UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 Section 240.14a-12
DIAL THRU INTERNATIONAL CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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May 12, 2003
Dear Stockholders:
I am pleased to invite you to Dial Thru International Corporation's Annual
Meeting of Stockholders. The meeting will be held at 10:00 a.m., Los Angeles
time, on Tuesday, July 1, 2003 at our principal executive offices, 17383
Sunset Boulevard, Suite 350, Los Angeles, CA 90272.
At the meeting, you will be asked to (1) elect six directors to our Board of
Directors, (2) ratify the appointment of KBA Group LLP as our independent
auditors for the current fiscal year, and (3) transact such other business
as may properly come before the meeting or any adjournment thereof. You will
also have the opportunity to hear what has happened in our business during
the past year and to ask questions of our executive officers who will be in
attendance at the Annual Meeting. You will find other detailed information
about us and our operations, including our audited financial statements, in
the enclosed Annual Report.
We hope that you can join us on July 1, 2003 and vote in person. Whether or
not you can attend, please read the enclosed Proxy Statement. Please note
that your vote is very important to us. A minimum number of shares must be
represented at the meeting, in person or by proxy, to obtain the requisite
quorum and proceed with the Annual Meeting. Therefore, we urge you to
attend the Annual Meeting in person, but if you are not able to attend,
we request that you complete the attached proxy and return it to us prior
to the meeting. We value our stockholders and look forward to your
participation.
Yours truly,
/s/ John Jenkins
------------------------------------
John Jenkins,
Chairman and Chief Executive Officer
DIAL THRU INTERNATIONAL CORPORATION
17383 SUNSET BOULEVARD, SUITE 350
LOS ANGELES, CALIFORNIA 90272
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 1, 2003
To the Stockholders of Dial Thru International Corporation:
NOTICE IS HEREBY given that the 2003 Annual Meeting of Stockholders of Dial
Thru International Corporation will be held at Dial Thru's principal
executive offices, 17383 Sunset Boulevard, Suite 350, Los Angeles, CA 90272
on Tuesday, July 1, 2003 at 10:00 a.m., Los Angeles time, for the following
purposes:
1. To elect six directors to serve until the 2004 Annual Meeting of
Stockholders and until their successors are duly elected and
qualified;
2. To consider and act upon a proposal to ratify the selection of KBA
Group LLP to serve as independent auditors for our current fiscal
year; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Our Board of Directors has fixed the close of business on May 2, 2003 as the
record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournments thereof.
A list of our stockholders entitled to notice of and to vote at the Annual
Meeting will be available for examination by any stockholder of our Company,
for any purpose germane to the meeting, at the Annual Meeting and during
ordinary business hours at our principal offices at the address set forth
above for a period of ten days prior to the meeting.
Los Angeles, California By Order of the Board of Directors,
May 12, 2003
/s/ Allen Sciarillo
-----------------------------------
Allen Sciarillo,
Secretary
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE
ANNUAL MEETING IN PERSON, BUT IF YOU DO NOT PLAN TO ATTEND, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
IF YOU DO SUBSEQUENTLY ATTEND THE ANNUAL MEETING, YOU MAY, IF YOU PREFER,
REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
DIAL THRU INTERNATIONAL CORPORATION
17383 SUNSET BOULEVARD, SUITE 350
LOS ANGELES, CALIFORNIA 90272
-------------------------
PROXY STATEMENT
-------------------------
2003 ANNUAL MEETING OF STOCKHOLDERS
General Information
The Board of Directors of Dial Thru International Corporation is soliciting
your proxy for use at the Annual Meeting of Stockholders to be held on July
1, 2003. This Proxy Statement, the accompanying proxy and our annual report
to stockholders for the year ended October 31, 2002 will first be sent to
our stockholders on or about May 15, 2003.
Voting and Revocation of Proxies
All properly completed proxies received prior to the Annual Meeting and not
revoked will be voted in accordance with your instructions. IF NO SUCH
INSTRUCTIONS ARE MADE, THEN PROXIES WILL BE VOTED AS FOLLOWS:
* FOR THE ELECTION OF THE SIX NOMINEES FOR DIRECTOR; AND
* FOR THE RATIFICATION OF THE APPOINTMENT OF KBA GROUP LLP TO SERVE
AS OUR INDEPENDENT AUDITORS FOR THE 2003 FISCAL YEAR.
If any other matters come before the Annual Meeting, the persons named as
proxies will vote upon such matters according to their best judgment.
We encourage the personal attendance of our stockholders at the Annual
Meeting. The execution of the accompanying proxy will not affect a
stockholder's right to attend the Annual Meeting and to vote in person.
Proxies may be revoked if you:
* Deliver a signed, written revocation letter, dated any time before
the proxy is voted, to Mr. Allen Sciarillo, Secretary, Dial Thru
International Corporation, at our principal executive offices, 17383
Sunset Boulevard, Suite 350, Los Angeles, California 90272; or
* Sign and deliver a proxy, dated later than any previously delivered
proxy to the above address; or
* Attend the meeting and vote in person. Attending the Annual Meeting
alone will not revoke your proxy. A revocation letter or a later-dated
proxy will not be effective until received by us at or prior to the
Annual Meeting.
Securities Entitled to be Voted at the Annual Meeting
Only stockholders of record at the close of business on May 2, 2003 will be
entitled to notice of and to vote at the Annual Meeting. On May 2, 2003 we
had issued and outstanding 16,048,755 shares of our common stock, $.001 par
value per share. Each share of Common Stock is entitled to one vote on each
matter presented to the stockholders.
How Proxies are Solicited
In addition to the solicitation of proxies by use of the mail, we may also
use certain officers, directors and regular employees who may solicit the
return of proxies by personal interview, mail, telephone, facsimile and/or
through the Internet. These persons will not be additionally compensated,
but will be reimbursed for out-of-pocket expenses. We will also request
brokerage houses and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares. We will
reimburse such persons and the transfer agent for their reasonable out-of-
pocket expenses in forwarding such materials. We will bear all costs of the
solicitation.
Quorum and Voting Requirements
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.
Abstentions and broker non-votes are counted for the purposes of determining
the presence or absence of a quorum for the transaction of business.
Abstentions are counted in the tabulations of votes cast on proposals
presented to the stockholders, while broker non-votes are not counted as
among the shares entitled to vote with respect to such matter, and thus have
the effect of reducing the number of affirmative votes required to approve a
proposal and the number of negative votes or abstentions required to block
such approval. A broker non-vote is a proxy submitted by a broker that does
not indicate a vote for some or all of the proposals because the broker does
not have discretionary voting authority and has not received instructions
from its client as to how to vote on a particular proposal.
Assuming the presence of a quorum, the affirmative vote of a plurality of
the shares of Common Stock represented in person or by proxy at the Annual
Meeting, is required to elect our directors. Stockholders may not cumulate
their votes in the election of directors. All other matters submitted for a
vote at the Annual Meeting will be decided by the affirmative vote of a
majority of the shares present in person or represented by proxy at the
Annual Meeting, except as otherwise provided by law or in our Certificate of
Incorporation or Bylaws.
PROPOSAL ONE: ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting, to serve until our
next annual meeting of stockholders and until their respective successors
are elected and qualified, or until their earlier resignation or removal.
All of the nominees listed below currently serve as our directors and
were elected to our Board of Directors at our 2002 Annual Meeting of
Stockholders. Unless authority to vote for one or more nominees is withheld,
the enclosed proxy will be voted FOR the election of all of the nominees
listed below. Although the Board of Directors does not contemplate that any
of the nominees will be unable to serve, if such a situation arises prior to
the Annual Meeting, the persons named in the enclosed proxy will vote for
the election of such other person(s) as may be nominated by the Board of
Directors.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL OF THE NOMINEES
The following table sets forth certain information regarding each nominee
for election as a director and our executive officers.
Name Age Position with the Company
----------------- --- --------------------------------------------------
John Jenkins 41 Chairman, Chief Executive Officer, President and
Director
Allen Sciarillo 38 Executive Vice President, Chief Financial Officer,
Secretary and Director
Lawrence Vierra 57 Executive Vice President and Director
Robert M. Fidler 63 Director
Nick DeMare 47 Director
David Hess 41 Director
JOHN JENKINS has served as our Chairman of the Board and Chief Executive
Officer since October 2001, and has served as our President and a director
since December 1999. Mr. Jenkins has also served as the President of Dial
Thru.com, Inc., one of our subsidiaries, since November 1999. In May 1997,
Mr. Jenkins founded Dial Thru International Corporation (subsequently
dissolved in November 2000), and served as its President and Chief Executive
Officer until joining us in November 1999. Prior to 1997, Mr. Jenkins
served as the President and Chief Financial Officer for Golden Line
Technology, a French telecommunications company. Prior to entering the
telecommunications industry, Mr. Jenkins owned and operated several
software, technology and real estate companies. Mr. Jenkins holds degrees
in physics and business/economics.
ALLEN SCIARILLO has been our Chief Financial Officer, Executive Vice
President and Secretary since July 2001 and was elected as a director in May
2002. From January to March 2001, Mr. Sciarillo was the Chief Financial
Officer of Star Telecommunications, Inc., a global facilities-based
telecommunications carrier. Prior to that time, Mr. Sciarillo served as
Chief Financial Officer of InterPacket Networks, a provider of Internet
connectivity to Internet service providers worldwide, from July 1999 until
its acquisition by American Tower Corporation in December 2000. From
October 1997 to June 1999, he served as Chief Financial Officer of RSL
Com USA, a division of RSL Com Ltd., a global facilities-based
telecommunications carrier. Prior to joining RSL, Mr. Sciarillo was Vice
President and Controller of Hospitality Worldwide Services, Inc. from July
1996 to October 1997. Mr. Sciarillo began his career at Deloitte & Touche
and is a Certified Public Accountant.
LAWRENCE VIERRA has served as our Executive Vice President and a director
since January 2000. From 1995 through 1999, Mr. Vierra served as
the Executive Vice President of RSL Com USA, Inc., an international
telecommunications company, where he was primarily responsible for
international sales. Mr. Vierra has also served on the board of directors
and executive committees of various telecommunications companies and he has
extensive knowledge and experience in the international sales and marketing
of telecommunications products and services. Mr. Vierra holds degrees in
marketing and business administration.
ROBERT M. FIDLER has served as one of our directors since November 1994.
Mr. Fidler joined Atlantic Richfield Company (ARCO) in 1960, was a member of
ARCO's executive management team from 1976 to 1994 and was ARCO's manager of
New Marketing Programs from 1985 until his retirement in 1994.
NICK DEMARE has served as one of our directors since January 1991. Since
May 1991, Mr. DeMare has been the President and Chief Executive Officer of
Chase Management Ltd., a private company providing a broad range of
administrative, management and financial services to private and public
companies with varied interests in mineral exploration and development,
precious and base metals production, oil and gas, venture capital and
computer software. Mr. DeMare has served and continues to serve on the
boards of a number of Canadian public companies, three of which are SEC
reporting companies; Hilton Petroleum, Ltd., Trimark Energy Ltd. and
California Exploration Ltd. Mr. DeMare is a Chartered Accountant (Canada).
DAVID HESS was elected to our Board of Directors in May 2002. From November
2001 until December 2002, Mr. Hess served as the Chief Executive Officer and
President, North America of Telia International Carrier, Inc. Prior to
joining Telia, Mr. Hess was part of a turnaround team hired by the board of
directors of Rapid Link Incorporated. He served as the Chief Executive
Officer and as a director of Rapid Link Incorporated from August 2000 until
September 2001. On March 13, 2001, Rapid Link Incorporated filed for
Chapter 11 bankruptcy protection. Before joining Rapid Link, Mr. Hess
served as Chief Executive Officer of Long Distance International from
January 1999 until its acquisition by World Access in February 2000. Mr.
Hess also served as President and Chief Operating Officer of TotalTel USA
from May 1995 until January 1999. Mr. Hess received a BA in Communications
with a Minor in Marketing from Bowling Green State University.
Meetings of the Board of Directors
The Board of Directors held one meeting during the fiscal year ended October
31, 2002. The Board of Directors has two standing committees: an Audit
Committee and a Compensation Committee. There is no standing nominating
committee. Each of the directors attended the meeting of the Board of
Directors and all meetings of any committee on which such director served.
Committees of the Board of Directors
Our Audit Committee is comprised of two non-employee directors, Nick DeMare
and Robert M. Fidler. The Audit Committee makes recommendations to
the Board of Directors or management concerning the engagement of our
independent public accountants and matters relating to our financial
statements, our accounting principles and our system of internal accounting
controls. The Audit Committee also reports its recommendations to the Board
of Directors as to the approval of our financial statements. The Audit
Committee held one meeting during the fiscal year ended October 31, 2002.
Our Compensation Committee is comprised of two non-employee directors, Nick
DeMare and Robert M. Fidler. The Compensation Committee is responsible for
considering and making recommendations to the Board of Directors regarding
executive compensation and is also responsible for administration of our
stock option and executive incentive compensation plans. The Compensation
Committee held no meetings during the fiscal year ended October 31, 2002.
Compensation of Directors
Each of our directors who is not one of our executive officers receives
a fee of $1,500 for each Board meeting attended. Directors are not
compensated for attending committee meetings. Our directors also
participate in our Company's equity incentive plan and are annually awarded
non-qualified stock options for an aggregate of 5,000 shares of our Common
Stock for services rendered to our Company as a director.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers and persons who own more than 10% of
our Common Stock to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of our Common Stock
and other equity securities. Officers, directors and greater than 10%
stockholders are required by SEC regulations to furnish us with copies of
all Section 16(a) reports that they file. To our knowledge, based solely on
the review of the copies of such reports filed during the fiscal year ended
October 31, 2002, all Section 16(a) filing requirements applicable to our
officers, directors and greater than 10% beneficial owners were met.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth certain information as of May 2, 2003,
concerning the beneficial ownership of our Common Stock by (i) each
stockholder known by us to own beneficially five percent or more of our
outstanding Common Stock, (ii) each of our current directors, (iii) each
Named Executive Officer, and (iv) all of our executive officers and
directors as a group. Except as otherwise indicated below, each of the
entities or persons named in the table has sole voting and investment power
with respect to all shares of our Common Stock beneficially owned by them.
Effect has been given to shares reserved for issuance under outstanding
stock options and warrants where indicated.
Number of Percent of
Name and address of Beneficial Owner Shares (1) Class (2)
------------------------------------ ------------ ---------
John Jenkins 3,746,220 (3) 18.32%
17383 Sunset Boulevard, Suite 350
Los Angeles, California 90272
Lawrence Vierra 293,333 (4) 1.43%
8760 Castle Hill Avenue
Las Vegas, Nevada 89129
Nick DeMare 20,280 (5) *
1090 West Georgia Street, Suite 1305
Vancouver, British Columbia V6E 3V7
Robert M. Fidler 14,000 (6) *
987 Laguna Road
Pasadena, California 91105
David Hess -0- *
17383 Sunset Boulevard, Suite 350
Los Angeles, California 90272
Allen Sciarillo 250,000 (7) 1.22%
17383 Sunset Boulevard, Suite 350
Los Angeles, California 90272
Global Capital Funding Group L.P. 1,323,838 (8) 6.47%
106 Colony Park Drive
Cumming, Georgia 30040
All Executive Officers and Directors 4,323,833 21.14%
as a group (6 persons)
* Reflects less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of
the SEC. In computing the number of shares beneficially owned by
a person and the percentage ownership of that person, shares of
our Common Stock subject to options or warrants held by that
person that are exercisable within 60 days of May 2, 2003
are deemed outstanding. Such shares, however, are not deemed
outstanding for purposes of computing the ownership of any other
person.
(2) Based upon 20,450,309 shares of Common Stock outstanding as of May
2, 2003.
(3) Includes 1,996,220 shares of Common Stock which may be acquired
through the exercise of options and warrants which are exercisable
within 60 days of May 2, 2003.
(4) Includes 283,333 shares of Common Stock which may be acquired
through the exercise of warrants which are exercisable within 60
days of May 2, 2003.
(5) Includes 10,000 shares of Common Stock which may be acquired
through the exercise of options which are exercisable within 60
days of May 2, 2003.
(6) Includes 10,000 shares of Common Stock which may be acquired
through the exercise of options which are exercisable within 60
days of May 2, 2003.
(7) Includes 250,000 shares of Common Stock which may be acquired
through the exercise of option and warrants which are exercisable
within 60 days of May 2, 2003.
(8) Includes 600,000 shares of Common Stock which may be acquired
through the exercise of warrants which are exercisable within 60
days of May 2, 2003.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 2001, we executed 10% convertible notes with three of our
executive officers and director, who each provided financing to our Company
in the aggregate principal amount of $1,945,958. The Notes were issued as
follows: (i) a Note in the principal amount of $1,745,958 to John Jenkins,
our Chief Executive Officer; (ii) a Note in the principal amount of $100,000
to Allen Sciarillo, our Executive Vice President and Chief Financial
Officer; and (iii) a Note in the principal amount of $100,000 to Larry
Vierra, our Executive Vice President. With an original maturity date of
October 24, 2003, these Notes were amended subsequent to fiscal year 2002
and now mature on February 24, 2004. Each Note is secured by certain of our
assets. Each Note was originally convertible at six-month intervals only,
but was subsequently amended in November 2002 to provide for conversion into
shares of our Common Stock at the option of the holder at any time prior to
maturity. The conversion price is equal to the closing bid price of our
Common Stock on the last trading day immediately preceding the conversion.
We also issued to the holders of the Notes warrants to acquire an aggregate
of 1,945,958 shares of Common Stock at an exercise price of $0.75 per share,
which warrants expire on October 24, 2003.
In January and July 2002, the Notes issued to Mr. Jenkins were amended to
include additional advances in the aggregate principal amount of $402,433.
We also issued to Mr. Jenkins two warrants to acquire an additional 102,433
and 300,000 shares of Common Stock, respectively, at an exercise price of
$0.75, which warrants expire on January 28, 2007 and July 8, 2007,
respectively.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of non-employee directors Messrs. DeMare
and Fidler. None of the members of the Compensation Committee has been or
is an officer or employee of our Company. None of our executive officers
serves as a member of the board of directors or compensation committee of
any other entity that has one or more executive officers serving as a member
of our Board of Directors or Compensation Committee. No member of our
Board of Directors is an executive officer of a company in which one of our
executive officers serves as a member of the board of directors or
compensation committee of that company.
EXECUTIVE COMPENSATION
The following table summarizes the compensation we paid during the fiscal
years ended October 31, 2002, 2001, and 2000 for services in all capacities
to each of our chief executive officer and our other executive officers
whose total annual salary and bonus exceeded $100,000 during fiscal 2002.
We refer to these individuals collectively as our Named Executive Officers.
Summary Compensation Table
Securities
Underlying
Name and Principal Options/ All other
Position Year Salary Warrants (#) Compensation
--------------------------- ---- -------- ------------ ------------
John Jenkins 2002 181,042 -0- -0-
Chairman, CEO 2001 108,833 700,000 -0-
and Director 2000 175,950 -0- 1,599 (1)
Allen Sciarillo 2002 141,667 -0- -0-
Executive Vice President 2001 -0- 500,000 -0-
and Chief Financial Officer 2000 -0- -0- -0-
(1) Includes compensation associated with supplemental long-term disability
insurance and matching 401(k) plan contributions we paid.
Aggregated Option Exercise in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth information with respect to the number of
options held at fiscal year end and the aggregate value of in-the-money
options held at fiscal year end by each of the Named Executive Officers.
Number of securities Value of unexercised
underlying unexercised in-the-money options
Value options at Fiscal at Fiscal
Shares acquired realized Year End (#) Year End ($) (2)
Name on exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
--------------- --------------- -------- -------------------------- --------------------------
John Jenkins -0- -0- 233,333 466,667 -0- -0-
Allen Sciarillo -0- -0- 166,667 333,333 -0- -0-
(1) The value realized upon the exercise of stock options represents the
difference between the exercise price of the stock option and the fair
market value of our Common Stock, multiplied by the number of options
exercised on the date of exercise.
(2) The value of "in-the-money" options represents the positive spread
between the exercise price of the option and the fair market value of the
underlying shares based on the closing stock price of our Common Stock on
the last trading day of fiscal year 2003, which was $0.12 per share. "In-
the-money" options include only those options where the fair market value of
the stock is higher than the exercise price of the option on the date
specified. The actual value, if any, an executive realizes on the exercise
of options will depend on the fair market value of our Common Stock at the
time of exercise.
Employment Agreements
We do not currently have employment agreements with any of our officers or
employees.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for implementing, overseeing
and administering the Company's overall compensation policy. The basic
objectives of that policy are to (a) provide compensation levels that are
fair and competitive with peer companies, (b) align pay with performance,
and (c) where appropriate, provide incentives which link executive and
stockholder interests and long-term corporate objectives through the use of
equity-based incentives. Overall, the compensation program is designed to
attract, retain and motivate high quality and experienced employees at all
levels. The principal elements of executive officer compensation are base
pay, bonus and stock options, together with health benefits. The various
aspects of the compensation program, as applied to the Company's Named
Executive Officers, are outlined below.
Executive officer compensation is, in large part, determined by the
individual officer's ability to achieve his or her performance objectives.
Each of the Company's Named Executive Officers participates in the
development of an annual business strategy from which individual objectives
are established and performance goals are measured periodically. Initially,
the objectives are proposed by the particular officer involved. Those
objectives are then determined by the Chief Executive Officer or, in the
case of Mr. Jenkins's objectives, by the Board of Directors.
Base Pay
Initially, base pay was established at levels that were considered to be
sufficient to attract experienced personnel but which would not exhaust
available resources. As the Company grows, the compensation focus continues
to emphasize other areas of compensation. Executive officers understand that
their principal opportunities for substantial compensation lie not in
enhanced base salary, but rather through appreciation in the value of
previously granted stock options. Thus, base pay has not represented the
most critical element of executive officer compensation.
Mr. Jenkins, the Company's President and Chief Operating Officer through
September 2001, was promoted to the position of Chief Executive Officer
in October 2001. Mr. Jenkins' base pay for fiscal 2001 and 2002 was
established at an amount considered below market in comparison to executive
compensation levels for companies of similar size and maturity. The
Compensation Committee established, and Mr. Jenkins accepted, below market
compensation at the beginning of fiscal 2001, based on a variety of factors,
including the performance of the Company, the ability of the Company to
obtain funding to support its operational cash flow requirements, and a
desire to save the Company the expense of compensation at market levels.
The Compensation Committee set Mr. Jenkins' salary at $100,000 per annum for
fiscal 2001, and $150,000 for 2002, compared to $175,950 for fiscal 2000.
Bonus
The Compensation Committee has determined that a cash incentive plan will be
implemented when the Company is able to achieve positive operating results.
Stock Options
The Compensation Committee believes that a stock option plan provides
capital accumulation opportunities to participants in a manner that fosters
the alignment of the participants' interests and risks with the interests
and risks of public stockholders. The Compensation Committee further
believes that stock options can function to assure the continuing retention
and loyalty of employees. Options that have been granted to the Named
Executive Officers typically carry three-year vesting schedules. If these
officers leave the Company's employ before their options are fully vested,
they will lose a portion of the benefits that they might otherwise receive
if they remain in the Company's employ for the entire vesting period. Stock
option grants have been based upon amounts deemed necessary to attract
qualified employees and amounts deemed necessary to retain such employees
and to equitably reward high performance employees for their contributions
to our development. For most of the Company's executive officers, stock
options generally constitute the most substantial portion of the Company's
compensation program.
The Compensation Committee believes that an appropriate compensation program
can help in fostering competitive operations if the program reflects a
suitable balance between providing appropriate awards to key employees while
at the same time effectively controlling compensation costs, principally
by establishing cash compensation at competitive levels and emphasizing
supplemental compensation that correlates the performance of individuals,
the Company and its Common Stock.
This report has been furnished by the Compensation Committee of the Board of
Directors.
Nick DeMare, Chairman
Robert M. Fidler
AUDIT COMMITTEE MATTERS
Independence of Audit Committee Members
Our Common Stock is quoted on the OTC Bulletin Board and is governed by the
standards applicable thereto. All members of the Audit Committee of the
Board of Directors have been determined to be "independent directors"
pursuant to the definition contained in Rule 4200(a)(15) of the National
Association of Securities Dealers' Marketplace rules.
AUDIT COMMITTEE REPORT
In connection with the preparation and filing of our Annual Report on Form
10-K for the year ended October 31, 2002:
(1) the Audit Committee reviewed and discussed the audited financial
statements with our management;
(2) the Audit Committee discussed with our independent auditors the matters
required to be discussed by Statement of Auditing Standards No. 61; and
(3) based on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial
statements be included in the 2002 Annual Report on Form 10-K for
filing with the SEC.
By: The Audit Committee of the Board of Directors
Nick DeMare, Chairman
Robert Fidler
Stock Performance Graph
The following graph compares the percentage change in the cumulative total
shareholder return on our Common Stock with the cumulative total return of
the Nasdaq Stock Market (U.S.) Composite Index and the Nasdaq Stock Market
Telecommunications Index (IXTC-O) for the five year period ended October 31,
2002. For purposes of the graph, it is assumed that the value of the
investment in our Common Stock and each index was $100 on October 31, 1997
and that all dividends were reinvested.
The comparison in the graph below is based solely on historical data and is
not intended to forecast the possible future performance of our Common
Stock.
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL RETURN AMONG DIAL THRU INTERNATIONAL CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) AND THE NASDAQ TELECOM INDEX
[ PERFORMANCE GRAPH APPEARS HERE ]
TELECOMMUNICATIONS INDEX
October October October October October October
31, 31, 31, 31, 31, 31,
CUMULATIVE TOTAL RETURN 1997 1998 1999 2000 2001 2002
------------------------------------------------------------------------------
Dial Thru International $100.0 $18.5 $51.9 $90.7 $41.5 $7.1
Corporation
Nasdaq Stock Market (US) $100.0 $137.4 $258.7 $321.9 $133.9 $102.7
Nasdaq Telecom Index $100.0 $135.2 $251.7 $211.8 $71.8 $35.9
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Our Audit Committee has appointed the firm KBA Group LLP as our independent
auditors for the fiscal year ending October 31, 2003. That appointment has
also been confirmed and ratified by our Board of Directors and the Board of
Directors recommends that the stockholders ratify the appointment of KBA
Group LLP as our Company's independent auditors. Although our Bylaws do not
require the ratification of the selection of KBA Group LLP by stockholders,
as a matter of good corporate practice, our Board is submitting the
selection of KBA Group LLP for stockholder approval. However, even if
the stockholders ratify the selection, our Board of Directors, in its
discretion, may still direct the appointment of other independent auditors
at any time during the year if our Board believes that such change would be
in the best interests of our Company and our stockholders.
Changes in Certifying Accountants
On November 2, 2001, we dismissed King Griffin & Adamson P.C. as our
independent public accountants. Our Audit Committee participated in and
approved the decision to change independent public accountants. The audit
reports of King Griffin & Adamson P.C. on our consolidated financial
statements as of and for the years ended October 31, 2000 and 1999, the two
most recent fiscal years audited by King Griffin & Adamson P.C., did not
contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting
principles, except that King Griffin & Adamson P.C.'s report on our
financial statements for the fiscal year ended October 31, 2000 contained a
modification as to the uncertainty of our ability to continue as a going
concern.
In connection with the audits for the two years ended October 31, 2000, and
through November 2, 2001, there were no disagreements with King Griffin &
Adamson P.C. on any matter of accounting principle or practice, financial
statement disclosure, or auditing scope or procedure, which disagreements if
not resolved to the satisfaction of King Griffin & Adamson P.C. would have
caused them to make reference to them in their report on the financial
statements for those years. During the two fiscal years ended October, 31,
2000, and through November 2, 2001, there were no reportable events (as
defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act).
In its letter dated November 5, 2001 to the SEC, King Griffin & Adamson P.C.
stated that it agreed with the statements in the preceding two paragraphs.
This letter was filed as Exhibit 16.1 to our Current Report on Form 8-K,
filed with the SEC on November 7, 2001.
We engaged Arthur Andersen LLP as our new independent public accountants as
of November 2, 2001. During the two fiscal years ended October 31, 2000,
and through November 2, 2001, we did not consult with Arthur Andersen LLP
regarding the following:
* the application of accounting principles to a specified
transaction, either completed or proposed;
* the type of audit opinion that might be rendered on our financial
statements, and in no case was a written report provided to us nor
was oral advice provided that we concluded was an important factor
in reaching a decision as to an accounting, auditing or financial
reporting issue; or
* any matter that was either the subject of a disagreement, as that
term is defined in Item 304(a)(1)(iv) of Regulation S-K and
the related instructions to Item 304 of Regulation S-K, or a
reportable event, as that term is defined in Item 304(a)(1)(v) of
Regulation S-K.
On August 2, 2002, we received a letter from the SEC notifying us that
Arthur Andersen LLP, in connection with the winding-down of its business,
had notified the SEC that it would be unable to perform future audit
services for us effective immediately. We did not receive a copy of this
notification directly from Arthur Andersen LLP.
The audit report of Arthur Andersen LLP on our consolidated financial
statements as of and for the year ended October 31, 2001, the fiscal year
audited by Arthur Andersen LLP, did not contain any adverse opinion or
disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles, other than a modification as to the
uncertainty of our ability to continue as a going concern. In connection
with the audit for the most recent fiscal year and through August 7, 2002,
there were no disagreements with Arthur Andersen LLP on any matter
of accounting principle or practice, financial statement disclosure, or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of Arthur Andersen LLP would have caused them to make reference
to them in their report on the financial statements for those periods.
During the fiscal year ended October 31, 2001 and through August 7, 2002,
there were no reportable events (as defined in Item 304(a)(1)(v) of
Regulation S-K.
On August 23, 2002, we reengaged King Griffin & Adamson P.C. as our
independent public accountants. Our Audit Committee participated in and
approved the decision to reengage King Griffin & Adamson P.C. During the
fiscal year ended October 31, 2001 and through August 23, 2002, we did not
consult with King Griffin & Adamson P.C. regarding the following:
* the application of accounting principles to a specified
transaction, either completed or proposed;
* the type of audit opinion that might be rendered on our financial
statements, and in no case was a written report provided to us nor
was oral advice provided that we concluded was an important factor
in reaching a decision as to an accounting, auditing or financial
reporting issue; or
* any matter that was either the subject of a disagreement, as that
term is defined in Item 304(a)(1)(iv) of Regulation S-K and the
related instructions to Item 304 of Regulation S-K, or a
reportable event, as that term is defined in Item 304(a)(1)(v) of
Regulation S-K.
On March 6, 2003, King Griffin & Adamson P.C. resigned to allow its
successor entity KBA Group LLP to be engaged as our independent public
accountants.
The report issued by King Griffin & Adamson P.C. on our financial statements
for the fiscal year ended October 31, 2002 did not contain an adverse
opinion nor a disclaimer of opinion, and was not qualified or modified as to
audit scope or accounting principles. The report issued by King Griffin &
Adamson P.C. on our financial statements for the fiscal year ended October
31, 2002 was modified to include an explanatory paragraph describing
conditions that raised substantial doubt about our ability to continue as a
going concern.
In connection with its audit for the most recent fiscal year and through
March 5, 2003, there were no disagreements with King Griffin & Adamson P.C.
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of King Griffin & Adamson P.C., would have
caused King Griffin & Adamson P.C. to make reference thereto in their report
on the financial statements for such year or such interim periods.
In its letter dated March 10, 2003 to the SEC, King Griffin & Adamson P.C.
stated that it agreed with the statements in the preceding three paragraphs.
This letter was filed as Exhibit 16 to our Current Report on Form 8-K, filed
with the SEC on March 10, 2003.
Our Audit Committee approved the engagement of KBA Group LLP and we engaged
KBA Group LLP as our new independent public accountants as of March 6, 2003.
As KBA Group LLP is a successor entity to King Griffin & Adamson P.C., the
section addressing consultation of the newly engaged independent public
accountants is not applicable.
Audit Fees
For the year ended October 31, 2002, our current independent public accounts
KBA Group LLP, billed us an aggregate of $91,679, and Arthur Andersen LLP,
our former independent public accountants, billed us an aggregate of $8,900
for professional services rendered for the audit of our financial statements
for such period and the reviews of the financial statements included in our
Quarterly Reports on Form 10-Q during such period.
Financial Information Systems Design and Implementation Fees
There were no financial information systems design and implementation
services rendered for the year ended October 31, 2002.
All Other Fees
During the year ended October 31, 2002, we were billed $26,280 and $3,500
for non-audit services (other than the non-audit services described above)
rendered by KBA Group LLP and Arthur Andersen LLP, respectively.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
SELECTION OF KBA GROUP LLP AS OUR INDEPENDENT AUDITORS FOR 2003
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for us to consider for
inclusion in our 2004 proxy materials and for presentation at our 2004
Annual Meeting of Stockholders, you must send such proposal to our Company
Secretary at the address indicated on the first page of this proxy
statement, so that the Secretary receives it no later than December 5, 2003,
unless the 2004 Annual Meeting will be held on a date that is more than 30
days before or after July 1, 2004, the anniversary of the date of the 2003
Annual Meeting, in which case we must receive your proposal within a
reasonable time before we mail the proxy materials for our 2004 Annual
Meeting.
Advance Notice Requirements
Our Bylaws require that stockholder proposals and director nominations by
stockholders be made in compliance with certain advance notice requirements.
For business to be properly brought before an annual meeting by a
stockholder, the stockholder must deliver a written notice to our Secretary
no later than 90 days prior to the date of the scheduled meeting; however,
if less than 100 days' notice or prior public disclosure of the date of the
scheduled meeting is given, notice by the stockholder must be given no later
than the close of business on the tenth day following our public disclosure
or mailing of a notice setting forth the date of the annual meeting. A
stockholder's notice to the Secretary with regard to an annual meeting shall
be in the form required by our Bylaws.
The chairman of the meeting may refuse to bring any business before the
meeting that is not properly brought before the meeting in accordance with
our Bylaws. Copies of our Bylaws are available upon written request to our
Secretary. The advance notice requirements for our annual meetings do not
supersede the requirements or conditions established by the SEC for
stockholder proposals to be included in our proxy materials for a meeting of
stockholders.
Annual Report and Financial Information
Our Annual Report to stockholders covering our fiscal year ended October 31,
2002, including our audited financial statements, is enclosed herewith. The
Annual Report does not form any part of the materials for the solicitation
of proxies.
OTHER MATTERS
Our Board of Directors is not aware of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the
judgment of the persons voting the proxy.
By Order of the Board of Directors
/s/ Allen Sciarillo
----------------------------------
Allen Sciarillo,
Secretary
[PROXY CARD]
DIAL THRU INTERNATIONAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON JULY 1, 2003
The undersigned hereby constitutes and appoints Allen Sciarillo and John
Jenkins, or either of them, as the true and lawful attorneys and proxies
of the undersigned, with full power of substitution, to represent the
undersigned and to vote all of the shares of Common Stock of Dial Thru
International Corporation, that the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Dial Thru International Corporation to be
held on July 1, 2003 and at any and all adjournments thereof.
1. Election of [ ] FOR ALL nominees [ ] WITHOLD
Directors: named below AUTHORITY to
(except as vote for all
marked to the nominees
contrary) named below
John Jenkins, Allen Sciarillo, Larry Vierra, Robert M. Fidler,
Nick DeMare, David Hess
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name on the line below.)
----------------------------------------------------------------------------
2. To ratify the selection of KBA Group LLP to serve as independent public
accountants for Dial Thru International Corporation for the 2003 fiscal
year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, to vote upon such other business as may properly come
before the meeting or any adjournments thereof.
(Continued and to be signed on Reverse Side)
(Continued from Other Side)
THE RIGHT TO REVOKE THIS PROXY AT ANY TIME BEFORE IT IS VOTED IS RESERVED.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED OR WITHHELD IN ACCORDANCE
WITH THE SPECIFICATIONS MADE IN THIS PROXY. IF NO SPECIFIC DIRECTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR EACH
OTHER PROPOSAL SET FORTH HEREIN AND IN THE DISCRETION OF THE PROXY HOLDERS
ON ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
All proxies to vote at the Meeting or any adjournment thereof previously
given by the undersigned are hereby revoked.
[INSERT MAILING Dated: ____________________________
LABEL]
___________________________________
Signature of Shareholder
___________________________________
Signature (if jointly
owned) Please sign exactly as the name
appears on the certificate or certificates
representing shares to be voted by the
proxy. When signing as executor,
administrator, attorney trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by president or other authorized
person. If a partnership, please sign
in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.