9
RECONDITIONED SYSTEMS, INC.
444 West Fairmont
Tempe, Arizona 85282
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 31, 2002
To the Stockholders of Reconditioned Systems, Inc.:
The 2002 Annual Meeting of the Stockholders of Reconditioned Systems,
Inc., an Arizona corporation (the "Company"), will be held at the offices of
Generation Capital, 1085 Riverside Trace N.W., Atlanta, Georgia 30328, on
Wednesday, July 31, 2002, at 5:00 p.m., Eastern Standard Time, for the following
purposes:
1. To elect five directors to the Board of Directors;
2. To consider and act upon a proposal to ratify the appointment of
Moffitt & Company, PC as the Company's independent public
accountants for the fiscal year ending March 31, 2003
3. To act upon an amendment to increase the number of authorized shares of
Common Stock to 100,000,000; and
4. To transact such other business as may properly come before the
meeting.
Only Stockholders of record at the close of business on June 10, 2002
are entitled to notice of and to vote at the Annual Meeting. Holders of Common
Stock as of such date are entitled to vote on all of the above proposals. Shares
can be voted at the meeting only if the holder is present or represented by
proxy. A list of Stockholders entitled to vote at the Annual Meeting will be
open for inspection at the Annual Meeting and will be open for inspection at the
offices of Reconditioned Systems, Inc., 444 West Fairmont, Tempe, Arizona 85282,
during ordinary business hours for ten days prior to the meeting.
It is important that your shares be represented at this
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meeting. To assure your representation at the meeting, please complete, date,
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sign and promptly mail the enclosed proxy card in the accompanying envelope,
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which requires no postage if mailed in the United States.
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By Order of the Board of Directors,
/s/Dirk D. Anderson
Tempe, Arizona Dirk D. Anderson, Secretary
July 5, 2002
PROXY STATEMENT
OF
RECONDITIONED SYSTEMS, INC.
444 West Fairmont
Tempe, Arizona 85282
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GENERAL INFORMATION
-------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Reconditioned Systems, Inc., an Arizona
corporation (the "Company"), of proxies for use at the 2002 Annual Meeting of
Stockholders to be held on July 31, 2002, at 5:00 p.m., Eastern Standard
Time. The Annual Meeting will be held at Generation Capital,
1085 Riverside Trace, N.W., Atlanta Georgia 30328.
This Proxy Statement and the accompanying form of proxy are being first
mailed to Stockholders on or about July 5, 2002. The Stockholder giving the
proxy may revoke it at any time before it is exercised at the meeting by: (i)
delivering to the Secretary of the Company a written instrument of revocation
bearing a date later than the date of the proxy; (ii) duly executing and
delivering to the Secretary a subsequent proxy relating to the same shares; or
(iii) attending the meeting and voting in person (attendance at the meeting will
not in and of itself constitute revocation of a proxy). Any proxy which is not
revoked will be voted in accordance with the recommendations of the Board of
Directors as to such items. The proxy card gives authority to the proxies to
vote shares in their discretion on any other matter properly presented at the
Annual Meeting.
Proxies will be solicited from the Company's Stockholders by mail. The
Company will pay all expenses in connection with the solicitation, including
postage, printing and handling, and the expenses incurred by brokers,
custodians, nominees and fiduciaries in forwarding proxy material to beneficial
owners. It is possible that directors, officers and regular employees of the
Company may make further solicitation personally or by telephone, telegraph or
mail. Directors, officers and regular employees of the Company will receive no
additional compensation for any such further solicitation.
Only holders (the "Stockholders") of the Company's Common Stock, no par
value (the "Common Stock") at the close of business on June 10, 2002 (the
"Record Date"), are entitled to notice of, and to vote at, the Annual Meeting.
On the Record Date, there were 1,194,608 shares of Common Stock outstanding.
Each share of Common Stock is entitled to one vote on each matter to be
considered at the Annual Meeting. A majority of the outstanding shares of Common
Stock present in person or represented by proxy at the Annual Meeting, will
constitute a quorum for the transaction of business at the Annual Meeting.
The affirmative vote of holders of a plurality of the outstanding
shares of Common Stock of the Company entitled to vote and present in person or
by proxy at the Annual Meeting is required for approval of the election of
directors pursuant to Proposal One. The affirmative vote of holders of a
majority of the outstanding shares of Common Stock of the Company entitled to
vote and present in person or by proxy at the Annual Meeting is required for
approval of Proposal Two and Proposal Three. Votes that are withheld will have
the effect of a negative vote. Abstentions may be specified on all proposals
except Proposal One relating to the election of directors. Abstentions will have
the effect of a negative vote on a proposal. Broker non-votes are not counted
for purposes of determining whether a quorum is present or whether a proposal
has been approved. With regard to the election of directors, votes may be cast
in favor of or withheld from each nominee. Stockholders voting on the election
of directors may cumulate their votes and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of votes
to which the Stockholder's shares are entitled, or may distribute their votes on
the same principle among as many candidates as being solicited. In order to
cumulate votes, at least one Stockholder must announce, prior to the casting of
votes for the election of directors, that he or she intends to cumulate votes.
Proxies will be tabulated by the Company with the assistance of the Company's
transfer agent. The Company will, in advance of the Annual Meeting, appoint one
or more Inspectors of Election to count all votes and ballots at the Annual
Meeting and make a written report thereof.
Security Ownership of Certain Beneficial Owners and Management
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The following table sets forth certain information, as of June 10,
2002, with respect to the number of shares of the Company's Common Stock
beneficially owned by individual directors, by individual executive officers, by
all directors and executive officers of the Company as a group and by persons
known by the Company to own more than 5% of the Company's Common Stock.
Amount
And Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Owner Total **
---------------- ------ ---------
Scott W. Ryan 371,820* 26.29%
920 Ford Street, Suite 200
West Conshohocken, PA 19428
Granite Capital 347,672 24.58%
25th Floor
126 W. 56th Street
New York, NY 10022
Dirk Anderson 133,012* 9.40%
444 West Fairmont
Tempe, Arizona 85282
Frank Hart 72,397 5.12%
1085 Riverside Trace N.W.
Atlanta, GA 30328
All directors and officers as 577,229** 40.81%
a group (three persons)
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* Includes options to purchase 109,725 shares that are presently exercisable.
** Includes options to purchase 219,450 shares that are presently exercisable.
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
The Board of Directors currently consists of three members holding
seats to serve as members until the next Annual Meeting of Stockholders or until
their respective successors are duly elected and qualified, unless they earlier
resign or are removed from office. The Company's Articles of Incorporation
presently provide for a Board of Directors of not less than three (3) nor more
than nine (9) in number, with the exact number to be fixed as provided by the
Company's Bylaws. The term of office of all current directors will expire at the
2002 Annual Meeting of Stockholders.
On March 22, 2002, the Company's Board of Directors voted to increase
the number of elected board members to five and nominated Messrs. Scott W. Ryan,
Dirk D. Anderson, Frank Hart, Dave Rapaport and Ronald Ziegler for election to
the Board of Directors. Messrs. Scott W. Ryan, Dirk D. Anderson and Frank Hart
are currently serving as directors. None of the nominees has a family relation
to any of the other nominees. A brief description of the business experience of
each nominee is set forth below in the table under the heading "Directors and
Executive Officers." Unless otherwise instructed, the persons named in the
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accompanying proxy will vote FOR the election of such nominees. All of the
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nominees have consented to being named herein and have indicated their intention
to serve if elected. If for any reason any nominee should become unable to serve
as a director, the accompanying proxy may be voted for the election of a
substitute nominee designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
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ELECTION OF EACH OF THE NOMINEES.
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Directors and Executive Officers
--------------------------------
The following table sets forth certain information with respect to the directors
and executive officers of the Company as of July 5, 2002.
Name Age Position, Tenure and Experience
---- --- -------------------------------
Scott W. Ryan 56 Mr. Ryan has been a Director since December 1995
and served as the Company's President and Chief Executive Officer from
November 1999 to August 2000. Mr. Ryan is also the Chief Operating Officer
of S.W. Ryan & Company, Inc. which is a securities brokerage and asset
management firm located in West Conshohocken, Pennsylvania that he founded
in 1988. Previously, Mr. Ryan was with other securities brokerage firms
including Merrill Lynch and Goldman, Sachs & Co. Mr. Ryan was also a Board
Member and Vice Chairman of NASD District #9 and is currently on the NASDR
Small Firm Advisory Board.
Dirk D. Anderson 38 Mr. Anderson has been a Director since December 1995 and the Company's
President and Chief Executive Officer since August 2000 He served as the
Company's Chief Operating Officer from November 1999 to August 2000 and as the
Chief Financial Officer from August 1995 through October 1999 and prior to that
was employed as the Company's Controller for approximately two years.
Previously, he served as Audit Manager at Semple & Cooper, LLP, where his
career spanned seven years.
Frank Hart 55 Mr. Hart has been a Director since August 2000 and has been President of Profit
Concepts, Ltd. since 1978. Profit Concepts, Ltd. has been the Manager of a
private investment fund, High Capital Funding, LLC and its predecessor,
since 1983. Prior to 1983, Profit Concepts, Ltd. was in the business of
rendering management and financial consulting services.
David A. Rapaport 59 For the last 30 years Mr.Rapaport has specialized in capital formation for
small to mid-size companies and has held various senior management positions
(including Chief Executive Officer) of several public companies. Mr. Rapaport
has as served Executive Vice President and General Counsel of Profit Concepts,
Ltd, the manager of a private investment fund, since February 1997. From
January 1996 to January 1997 Mr. Rapaport served as a consultant and General
Counsel to Myriad International, Inc., a development stage company involved
in developing affordable housing in Peru. Mr. Rapaport served as Executive
Vice President, General Counsel and Secretary of Conversion Industries, Inc.,
a publicly held merchant banking firm from August, 1990 to December 1995.
Mr. Rapaport is a graduate of the St. John's University School of Law (1966)
and practiced corporate law in New York City from 1967 to 1975. From 1975 to
August 1990, Mr. Rapaport was an executive officer of National Patent
Development Company, a diversified company with interests in growth
technologies, technical training and engineering support, medical and health
care, and consumer products distribution.
Ronald Ziegler 41 Mr. Ziegler has been with the company as a Vice President of Total Office
Interiors - Los Angeles since January 2002. Previously Mr. Ziegler was a
consultant for the BRG Group, a $200 million national office furniture company.
From 1996 to 2001, Mr. Ziegler was president and CEO of the Business Outlet,
Inc., a remanufacturer of Herman Miller workstations located in West Reading,
Pennsylvania.
Board Meetings and Committees of the Board of Directors
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During the fiscal year ended March 31, 2002, the Board of Directors met
six times. The Board of Directors has established an Audit Committee and a
Compensation Committee. The Board does not have a Nominating Committee, and the
entire Board is responsible for recommending nominees to serve on the Board.
During the fiscal year ended March 31, 2001, the Board of Directors
appointed Scott W. Ryan and Frank Hart to the Audit Committee and adopted an
Audit Committee Charter. The functions of the Audit Committee are to: receive
reports with respect to loss contingencies, which may be legally required to be
publicly disclosed through financial statement notation; annually review and
examine those matters that relate to the financial audit of the Company;
recommend to the Company's Board of Directors the selection, retention and
termination of the Company's independent accountants; review the professional
services, proposed fees and independence of such accountants; review and examine
those matters that relate to the interim financial statements of the Company;
and provide for the periodic review and examination of management performance in
selected aspects of corporate responsibility. The Audit Committee met three
times during the fiscal year ended March 31, 2002.
During the fiscal year ended March 31, 2002, the Board of Directors
appointed Scott W. Ryan and Frank Hart to the Compensation Committee. The
functions of the Compensation Committee are to review annually the performance
of the Chief Executive Officer and President and of the other principal officers
whose compensation is subject to the Committee's review and report thereon to
the Company's Board of Directors. In addition, the Compensation Committee
reviews the compensation of outside directors for their services on the Board of
Directors and reports thereon to the Board of Directors. The Compensation
Committee met once during the fiscal year ended March 31, 2002.
During the fiscal year ended March 31, 2002, each incumbent director
attended 75% or more of the aggregate of (i) the total number of meetings of the
Board of Directors and (ii) the total number of meetings held by all committees
on which such director served.
Compensation of Directors
-------------------------
The Company provides for quarterly compensation to its non-employee
directors of $1,250. In addition, the Company reimburses them for reasonable
expenses incurred in attending meetings.
Executive Compensation
----------------------
The following table sets forth the compensation paid or accrued to the
current Chief Executive Officer (Named Executive Officer) of the Company.
Summary Compensation Table
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Long-Term
Compensation
Awards
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Annual Compensation Securities
Name and Principal ------------------- Underlying All Other
Position Year Ended Salary ($) Bonus ($) Options (#)* Compensation
Dirk D. Anderson March 31, 2002 $100,000 $0 0 $ 0
CEO March 31, 2001 $100,000 $ 60,795 2,625 $ 0
March 31, 2000 $100,000 $ 32,856 2,100 $ 0
* Adjusted for 5% Stock Dividend issued on August 13, 2001
Option Grants
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There were no options or SARs granted to the Chief Executive Officer
(Named Executive Officer) of the Company during the last fiscal year.
Aggregated Option Exercises and Fiscal Year-End Option Values
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The following table sets forth information with respect to the number
of unexercised options held by the Named Executive Officer on March 31, 2002. No
options were exercised by the Named Executive Officer during the fiscal year
ended March 31, 2002.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
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Number of Securities Underlying Value of Unexercised
Unexercised Options at FY-End (#) In-the Money
Options at FY-End ($)
--------------------------------- -------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
Dirk D. Anderson 109,725/0 $131,250/$0
Employment Agreements and Termination of Employment Arrangements
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On August 10, 1996, the Company entered into an employment agreement
with Dirk Anderson pursuant to which he serves as the Company's Chief Executive
Officer. The agreement is automatically extended for successive one year periods
unless either the Board of Directors or Mr. Anderson gives written notice to the
other at least ninety days prior to the end of the initial or any renewal term
of its or his intention not to renew. The agreement automatically renewed on
August 10, 2001, and since no written notice was given by the Company ninety
days prior to August 10, 2002, the agreement will again be automatically
extended. Under the agreement, Mr. Anderson receives a base annual salary of
$75,000. Increases to Mr. Anderson's base salary and bonuses are at the
discretion of the Company's Board of Directors. Mr. Anderson is entitled to
participate in all retirement and employee benefit plans that the Company may
adopt for the benefit of its senior executives. On March 24, 1999, the Board of
Directors and Mr. Anderson agreed to change the base annual salary of Mr.
Anderson to $100,000, effective April 1, 1999. The agreement also entitles Mr.
Anderson to receive the options described above under the heading "Aggregated
Option Exercises and Fiscal Year-End Option Values."
Under the agreement, if Mr. Anderson's employment is terminated by
reason of death, Disability or Retirement, upon expiration of the term of the
agreement, by the Company for Cause or by Mr. Anderson without Good Reason (in
each case as such terms are defined in the agreement), the Company shall: (i)
pay Mr. Anderson any base salary which has accrued but has not been paid as of
the termination date (the "Accrued Base Salary"); (ii) reimburse Mr. Anderson
for expenses incurred by him prior to termination which are subject to
reimbursement pursuant to applicable Company policies (the "Accrued Reimbursable
Expenses"); (iii) provide to Mr. Anderson any accrued and vested benefits
required to be provided by the terms of any Company-sponsored benefit plans (the
"Accrued Benefits"); (iv) pay Mr. Anderson any discretionary bonus with respect
to a prior fiscal year which has accrued and been earned but has not been paid
(the "Accrued Bonus"); (v) permit Mr. Anderson to exercise all vested,
unexercised stock options outstanding at the termination date; and (vi) to the
extent permitted by the terms of the policies then in effect, give Mr. Anderson
a right of first refusal to cause the transfer of the ownership of all key-man
life insurance policies maintained by the Company on Mr. Anderson to Mr.
Anderson at his expense (the "Right of First Refusal"). If Mr. Anderson's
employment is terminated by the Company without Cause or by Mr. Anderson for
Good Reason, the Company shall: (i) pay Mr. Anderson the Accrued Base Salary;
(ii) pay Mr. Anderson the Accrued Reimbursable Expenses; (iii) pay Mr. Anderson
the Accrued Benefits; (iv) pay Mr. Anderson the Accrued Bonus; (v) pay Mr.
Anderson the base salary, as and when it would have been paid had the
termination not occurred, for a period of six months following the termination
date; (vi) maintain in effect, until the first to occur of (a) his attainment of
comparable benefits upon alternative employment or (b) six months following the
termination date, the employee benefits in which he was entitled to participate
immediately prior to such termination; (vii) permit Mr. Anderson to exercise all
vested, unexercised stock options in accordance with the terms of the plans and
agreements pursuant to which they were issued; and (viii) give Mr. Anderson the
Right of First Refusal.
On August 19, 1996 the Company amended the employment agreement to
include compensation pursuant to a change in control. Under the amendment, if
Mr. Anderson's employment is terminated by the Company subsequent to a Change of
Control by the Company either by the new controlling party or by the executive
for Good Reason, Mr. Anderson will receive a two-year consulting agreement at
$100,000 per year in addition to the severance pay detailed above.
Section 16(a) Beneficial Ownership Reporting Compliance
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Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial report of ownership and
reports of changes in ownership of the Company's equity securities. Based solely
upon the copies of such reports furnished to the Company and certain written
representations, the Company believes that all Section 16(a) filing requirement
applicable to the Company's officers, directors and greater than 10%
stockholders were timely satisfied during the fiscal year ended March 31, 2002.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Board of Directors has selected, and is submitting to the
Stockholders for ratification, the appointment of Moffitt & Company, PC to serve
as independent public accountants to audit the financial statements of the
Company for the fiscal year ending March 31, 2003 and to perform other
accounting services as may be requested by the Company. Moffitt & Company, PC
has acted as independent public accountants for the Company since its
appointment effective June 22, 2001.
The Company does not expect that representatives of Moffitt & Company,
PC will be present at the 2002 Annual Meeting. If present, however, they will
have the opportunity to make a statement and will be available to respond to
appropriate questions.
Although it is not required to do so, the Board of Directors has
submitted the selection of Moffitt & Company, PC to the Stockholders for
ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL TWO.
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PROPOSAL THREE
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION INCREASING
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Company's Articles of Incorporation presently authorizes the
issuance of up to 20,000,000 shares of Common Stock. The Board of Directors has
approved a resolution, which if approved by the shareholders would increase the
number of authorized shares of Common Stock to 100,000,000.
As of June 10, 2002, the number of issued and outstanding shares of
Common Stock on a fully converted basis is 1,436,443. These shares consist of
the following: o 1,194,608 shares of Common Stock actually issued and
outstanding; o 241,835 shares issuable upon exercise of outstanding options (of
which 219,450 were vested as of such date).
The resolution to be considered by the shareholders at the Annual
Meeting reads as follows:
RESOLVED, that Paragraph (A) Authorized Capital of Article V
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of the Articles of Incorporation of the Company shall be amended and
restated to read in full as follows:
A. Authorized Capital. This Corporation is authorized to
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issue two (2) classes of shares to be designated,
respectively, Preferred Stock ("Preferred Stock") and
Common Stock ("Common Stock"). The total number of
shares of capital stock that the Corporation is
authorized to issue is one hundred ten million
(110,000,000) shares. The total number of shares of
Preferred Stock that this Corporation shall have
authority to issue is ten million (10,000,000). The
total number of share of Common Stock that this
Corporation shall have the authority to issue is one
hundred million (100,000,000).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL THREE.
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Changes in and Disagreements With Accountants on Accounting and Financial
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Disclosure
----------
On June 8, 2001, the Company's former principal independent accountant,
Semple & Cooper, LLP resigned. Semple & Cooper's reports on the Company's
financial statements for the years ended March 31, 1999 and 2000 did not contain
an adverse opinion or disclaimer of opinion, and were not modified as to
uncertainty, audit scope, or accounting principles. There were no disagreements
with Semple & Cooper on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. On June 29th,
2001, Semple & Cooper notified the Company they were withdrawing their opinions
for the audits for the fiscal years ended March 31, 1999 and 2000. (See the
Company's reports filed on Form 8-K dated June 15, 2001 and June 29, 2001.) On
June 22, 2001, the Registrant appointed Moffitt & Company, P.C. as its new
principal independent accountant to audit the Company's financial statements for
the year ended March 31, 2001. The Company subsequently engaged Moffitt &
Company, P.C. to re-audit its financial statements for the years ended March 31,
2000 and 1999. The Company authorized Semple & Cooper to respond fully to the
inquiries, if any, of the new accountant. There were no adjustments to any
reported financial statements as a result of the required re-audits.
Fees to Independent Public Accountants
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Audit Fees
----------
The aggregate amount of fees billed or expected to be billed to the
Company by Moffitt & Company, PC for professional services rendered in
connection with the audit of the Company's annual financial statements for the
fiscal year ended March 31, 2002 is currently expected to approximate $20,000.
The aggregate amount of fees billed or expected to be billed to the Company by
Moffitt & Company, PC, for the review of the Company's interim financial
statements including the Company's quarterly reports on Form 10-QSB for the
fiscal year ended March 31, 2002, is currently expected to approximate $4,500.
Financial Information System Design and Implementation Fees
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There were no professional services rendered to the Company by Moffitt
& Company, PC for the design and implementation of financial information systems
for the fiscal year ended March 31, 2002.
All Other Fees
--------------
The aggregate amount of fees billed to the Company Moffitt & Company,
PC for all other non-audit services rendered to the Company for the fiscal year
ended March 31, 2002 was approximately $1,700.
Audit Committee Report
----------------------
Management is responsible for the Company's internal controls,
financial reporting process and compliance with laws and regulations and ethical
business standards. The independent auditor is responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and issuing a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes on behalf of the Board of Directors.
In this context, the Audit Committee has reviewed and discussed the
audited financial statements with management and the independent auditors. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committee). In addition, the Audit Committee has received from the
independent auditors the written disclosures required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees) and
discussed with them their independence from the Company and its management.
Moreover, the Audit Committee has considered whether the independent auditor's
provision of information technology services and other non-audit services to the
Company is compatible with maintaining the auditor's independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2002, for filing with the Securities and Exchange
Commission. By recommending to the Board of Directors that the audited financial
statements be so included, the Audit Committee is not opining on the accuracy,
completeness or presentation of the information contained in the audited
financial statements.
Submitted by the Audit Committee of the Board of Directors
Scott W. Ryan, Chairman
Frank E. Hart
OTHER MATTERS
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The Company's Board of Directors is not aware of any other business to
be considered or acted upon at the Annual Meeting of the Stockholders other than
those described above. If other business requiring a vote of the Stockholders is
properly presented at the meeting, proxies will be voted in accordance with the
judgement on such matters of the person or persons acting as proxies. If any
matter not appropriate for action at the Annual Meeting is presented, the holder
of the proxies will vote against consideration thereof or action thereon.
STOCKHOLDER PROPOSALS
---------------------
The Company welcomes comments or suggestions from its Stockholders. If
a Stockholder desires to have a proposal formally considered at the 2003 Annual
Meeting of Stockholders, and evaluated by the Board for possible inclusion in
the Proxy Statement for that meeting, the proposal (which must comply with the
requirements of Rule 14a-8 promulgated under the Exchange Act) must be received
in writing by the Secretary of the Company at the address set forth on the first
page hereof on or before March 15, 2003. If a Stockholder desires to have a
proposal formally considered at such meeting, but outside the process of Rule
14a-8, the proposal must be received in writing by the Secretary of the Company
at the address set forth on the first page hereof on or before May 25, 2003.
ANNUAL REPORT
-------------
The Company' Annual Report to Stockholders and the Annual Report on
Form 10-KSB, with audited financial statements, accompanies this Proxy Statement
and was mailed this date to all Stockholders of record as of the Record Date.
The Company will furnish to any Stockholder submitting a request a copy of any
exhibit to the Annual Report on Form 10-KSB. The fee for furnishing a copy of
any exhibit will be 25 cents per page plus $3.00 for postage and handling.
Please direct any and all such requests to Investor Relations, 444 West
Fairmont, Tempe, Arizona 85282.