UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
SPACEDEV, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(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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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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[GRAPHIC OMITED]
13855 Stowe Drive
Poway, California 92064
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 18, 2003
TO THE SHAREHOLDERS OF SPACEDEV, INC.:
The annual meeting of the shareholders of SpaceDev, Inc. (the "Company") will be
held at 13855 Stowe Drive, Poway, California 92064, on July 18, 2003, at 11:00
A.M. for the following purpose:
1. To elect a Board of Directors for the Company.
2. To approve the appointment of PKF, Certified Public Accountants, as the
Company's independent public accountants for the fiscal year ending December 31,
2003.
3. To approve an amendment to the Articles of Incorporation of the Company
to increase the number of authorized shares of the Company's Common Stock.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES TO THE BOARD OF DIRECTORS AND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF EACH OTHER ITEM LISTED ON THIS NOTICE OF ANNUAL MEETING OF SHAREHOLDERS.
Shareholders of record at the close of business on May 29, 2003, are the only
persons entitled to notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. WHETHER OR NOT YOU
EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE FILL IN THE INFORMATION
COMPLETLY. PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
IN ORDER TO SAVE THE COMPANY FURTHER SOLICITATION EXPENSE. If you are present at
the meeting, you may then revoke your proxy and vote in person, as explained in
the Proxy Statement in the section entitled "ANNUAL MEETING OF SHAREHOLDERS -
JULY 18, 2003." A return envelope is enclosed for your convenience.
/s/ Richard B. Slansky
-------------------------
Richard B. Slansky
Corporate Secretary
Dated: June 12, 2003
________________________________________
PROXY STATEMENT
________________________________________
SPACEDEV, INC.
13855 Stowe Drive
Poway, California 92064
ANNUAL MEETING OF SHAREHOLDERS - JULY 18, 2003
The enclosed Proxy is solicited by the Board of Directors of SpaceDev, Inc. (the
"Board") in connection with the annual meeting of shareholders of SpaceDev, Inc.
(the "Company") to be held on July 18, 2003 at 11:00 A.M. at 13855 Stowe Drive,
Poway, California 92064, and at any adjournments thereof. The Company will pay
the cost of solicitation, including the cost of preparing and mailing the Notice
of Shareholders' Meeting and this Proxy Statement. Such mailing took place on
approximately June 12, 2003. Representatives of the Company may, without cost to
the Company, solicit Proxies for the management of the Company by means of mail,
telephone or personal calls.
A Proxy may be revoked before the meeting by giving written notice of revocation
to the Secretary of the Company, or may be revoked at the meeting, prior to
voting. Unless revoked, properly executed Proxies with respect to the Company
will be voted as indicated in this Proxy Statement. Should any other matters
come before the meeting, it is the intention of the persons named as Proxies in
the enclosed Proxy to act upon them according to their best judgment. In
instances where choices are specified by the shareholders in the Proxy, those
Proxies will be voted or the vote will be withheld in accordance with each
shareholder's choice. An "abstention" on any proposal will be counted as
present for purposes of determining whether a quorum of shares is present at the
meeting with respect to the proposal on which the abstention is noted, but will
be counted as a vote "against" such proposal.
Only shareholders of record at the close of business on May 29, 2003 may vote at
the meeting or any adjournments thereof. As of that date there were issued and
outstanding approximately 15,338,907 common shares of all classes, $.0001 par
value, of the Company. Each shareholder is entitled to one vote for each common
share held. Voting for the election of directors is not cumulative, which means
that the holders of a majority of the Company's outstanding shares have the
power to elect the entire Board of Directors. None of the matters to be
presented at the meeting will entitle any shareholder to appraisal rights. In
the event that Proxies which are sufficient in number to constitute a quorum are
not received by July 17, 2003, we may propose one or more adjournments of the
meeting to permit further solicitation of Proxies. Such adjournments will
require the affirmative vote of the holders of a majority of the shares present
in person or by Proxy at the meeting. The persons named as Proxies will vote in
favor of such adjournment. At the annual meeting, the shareholders will be asked
to re-elect the current members of our Board of Directors, to approve the
selection of the independent public accountant for the Company, and to approve
an amendment to the Articles of Incorporation of the Company to increase the
number of authorized shares of the Company's Common Stock.
SHARE OWNERSHIP
The following table provides information as of June 2, 2003 concerning the
beneficial ownership of the Company's common stock by (i) each director, (ii)
each named executive officer, (iii) each shareholder known by us to be the
beneficial owner of more than 5% of the Company's outstanding Common Stock, and
(iv) the directors and officers as a group. Except as otherwise indicated, the
persons named in the table have sole voting and investing power with respect to
all shares of Common Stock owned by them.
------------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Beneficial Amount and Nature of Percent of
Owner Beneficial Ownership(1) Class(1)
----------------------------- -----------------------------------------------------------------------------------
..0001 par value common stock James W. Benson, CEO and 12,078,336(2) 56.8%
Chairman
13855 Stowe Drive
Poway, California 92064
..0001 par value common stock J. Mark Grosvenor, Director 1,339,991(3) 6.3%
13855 Stowe Drive
Poway, California 92064
..0001 par value common stock Curt Dean Blake, Director 100,930(4) 0.5%
13855 Stowe Drive
Poway, California 92064
..0001 par value common stock Wesley T. Huntress Jr., Director 60,515(5) 0.3%
13855 Stowe Drive
Poway, California 92064
..0001 par value common stock General Howell M. Estes, III, 26,667(6) 0.1%
Director
13855 Stowe Drive
Poway, California 92064
..0001 par value common stock Robert S. Walker, Director 26,667(7) 0.1%
13855 Stowe Drive
Poway, California 92064
..0001 par value common stock Stuart Schaffer, Director & Vice 346,410(8) 1.6%
President, Product Development
& Marketing
13855 Stowe Drive
Poway, California 92064
..0001 par value common stock Scott McClendon, Director -- <0.1%(9)
13855 Stowe Drive
Poway, California 92064
..0001 par value common stock Officers and Directors as a group 14,004,516(10) 65.9%(1)
(9 Persons)
------------------------------------------------------------------------------------------------------------------
(1) Where persons listed on this table have the right to obtain additional
shares of our common stock through the exercise of outstanding options or
warrants or the conversion of convertible securities within 60 days from June 2,
2003, these additional shares are deemed to be beneficially owned for the
purpose of computing the amount and percentage of common stock owned by such
persons. Percentages are based on total outstanding shares on June 2, 2003 plus
options and warrants that will become exercisable within 60 days of June 2,
2003, for a total of 21,282,688 shares.
(2) Represents 236,000 shares held directly by Mr. Benson and his wife,
Susan Benson; 8,895,000 shares held by SD Holdings, LLC, an entity controlled by
James W. Benson; and 497,413 shares recently transferred from SD Holdings, LLC
to Space Development Institute, a 501(c)(3) corporation, plus 503,333 options
and 973,295 warrants plus 973,295 equivalents from a convertible debt instrument
currently outstanding beneficially owned at May 7, 2003. In addition, Mr.
Benson has unvested options on 2,006,667 shares.
(3) Mr. Grosvenor owns 665,188 shares of our common stock plus 665,188 vested
warrants that he purchased in our private placement. In addition, Mr. Grosvenor
has vested options on 9,615 shares and unvested options on 10,000 shares.
(4) Mr. Blake owns 30,612 shares of our common stock plus 30,612 vested
warrants that he purchased in our private placement. Mr. Blake also owns 39,706
vested options, which he received as compensation for his participation on our
Board of Directors. In addition, Mr. Blake has unvested options on 40,000
shares.
(5) Mr. Huntress owns 8,868 shares of our common stock. Mr. Huntress also
owns 51,647 vested options, which he received as compensation for his
participation on our Board of Directors. In addition, Mr. Huntress has unvested
options on 35,000 shares.
(6) General Estes III owns 26,667 vested options, which he received as
compensation for his participation on our Board of Directors. In addition,
General Estes III has unvested options on 45,000 shares.
(7) Mr. Walker owns 26,667 vested options, which he received as compensation
for his participation on our Board of Directors. In addition, Mr. Walker has
unvested options on 40,000 shares.
(8) Mr. Schaffer owns 128,205 warrants plus 128,205 share equivalents from a
convertible debt instrument currently outstanding. Mr. Schaffer also owns
45,000 vested options, which he received as part of his compensation package as
Vice President of Product Development and Marketing. In addition, Mr. Schaffer
has unvested options on 360,000 shares.
(9) Mr. McClendon has unvested options on 30,460 shares, which he received
as compensation for his participation on our Board of Directors.
(10) Officers and directors as a group include our eight Board members, two
of whom are also officers, plus Mr. Slansky, who beneficially owns 25,000
shares. In addition, Mr. Slansky has unvested options on 350,000 shares, which
are not included in the calculation.
ANNUAL REPORT OF THE COMPANY
The annual report of the Company containing audited financial statements for the
twelve months ended December 31, 2002 was mailed to the shareholders on or about
June 12, 2003.
PROPOSAL 1
ELECTION OF DIRECTORS
It is intended that the enclosed Proxy will be voted for the election of the
eight (8) persons named below as directors for the Company unless such authority
has been withheld in the respective Proxy. The term of office of each person
elected to our Board of Directors will be until the next regular or annual
meeting of the shareholders at which election of directors is an agenda item and
until his successor is duly elected and shall qualify. Each of our current
directors is a nominee for director. Pertinent information regarding each
nominee for the past five years is set forth following his name below.
NAME AND AGE POSITION WITH THE COMPANY AND PRINCIPAL OCCUPATIONS ADDRESS
------------------------------------------------------------------------------------------------------------
James W Benson (58) Mr. Benson is the founder, Chairman and Chief Executive 13855 Stowe Drive
Officer of the Company. Mr. Benson served as President Poway, CA 92064
of the Company until he resigned from that position on
February 4, 2000. Mr. Benson is also a Director of the
Company, a position he has held since October 1997. In
1984, Mr. Benson founded Compusearch Software Systems
in McLean, Virginia. The company was based on use of
personal computers to create full text indexes of
massive government procurement regulations and to
provide fast full text searches for any word or phrase;
the first instance of large scale, commercial
implementation of PC-based full text searching. In
1995, Mr. Benson sold Compusearch. Mr. Benson started
SpaceDev LLC, which was acquired by the Company in
October 1997. Mr. Benson holds a Bachelor of Science
degree in Geology from the University of Missouri. He
founded the non-profit Space Development Institute and
introduced the $5,000 Benson Prize for Amateur
Discovery of Near Earth Objects. He is also
Vice-Chairman and private sector representative on
NASA's national Space Grant Review Panel and a member
of the American Society of Civil Engineers subcommittee
on Near Earth Object Impact Prevention and Mitigation.
Scott McClendon (64) Scott McClendon was appointed to the Board of Directors 13855 Stowe Drive
as an independent director on July 19, 2002. McClendon Poway, CA 92064
currently sits on the Board of Directors for Overland
Storage, Inc., where he acts as chairman of the Board.
He became the chairman after serving as President and
Chief Executive Officer from October 1991 to March
2001. Prior to joining Overland Storage, Inc., Mr.
McClendon was employed by Hewlett-Packard Company for
over 32 years in various positions of engineering,
manufacturing, sales and marketing. Mr. McClendon
received a Bachelor of Science degree in electrical
engineering in June 1960, and a Master of Science
degree in electrical engineering in June 1962 from
Stanford University School of Engineering.
Curt Dean Blake(45) Curt Dean Blake was appointed to the Board of Directors 13855 Stowe Drive
as an independent director on September 5, 2000. Mr. Poway, CA 92064
Blake acted as the Chief Operating Officer of the
Starwave Corporation from 1993 until 1999, where he
managed business development, finance, legal and
business affairs, and operations for the world's most
successful collection of content sites on the Internet.
During that time, he developed business strategies,
financial models, and structured and negotiated venture
agreements for Starwave's flagship site, ESPN
Sportszone, at that time the highest traffic
destination site on the Internet. He also developed and
negotiated venture agreements with the NBA, NFL,
Outside Magazine and NASCAR to create sites around
these brands. Mr. Blake negotiated sale of controlling
interest in Starwave Corporation to Disney/ABC. Prior
to Starwave, Mr. Blake worked at Corbis from 1992 to
1993, where he led the acquisitions and licensing
effort to fulfill Bill Gates' vision of creating the
largest taxonomic database of digital images in the
world. Mr. Blake acted as General Counsel to Aldus
Corporation from 1989 to 1992, where he was responsible
for all legal matters of the $125 million public
corporation and its subsidiaries. Prior to that, Mr.
Blake was an attorney at Shidler, McBroom, Gates and
Lucas, during which time he was assigned as onsite
counsel to the Microsoft Corporation, where he was
primarily responsible for the domestic OEM/Product
Support and Systems Software divisions. Mr. Blake has
an MBA and JD from the University of Washington
Howell M. Estes, III General Howell M. Estes, III (USAF Retired), was 13855 Stowe Drive
(61) appointed to the Board of Directors as an independent Poway, CA 92064
director on April 2, 2001. General Estes retired from
the United States Air Force in 1998 after serving for
33 years. At that time he was the Commander-in-Chief of
the North American Aerospace Defense Command
("CINCNORAD") and the United States Space Command
("CINCSPACE"), and the Commander of the Air Force Space
Command ("COMAFSPC") headquartered at Peterson AFB,
Colorado. In addition to a Bachelor of Science Degree
from the Air Force Academy, he holds a Master of Arts
Degree in Public Administration from Auburn University
and is a graduate of the Program for Senior Managers in
Government at Harvard's JFK School of Government. Gen.
Estes is the President of Howell Estes &
Associates, Inc., a wholly owned consulting firm to
CEOs, Presidents and General Managers of aerospace and
telecommunications companies worldwide. He serves as
Vice Chairman of the Board of Trustees at The Aerospace
Corporation. He served as a consultant to the Defense
Science Board Task Force on SPACE SUPERIORITY and more
recently as a commissioner on the U.S. Congressional
Commission to Assess United States National Security
Space Management and Organization (the "Rumsfeld
Commission").
Robert S. Walker (60) Robert S. Walker was appointed to the Board of 13855 Stowe Drive
Directors as an independent director on April 2, 2001. Poway, CA 92064
Mr. Walker has acted as Chairman of Wexler & Walker
Public Policy Associates in Washington, D.C. since
January 1997. As a former Congressman (1977-1997),
Chairman of the House Science Committee, Vice Chairman
of the Budget Committee, and a long-time member of the
House Republican leadership, Walker became a leader in
advancing the nation's space program, especially the
arena of commercial space, for which he was the first
sitting House Member to be awarded NASA's highest
honor, the Distinguished Service Medal. Bob Walker is a
frequent speaker at conferences and forums. His main
issues include the breadth and scope of space
regulation today, and how deregulation could unleash
the telecommunications, space tourism, broadcast and
Internet industries. Mr. Walker currently sits on the
board of directors of Aerospace Corporation, a position
he has held since March 1997. Wexler & Walker is a
Washington-based, full-service government relations
firm founded in 1981. Wexler & Walker principals have
served in Congress, in the White House and federal
agencies, as congressional staff, in state and local
governments and in political campaigns. Wexler & Walker
is a leader on the technology issues of the
twenty-first century. During 2002 and 2001, we incurred
consulting fees with Hill and Knowlton, Inc., an
affiliate of Wexler & Walker, in an aggregate amount of
approximately $56,000 and $36,000, respectively.
Wesley T. Huntress (61) Wesley T. Huntress was elected to our Board of 13855 Stowe Drive
Directors as an independent director at our annual Poway, CA 92064
shareholder meeting held June 30, 1999. Dr. Huntress is
currently Director of the Geophysical Laboratory at the
Carnegie Institution of Washington in Washington, DC,
where he leads an interdisciplinary group of scientists
in the fields of high-pressure science, astrobiology,
petrology and biogeochemistry. Prior to his appointment
at Carnegie, Dr. Huntress served the Nation's space
program as the Associate Administrator for Space
Science at NASA from October 1993 through September
1998 where he was responsible for NASA's programs in
astrophysics, planetary exploration, and space physics.
During his tenure, NASA space science produced numerous
major discoveries, and greatly increased the launch
rate of missions. These discoveries include the
discovery of possible ancient microbial life in a Mars
meteorite; a possible subsurface ocean on Jupiter's
moon Europa; the finding that gamma ray bursts
originate at vast distances from the Milky Way and are
extraordinarily powerful; discovery of massive rivers
of plasma inside the Sun; and a wealth of announcements
and images from the Hubble Space Telescope, which have
revolutionized astronomy as well as increased public
interest in the cosmos. Dr. Huntress also served as a
Director of NASA's Solar System Exploration Division
from 1990 to 1993, and as special assistant to NASA's
Director of the Earth Science and Applications from
1988 to 1990. Dr. Huntress came to NASA Headquarters
from Caltech's Jet Propulsion Laboratory ("JPL"). Dr.
Huntress joined JPL as a National Research Council
resident associate after receiving is B.S. in Chemistry
from Brown University in 1964 and his Ph.D. in Chemical
Physics from Stanford in 1968. He became a permanent
research scientist at JPL in 1969. He and his JPL team
gained an international reputation for their pioneering
studies of chemical evolution in interstellar clouds,
comets and planetary atmospheres. At JPL Dr. Huntress
served as co-investigator for the ion mass spectrometer
experiment in the Giotto Halley's Comet mission, and as
an interdisciplinary scientist for the Upper Atmosphere
Research Satellite and Cassini missions. He also
assumed a number of line and research program
management assignments while at JPL, and spent a year
as a visiting professor in the Department of Planetary
Science and Geophysics at Caltech.
Stuart E. Schaffer (43) Stuart Schaffer has been our Vice President of Product 13855 Stowe Drive
Development and Marketing, since May 2002. From 1998 to Poway, CA 92064
2001, Mr. Schaffer acted as Vice President of marketing
for Infocus Corporation, a fully reporting company,
where he managed all aspects of the marketing mix for
market-share leading digital projection business
throughout the Americas region. In that position, Mr.
Schaffer revitalized the Proxima brand, managed a
multi-million dollar annual advertising, communications
and program budgets, directed multiple outside and
in-house agencies, led product marketing teams in
defining and delivering both mobile and conference room
digital projector product lines, developed channel
strategies and programs for both value-added and volume
channels, served as primary press spokesperson for the
company, established a market intelligence structure
focused on developing customer and industry knowledge
and spearheaded merger teams to ensure the smooth
transition of the merger between the Infocus and
Proxima marketing organizations. Prior to Infocus, Mr.
Schaffer worked for the Hewlett-Packard Company from
1985 to 1998, where he held various positions in
Business Development, Marketing and Business Planning.
Mr. Schaffer has worked with the Leukemia & Lymphoma
Society, on a volunteer basis, as an Assistant Coach
and Mentor. Mr. Schaffer has an MBA from Harvard
University and a BS degree in physics from Harvey Mudd
College.
J. Mark Grosvenor (55) J. Mark Grosvenor was appointed to the Board of 13855 Stowe Drive
Directors as an independent director at our Board Poway, CA 92064
Meeting on March 19, 2003. Mr. Grosvenor is currently
Chief Executive Officer of Grosvenor Industries,
originally established in San Diego in 1979. Grosvenor
Industries was involved in the purchase and sale of the
historic El Cortez Hotel in addition to owning three
other city blocks of property in downtown San Diego.
Grosvenor Industries also owns and operates Grosvenor
Square Shopping Center. Since 1979, Mr. Grosvenor has
built three hotels and has founded or become involved
with many other national businesses. In 1984, he
started Medallion Foods, Inc. in Newport, Arkansas, a
snack food manufacturing company supplying Wal-Mart,
Sam's Club and Costco as well as other companies. In
1989, Grosvenor formed GHG Hospitality, Inc., which
owns and operates eleven hospitality projects including
motels, hotels, resorts, and marinas across the United
States. Prior to founding Grosvenor Industries and its
combination of businesses, Grosvenor worked for more
than three years as a stockbroker and financial
planner. In 1973 he founded Jaymark Financial, a real
estate company with offices in San Diego, Tokyo and
Osaka, Japan. Mr. Grosvenor graduated from San Diego
State University with a bachelor's degree in business
and finance. Mr. Grosvenor has been very active in the
community as a member of San Diego Sheriff's
Association Honorary Deputy, Young Presidents
Organization: California and Colorado Chapters, the
President's Council at San Diego State University, the
Lincoln Club, the San Diego Rotary, the University Club
and the San Diego Yacht Club. He serves as a Director
of the Grosvenor Foundation, a private family
foundation which funds other charities.
Three of our independent directors currently sit on the boards of directors of
other Reporting Companies. "Reporting Companies" include companies with a class
of securities registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended (the "1934 Act") or subject to the requirements of Section
15(d) of the 1934 Act, or any company registered as an investment company under
the Investment Company Act of 1940, as amended (the "1940 Act").
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
We have a standing audit committee comprised of Mr. Blake, Mr. McClendon and Dr.
Huntress. We do not have a nominating committee or an advisory committee. The
Company does not maintain any pension, retirement or other arrangement other
than as disclosed in the following table for compensating its Directors. Our
Board of Directors took action fifteen (15) times during the last fiscal year:
eight (8) times at regular or special meetings attended by all of the members of
the Board either personally or telephonically, and seven (7) times by unanimous
written consent. Our Audit Committee took separate action three (3) times during
the last fiscal year, each time at a regular or special meeting attended by all
of the members of the committee either personally or telephonically.
DIRECTOR COMPENSATION
The following table sets forth the remuneration paid to our directors during the
fiscal year ended December 31, 2002. We do not pay directors who are also
officers of the Company additional compensation for their service as directors.
Cash Compensation Security Grants
Name Annual Meeting Fees Consulting Fees Number of Number of
Retainer Fees /Other Fees Shares Securities
Underlying
Options/SARs
James W. Benson - - - - -
----------------------------- -------------------- --------------- --------------- --------- ----------------
Charles H.Lloyd - - - - -
----------------------------- -------------------- --------------- --------------- --------- ----------------
Stuart Schaffer - - - - -
----------------------------- -------------------- --------------- --------------- --------- ----------------
Wesley T. Huntress - - - - 30,000
----------------------------- -------------------- --------------- --------------- --------- ----------------
Curt Dean Blake - - - - 30,000
----------------------------- -------------------- --------------- --------------- --------- ----------------
General Howell M. Estes, III - - - - 30,000
----------------------------- -------------------- --------------- --------------- --------- ----------------
Robert S. Walker - - - - 25,000
----------------------------- -------------------- --------------- --------------- --------- ----------------
Scott McClendon(1) - - - - 15,460(1)
----------------------------- -------------------- --------------- --------------- --------- ----------------
(1) Pursuant to our policy regarding compensation of independent directors,
we issued Mr. McClendon options to purchase a total of $5,000 in common shares,
or 10,460 shares at a per share price of $0.478, upon acceptance of his position
as one of our directors. The exercise price of the shares represents the fair
market value on July 19, 2002, the date of issuance. The options vest at a rate
of 50% on July 19, 2003 and the remaining 50% on July 19, 2004. Mr. McClendon
also received options to purchase 5,000 shares on October 31, 2002 for
attendance at a telephonic meeting of the Board of Directors. These options
vest as follows: 50% on the one-year anniversary of the grant date and 50% on
the two-year anniversary of the grant date.
EXECUTIVE OFFICERS
Certain information about the current executive officers of the Company is set
forth below. Each executive officer of the Company may be removed from office at
any time by a majority of the Company's Board of Directors with or without
cause.
James W. Benson (58) - Chief Executive Officer and Chairman of the Board of
Directors
Mr. Benson is the founder, Chairman and Chief Executive Officer of the Company.
Mr. Benson served as President of the Company until he resigned from that
position on February 4, 2000. Mr. Benson is also a Director of the Company, a
position he has held since October 1997. In 1984, Mr. Benson founded Compusearch
Software Systems in McLean, Virginia. The company was based on use of personal
computers to create full text indexes of massive government procurement
regulations and to provide fast full text searches for any word or phrase; the
first instance of large scale, commercial implementation of PC-based full text
searching. Mr. Benson sold Compusearch and started SpaceDev LLC, which was
acquired by the Company in October 1997. Mr. Benson holds a Bachelor of Science
degree in Geology from the University of Missouri. He founded the non-profit
Space Development Institute and introduced the $5,000 Benson Prize for Amateur
Discovery of Near Earth Objects. He is also Vice-Chairman and private sector
representative on NASA's national Space Grant Review Panel and a member of the
American Society of Civil Engineers subcommittee on Near Earth Object Impact
Prevention and Mitigation.
Stuart E. Schaffer (43) - Vice President of Product Development and Marketing
Mr. Schaffer has served as the Company's Vice President of Product Development
and Marketing since May 20, 2002. From 1998 to 2001, Mr. Schaffer acted as Vice
President of Marketing for Infocus Corporation, a fully reporting company, where
he managed all aspects of the marketing mix for market-share leading digital
projection business throughout the Americas region. In that position, Mr.
Schaffer revitalized the Proxima brand, managed a multi-million dollar annual
advertising, communications and program budget, directed multiple outside and
in-house agencies, led product marketing teams in defining and delivering both
mobile and conference room digital projector product lines, developed channel
strategies and programs for both value-added and volume channels, served as
primary press spokesperson for the company, established a market intelligence
structure focused on developing customer and industry knowledge and spearheaded
merger teams to ensure the smooth transition of the merger between the Infocus
and Proxima marketing organizations. Prior to his employment by Infocus
Corporation, Mr. Schaffer worked for the Hewlett-Packard Company from 1985 to
1998, where he held various positions in Business Development, Marketing and
Business Planning. Mr. Schaffer worked with the Leukemia & Lymphoma Society, on
a volunteer basis, as an Assistant Coach and Mentor from 2000 through the date
of employment with the Company. In that capacity, he was responsible for
ensuring that participants in the Society's Team-in-Training Program reached
their goal to run a marathon, while mentoring them in fundraising for research
and aid for patients suffering from Leukemia and other blood-related cancers.
Mr. Schaffer has an MBA from Harvard University (1985) and a BS degree in
physics from Harvey Mudd College (1981).
Richard B. Slansky (46) - Chief Financial Officer
Mr. Slansky is the Chief Financial Officer and Corporate Secretary and joined us
on February 10, 2003. Mr. Slansky served as interim Chief Executive Officer and
Chief Financial Officer of Quick Strike Resources, Inc., an IT training,
services and consulting firm, from July 2002 to February 2003. Previously, Mr.
Slansky served as Chief Financial Officer, Vice President of Finance,
Administration and Operations and Corporate Secretary for Path 1 Network
Technologies, Inc., a company focused on merging broadcast and cable quality
video transport with IP networks from May 2000 to July 2002. Before his tenure
at Path 1, Mr. Slansky served as President, Chief Financial Officer and member
of the Board of Directors of Nautronix, Inc., a marine electronics/engineering
services company, from January 1999 to May 2000. Prior to Nautronix, Mr. Slansky
served as Chief Financial Officer of Alexis Corporation, an international
pharmaceutical research products technology company, from August 1995 to January
1999. He also served as President and Chief Financial Officer of C-N
Biosciences, formerly Calbiochem, from July 1989 to July 1995. Mr. Slansky is
currently serving on the Board of Directors of two privately held high
technology companies and one closely held, private real estate company. Mr.
Slansky earned a bachelor's degree in economics and science from the University
of Pennsylvania's Wharton School of Business and a master's degree in business
administration in finance and accounting from the University of Arizona.
EXECUTIVE OFFICER COMPENSATION
During the fiscal years ended December 31, 2000, 2001, and 2002, the Company
granted options to certain of its officers as compensation for their services
pursuant to the Company's Stock Option Plan. Total compensation paid to officers
of the Company for its past three fiscal years is set forth below:
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
Securities All
Name and Other Restricted Under-lying LTIP Other
Principal Annual Stock Options/ Payouts Compen-
Position(1) Year Salary ($) Bonus ($) Compensation($) Award(s) ($) SARs (#) ($) sation
------------- ---- ------------- ----------- --------------- ------------ ------------ ------- -------
James W. 2000 42,946 - - - 2,500,000(2) - -
Benson, CEO 2001 147,923 - - - 10,000(2) - -
(2) 2002 141,325 - - - - - -
------------- ---- ------------- ----------- --------------- ------------ ------------ ------- -------
Charles H. 2000 77,770 - - - 750,000(3) - -
Lloyd, COO 2001 200,000 - - - 10,000(2) - -
& CFO 2002 118,565 - - - - - -
------------- ---- ------------- ----------- --------------- ------------ ------------ ------- -------
(1) The table includes information as to the Chief Executive Officer and
highest paid officers of the Company for the last fiscal year, including persons
whose information would have been required but for the fact that they were not
serving as officers of the Company at its fiscal year end. For purposes of the
table, only persons whose total annual salary and bonus exceeded $100,000 have
been included.
(2) Mr. Benson was awarded 2,500,000 options in 1997 and those options were
modified in 2000. Messrs. Benson and Lloyd were awarded 10,000 options each as
a part of an annual award of options to our employees. Mr. Lloyd resigned in
June 2002.
(3) 200,000 of these options were performance-based options, which
terminated on December 31, 2000. Mr. Lloyd was awarded 10,000 options as a part
of an annual award of options to our employees.
During the last fiscal year and as of December 31, 2002, the Company
granted stock options to executive officers as set forth in the following table:
OPTION/SAR GRANTS ENDED DECEMBER 31, 2002
Number of
Securities Value of
Underlying Unexercised In-the-
Unexercised Money
Options/SARs Options/SARs at
FY-End (#) at FY- End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable(1)
----------- --------------- ------------------ ------------------ -------------------
James W. 0 0 503,333/ 0/0
Benson 2,006,667
----------- --------------- ------------------ ------------------ -------------------
Charles H. 0 0 697,963/ 0/0
Lloyd(2) 0
----------- --------------- ------------------ ------------------ -------------------
(1) For purposes of determining whether options are "in-the-money," we
defined fair market value as the five-day weighted average of the closing price
of our common stock on the Over-The-Counter Bulletin Board as of March 7, 2003,
or $0.46 per share. None of the options listed on the table are "in-the-money."
(2) Mr. Lloyd resigned in June 2002; however, his options will remain
exercisable until the five-year anniversary of the grant date of each option, as
specified in a separation agreement with him dated May 31, 2002.
EMPLOYMENT AGREEMENTS
On November 21, 1997, we entered into a five-year employment agreement with our
CEO, Mr. Benson. This agreement provides for compensation of salary and stock as
well as stock options. This agreement also prohibits Mr. Benson from competing
with us, disclosing any confidential information, or soliciting any of our
employees or customers for one year after termination of employment. Our Board
of Directors revised Mr. Benson's employment agreement at its meeting on July
16, 2000. This employment contract supercedes the previous agreement. The term
of this revised employment contract is for a period of five (5) years from July
16, 2000. The revised agreement provides for the grant of options to purchase up
to 4,000,000 shares of our common stock upon the occurrence of certain events,
of which options to purchase 500,000 shares are currently vested.
On May 17, 2002, we entered into an "at-will" employment agreement with Mr.
Schaffer. The agreement provided for Mr. Schaffer's compensation of salary,
benefits and options to purchase up to 450,000 shares of our common stock. The
agreement also provided for severance under certain termination provisions.
On May 31, 2002, we entered into a Confidential Separation Agreement and General
Release of Claims with Mr. Lloyd, our former Chief Operating Officer and Chief
Financial Officer. The agreement provided for the resignation of Mr. Lloyd as an
officer and director of SpaceDev, Inc. and Integrated Space Systems, Inc.,
effective June 14, 2002. In exchange for a release of claims and other promises
set forth in the agreement, Mr. Lloyd received $36,000 and an extension of the
exercise period of each of his non-statutory stock options for a five-year
period from the original date of grant. Until May 31, 2003, the agreement also
prohibits Mr. Lloyd from soliciting our employees, inducing any customer away
from us or representing himself on our behalf.
On February 14, 2003, we entered into an "at-will" employment agreement with Mr.
Slansky. The agreement provided for Mr. Slansky's compensation of salary,
benefits and options to purchase up to 375,000 shares of our common stock. The
agreement also provided for severance under certain termination provisions.
EMPLOYEE BENEFITS
At our 1999 Annual Stockholder Meeting, the shareholders adopted an Incentive
Employee Stock Option Plan under which its Board of Directors may grant our
employees, directors and affiliates Incentive Stock Options, Supplemental Stock
Options and other forms of stock-based compensation, including bonuses or stock
purchase rights. Incentive Stock Options, which provide for preferential tax
treatment, are only available to employees, including officers, and affiliates,
and may not be issued to non-employee directors. The exercise price of the
Incentive Stock Options must be 100% of the fair market value of the stock on
the date the option is granted. Pursuant to our plan, the exercise price for the
Supplemental Stock Options will not be less than 85% of the fair market value of
the stock on the date the option is granted. We are required to reserve an
amount of common shares equal to the number of shares, which may be purchased as
a result of awards made under the Plan.
At the 2000 Annual Stockholder Meeting, the shareholders approved an amendment
to the Stock Option Plan of 1999, increasing the number of shares eligible for
issuance under the Plan to 30% of the then outstanding common stock and allowing
the Board of Directors to make annual adjustments to the Plan to maintain a 30%
ratio to outstanding common stock at each annual meeting of the Board of
Directors. The Board, at its annual meetings in 2001 and 2002, made no
adjustment, as a determination was made that the number of shares then available
under the Plan was sufficient to meet the Company's needs. As of December 31,
2002, 4,184,698 shares were authorized for issuance under the Plan, 3,398,772 of
which are currently subject to outstanding options and awards. The Stock Option
Plan of 1999 was registered with the U.S. Securities & Exchange Commission on
Form S-8.
During the fourth quarter of fiscal year 2002, we issued non-statutory options
to purchase 30,000 shares to our independent directors for attendance at our
October 18, 2002 Board of Directors meeting. In addition to the Stock Option
Plan of 1999, our shareholders adopted the 1999 Employee Stock Purchase Plan,
which authorized our Board of Directors to make twelve consecutive offerings of
our common stock to our employees. The 1999 Employee Stock Purchase Plan has
been instituted. To date, no employees have purchased any shares of common stock
under the Plan. We also offer a variety of health, dental, vision, 401(k) and
life insurance benefits to our employees in conjunction with our co-employment
partner, Administaff.
EQUITY COMPENSATION PLAN INFORMATION
(a) (b) (c)
-------------------------------------------- --------------------- ---------------- -----------------
Plan category Number of Weighted-average Number of
securities to be exercise price of securities
issued upon outstanding remaining
exercise of options, warrants available for
outstanding and rights future issuance
options, warrants under equity
and rights compensation plans
(excluding
securities
reflected in
column (a))
-------------------------------------------- --------------------- ---------------- -----------------
Equity
compensation plans 2,938,772 $0.86 1,245,926
approved by
security holders
-------------------------------------------- --------------------- ---------------- -----------------
Equity 2,500,000 $10.50 0
compensation plans
not approved by
security holders
-------------------------------------------- --------------------- ---------------- -----------------
Total 5,438,772 $5.29 1,245,926
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James W. Benson, our Chief Executive Officer and Chairman of the Board of
Directors, and Susan Benson, our former Corporate Secretary, are husband and
wife. Mr. Benson has personally guaranteed the building lease on our facility.
One of our independent directors, Robert S. Walker, is a principal of Wexler &
Walker Public Policy Associates, a Washington-based, full-service government
relations firm founded in 1981. Wexler & Walker principals have served in
Congress, in the White House and federal agencies, as congressional staff, in
state and local governments and in political campaigns. Wexler & Walker is a
leader on the technology issues of the twenty-first century. During 2002 and
2001, we incurred consulting fees with Hill and Knowlton, Inc., an affiliate of
Wexler & Walker, in an aggregate amount of approximately $56,000 and $36,000,
respectively.
In December 2001, we entered into a consulting agreement with one of our
independent directors, Curt D. Blake, pursuant to which Mr. Blake agreed to
perform certain services for us and identify and qualify significant investors
and potential acquisition targets for us. Under the agreement, Mr. Blake was to
receive compensation, in cash and non-statutory stock options, for his services.
In addition, Mr. Blake was to receive a cash finder's fee plus a common stock
grant for all monies raised as a result of introductions made by him. However,
as a result of the independence rules imposed by the Sarbanes-Oxley Act of 2002,
Mr. Blake voluntarily terminated his agreement with us on November 25, 2002.
In September and October 2002, certain of our officers provided personal
interest-free short-term loans to support our working capital needs. The officer
loans were paid with the proceeds from imminently pending contract payments and
the proceeds of the convertible note program sales.
From October 14, 2002 through November 14, 2002, we sold an aggregate of
$475,000 of 2.03% convertible debentures to two of our directors, officers and
Mr. Skarupa, a former officer. Mr. Benson purchased $375,000 of Series A
Subordinated Convertible Notes and Mr. Shaffer purchased $50,000. The total
funding was completed on November 14, 2002. The convertible debentures entitle
the holder to convert the principal and unpaid accrued interest into our common
stock when the note matures. The notes originally were set to mature six (6)
months from issue date and were subsequently extended to twelve (12) months from
issue date on March 19, 2003, unless paid, extended or re-negotiated, the
convertible debentures are exercisable into a number of our common shares at a
conversion price that equals the 20-day average asking price less 10%, which was
established when the note was issued, or the initial conversion price.
Concurrent with the issuance of the convertible debentures, we issued to the
subscribers, warrants to purchase up to 1,229,705 shares of our common stock.
These warrants are exercisable for three (3) years from the date of issuance at
the initial exercise price, which equals to the 20-day average asking price less
10% which was established when the note was issued, or the initial conversion
price. Upon issuance, the warrants were valued using the Black-Scholes pricing
model based on the expected fair value at issuance and the estimated fair value
was recorded as debt discount. See Note 8(c) to our Consolidated Financial
Statements for discussion of the terms of the warrants. The debt discount is
being amortized as additional interest expense over the term of the convertible
debentures.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review on the Forms 3 and 4 furnished to us with respect to our
most recent fiscal year, each of the Directors and/or Executive Officers each
timely filed his initial Form 3 and Forms 4 under Section 16(a) of the
Securities and Exchange Act of 1934 during 2002 with the following exception:
Messrs. Schaffer and McClendon filed their initial Form 3's a few days late.
REQUIRED VOTE
In voting for directors, you must vote all of your shares noncumulatively. This
means that the owners of a majority of the Company's outstanding common shares
have the power to elect the entire Board of Directors. The vote of a majority of
shares of the Company represented at the meeting, provided at least a quorum (a
majority of the outstanding shares) is represented in person or by proxy, is
sufficient for the election of the above nominees. By completing the Proxy, you
give the named Proxies the right to vote for the persons named in the table
above. If you elect to withhold authority for any individual nominee or
nominees, you may do so by making an "X" in the box marked "VOTE FOR NOMINEE(S)
NOT LINED OUT," and by striking a line through the nominees' name or names on
the Proxy that you do not vote for.
Each of the nominees for director has agreed to serve as a director of the
Company until his replacement is elected and qualified. If any unforeseen event
prevents one or more of the nominees from serving as a director, your votes will
be cast for the election of a substitute or substitutes selected by the Board.
In no event, however, can the Proxies be voted for a greater number of persons
than the number of nominees named. Unless otherwise instructed, the Proxies will
vote for the election of each nominee to serve as a director of the Company.
OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY.
PROPOSAL 2
RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Sarbanes-Oxley Act of 2002 ("Act") established the Public Company Accounting
Oversight Board ("PCAOB") and charged it with the responsibility of overseeing
the audits of public companies that are subject to the federal securities laws.
Under the Act, the PCAOB's duties include the establishment of a registration
system for public accounting firms. The PCAOB has proposed rules for the
registration process, which will require approval of the U.S. Securities
Commission ("SEC") prior to enforcement. Within 180 days after SEC approval, all
public accounting firms will be required to register with the PCAOB if they wish
to prepare or issue audit reports on U.S. public companies, or to play a
substantial role in the preparation or issuance of such reports. Once
registered, public accounting firms will be required to file periodic reports
with the PCAOB. At this time, the cost of compliance with these new rules cannot
be determined, and, as a result of the recent legislation, the cost of
professional liability insurance for public accounting firms has dramatically
increased. We have been informed by our independent auditor, Nation Smith Hermes
Diamond, Accountants and Consultants, P.C. ("Nation Smith"), that it will not
register with the PCAOB and, as a result, will not be able to continue to act as
our independent auditor once the rules are in effect.
Our Board of Directors has selected PKF, Certified Public Accountants, as the
Company's independent accountants for the fiscal year ending December 31, 2003,
and has directed us to submit the selection of independent accountants to the
shareholders for ratification at the Annual Meeting. Nation Smith audited the
Company's financial statements for fiscal 2002. A representative of PKF,
Certified Public Accountants, is expected to be present at the Annual Meeting.
Stockholders are not required to ratify the selection of PKF, Certified Public
Accountants, as the Company's independent accountants. However, our Board of
Directors is submitting the selection of PKF, Certified Public Accountants, to
the shareholders for ratification as a matter of good corporate practice. If the
shareholders fail to ratify the selection, our Board of Directors will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Board, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if it
determines that such a change would be in the best interests of the Company and
its shareholders.
AUDIT FEES
The fees billed by Nation Smith for professional services for the audit of the
Company's annual consolidated financial statements for the 2002 Fiscal Year and
the review of the quarterly consolidated financial statements was $54,000. The
aggregate fees for non-audit services rendered to the Company during the 2002
Fiscal Year were $25,657. Non-audit services include fees for tax consultation,
tax preparation and fees associated with an audit by the Internal Revenue
Service.
The affirmative vote of the holders of a majority of the common shares
represented and voting at the meeting will be required to ratify the selection
of PKF, Certified Public Accountants.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
RATIFY SELECTION OF THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2003.
PROPOSAL 3
RATIFICATION OR REJECTION OF
INCREASE IN AUTHORIZED SHARES
Under Colorado law, we may issue shares only to the extent such shares have been
authorized under our Articles of Incorporation. Our Articles of Incorporation
currently authorize the issuance of up to 25,000,000 common shares, $0.0001 par
value per share, and up to 10,000,000 preferred shares, $0.001 par value per
share. As of May 29, 2003, approximately 15,338,907 common shares were issued
and outstanding, and an aggregate of approximately 9,632,497 shares were
reserved for issuance as follows:
An aggregate of approximately 2,554,020 shares are issuable in connection with
the exercise of outstanding warrants issued by the Company.
An aggregate of approximately 2,500,000 shares are issuable in connection with
the exercise of outstanding options issued by the Company in connection with
certain employment contacts.
An aggregate of approximately 3,348,772 shares are issuable in connection with
the exercise of outstanding options issued to employees of the Company as part
of annual awards made to employees under the Company's 1999 Stock Option Plan.
An aggregate of approximately 1,229,707 shares are issuable in connection with
the exercise of outstanding convertible notes issued to certain officers of the
Company under its recent convertible note offering.
Therefore, assuming the exercise of all options, warrants and convertible notes
of the Company outstanding as of May 29, 2003 plus the ungranted but reserved
stock options under the Company's 1999 Stock Option Plan, the Company would be
oversubscribed by 1,807,871 common shares. As a consequence, the Company has no
shares available to it for issuance and insufficient shares to meet all of its
obligations in the event of exercise of all outstanding convertible securities.
Our Board of Directors has approved, subject to the shareholder approval, an
amendment to our Articles of Incorporation, which would change the
capitalization of the Company by increasing the number of authorized common
shares from the currently authorized 25,000,000 shares of $0.0001 par value
common stock to 50,000,000 shares of $0.0001 par value common stock, all common
shares to constitute a single class. The text of the proposed amendment is set
forth in Appendix A to this Proxy Statement.
PURPOSE OF AMENDMENT
Our Board of Directors is seeking the ensure that shares will be available both
to cover currently outstanding obligations on convertible securities and for
future issuance in the event that our Board of Directors determines that it is
necessary or advisable to raise additional capital through the sale of
securities to fund business operations, to attract strategic partners and/or
candidates for business combination who can assist the Company in generating
revenue streams and are capable of increasing our revenues, to declare share
dividends (when appropriate) and affect share splits (if necessary or
advisable), or for other corporate purposes.
Other than as described above, our Board of Directors has no present agreement,
arrangement or commitment to issue any of the shares for which approval is
sought. However, the Board of Directors believes that if an increase in the
number of authorized common shares were to be postponed until a specific need or
purpose arose, the delay and expense in obtaining the approval of our
shareholders at that time could impair significantly our ability to acquire
strategic assets, meet financing requirements or meet other objectives.
EFFECT OF AMENDMENT
It is not possible to determine the effect of the additional authorized common
shares on the rights of the shareholders of the Company until the Board of
Directors actually issues additional common shares; however, our Board of
Directors will have the authority to issue authorized common shares without
requiring future shareholder approval of such issuances, except as may be
required by applicable law or regulations or the Company's governing documents.
Our shareholders could, therefore, experience a reduction in their ownership
interest in the Company with respect to earnings per share (if any), voting,
liquidation value, and book and market value if the additional authorized shares
are issued. If the Board of Directors elects to issue additional common shares,
the issuance could have a dilutive effect on earnings per share and book value
per share, as well as percentage voting power, if a shareholder does not
purchase additional shares to maintain its, his or her pro rata interest.
Although the Board of Directors will authorize the issuance of additional common
shares only when it considers doing so to be in the best interests of the
shareholders, the availability for issuance of additional common shares could
also enable the Board of Directors to render more difficult or discourage an
attempt to obtain control of the company through, for example, a proposed
merger, tender offer, proxy contest or unsolicited takeover attempt. When, in
the judgment of the Board of Directors such action would be in the best
interests of the shareholders and the Company, the issuance of common shares
could be used to create voting impediments or to discourage persons seeking to
gain control of the Company, for example, by the sale of common shares to
purchasers favorable to the Board of Directors. The issuance of new shares could
also be used to dilute the share ownership of a person or entity seeking to
obtain control of the Company should the Board of Directors consider the action
of such entity or person not to be in the best interests of the shareholders and
the Company. Such issuance of common shares would also have the effect of
diluting the earnings per share and book value per share of the common shares
held by the current holders of common shares. Neither management nor the Board
is aware of any planned effort on the part of any party to accumulate material
amounts of common shares or to acquire control of the Company by means of a
merger, tender offer, proxy contest or otherwise, or to change the Company's
management.
The Board of Directors is required to make any determination to issue common
shares based upon its judgment as to the best interests of the shareholders and
the Company. Our Board of Directors believes that the authorization of the
additional common shares is in the best interests of the Company and its
shareholders and believes that it is advisable to authorize such shares and have
them available in connection with possible funding of new financial product
programs or businesses and other uses not presently determinable and as may be
deemed to be feasible and in the best interests of the Company. Other than in
connection with the conversion of our currently outstanding securities or our
line of credit, our Board of Directors has no present agreement, arrangement or
commitment to issue any of the shares for which approval is sought. While the
Company may consider effecting an equity offering of common shares in the future
for the purposes of raising additional working capital or otherwise, as of the
date hereof, we have no agreements or understandings with any third party to
effect any such offering, and no assurances are given that any offering will in
fact be effected.
In addition, although an increase in the authorized common shares could, under
certain circumstances, be construed as having an anti-takeover effect, the Board
of Directors is not proposing this amendment to the Articles of Incorporation in
response to any effort known to the Board of Directors to accumulate common
shares or to obtain control of the Company by means of a merger, tender offer or
solicitation in opposition to management. Finally, the Board of Directors does
not currently contemplate recommending the adoption of any other amendments to
the Articles of Incorporation, which could be construed as affecting the ability
of third parties to take over or to change the control of the Company.
RIGHTS OF HOLDERS OF COMMON STOCK
Holders of the newly authorized common shares, like the current shareholders,
will be entitled to one vote per share on all matters submitted to a vote of the
shareholders and to receive ratably dividends, if any, as may be declared from
time to time by the Board of Directors from funds legally available therefore,
subject to the payment of any outstanding preferential dividends declared with
respect to any preferred shares that from time to time may be outstanding. Upon
our liquidation, dissolution or winding up, holders of common shares will be
entitled to share ratably in any assets available for distribution to
shareholders after payment of all of our obligations, subject to the rights to
receive preferential distributions of the holders of any preferred shares then
outstanding. As of the date hereof, no shares of preferred stock are
outstanding.
The holders of our common shares have no preemptive rights, which means that
current shareholders do not have a prior right to purchase any new issue of
common shares in order to maintain their proportionate ownership in the Company.
Our Board of Directors has no plans to grant preemptive rights with respect to
any of the newly-authorized shares.
REQUIRED VOTE
Approval of the amendment to the Articles of Incorporation to increase the
number of the Company's authorized common shares from 25,000,000 to 50,000,000
requires the affirmative vote of a majority of the shares cast at the meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND
OUR ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED COMMON
SHARES.
OTHER MATTERS
We do not intend to present any business at the meeting not mentioned in this
Proxy Statement, and currently know of no other business to be presented. If any
other matters are brought before the meeting, the appointed Proxies will vote on
all such matters in accordance with their judgment of the best interests of the
Company.
AUDIT COMMITTEE REPORT
Following is the report of the Audit Committee with respect to the Company's
audited consolidated financial statements for the fiscal year ended December 31,
2002, which include the consolidated balance sheets of the Company as of
December 31, 2002 and 2001 and the related consolidated statements of
operations, shareholders' equity and cash flow for each of the fiscal years
ended December 31, 2002 and 2001, and the notes thereto.
The Audit Committee of the Company's Board of Directors currently consists of
three directors, none of which are employees of the Company or any of its
subsidiaries. Pursuant to an Audit Committee Charter adopted on April 19, 2002,
the Audit Committee is required to be comprised of at least three directors. The
Board believes that the current members of the committee, Mr. Blake, Mr.
McClendon and Dr. Huntress, are "independent directors" as that term is defined
under the Nasdaq listing standards.
The primary responsibility of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities related to corporate
accounting, financial reporting practices, and the quality and integrity of the
Company's financial reports. In that respect, the Audit Committee has reviewed
and discussed the audited financial statements and the footnotes thereto with
management and the independent auditors. The Audit Committee has not been
apprised of any misstatements or omissions in the financial statements. In
addition, the Audit Committee discussed with the independent auditors the
matters required to be discussed by Statement of Auditing Standard No. 61,
Communication with Audit Committees, including, among other items, matters
related to the conduct of the audit of the Company's financial statements.
The Audit Committee has received from the independent accountants, as required
by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committee, (i) a written disclosure, indicating all relationships, if any,
between the independent auditor and its related entities and the Company and its
related entities which, in the auditor's professional judgment, reasonably may
be thought to bear on the auditor's independence, and (ii) a letter from the
independent auditor confirming that, in its professional judgment, it is
independent of the Company; and the Audit Committee has discussed with the
auditor the auditor's independence from the Company.
Based on the reviews and discussions referred to above, we recommended to the
Board of Directors that the audited consolidated financial statements be
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2002.
Submitted by the Audit Committee of the Company's Board of Directors:
Curt Dean Blake
Scott McClendon
Wesley T. Huntress
AUDIT COMMITTEE CHARTER
Our Audit Committee currently consists of three independent members of the Board
of Directors: Messrs. Blake, McClendon and Dr. Huntress. On April 19, 2002, the
Board of Directors adopted and approved a charter for the Audit Committee. The
primary function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing the financial information
that will be provided to the shareholders and others, the preparation of the
Company's internal financial statements, and the Company's audit and financial
reporting process. In addition, our Audit Committee is responsible for
maintaining free and open lines of communication among the committee, the
independent auditors and management. Our Audit Committee consults with the
Company's management and independent auditors prior to the presentation of
financial statements to shareholder and, as appropriate, initiates inquiries
into various aspects of the Company's financial affairs. The committee is also
responsible for considering and recommending the appointment of and reviewing
fee arrangements with our independent auditors. It is not responsible for
preparing the Company's financial statements or for planning or conducting the
audits.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be presented by
such shareholders at the Company's next Annual Meeting of Shareholders must be
received by the Company no later than May 1, 2004 in order to be considered for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
/s/ Richard B. Slansky
-------------------------
Richard B. Slansky,
Corporate Secretary
Dated: June 12, 2003
PROXY PROXY
SPACEDEV, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 18, 2003
The undersigned hereby appoints James W. Benson and Richard B. Slansky, Chief
Executive Officer and Corporate Secretary, respectively, and each of them, as
attorneys and Proxies of the undersigned, with full power of substitution, to
vote all of the shares of stock of SpaceDev, Inc. (the "Company") which the
undersigned may be entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at 13855 Stowe Drive, Poway, California 92064 on July 18,
2003 at 11:00 A.M. local time and at any and all continuations and adjournments
or postponements thereof, with all powers that the undersigned would possess if
personally present, on the following matters, in accordance with the following
instructions, and on all matters that may properly come before the meeting. With
respect to any matter not known to the Company as of July 18, 2003, such proxies
are authorized to vote in their discretion.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2, AND FOR PROPOSAL 3 AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
YOUR VOTE IS IMPORTANT. THEREFORE, YOU ARE URGED TO COMPLETE,
SIGN, DATE AND PROMPTLY RETURN THIS PROXY
IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on the other side)
SPACEDEV, INC.
PLEASE MARK VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES
FOR DIRECTOR AND FOR PROPOSALS 2 AND 3.
1. To elect eight directors to hold office until the 2003 Annual Meeting of
Shareholders.
FOR WITHHELD VOTE FOR NOMINEE(S) NOT LINED OUT
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[ ] [ ] [ ] Strike a line through the nominee(s) name or names below
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that you do not vote for
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NOMINEES: James W. Benson, Scott McClendon, Curt Dean Blake, Gen. Howell M.
Estes, III, Robert S. Walker, Wesley T. Huntress, Stuart E. Schaffer, and J.
Mark Grosvenor.
2. To approve the appointment of PKF, Certified Public Accountants, as the
Company's independent public accountants for the fiscal year ending December 31,
2003.
FOR AGAINST ABSTAIN
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[ ] [ ] [ ]
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3. To approve an amendment of the Articles of Incorporation of the Company
to increase the number of authorized shares of the Company's Common Stock from
25,000,000 shares to 50,000,000 shares.
FOR AGAINST ABSTAIN
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[ ] [ ] [ ]
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Date Shares Held Signature
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Print Name
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Date Shares Held Signature
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Print Name
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E-Mail Address
Please sign exactly as your name appears on your stock certificate. If the
stock is registered in the names of two or more persons, each should sign.
Executors, administrators, trustees, guardians and attorneys-in-fact should add
their titles. If signer is a corporation, please give full corporate name and
have a duly authorized officer sign, stating title. If signer is a partnership
or limited liability company, please sign the company name by authorized person.