000 was used to reduce his note with the Company. As of
December 31, 1999, the balance of Mr. Hussey's receivable was $81,000.
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The members of the Audit Committee of the Board of Directors join with
the remaining board member in recommending the appointment of BDO Seidman, LLP
("BDO Seidman") as the Company's independent public accountants, to audit the
Company's financial statements for the current fiscal year ending December 31,
2000 and to perform other appropriate accounting services. BDO Seidman has
served as independent public accountants for the Company since 1993.
A proposal will be presented at the meeting to ratify the appointment
of BDO Seidman as the Company's independent public accountants. If the
shareholders do not ratify this appointment by the affirmative vote of a
majority of the shares present in person or represented by proxy at the meeting,
other independent public accountants will be considered by the Board of
Directors.
Representatives of BDO Seidman are not expected to attend the annual
meeting, but will be available by phone to make a statement or respond to
appropriate questions.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of the independent public accountants.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and officers, and persons who own more
than 10% of a registered class of the Company's equity securities at any time
during the year, to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "SEC"). Such persons
are required by SEC regulations promulgated pursuant to the Exchange Act to
furnish the Company with copies of all Section 16(a) report forms they file with
the SEC.
The Company's registration statement under Section 12 of the Exchange
Act became effective February 13, 1996. Based on a review of the copies of
report forms furnished to the Company, the Company believes that all Section
16(a) reporting and filing requirements applicable to its directors, officers
and persons who own more than 10% of a registered class of the Company's equity
securities were complied with during the year ended December 31, 1999.
SHAREHOLDER PROPOSALS
Any shareholder of record of the Company who desires to submit any
proper proposal for inclusion in the proxy materials relating to the next Annual
Meeting of Shareholders must do so in writing and it must be received at the
Company's principal executive office by September 28, 2000. The proponent must
be a record or beneficial owner entitled to vote at the next Annual Meeting on
their proposal and must continue to own such security entitling them to vote
through the date on which the meeting is held.
PRESIDENT'S LETTER TO SHAREHOLDERS AND FORM 10-KSB
Copies of the President's Letter to Shareholders and of the Form
10-KSB, which contains financial statements of the Company for the fiscal year
ended December 31, 1999, are enclosed with this proxy statement.
Upon written request from any shareholder of record at May 5, 2000 (or
any beneficial owner representing that they are or were entitled to vote at the
2000 Annual Meeting), the Company will furnish to such shareholder, without
charge, an additional copy of the Form 10-KSB as filed with Securities and
Exchange Commission, including financial statements. The Company may impose a
reasonable fee for its expenses in connection with providing exhibits that may
be referred to in the Form 10-KSB, if the full text of such exhibits is
specifically requested. Requests should be directed to: Director of Investor
Relations, Digital Data Networks, Inc., 3102 Maple Avenue, Suite 230, Dallas,
Texas 75201. Form 10-KSB may also be viewed at and printed from the Securities
and Exchange Commission's web site on the internet at www.sec.gov for no charge.
OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters that are to be presented for action at the Annual Meeting. Should any
other matters be properly brought before the meeting or any adjournments
thereof, the persons named in the enclosed proxy will have the discretionary
authority to vote all proxies with respect to such matters in accordance with
their judgments.
By Order of the Board of Directors
JAMES F. BIAGI, JR.
Secretary
Dallas, Texas
May 22, 2000
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, AND DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. A PROMPT RESPONSE IS HELPFUL, AND YOUR
COOPERATION WILL BE APPRECIATED.
DIGITAL DATA NETWORKS, INC.
3102 Maple Avenue, Suite 230, Dallas, TX 75201
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 28, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Donald B. Scott, Jr. and Richard J.
Boeglin, and each of them, Proxies, with full power of substitution in each of
them, in the name, place and stead of the undersigned, to vote at the Annual
Meeting of Shareholders of Digital Data Networks, Inc. on Wednesday, June 28,
2000, at the Company's offices, 3102 Maple Avenue, Suite 230, Dallas, Texas
75201 or at any adjournment or adjournments thereof, according to the number of
votes that the undersigned would be entitled to vote if personally present, upon
the following matters:
1. ELECTION OF DIRECTORS:
___ FOR all nominees listed below ___ WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all
nominees below
Donald B. Scott, Jr., James F. Biagi, Jr., Robert F. Hussey
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space below.)
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2. PROPOSAL TO RATIFY THE APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS TO AUDIT THE COMPANY'S FINANCIAL STATEMENTS FOR THE
CURRENT YEAR ENDING DECEMBER 31, 2000 AND TO PERFORM OTHER APPROPRIATE
ACCOUNTING SERVICES.
FOR___ AGAINST___ ABSTAIN___
(Continued and to be signed on reverse side)
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED "FOR" THE INDIVIDUALS NOMINATED
BY THE BOARD OF DIRECTORS AND "FOR" RATIFICATION OF APPOINTMENT OF THE
INDEPENDENT PUBLIC ACCOUNTANTS.
DATED:________________________________,2000
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
