STRATESEC INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 23, 2002
The 2002 Annual Meeting of the Shareholders of STRATESEC Incorporated,
a Delaware corporation (the "Company"), will be held on December 23, 2002 at
2:00 p.m. local time at 2600 Virginia Avenue, N.W., Suite 500, Washington, D.C.
for the following purposes:
1. To elect a Board of five Directors.
2. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
These items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only shareholders of record at the close of business on November 1,
2002 are entitled to notice of and to vote at the meeting.
A majority of the Company's outstanding shares must be represented at
the meeting (in person or by proxy) to transact business. To assure proper
representation at the meeting, please mark, sign, and date the enclosed proxy
and mail it promptly in the enclosed self-addressed envelope. Your proxy will
not be used if you revoke such proxy either before or at the meeting.
Nassima Briggs
Secretary
Dated: November 5, 2002
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IF YOU ARE UNABLE TO BE PERSONALLY PRESENT, PLEASE SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOUR VOTE IS IMPORTANT.
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STRATESEC INCORPORATED
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited on behalf of the Board of Directors of
STRATESEC Incorporated (the "Company") for use at the Annual Meeting of
Shareholders to be held on December 23, 2002 at 2:00 p.m. local time, or at any
adjournment or postponement thereof. The Annual Meeting will be held at 2600
Virginia Avenue, N.W., Suite 500, Washington, D.C. The Company's principal
offices are located at 14360 Sullyfield Circle, Suite B, Chantilly, Virginia
20151 and its telephone number is (703) 995-2121. These proxy solicitation
materials will be mailed to shareholders on or about November 15, 2002.
Shareholders of record at the close of business on November 1, 2002 are
entitled to notice of, and to vote at, the Annual Meeting. On November 1, 2002,
8,401,472 shares of the Company's Common Stock were issued and outstanding. Each
share of Common Stock outstanding on the record date is entitled to one vote.
Votes Required for Approval
The five nominees for director receiving a plurality of the votes cast
at the meeting in person or by proxy shall be elected.
The other matters will be approved if a majority of the votes cast at
the meeting approve the action. Abstentions and broker non-votes will not be
treated as votes cast and therefore will have no effect on the outcome of the
matters to be voted on at the Annual Meeting.
Any person may revoke a proxy at any time before its use by delivering
to the Company a written revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
The costs of this solicitation will be borne by the Company. These
costs represent amounts normally expended for a solicitation for an election of
directors. The Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally, by telephone or otherwise.
Deadline for Receipt of Shareholder Proposals for 2002 Annual Meeting
Proposals of shareholders intended to be included in the Company's
proxy materials for its 2003 Annual Meeting must be received by the Company no
later than February 25, 2003. If a shareholder intends to submit a proposal at
the 2003 Annual Meeting that is not eligible for inclusion in the proxy
materials relating to that meeting, the stockholder must do so no later than May
9, 2003. If the stockholder fails to comply with this notice provision, the
proxy holders will be allowed to use their discretionary voting authority when
and if the proposal is raised at the 2003 Annual Meeting. Such proposals should
be addressed to: Secretary, STRATESEC Incorporated, 2600 Virginia Avenue, N.W.,
Suite 500, Washington, D.C. 20037.
-2-
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of October 23, 2002 certain
information with respect to the beneficial ownership of the Company's Common
Stock by (i) each person known by the Company to be the beneficial owner of more
than 5% of the Company's voting securities, (ii) each of the Company's
directors, (iii) each of the Named Executive Officers, and (iv) all executive
officers and directors of the Company as a group.
Number Percent
of Shares of Total
--------- --------
NetCom Solutions International, Inc. 700,000 8.3%
Wirt D. Walker, III (1)(2) 650,010 7.7%
Barry W. McDaniel (2) 144,524 1.7%
Emmit J. McHenry (2)(3) 732,857 8.7%
James A. Abrahamson (2) 29,286 *
Charles W. Archer (2) 32,857 *
All Officers and Directors as a Group (5 persons) (4) 1,589,534 18.9%
-----------------------
* Less than one percent
(1) Consists of 429,010 shares held by Mr. Walker, 45,000 shares held by Mr.
Walker's son, 50,000 shares owned by a trust for Mr. Walker's son, of which
Mr. Walker is the trustee, and 126,000 shares owned by a trust for Mr.
Walker's mother, of which Mr. Walker is also a trustee. Does not include
204,562 shares owned by KuwAm Corporation, of which Mr. Walker is the
Managing Director.
(2) Includes shares issuable upon exercise of options that are exercisable
within 60 days, as follows: Mr. Walker, 61,666 shares; Mr. McDaniel,
111,667 shares; Mr. McHenry, 15,000 shares; Lt. Gen. Abrahamson, 15,000
shares; Mr. Archer, 15,000 shares.
(3) Includes shares held by NetCom Solutions International, Inc., of which Mr.
McHenry is the founder, President and CEO.
(4) On October 23, 2002, executive officers and directors of the Company as a
group held options to purchase an aggregate of 515,000 shares of Common
Stock, representing approximately 23.8% of outstanding options at that
date. The numbers set forth in this table include an aggregate of 218,333
shares underlying options that are currently exercisable within 60 days of
such date.
-3-
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of five directors is to be elected at the Annual Meeting.
Unless marked to the contrary, all properly signed and returned proxies will be
voted for the election of management's five nominees named below, all of whom
are presently directors of the Company. If any nominee is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for any nominee designated by the present Board of Directors to fill the
vacancy. The Company is not aware of any nominee who will be unable or will
decline to serve as a director. The term of office of each person elected as a
director will continue until the next Annual Meeting of Shareholders or until a
successor has been elected and qualified.
The following sets forth certain information regarding each of the
nominees for election as director:
Wirt D. Walker, III, age 56, has served as Chief Executive Officer of
the Company since January 1999; he has served as a director of the Company since
1987, and as Chairman of the Board of Directors since 1992. Since 1982, Mr.
Walker has served as a director and the Managing Director of KuwAm Corporation,
a private investment firm. He is the Chairman and Chief Executive Officer of
Aviation General, Incorporated, a publicly traded holding company with two
wholly-owned subsidiaries: Commander Aircraft Company, which manufactures,
markets and provides support services for its line of single engine, high
performance Commander aircraft and provides consulting, brokerage and
refurbishment services for piston aircraft, and Strategic Jet Services, Inc.,
which provides consulting, brokerage and refurbishment services for jet
aircraft.
Barry W. McDaniel, age 53, has served as Chief Executive Officer of the
Company since January 2002. He previously served as Chief Executive Officer of
the Commercial Services division since December 2000, and as a director since
January 1999. Prior to joining the Company in 1998 as its Chief Operating
Officer, Mr. McDaniel was employed by BDM International from 1989 to 1998, most
recently as Vice President of Material Distribution and Management Systems. From
1989 to 1992 he was Vice President, Business Development and Operations for the
Systems and Communications Group. Mr. McDaniel was previously employed, from
1988 to 1989, by Proxim, a real-time systems integration company as Vice
President, Government Systems Integration. From 1970 to 1987, he was employed by
the U.S. Government with his last assignment as a member of the Senior Executive
Service (SES), serving as Deputy Director of Readiness for the United States
Army Materiel Command.
Charles W. Archer, age 56, has served as a director since March 1998.
Mr. Archer has been Vice President, Strategic Development for Litton/PRC since
January 1999. Mr. Archer served as the Company's President and Chief Executive
Officer from March 1998 to January 1999. Prior to 1998, Mr. Archer was employed
for 27 years by the Federal Bureau of Investigation (F.B.I.). During his tenure
with the F.B.I., Mr. Archer held a variety of management positions involving
large integrated technology projects and finance. From 1996 to 1997, he was an
Assistant Director of the F.B.I., in charge of its Criminal Justice Information
Services Division, the F.B.I.'s largest division.
-4-
Lt. General James A. Abrahamson, USAF (Retired), age 68, has served as
a director of the Company since December 1997. General Abrahamson has been the
Chairman and CEO of International Air Safety, LLC since November 1996. He served
as Chairman of the Board of Directors of Oracle Corporation from 1992 to 1995
and held various executive positions and served as a member of the board of
Hughes Aircraft Company from 1989 to 1992. General Abrahamson was formerly
Commissioner of the White House Commission on Aviation Safety and Security (Gore
Commission). Prior to 1989, General Abrahamson served in the United States Air
Force. During his tenure with the Air Force he held a variety of positions,
including Director of Development of the F-16 International Fighter, Director of
NASA's Space Shuttle Program and Director of President Reagan's Strategic
Defense Initiative ("Star Wars" Program).
Emmit J. McHenry, age 58, has served as a director of the Company since
March 2000. Mr. McHenry was the founder, and currently is the President and CEO
of NetCom Solutions International, Inc., an international telecommunications,
engineering, consulting, and technical services company. Prior to founding
NetCom Solutions International in 1995, Mr. McHenry was a founder of Network
Solutions, Inc., the internet domain services provider. In the past, Mr. McHenry
has held management positions with IBM, Connecticut General, Union Mutual, and
Allstate Insurance Company. He is an active member of the State Department's
Advisory Committee for International Communications and Information Policy and
serves as a Commissioner for the Fairfax County Economic Development Authority.
He is also a director of James Martin Government Intelligence and Global
Technology, L.L.C.
Director Compensation
Directors are paid an annual fee of $10,000, payable in equal quarterly
installments, for services as a director. Such fees are prorated when a director
does not serve for a full year. Directors receive no additional compensation for
committee participation or attendance at committee meetings, other than
reimbursement of travel and lodging expenses. In 2001, Directors were issued
common stock in lieu of their compensation, in the amount of 14,286 shares each.
All but one director also received 3,571 shares of common stock in lieu of their
prorated compensation due for the last quarter 2000, or $2,500.
The 1997 Stock Option Plan provides for the automatic annual grant of a
stock option to purchase 15,000 shares of Common Stock to each eligible
non-employee and employee director of the Company; non-employee directors will
automatically receive a non-statutory stock option and employee directors will
automatically receive an incentive stock option.
Board Meetings and Committees
The Board of Directors held a total of four meetings during the fiscal
year ended December 31, 2001. The Board has two committees: the Audit Committee
and the Compensation Committee.
-5-
The Audit Committee, comprised of Directors Abrahamson and Archer,
recommends the selection of the Company's independent accountants and approves
the scope of the audit to be conducted. The Committee is primarily responsible
for reviewing and evaluating the Company's accounting practices and its systems
of internal accounting controls. The Audit Committee held one meeting during
fiscal year 2001.
The Compensation Committee recommends the amount and type of
compensation to be paid to the Company's executive officers, reviews the
performance of the Company's key employees and administers and determines
distributions under the Company's Profit Sharing Plan. The Compensation
Committee will also determine the number of shares, if any, to be granted each
employee under such plan and the terms of such grants. The Compensation
Committee held one meeting during fiscal year 2001. Mr Abrahamson constitutes
the Compensation Committee.
No director attended fewer than 75% of all meetings of the Board of
Directors held during fiscal 2001 or of all meetings of any committee upon which
such director served during fiscal 2001.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Mr. Abrahamson, who is not
an employee of the Company. He is not eligible to participate in the Company's
Profit Sharing Plan. He receives compensation for services as a director (see
"Director Compensation").
Other Officers
R. Michael Lagow, age 42, has served as Executive Vice President since
January 2000. Mr. Lagow served in various executive positions with the company
from 1993 through 1999. Prior to joining the Company, Mr. Lagow was employed as
National Sales Manager of Control Systems International, a security systems
company, from 1991 to 1993. Prior to 1993, Mr. Lagow served as Vice President,
Network Security Corporation, developing and managing new markets for that
company.
Richard Roomberg, age 36, joined the Company in June 2002 as Executive
Vice-President, Chief Operating Officer and Chief Financial Officer. Prior to
joining the Company, from July 2001 to June 2002, he was providing financial
consulting services to various public and private technology companies. From
March 2000 to June 2001, Mr. Roomberg was Vice-President Finance and Corporate
Controller for Liquidation.com, Inc., a start-up software and Internet company.
Prior to that, he served as Vice President and Corporate Controller for Allstate
Financial Corporation and as International Controller for Digene Corporation, a
NASDAQ National Market biotechnology listed company. Mr. Roomberg is a Certified
Public Accountant and Certified Management Accountant.
-6-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows certain information concerning the
compensation of each of the Company's most highly compensated executive officers
for services rendered in all capacities to the Company for the fiscal years
ended 2001, 2000 and1999 (the "Named Executive Officers").
Annual Compensation Long-Term Compensation
----------------------------------- ---------------------------------
Securities
Underlying
Awarded Options Other Annual
Year Salary Bonus (in shares) Compensation (1)
----------------------------------------------------------------------
Wirt D. Walker, III........................... 2001 -- -- 115,000 $101,769 (2)
Chairman and Director 2000 -- -- 35,000 $133,500 (2)
1999 -- -- 65,000 $136,000 (2)
Barry W. McDaniel............................. 2001 $130,962 -- 215,000 --
President, Chief Executive Officer 2000 $150,000 -- 60,000 $7,500
and Director 1999 $150,000 -- 90,000 $7,500
R. Michael Lagow.............................. 2001 $142,870 -- -- --
Executive Vice President 2000 $125,000 -- 40,000 --
1999 $105,000 $21,000 65,000 --
----------------------
(1) Amounts paid as director fees unless otherwise indicated.
(2) Includes consulting fees paid.
-7-
Option Grants in Last Fiscal Year
The Committee approved the following stock option grants for the
executive officers during fiscal year 2001.
Potential Realizable Value
Number Percent of at Assumed Annual Rates of
of Securities Total Options Stock Price Appreciation for
Underlying Granted to Option Term
Options Employees in Exercise Expiration ----------------------------
Granted (1) Fiscal Year Price Date 5% 10%
---------------------------------------------------------------------------------------
Wirt D. Walker, III 115,000 11% $0.70 9/15/04 $12,689 $26,646
Barry W. McDaniel 215,000 20.8% $0.70 9/15/04 $23,723 $49,816
------------------
(1) Each option is non-transferable; vests as to 33% of the shares covered by
such option over three years, commencing on the first anniversary of the
date of issuance; is canceled prior to vesting in the event the holder
either resigns from the Company or is terminated for justifiable cause; and
is void after the date listed under the heading "Expiration Date." The
exercise price of the stock subject to options was equal to the market
value on the date of grant. The number of shares issuable upon exercise of
each option is subject to adjustment subsequent to any stock dividend,
split-up, re-capitalization or certain other transactions.
During 2001, Messrs. Walker and McDaniel were each granted an option to
purchase 15,000 shares of Common Stock for their services as a director,
pursuant to the 1997 Stock Option Plan.
-8-
Aggregated Option Exercises in Last Fiscal Year and Option Values as of December
31, 2001.
The following table shows the options exercised during fiscal 2001, the
number of shares of Common Stock represented by outstanding stock options held
by each executive officer as of December 31, 2001 and the value of such options
based on the closing price of the Company's Common Stock on December 31, 2001,
which was $0.58.
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options at FY End (#) (1) Money Options at FY End ($)(2)
Number of ------------------------ ------------------------------
Shares Acquired Value Exercisable/
Name On Exercise (#) Realized(3) Unexercisable Exercisable/Unexercisable
---- --------------- ----------- ------------- -------------------------
Wirt D. Walker, III --- --- 55,000/160,000 $0/0
Barry W. McDaniel --- --- 80,000/285,000 $0/0
--------------
(1) Represents the total number of shares subject to stock options held by each
executive officer. These options were granted on various dates during
fiscal years 1999 through 2001 and are exercisable on various dates
beginning in 2000 and expiring in 2004.
(2) Represents the difference between the exercise price and $0.58, which was
the closing price on December 31, 2001. Stock option exercise prices range
from $0.70 to $2.75, therefore no options were in the money at December 31,
2001.
(3) No options were exercised in 2001.
Equity Compensation Plan Information
The following table provides certain equity plan information as of the
fiscal year ended December 31, 2001.
(a) (b) (c)
------------------------------- ---------------------------- ---------------------------- ----------------------------
Plan Category Number of securities to be Weighted-average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plan
(excluding securities
reflected in column (a))
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plan
approved by security holders 2,151,000 $1.11 489,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plan not
approved by security holders N/A N/A N/A
------------------------------- ---------------------------- ---------------------------- ----------------------------
-9-
Consulting Agreement
The Company has entered into a consulting agreement with Mr. Walker, to
provide strategic and corporate development services through March 31, 2002,
renewable automatically every year for a term of one year. The agreement
originally provided for payment of annual consulting fees of $145,000, and was
subsequently reduced by 10 percent. Fees for 2001 were $101,769, and Mr. Walker
is currently being paid fees at an annual rate of $130,500.
BOARD AUDIT COMMITTEE REPORT
Under the guidance of a written charter adopted by the Board of
Directors, the Audit Committee is responsible for overseeing the Company's
financial reporting process on behalf of the Board of Directors. A copy of the
charter is included in Appendix A to this proxy statement.
Management has the primary responsibility for the system of internal
controls and the financial reporting process. The independent auditors have the
responsibility to express an opinion on the financial statements based on an
audit conducted in accordance with generally accepted auditing standards. The
Audit Committee has the responsibility to monitor and oversee these processes.
In fulfilling its responsibilities, the Audit Committee recommended to
the Board the selection of the Company's independent auditors, Argy, Wiltse &
Robinson, LLP. That firm has discussed with the Committee and provided written
disclosures on (1) that firm's independence as required by the Independence
Standards Board and (2) the matters required to be communicated under generally
accepted auditing standards.
The Committee reviewed with the independent auditors, and without
management present, the overall scope and specific plans for the respective
audits as well as the results of their examinations, their evaluation of the
Company's internal controls, and the overall quality, not just the
acceptability, of STRATESEC's accounting and financial reporting.
Following these actions, the Committee recommended to the Board that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001 for filing with the Securities and Exchange
Commission. On May 24, 2002, Argy, Wiltse & Robinson ("Argy, Wiltse") resigned
as the Company's independent auditors because the firm had determined to resign
from all of its engagements as auditor of public companies. The Audit Committee
subsequently recommended the selection of Reznick Fedder & Silverman, LLP as the
Company's independent auditors for 2002.
Auditor Fees.
The fees billed to the Company by Argy, Wiltse & Robinson, LLP for
fiscal year 2001 were as follows:
-10-
Audit Fees. Argy, Wiltse & Robinson's fee for its audit of the
Company's annual financial statements and its review of the Company's quarterly
financial statements was $66,906.
Financial Information Systems Design and Implementation Fees. Argy,
Wiltse & Robinson did not provide any financial information systems design and
implementation services to the Company during 2001 and thus billed no fees for
such services.
As the members of the Audit Committee, both Messrs. Abrahamson and
Archer are considered "Independent" for purposes of the American Stock Exchange
listing standards.
THE AUDIT COMMITTEE
CHARLES W. ARCHER
LT. GEN. JAMES A. ABRAHAMSON
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is composed of Lt. General James A. Abrahamson. He is an independent outside
director. The Committee is charged with the responsibility for reviewing the
performance and approving the compensation of key executives and for
establishing general compensation policies and standards for reviewing
management performance. The Committee also reviews both corporate and key
executive performance in light of established criteria and goals and approves
individual key executive compensation.
Compensation Philosophy
The executive compensation philosophy of the Company is to provide
competitive levels of compensation that advance the Company's annual and
long-term performance objectives, reward corporate performance, and assist the
Company in attracting, retaining and motivating highly qualified executives. The
framework for the Committee's executive compensation programs is to establish
base salaries which are competitive to similarly sized companies and to create
incentives for excellent performance by providing executives with the
opportunity to earn additional remuneration linked to the Company's
profitability. The incentive plan goals are designed to improve the
effectiveness and enhance the efficiency of Company operations and to create
value for stockholders. It is also the Company's policy to encourage share
ownership by executive officers and non-employee directors through the grant of
stock options.
-11-
Components of Compensation
The compensation package of the Company's executive officers consists
of base annual salary, participation in the Company's 401(k) plan and stock
option grants.
At executive levels, base salaries are reviewed but not necessarily
increased annually. Base salaries are fixed at levels slightly below competitive
amounts paid to individuals with comparable qualifications, experience and
responsibilities engaged in similar businesses as the Company, based on the
experience of the Committee members, directors and employees of the Company
within the security systems industry.
The Company offers a 401(k) pre-tax employee savings plan to all
eligible employees. Employees may contribute 1% to 15% of pre-tax earnings up to
a maximum of $8,899. The Company contributes 25% of the first 5% of an
employee's contributed earnings or a maximum of 1.25% of an employee's total
earnings.
The Company uses stock options both to reward past performance and to
motivate future performance, especially long-term performance. The Committee
believes that through the use of stock options, executive interests are directly
tied to enhancing shareholder value. Stock options are granted at fair market
value as of the date of grant and generally have a term of three years. The
options vest 33% per year, beginning on the first anniversary date of the grant.
The stock options provide value to the recipients only when the market price of
the Company's Common Stock increases above the option grant price and only as
the shares vest and become exercisable.
Section 162(m) of the Internal Revenue Code, which provides for a
$1,000,000 limit on the deductibility of compensation, presently is not
applicable to the Company. The Committee will review its policy with respect to
Section 162(m) when and if the section is applicable in the future.
Compensation of Chief Executive Officer
The Committee makes decisions regarding the compensation of the Chief
Executive Officer using the same philosophy set forth above. The Committee's
approach in setting the Chief Executive Officer's compensation, as with that of
the Company's other executives, is to be competitive with other companies within
the industry, taking into consideration company size, operating conditions and
compensation philosophy and performance. Wirt D. Walker, III served as the Chief
Executive Officer from January 1999 until January 2002, when Barry McDaniel was
appointed to the position.
COMPENSATION COMMITTEE
LT. GEN. JAMES A. ABRAHAMSON
-12-
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and holders of more than ten percent
of the Company's Common Stock to file reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
The Company believes that during the fiscal year ended December 31, 2001, its
officers, directors and holders of more than 10% of the Company's Common Stock
complied with all Section 16(a) filing requirements.
-13
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company
include in this Proxy Statement a line-graph presentation comparing cumulative,
five-year shareholder returns on an indexed basis with (i) a broad equity market
index and (ii) either an industry index or peer group. An initial public
offering of the Company's stock occurred on October 2, 1997. The following graph
compares the percentage change in the cumulative total stockholder return on the
Company's Common Stock against the cumulative total return of the AMEX Market
Value Index and the Russell 2000 from October 2, 1997 through December 31, 2001.
Total return for the purpose of this graph assumes reinvestment of all
dividends, if any. The stock price performance shown on the graph is not
necessarily indicative of future price performance.
[GRAPHIC OMITTED]
-14
CERTAIN TRANSACTIONS
On November 30, 2000, the Company acquired Security Systems
Integration, Inc. (SSI) in a business combination accounted for as a pooling of
interests. In the transaction, SSI merged with a wholly owned subsidiary of the
Company, which then merged into the Company. The Company exchanged 1,650,000 in
newly issued shares and 350,000 in treasury shares of its common stock to Kamran
Hashemi, the sole stockholder of SSI, for all of the outstanding stock of SSI.
On May 29, 2002, the Company exchanged certain assets and liabilities with a
fair value of $193,555 to acquire 2 million shares of Stratesec Incorporated
from Mr. Hashemi.
During 2000, the Company entered into a lease agreement with Mr.
Hashemi for office space in Springfield, Virginia. The lease agreement provided
for payments of $10,000 per month through December 31, 2005. The Company
relocated to Chantilly, Virginia in March 2002 and the lease was terminated on
May 29, 2002 as part of the exchange of treasury stock.
The Company entered into a one-year lease, beginning March 24, 2002,
with NetCom Solutions International, Inc., a company that is a stockholder of
the Company and is controlled by Emmit McHenry, who is a director of the
Company. The lease calls for monthly payments of approximately $10,000 for rent
and expenses for phone, Internet, and other typical office services.
The Company entered into a consulting agreement with Wirt D. Walker
III, its chairman (who is also managing partner of KuwAm Corporation), which
provides for an annual consulting fee of $145,000 through March 31, 2003. As of
February 1998, the annual consulting fee under this agreement was reduced by 10
percent.
During 2002, the Company engaged KuwAm Corporation for corporate
secretarial services at the rate of $2,500 per month.
INDEPENDENT AUDITORS
The Board of Directors has approved a resolution retaining Reznick
Fedder & Silverman, LLP as its independent auditors for fiscal 2002.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the shares they
represent as the Board of Directors may recommend.
Nassima Briggs
Secretary
Dated: November 5, 2002
-15-
STRATESEC INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 23, 2002
The undersigned, having received the Annual Report to the Stockholders
and the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement dated November 5, 2002 hereby appoints Wirt D. Walker, III, Nassima
Briggs and each of them, proxies with full power of authorization, and hereby
authorizes them to represent and vote the shares of Common Stock of STRATESEC
INCORPORATED (the "Company") which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company to be
held on December 23, 2002 at 2:00 p.m. local time, and any adjournment thereof,
and especially to vote
1. PROPOSAL ONE--ELECTION OF DIRECTORS WITHHOLD AUTHORITY
FOR all nominees listed below__ to vote for all nominees listed below__
Wirt D. Walker, III, Barry W. McDaniel,
Emmit J. McHenry, Charles W. Archer, Lt. General James A. Abrahamson,
USAF (Retired)
To withhold authority to vote for any individual nominee, write that
nominee's name on the space provided below.
------------------------------------------------------------------------
4. IN THEIR DISCRETION the proxies are authorized to vote upon such other
business as may properly come before the meeting.
In the ballot provided for that purpose, if you specify a choice as the
action to be taken this proxy will be voted in accordance with such choice. If
you do not specify a choice, it will be voted FOR Proposal One as described in
the Proxy Statement.
Any proxy or proxies previously given for the meeting are revoked.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
Dated:________________________________,2002
___________________________________________
(Signature)
___________________________________________
(Signature if held jointly)
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or guardian
please give full title of each. If a
corporation, please sign in full corporate
name by president or other authorized
office. If a partnership, please sign in
partnership name by authorized person.