14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______)
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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 toss.240.14a-12
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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computed pursuant to Exchange Act Rule 0-11. (Set forth the
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statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
3750 INVESTMENT LANE, SUITE #5
WEST PALM BEACH, FLORIDA 33404
2001 ANNUAL MEETING OF SHAREHOLDERS
May 9, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders
of Health & Nutrition Systems International, Inc. We will hold the meeting on
Monday, June 11, 2001, at 9:00 a.m., Eastern Time, at the Hilton Hotel, 150
Australian Avenue, West Palm Beach, Florida 33406.
Enclosed you will find a notice setting forth the business expected to come
before the meeting, the Proxy Statement, a form of proxy and a copy of our 2000
Annual Report. At this year's meeting, the agenda includes election of the
members of our Board of Directors and a proposal to ratify the appointment of
our independent auditors. Our Board of Directors recommends that you vote FOR
the election of the members of our Board of Directors and FOR ratification of
the appointment of our independent auditors.
Your vote is very important to us. We hope you will be able to attend the
meeting and vote your shares in person. But, whatever your plans, we ask that
after you read the Proxy Statement, you please complete, sign and date the
enclosed proxy card and promptly return it in the envelope provided so that your
shares will be represented at the meeting.
We look forward to seeing you at the meeting.
Sincerely,
/s/Steven Pomerantz
------------------------------------------------
Steven Pomerantz
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
3750 INVESTMENT LANE, SUITE #5
WEST PALM BEACH, FLORIDA 33404
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, JUNE 11, 2001
The annual meeting of Shareholders of Health & Nutrition Systems
International, Inc. (the "Company") will be held at 9:00 a.m., Eastern Time, on
Monday, June 11, 2001, at the Hilton Hotel, 150 Australian Avenue, West Palm
Beach, Florida for the following purposes:
o To elect four (4) directors to hold office until the annual
meeting of shareholders in 2002 and until their respective
successors are duly elected and qualified;
o To ratify the selection of Daszkal Bolton Manela Devlin & Co.
as our independent auditors for the year ending December 31,
2001; and
o To transact such other business properly brought before the
shareholders at the meeting.
This notice, together with the accompanying proxy statement and
enclosed proxy card, will be mailed to shareholders on or about May 11, 2001.
The board of directors has set the close of business on May 2, 2001 as
the record date of the meeting. Shareholders of record at the close of business
on May 2, 2001 will be entitled to notice of and to vote at the annual meeting
or any adjournment or continuation of the meeting. Each share of common stock is
entitled to one vote. The proxy card provided with the Proxy Statement indicates
the number of shares of the Company's common stock that you own and are entitled
to vote. A list of shareholders will be available for inspection at the meeting.
All shareholders are cordially invited to attend the annual meeting.
By Order of the Board of Directors,
/s/Christopher Tisi
-----------------------------------
Christopher Tisi, Secretary
West Palm Beach, Florida
May 9, 2001
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, DATE
AND SIGN YOUR PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
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2001 ANNUAL MEETING OF SHAREHOLDERS
JUNE 11, 2001
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PROXY STATEMENT
DATED MAY 9, 2001
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GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
WHY DID YOU SEND ME THIS PROXY STATEMENT?
We sent you this proxy statement and the enclosed proxy card because
the Company's board of directors is soliciting your proxy to vote at the 2001
Annual Meeting of Shareholders. This proxy statement summarizes the information
you need to know to vote at the annual meeting on June 11, 2001, and at any
adjournment or postponement of the meeting, for the purposes indicated in the
accompanying Notice of 2001 Annual Meeting of Shareholders. However, you do not
need to attend the annual meeting to vote your shares. Instead, you may simply
complete, sign and return the enclosed proxy card. This proxy statement and the
accompanying form of proxy will be mailed to shareholders on or about May 11,
2001. The annual report which accompanies the proxy materials is not to be
regarded as proxy soliciting material.
WHO CAN VOTE?
You can vote your shares of common stock if our records show that you
owned the shares at the close of business on May 2, 2001. A total of 3,632,813
shares of common stock can vote at the annual meeting. You get one vote for each
share of common stock you own. The enclosed proxy card shows the number of
shares you can vote.
HOW DO I VOTE BY PROXY?
Follow the instructions on the enclosed proxy card to vote on each
proposal to be considered at the annual meeting. Sign and date the proxy card
and mail it back to us in the enclosed envelope. The proxyholders named on the
proxy card will vote your shares as you instruct. If you sign and return the
proxy card but do not vote on a proposal, the proxyholders will vote for you on
that proposal. Unless you instruct otherwise, the proxyholders will vote FOR
each of the four director nominees; and FOR the ratification of Daszkal Bolton
Manela Devlin & Co. as our independent auditors; and according to their best
judgment with regard to any other proposals to be considered at the annual
meeting.
WHAT IF OTHER MATTERS COME UP AT THE ANNUAL MEETING?
The matters described in this proxy statement are the only matters we
know will be voted on at the annual meeting. If other matters are properly
presented at the meeting, the proxyholders will vote your shares as they see
fit.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. At any time before the vote on a proposal, you can change your
vote either by giving our corporate secretary a written notice revoking your
proxy card or by signing, dating and returning to us a new proxy card. We will
honor the proxy card with the latest date.
CAN I VOTE IN PERSON AT THE ANNUAL MEETING RATHER THAN BY COMPLETING THE PROXY
CARD?
Although we encourage you to complete and return the proxy card to
ensure that your vote is counted, you can attend the annual meeting and vote
your shares in person.
WHAT DO I DO IF MY SHARES ARE HELD IN "STREET NAME"?
If your shares are held in the name of your broker or other nominee,
that party should give you instructions for voting your shares.
HOW ARE VOTES COUNTED?
We will hold the annual meeting if holders of a majority of the shares
of common stock entitled to vote either sign and return their proxy cards or
attend the meeting. If you sign and return your proxy card, your shares will be
counted to determine whether we have a quorum even if you abstain or fail to
vote on any of the proposals listed on the proxy card.
WHO WILL COUNT THE VOTES?
Florida Atlantic Stock Transfer Company, HNS's transfer agent, will
tabulate the returned proxy votes by mail and the independent inspector of the
election will tabulate the votes at the meeting. The inspector of election will
treat shares represented by properly signed and returned proxies that reflect
abstentions from voting as shares that are present and entitled to vote for
purposes of determining the presence of a quorum on all matters.
If your shares are held in the name of a broker or nominee, and you do
not tell the broker or nominee how to vote your shares (so-called "broker
non-votes"), the nominee can vote them as it sees fit only on matters that are
deemed to be routine, and not on any other proposal. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be voted on that matter.
However, the inspector of election will treat "broker non-votes" as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum.
WHO PAYS FOR THIS PROXY SOLICITATION?
We do. In addition to sending you these materials, some of our
employees may contact you by telephone, by mail, or in person. None of these
employees will receive any extra compensation for doing this. We may request
persons holding shares in their names for others to forward soliciting materials
to our principals to obtain authorization for the execution of proxies, and we
will reimburse such persons for their expenses in so doing.
None of the actions to be voted upon at the 2001 Annual Meeting of
Shareholders shall create dissenters' rights under the Florida Business
Corporation Act.
You are requested, regardless of the number of shares you hold, to sign
the proxy and return it promptly in the enclosed envelope.
2
PROPOSAL 1: ELECTION OF DIRECTORS
At the annual meeting, four nominees will be elected as directors. In
accordance with our By-Laws, the board of directors has presently set the size
of the board at four directors. The directors elected will hold office until the
next annual meeting of shareholders, and until their respective successors are
duly elected and qualified.
NOMINATIONS. At the annual meeting, we will nominate the persons named
in this proxy statement as directors. Although we don't know of any reason why
one of these nominees might not be able to serve, the board of directors will
propose a substitute nominee if any nominee is not available for election. The
proxies will then be voted for such other person as the board of directors may
recommend, unless the board of directors reduces the number of directors. All of
the nominees are currently members of the board of directors of Health &
Nutrition Systems International, Inc.
GENERAL INFORMATION ABOUT THE NOMINEES. Our board of directors is set
at four persons. Set forth below is certain information concerning the nominees
for election as directors. The ages listed for the nominees are as of April 27,
2001.
NAME AGE POSITION
- ------------------- --- ----------------------------------
Steven Pomerantz(1) 45 Treasurer, Chief Executive Officer,
Chairman of the Board
Christopher Tisi 31 Secretary, President, Director
Ted Alflen 54 Director
William Husa 58 Director
- -------------
(1) On April 29, 2000, Steven Pomerantz was appointed to serve on the Audit
Committee as Chairman.
Each director holds his office until the next annual meeting of the
shareholders unless he resigns or is removed or disqualified. Officers are
elected by the board of directors and any number of offices may be held by the
same person.
The business experience of our executive officers and directors is set
forth below:
Steven Pomerantz has been our Chairman of the Board and Treasurer since
November 2000 and our Chief Executive Officer since March 1998, and was our
President from March 1998 until November 2000. From 1995 to March 1998, Mr.
Pomerantz was our Vice President of Finance and Chief Operating Officer. Prior
to joining HNS, Mr. Pomerantz was the President of CSP International, Inc., a
manufacturer of pepper gas, which he co-founded with Mr. Musso in 1985 and sold
in December 1994. Mr. Pomerantz was an Account Executive with NCR from
1982-1985.
Christopher Tisi has been our President and Secretary since November
2000, and was our Chief Operating Officer from December 1999 until November
2000. From March 1998 until December 1999, Mr. Tisi was our Vice President of
Sales and Marketing. From 1994 to March 1998, Mr. Tisi was our Vice President of
Training. From 1991 to December 1994, Mr. Tisi was a Marketing Director at
Quorum International, a multi-level marketing company in Phoenix, Arizona.
Ted Alflen has been one of our directors since October 2000. In March
1991, Mr. Alflen founded TCCD International Inc. and served as President from
1991 to present. TCCD manufactures and markets Crystal Deodorants. TCCD recently
acquired Real Natural Products and the Moistic brand of all natural lip balms.
Mr. Alflen has been in sales and marketing for 29 years. He has been on the
Advisory Board of the Pompano Beach Parks and Recreation.
William A. Husa has been one of our directors since November 2000.
Since February, 2001, Mr. Husa has been the Chief Executive Officer of GoNow
Securities, Inc., a stock brokerage firm. From February 2000 to February 2001,
Mr, Husa was the President and Chief Compliance Officer of Travis
3
Morgan Securities. Since 1985, Mr. Husa has been the founder and President of
The Winn Company. Mr. Husa has been a registered stock broker since 1980 and has
been an NASD Arbitrator since 1995.
There is no family relationship between any of the executive officers
and directors. Each director is elected at our annual meeting of shareholders
and serves for one year or until his successor is elected and qualified. The
Board elects officers and their terms of office are, except to the extent
governed by employment contract, at the discretion of the Board.
VOTE REQUIRED. Under the Florida Business Corporation Act, directors
are elected by a plurality of the votes cast by the shares entitled to vote for
the respective nominees. Proxies that are marked "Withhold Authority" and broker
non-votes, if any, will not affect the outcome of the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ALL NOMINEES FOR DIRECTOR.
4
MEETINGS OF THE BOARD OF DIRECTORS. During the year 2000, the board of
directors held two meetings for which a consent in writing, setting for the
action so taken, was signed by the directors after such action was held and each
of the directors attended at least 75 percent of the aggregate number of
meetings of the board of directors and committees (if any) on which he served.
COMMITTEES OF THE BOARD OF DIRECTORS. The board of directors has an
Audit Committee and a Stock Option Committee. The board of directors does not
have a committee whose functions include nominating directors and does not have
an executive committee. The following chart describes the function and
membership of each committee and the number of times it met in 2000.
AUDIT COMMITTEE - MEETINGS (NONE)
Function Members
----------------------------------------------------- --------------------
o Recommends independent auditors Steven Pomerantz (1)
Tony Musso (1)(2)
o Reviews internal financial information
o Reviews report of audit and management letter
o Participates in the determination of the adequacy
of the internal accounting control
o Reviews the results of audits with the independent
auditors
o Oversees quarterly and yearly reporting
o Responsible for policies, procedures and other
matters relating to business integrity, ethics
and conflicts of interests
- -------------
(1) On April 29, 2000, Steven Pomerantz and Tony Musso were elected to serve as
members of the Audit Committee.
(2) On March 22, 2001, Tony Musso resigned from the Board of Directors.
Because the shares of our stock trade on the OTC:BB, we are not required to have
an audit committee which is comprised of independent directors. Instead, Mr.
Pomerantz, acting as a committee of one, performed the functions described above
and submitted the report indicated below. Mr. Pomerantz would not be considered
"independent" under the definition in the standards of the New York Stock
Exchange, the American Stock Exchange or the NASDAQ. The Board of Directors has
not adopted a charter for the Audit Committee.
STOCK OPTION COMMITTEE - MEETINGS (NONE)*
Function Members
----------------------------------------------------- --------------------
Administers stock option plans Steven Pomerantz (1)
Herbert Bryant(1)(2)
(1) On May 1, 1998, Steven Pomerantz and J.C. Herbert Bryant III were elected
to serve as the members of the Stock Option Committee.
(2) Mr. Bryant resigned as a member of the Board on September 13, 1999.
* Because Mr. Pomerantz has constituted the entire committee during calendar
year 2000, administration of the plans was accomplished without any formal
meetings.
5
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process
on behalf of the board of directors. Management has the primary responsibility
for the financial statements and the reporting process including the systems of
internal controls. In fulfilling my oversight responsibilities as the Audit
Committee, I have reviewed and discussed the audited financial statements in the
annual report with the other members of management including a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements. Because the committee is comprised of only myself, the
Committee held no meetings during fiscal year 2000.
Acting as a committee of one, I reviewed and discussed with the
independent auditors, who are responsible for expressing an opinion on the
conformity of those financial statements with generally accepted accounting
principles, their judgments as to the quality, not just the acceptability, of
the Company's accounting principles and such other matters as are required to be
discussed with the Committee by SAS 61 (codification on Statements on Auditing
Standards, AU 380). In addition, I have discussed with the independent auditors
the auditors' independence from management and the Company, and have received
the written disclosures and the letter from the independent auditors required by
the Independence Standards Board No. 1 and have considered the compatibility of
nonaudit services with the auditors' independence.
I discussed with the Company's independent auditors the overall scope
and plans for their audit. I met with the independent auditors to discuss the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, I
recommended to the board of directors (and the board has approved) that the
audited financial statements be included in the Company's annual report on Form
10-KSB for the year ended December 31, 2000 for filing with the Securities and
Exchange Commission. The Committee and the board have also recommended, subject
to shareholder approval, the selection of the Company's independent auditors for
the year ending December 31, 2001.
AUDIT COMMITTEE
Steven Pomerantz
DIRECTORS' COMPENSATION
During 2000, we paid to each of our non-employee directors meeting fees
of $500 for attendance at each board meeting. During 2000, although Mr. Musso
was a member of the board and not an employee, we did not pay him for his
attendance at board meetings.
Pursuant to the terms of the 1998 Stock Option Plan, a grant of a stock
option for the purchase of common shares may be made to each non-employee
director. Those options are granted at an exercise price equal to the fair
market value of our common stock on the date of grant, and become 25% vested on
each anniversary date of grant or, if earlier, upon a change of control as
defined in the plan and expire ten years from the date of grant or earlier in
the event service as a director ceases. Options were granted to our non-employee
directors on October 2, 2000 at an exercise price of $.50 and November 27, 2000
at an exercise price of $1.25 per share.
6
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS, DIRECTORS, NOMINEES,
AND EXECUTIVE OFFICERS
The table below shows, as of May 2, 2001, the number of shares of common
stock beneficially owned by
o each person whom we know beneficially owns more than 5% of the common
stock,
o each director and nominee for director,
o each executive officer included in the Summary Compensation Table, and
o all executive officers and directors as a group.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
------------------
NUMBER OF SHARES AND
NAME AND ADDRESS OF BENEFICIAL NATURE OF SHARES
OWNER (1) BENEFICIALLY OWNED (2) PERCENT OF CLASS (3)
- --------- ---------------------- --------------------
Tony Musso 534,329(4) 14.7%
1700 S.E. Ranch Road
Jupiter, FL 33478
Tony D'Amato 339,750(4) 9.4%
1526 Michigan Avenue, #1
Miami Beach, FL
Steven Pomerantz 516,829(4)(5) 14.0%
Christopher Tisi 769,088(4)(5) 20.6%
Ted Alflen 3,000 *
William Husa 72,500(6) 2.0%
All executive officers and directors as a 1,361,417(3)(4)(7) 36%
group (4 persons)
- -----------------------------
* Less than 1%
(1) The address of each executive officer and director is c/o the Company, 3750
Investment Lane, #5, West Palm Beach, FL 33404.
(2) Unless otherwise noted, all persons named in the table have sole voting and
dispositive power with respect to all shares of common stock beneficially
owned by them.
(3) Based upon 3,632,813 outstanding shares as of May 2, 2001, and, with
respect to each holder of options exercisable, or notes convertible, within
60 days of May 2, 2001, the shares issuable under such instruments. As
noted in our Annual Report, on April 13, 2001, the Company, Steven
Pomerantz and Anthony Musso sued Milton H. Barbarosh and Ricki Barbarosh
(Milton's wife) and three corporations which are owned or controlled by Mr.
Barbarosh, Stenton Leigh Group, Inc., Stenton Leigh Capital Corp., and EAI
Partners, Inc. in state court (the Fifteenth Judicial Circuit of Florida in
and for Palm Beach County). The lawsuit is intended to resolve the
uncertainty that now exists concerning whether two blocks of the Company's
common stock, which originally belonged to Pomerantz and Musso and together
comprise 235,000 post-split shares, are currently validly issued and
outstanding and, if so, the identities of the owners of those shares.
7
(4) As disclosed in the Schedule 13G filed by Tony D'Amato ("D'Amato"), Steve
Pomerantz ("Pomerantz"), Christopher Tisi ("Tisi"), and Tony Musso
("Musso"), dated February 14, 2001, D'Amato executed and delivered to Tisi
and the Company a Shareholders' Agreement on July 13, 2000, pursuant to
which D'Amato granted to Tisi an irrevocable proxy (the "Irrevocable
Proxy") authorizing Tisi to vote shares of the Company beneficially owned
by D'Amato as of that date and any shares of the Company acquired by
D'Amato thereafter. The Irrevocable Proxy has a two-year term. On January
31, 2001, Tisi relinquished his right to vote pursuant to the Irrevocable
Proxy with respect to 125,000 shares beneficially owned by D'Amato as of
that date. Tisi has sole voting power of 769,088 shares and sole
dispositive power of 518,788 share of common stock. D'Amato has sole voting
power of 125,000 shares and sole dispositive power of 339,750 shares of
common stock.
In addition, Tisi, Musso and Pomerantz have entered into an oral
understanding with each other that each will vote, in person or by proxy,
shares of Common Stock of the Company beneficially owned by him (or, in the
case of Tisi, as to which he has voting power) together as a group, but
only for the following purposes: (i) in favor of the same person or persons
to be nominated and elected to serve on the board of directors of the
Issuer to fill any vacancies on the board, if and as such vacancies may
arise from time to time (whether such vacancy occurs by removal,
resignation or an increase in the size of the board of directors) at any
time prior to the Company's 2001 annual meeting of shareholders, or any
adjournment thereof; and (ii)in favor of the same person or persons to be
nominated and elected as the slate of nominees, and elected, to the board
of directors to be voted upon by the shareholders of the Company at its
2001 annual meeting of shareholders, or any adjournment thereof.
(5) Share ownership of the following persons includes shares subject to
immediately exercisable options or options exercisable within 60 days of
May 2, 2001, as follows: for Mr. Pomerantz - 50,000 shares and for Mr.
Tisi - 102,000 shares.
(6) Includes indirect holdings of 7,500 shares beneficially owned by Mr. Husa's
wife, regarding which Mr. Husa disclaims beneficial ownership.
(7) Includes an aggregate of 152,000 shares subject to immediately exercisable
options or options exercisable within 60 days of May 2, 2001 held by
executive officers and directors as a group.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We became a reporting company under the Securities Exchange Act of 1934
(the "Exchange Act") in June 2000. Based solely upon a review of Forms 3 and 4
and amendments thereto furnished to us under Rule 16a-3(e) of the Exchange Act
during the fiscal year ended December 31, 2000, and Forms 5 furnished to us with
respect to the fiscal year ended December 31, 2000, we are not aware of any
person that failed to file on a timely basis, as disclosed in the aforementioned
forms, reports required by Section 16(a) of the Exchange Act during the fiscal
year ended December 31, 2000, other than the unintentional failure of Steven
Pomerantz, Tony F. Musso, Christopher Tisi, and Tony D'Amato to timely file the
initial Form 3 subsequent to our becoming a reporting company. The Form 3s were
filed with the Commission in September and October, 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Health & Nutritional Systems International, Inc. has, in the past,
engaged in related party transactions with J.C. Herbert Bryant III, who, served
as Vice President and Secretary between March 18, 1998 and September 13, 1999.
The entity controlled by Mr. Bryant, KMS-Thin Tab 100, Inc., purchased products
from us for resale to its customers on terms no more favorable than those given
to unaffiliated third parties in arms'-length transactions. For the year ended
December 31, 2000 KMS made aggregate purchases of $171,690. For the year ended
December 31, 1999, KMS-Thin Tab 100, Inc. made aggregate purchases of herbal
supplements of $136,944 from us. For 1998, purchases totaled $62,766.
8
Steve Pomerantz has provided a certificate of deposit in the principal
amount of $100,000 as collateral to SunTrust bank to obtain the loan for HNS in
the amount of $100,000. Mr. Pomerantz received a fee from HNS of $5,000 for
providing the collateral.
Except for the ownership of our securities that we have disclosed above
and except for the transactions disclosed above, none of our directors,
executive officers, holders (of whom we are aware) of five percent (5%) of our
outstanding shares of common stock, or any associate or affiliate of such
person, have, to our knowledge, had a material interest, direct or indirect,
during the three fiscal years ended December 31, 1998, 1999 and 2000 in any
proposed transaction which may materially affect us.
COMPENSATION OF MANAGEMENT
The following table sets forth the annual and long term compensation
during each of the last three years paid by us to Messrs. Pomerantz and Tisi,
who served as our Treasurer, Chief Executive Officer and Chairman of the Board,
President and Secretary, respectively, during 2000 (each a "Named Officer" and
collectively the "Named Officers"). No other executive officer was paid salary
and bonus compensation by us which exceeded $100,000 during 2000.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) OPTIONS(#)(2) ($)
- ------------------ ---- ------- ------ ------------ -------------- ------------
Steve Pomerantz 2000 100,000 11,642 - 50,000 -
Treasurer and Chief 1999 13,356 1,022 - - -
Executive Officer(3) 1998 41,731 - - - -
Christopher Tisi 2000 $100,000 $18,169 - 102,000 -
Secretary and 1999 61,000 $ 4,047 - - -
President(3) 1998 - - - - -
- --------------------
(1) The Named Officers did not receive any other annual compensation not
categorized as salary or bonus except for perquisites and other personal
benefits which in the aggregate did not exceed the lesser of $50,000 or 10%
of the total annual salary and bonus reported for such Named Officer.
(2) Mr. Pomerantz was granted options under our 1998 Stock Option Plan for the
purchase of 50,000 shares of common stock. Such options were granted at the
then current market value of the shares. The options granted vested
immediately on the date of grant. Mr. Tisi was granted options under our
1998 Stock Option Plan for the purchase of 102,000 shares of common stock.
Such options were granted at the then current market value of the shares.
The options granted vested immediately on the date of grant.
(3) Mr. Pomerantz was elected Chief Executive Officer on October 1, 2000, and
assumed the position of Chairman of the Board on November 27, 2000. Mr.
Tisi was elected President on October 1, 2000.
9
STOCK OPTION GRANTS
The following table contains information concerning the grant of stock
options under our 1998 Stock Option Plan to the Named Officers during 2000. We
do not currently have (and have not previously had) any plan pursuant to which
any stock appreciation rights may be granted.
OPTION GRANTS IN 2000
Number of Securities % of Total
Underlying Options Options to Exercise or
Granted Employees in Base Price Expiration
Name (#) (1) 2000 ($/Sh) Date (2)
---- ------- ---- ------ --------
Steve Pomerantz(3) 50,000 7.58 $.50 10/01/10
Treasurer and Chief
Executive Officer
Christopher Tisi(4) 102,000 15.45 $.50 10/01/10
Secretary and President
- -------------------
(1) All options granted in 2000 are non-qualified stock options and are not
intended to qualify as an incentive stock option ("ISOs") under ss.422 of
the Internal Revenue Code of 1986, as amended. The options are exercisable
as of the date of grant. The options were granted at fair market value on
the date of the grant.
(2) The term of the options is ten (10) years from the date of grant unless
terminated earlier due to termination of employment, disability or death.
(3) Mr. Pomerantz became Chief Executive Officer October 1, 2000, and Chairman
of the Board on November 22, 2000.
(4) Mr. Tisi became President on October 1, 2000.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth information relating to options
exercised during 2000 by each of the Named Officers and the number and value of
options held on December 31, 2000 by each of them.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR ENDED DECEMBER 31, 2000
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised In-the-
Shares Value Underlying Unexercised Money Options at
Acquired on Realized Options at Dec. 31, 2000 (#) Dec. 31, 2000 ($)(1)
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ -------- ----------- ------------- ----------- -------------
Steve Pomerantz - - 50,000(2) $6,250
Treasurer and Chief
Executive Officer
Christopher Tisi - - 102,000(2) $12,750
Secretary and President
(1) Total value of unexercised options is based upon the difference between the
last sales price of our common stock on the NASDAQ National Market System
on December 31, 2000, which was $0.625 per share, and the exercise price of
the options, multiplied by the number of option shares.
(2) Options granted under our 1998 Stock Option Plan.
No options to purchase common stock were exercised by any executive
officer during the year ended December 31, 2000.
10
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
On September 30, 1999, we entered into a two-year employment agreement with
Steve Pomerantz, our Chairman of the Board, Chief Executive Officer and
Treasurer. The agreement provides for an annual base salary of $100,000 and is
terminable for cause. The agreement also provides for quarterly bonuses of up to
$10,000, based upon our attainment of quarterly sales revenue benchmarks of
$600,000. Mr. Pomerantz has, in the past, voluntarily accrued certain portions
of his salary owed him by us. To date, all such amounts have been paid.
On September 30, 1999, we entered into a two-year employment agreement with
Christopher Tisi, our President and Secretary. The agreement provides for an
annual base salary of $100,000 and is terminable for cause. The agreement also
provides for quarterly bonuses of up to $10,000 based upon our attainment of
quarterly sales revenue benchmarks of $600,000.
On July 13, 2000, Mr. D'Amato executed and delivered to Mr. Tisi and
the Company a Shareholders' Agreement, pursuant to which D'Amato granted to Tisi
an irrevocable proxy (the "Irrevocable Proxy") authorizing Tisi to vote shares
of the Company beneficially owned by D'Amato as of that date and any shares of
the Company acquired by D'Amato thereafter. The Irrevocable Proxy has a two-year
term. On January 31, 2001, Tisi relinquished his right to vote pursuant to the
Irrevocable Proxy with respect to 125,000 shares beneficially owned by D'Amato
as of that date. Tisi has sole voting power of 769,088 shares and sole
dispositive power of 518,788 share of common stock. D'Amato has sole voting
power of 125,000 shares and sole dispositive power of 339,750 shares of common
stock.
In addition, Tisi, Musso and Pomerantz have entered into an oral
understanding with each other that each will vote, in person or by proxy, shares
of Common Stock of the Company beneficially owned by him (or, in the case of
Tisi, as to which he has voting power) together as a group, but only for the
following purposes: (i) in favor of the same person or persons to be nominated
and elected to serve on the board of directors of the Issuer to fill any
vacancies on the board, if and as such vacancies may arise from time to time
(whether such vacancy occurs by removal, resignation or an increase in the size
of the board of directors) at any time prior to the Company's 2001 annual
meeting of shareholders, or any adjournment thereof; and (ii) in favor of the
same person or persons to be nominated and elected as the slate of nominees, and
elected, to the board of directors to be voted upon by the shareholders of the
Company at its 2001 annual meeting of shareholders, or any adjournment thereof.
11
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT
OF DASZKAL BOLTON MANELA DEVLIN & CO.
AS INDEPENDENT AUDITORS
Daszkal Bolton Manela Devlin & Co. ("DBMD") were selected by the Board
of Directors as our independent auditors effective July 12, 2000. We are
submitting our selection of independent auditors for ratification at the Annual
Meeting.
A representative of DBMD is expected to be present at the Annual
Meeting and will be available to respond to appropriate questions from
shareholders.
Our By-laws do not require that the shareholders ratify the selection
of DBMD as our independent auditors. We are doing so because we believe it is a
matter of good corporate practice. If the shareholders do not ratify the
selection, the Board of Directors will reconsider whether or not to retain DBMD,
but may retain such independent auditors. Even if the selection is ratified, the
Board of Directors in their discretion may change the appointment at any time
during the year if they determine that such a change would be in the best
interest of Health and Nutrition Systems International, Inc., and its
shareholders.
The Securities and Exchange Commission's final Rule on Auditor
Independence requires that the Company make the following disclosures regarding
the amount of fees billed by its independent auditors and the nature of the work
for which these fees were billed:
Audit Fees: Aggregate fees billed for DBMD's audit of the Company's
annual financial statements for the year ended December 31,
2000 and for its reviews of the financial statements included
in the Company's Forms 10-Q for the fiscal year ended December
31, 2000 totaled $39,343.
Financial Information Systems Design and Implementation Fees: No fees
were incurred or billed for any financial information systems
design and implementation services rendered by DBMD for the
fiscal year ended December 31, 2000.
All Other Fees: Aggregate fees billed for all other services rendered by DBMD
for the fiscal year ended December 31, 2000 totaled $17,602.
VOTE REQUIRED. Pursuant to the Florida Business Corporation Act,
Proposal 2 will be approved if the number of votes cast in favor of the Proposal
exceeds the number of votes cast against the Proposal. Abstentions and broker
non-votes will have no effect on the outcome.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THIS PROPOSAL 2.
12
REPORT TO SHAREHOLDERS
A COPY OF OUR ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 2000, AND ANY AMENDMENTS THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO US AT 3750
INVESTMENT LANE, SUITE #5, WEST PALM BEACH, FLORIDA, ATTENTION: STEVEN A.
POMERANTZ, TREASURER.
SHAREHOLDER PROPOSALS
A shareholder proposal submitted for inclusion in the proxy statement
and form of proxy for our annual meeting of shareholders to be held in 2002 must
be received by us before January 9, 2002. Notice of a shareholder's proposal
submitted for consideration at the annual meeting of shareholders, which is not
submitted for inclusion in our proxy statement, will be considered untimely on
March 25, 2002, and the persons named in the proxies solicited for the 2002
Annual Meeting of Shareholders may exercise discretionary voting power with
respect to any such proposal. Proposals or notices should be sent to our
executive offices at 3750 Investment Lane, Suite 5, West Palm Beach, Florida
33407 Attention: Corporate Secretary.
OTHER MATTERS
The board of directors does not intend to present, and has no knowledge
that others will present, any other business at the annual meeting. If, however,
any other matters are properly brought before the annual meeting, it is intended
that the persons named in the enclosed proxy will vote the shares represented
thereby in accordance with their best judgment.
Kindly date, sign and return the enclosed proxy card.
By Order of the Board of Directors
/s/Steven Pomerantz
-------------------------------------------------
Steven Pomerantz
Chairman of the Board and Chief Executive Officer
13
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
OF HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
The undersigned, a holder of Common Stock of HEALTH & NUTRITION SYSTEMS
INTERNATIONAL, INC., hereby constitutes and appoints CHRISTOPHER TISI and STEVEN
POMERANTZ, and each of them acting individually, as the attorney and proxy of
the undersigned, with full power of substitution, for and in the name and stead
of the undersigned, to attend the Annual Meeting of Shareholders of the Company
to be held on Monday, June 11, 2001 at 9:00 a.m., at the Hilton Hotel, 150
Australian Avenue, West Palm Beach, Florida, and any adjournment of postponement
thereof, and thereat to vote all shares of HNS's Common Stock which the
undersigned would be entitled to vote if personally present, as follows:
(Please sign and date on reverse side)
---------------------------------------------
Annual Meeting of Shareholders
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
June 11, 2001
Please Detach and Mail in the Envelope Provided
---------------------------------------------
A |X| Please mark your vote as in this example.
1. ELECTION OF DIRECTORS.
VOTE FOR EACH OF THE
NOMINEES LISTED AT WITHHOLD AUTHORITY NOMINEES FOR ELECTION
RIGHT FOR ALL NOMINEES AS DIRECTORS:
[ ] [ ] Steven A. Pomerantz
Christopher Tisi
Ted Alflen
William Husa
INSTRUCTIONS:
To withhold authority to vote for any individual nominee, write that Nominee's
name on the line provided below:
2. Ratification of Daszkal Bolton Manela Devlin & Co. as independent
auditors for the year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS ON ALL MATTERS TO BE
CONSIDERED AT THE MEETING.
The undersigned hereby acknowledges receipt of the notice of annual
meeting and proxy statement of Health & Nutrition Systems International, Inc.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE.
Signature
------------------------------------------
Signature Dated: , 2001.
------------------------------------------ ---------------
IF SHARES HELD JOINTLY
NOTE: Please mark, date and sign exactly as your name appears on this proxy
card. When shares are held jointly, both holders should sign. When
signing as attorney, executor, administrator, trustee or guardian,
please give your full title. If the holder is a corporation or
partnership, the full corporate or partnership name should be signed by
a duly authorized officer.