UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
[X] Filed by the Registrant
[_] 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 167;240.14a-12
Profile Technologies, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box);
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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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.
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Profile Technologies, Inc.
One Blue Hill Plaza
P.O. Box 1574
Pearl River, New York 10965
____________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 2001
____________________________________
The Annual Meeting of Shareholders of Profile Technologies, Inc. (the
"Company") will be held at 9:00 a.m, local time, on Tuesday, November 13, 2001
at the Hilton Tarrytown, 455 South Broadway, Tarrytown, New York 10591 for the
following purposes:
1. To elect a Board of Directors consisting of six persons to serve a
term of one year (until the next annual Shareholder's Meeting) or
until their respective successors are elected and have been qualified.
2. To transact such other business as may properly come before the Annual
Meeting and any postponement or adjournment thereof.
The Board of Directors has fixed October 9, 2001 as the record for
determining the shareholders of the Company entitled to notice of and to vote at
the meeting and any adjournment of the meeting. The transfer books of the
Company will not be closed, but only shareholders of the Company of record on
such date will be entitled to notice of and to vote at the meeting or
adjournment.
Shareholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend the meeting in person, please sign and date
the accompanying proxy and return it promptly in the enclosed envelope. No
additional postage is required if the envelope is mailed in the United States.
The giving of a proxy will not affect your right to vote in person if you attend
the meeting and will assure that your shares are voted if you are unable to
attend.
By Order of the Board of Directors
Henry E. Gemino
Chief Executive Officer
October 12, 2001
PROFILE TECHNOLOGIES, INC.
One Blue Hill Plaza
P.O. Box 1574
Pearl River, New York 10965
_____________________________________________________________________________
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
To be held on November 13, 2001
____________________________________________________________________________
INTRODUCTION
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of Profile Technologies, Inc., a Delaware corporation (the "Company"), to be
voted at the Annual Meeting of Shareholders to be held at the Hilton Tarrytown,
455 South Broadway, Tarrytown, New York 10591 at 9:00 a.m. local time on
November 13, 2001 and at any and all adjournments of the meeting. The enclosed
materials will be mailed to Shareholders on or about October 15, 2001.
The matters listed below will be considered and voted upon at the meeting:
1. To elect a Board of Directors consisting of six persons to serve a term
of one year (until the next annual Shareholder's Meeting) or until their
respective successors are elected and have been qualified;
2. To transact such other business as may properly come before the Annual
Meeting and any postponement or adjournment thereof.
Shares of common stock as to which Proxies have been executed will be voted
as specified in the Proxies. If no specifications are made, the shares will be
voted "For" Management's nominees for Director and will be voted at the
discretion of the proxy with respect to other matters which may properly come
before the meeting pursuant to item 2 above. A Proxy may be revoked at any time
before it is voted by filing with the Secretary of the Company either a written
revocation or a duly executed Proxy bearing a later date. Additionally,
attendance at the meeting and voting shares in person will revoke any prior
proxy relating to such shares.
The presence, in person or by proxy, of the holders of a majority of the
outstanding Common Stock of the Company is necessary to constitute a quorum at
the meeting. Votes cast by proxy or in person at the Annual Meeting will be
counted by a person appointed by the Company to act as the election inspector
for the meeting. The election inspector will treat shares represented by
proxies that reflect abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum.
All of the officers and directors and their affiliates (who own in the
aggregate approximately 663,900 of the shares outstanding) have informed the
Company that they intend to vote in favor of management's nominees for director
as set forth herein.
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VOTING SECURITIES
The total number of outstanding shares of the Company's $.001 par value
Common Stock entitled to vote at the meeting, based upon the shares of record at
the close of business on October 9, 2001 (the "Record Date") is 4,261,092. As
of the Record Date, the only outstanding voting securities of the Company were
shares of Common Stock, each of which is entitled to one vote on each matter to
come before the meeting.
PROPOSAL 1
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ELECTION OF DIRECTORS
The current Board of Directors of the Company consists of Henry E. Gemino,
G. L. Scott, John Tsungfen Kuo, Murphy Evans, William A. Krivsky and Charles
Christenson. All of these persons have agreed to be renominated to stand for
election to the position of director at the annual shareholders meeting. If one
or more of the nominees is unable to serve or for good cause will not serve at
the time of the meeting, the shares represented by the proxies solicited by the
Board of Directors will be voted for the other nominees and for any substitute
nominee(s) designated by the Board of Directors. A quorum being present, a
favorable vote of a majority of shares present and voting, either in person or
by proxy, is required for the election of any Director. Under applicable
Delaware law, in tabulating the vote, abstentions and broker non-votes will be
disregarded and will have no effect on the outcome of the vote.
Nominees for the Election to the Board of Directors:
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION SINCE
------------ -------------------- -----
G. L. Scott (75) Chairman of the Board 1988
Henry E. Gemino (50) Chief Executive Officer, 1988
Chief Financial Officer,
Profile Technologies, Inc.
Murphy Evans (69) President, Profile Technologies, Inc. 1995
John Tsungfen Kuo (79) Professor Emeritus 1995
Columbia University
Vice-Chairman and Chief Technology
Officer
Profile Technologies, Inc.
Charles Christenson (71) Professor Emeritus 1998
Harvard Graduate School of
Business Administration
William A. Krivsky (74) Partner in Kellogg, Krivsky & Buttler 2000
3
Set forth below is information regarding the directors:
G. L. Scott. Mr. Scott, since 1988, has been Chairman of the Board of
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Profile Technologies, Inc. and served as the Company's Chief Executive Officer
until October 2000. From 1984 to the present, he has been Ranch Manager of the
GX2 Ranch in Rogue River, Oregon. From 1978 to 1984 Mr. Scott was Chief
Executive Officer and later Chairman of the Board of NORPAC Exploration
Services, Inc. of Denver, Colorado. While involved with NORPAC, he facilitated
the merger of several oil service companies into a conglomerate that included
oil exploration, drilling, data sales and brokerage, tape reproduction and data
storage. NORPAC went public in 1981 and was acquired by a subsidiary of Texas
Eastern Pipeline Co., in 1984.
Henry E. Gemino. From 1988, Mr. Gemino has been co-founder and Chief
---------------
Financial Officer of Profile Technologies, Inc. From 1988 through October 2000
he was Executive Vice President and Chief Operating Officer of the Company. In
October 2000 he became Chief Executive Officer.
Murphy Evans. Mr. Evans is President and a director of the Company and is
------------
also President of L & S Holding Co., a family owned holding company that is
engaged in several different businesses. Mr. Evans received an AB degree in
history from Princeton University in 1954 and an MBA degree from the Harvard
Graduate School of Business Administration in 1958.
John Tsungfen Kuo, Ph.D., Sc.D. Dr. Kuo has been a director of and
-------------------------------
consultant to the Company since 1995. Dr. Kuo is currently the Ewing and Worzel
professor emeritus at Columbia University and is an expert in acoustic, elastic,
hydrodynamics, and electromagnetic wave propagation. Born in China, Dr. Kuo
immigrated to the United States in 1949 and became a naturalized United States
citizen in 1967. He received a BS degree in Geology, Physics and Mathematics
from the University of Redlands in 1952 and an honorary Sc.D from the same
school in 1978. He received an MS degree in Geophysics from the California
Institute of Technology in 1954 and a Ph.D. in Geophysics from Stanford
University in 1958. Among his teaching positions, he was professor from 1967-
1983, Vinton professor from 1983-1985 and Ewing and Worzel professor from 1984-
1992, all at Columbia University. He has been involved in numerous research
projects involving various aspects of Geophysics for almost 40 years. He was
the recipient of the Alexander Vin Humboldt award for Distinguished U.S. senior
scientists from the Federal Republic of Germany in 1986. He was a distinguished
senior scholar at the University of Cambridge, England from 1970-1971; visiting
professor at the University of Texas in Austin from 1978-1979 as well as a
visiting professor in 1978; adjunct professor 1992 at Cornell University; and
visiting professor at the Technical University of Clausthal in the Federal
Republic of Germany in 1986-1987. He was also director of the Lamont-Doherty
Earth Observatory's underground Geophysical observatory in Ogdensburg, New
Jersey from 1967-1977. He is also associate life editor of Geophysics review (a
publication of the American Geophysics Union) and a member of numerous other
professional and scientific organizations.
4
Charles Christenson. Professor Christenson has been a director of the
-------------------
Company since 1998. He is the Royal Little Professor of Business
Administration, Emeritus, at the Graduate School of Business Administration at
Harvard University and served as faculty chairman of both the MBA and the
Doctoral Programs. He received his B.Sc. degree in Industrial and Labor
Relations from Cornell University in 1952, his MBA degree with high distinction
from Harvard University in 1954 and his DBA degree in Managerial Economics from
Harvard University in 1961. While on leave of absence from the Harvard
University faculty, he also served as Deputy to the Assistant Secretary of the
Air Force (Financial Management) during the Kennedy Administration. he is a
member of the American Association for the Advancement of Science, the American
Accounting Association and the American Economics Association. Professor
Christenson has also authored or co-authored a number of books and articles on
quantitative methods, management control and philosophy of science.
William A. Krivsky. Mr. Krivsky holds a Doctorate of Science from MIT and
------------------
was previously President of Velcro Industries N.V., Executive Vice President of
Bird Corporation, President of Compo Industries and Group Vice President of
Certaineed Corporation (now part of Paris-based St. Gobain Industries). He is
currently President in Kellogg, Krivsky & Buttler Inc., a mergers and
acquisition consulting firm, President of Keyson Enterprises Inc., and President
of the Keyson Co. Inc. He is also director of Cognex Corporation and Hitchiner
Manufacturing Co.
BOARD OF DIRECTORS AND COMMITTEES
The Company has an Audit Committee and a Compensation Committee. The
Company does not have a Nominating Committee.
The Audit Committee is composed of William Krivsky and Charles Christenson.
The principal functions of the Audit Committee are to monitor the Company's
financial reporting process and internal control system, to review and appraise
the audit efforts of the Company's independent accountants and the internal
audit function, and to provide an open avenue of communication among the
independent accountants, financial and senior management, the internal audit
function, and the Board of Directors. The committee held one meeting during the
year ended June 30, 2001. The committee also reviewed the Company's quarterly
financial reports before their publication but did not find any issues in them
that required formal meetings.
The Compensation Committee is composed of Murphy Evans, William Krivsky and
G. L. Scott. The principle functions of the Compensation Committee are to
establish overall compensation policies for the Company and to review the
recommendations submitted to it by the Company's management. The committee held
two meetings during the year ended June 30, 2001.
During the year ended June 30, 2001, the Company's Board of Directors held
7 meetings. All directors attended at least seventy-five percent of all of the
meetings including regularly scheduled and special meetings, and the meetings of
all committees of the Board on which they served that were held in the past
fiscal year during periods in which they were directors or served on such
committees.
5
There are no family relationships among the directors. There are no
arrangements or understandings between any directors and any other person
pursuant to which that director was elected.
The Company has no compensation, pension, profit sharing or similar plans
in effect. It provides a medical reimbursement plan and medical insurance
coverage to officers and may provide other benefits to officers and employees in
the future. It also pays a director's fee to non-employee directors of $1,000
per month and, to the Chairman of the Board of Directors, $1,000 per month in
cash and $1,000 per month in stock. The Company also reimburses actual expenses
incurred in attending Board meetings.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is composed of two directors
and operates under a written charter (Exhibit A), adopted by the Board of
Directors, in accordance with applicable rules of the Securities and Exchange
Commission and the National Association of Securities Dealers (NASD). Each of
the members of the Audit Committee is independent, as defined by the NASD.
The independent auditors are responsible for performing an independent
audit of the Company's financial statements in accordance with generally
accepted auditing standards and issuing a report thereon. One of the Audit
Committee's primary responsibilities is to monitor and oversee this process.
The Audit Committee also recommends to the Board of Directors the selection of
the Company's independent auditors.
In this context, the Audit Committee has reviewed and discussed the
Company's financial statements with management. The Audit Committee also
discussed with the independent auditors matters required of auditors to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Company's independent auditors also provided to the Audit
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Audit
Committee discussed with the independent auditors their independence.
Based on the foregoing, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 2001 for filing
with the Securities and Exchange Commission.
Audit Committee
William Krivsky
Charles Christenson
6
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the record date by
(i) all persons who own of record or are known to the Company to beneficially
own more than 5% of the issued and outstanding shares of common stock, and (ii)
by each director, each director nominee, each of the executive officers named in
the tables under "Executive Compensation" and by all executive officers and
directors as a group:
Amount and Nature of Percent of Class Based
Positions and Offices Beneficial Common Stock on Beneficial
Name and Address Held Ownership/(1)/ Ownership/(1)/
---------------------- ---- ------------- --------------
Henry Gemino Chief Executive 598,100/(2)/ 13.2%
5 Strickland Place Officer, Chief
Manhasset, L.I., NY Financial Officer,
11030 Director
G.L. Scott Chairman of the 167,800/(3)/ 3.9%
P.O. Box 986 Board of Directors
Rogue River, OR 97537
Murphy Evans President, 260,000/(4)/ 6.0%
204 Railroad Street Director
P.O. Box 688
Laurinburg, NC 28532
John Tsungfen Kuo Director, 340,000/(5)/ 7.4%
11 Hoffman Lane Vice-Chairman,
Blauvelt, NY 10913 Chief Technology
Officer
Charles Christenson Director 14,000/(6)/ *
1 Chauncy Lane
Cambridge, MA 02238
William A. Krivsky Director 15,000/(7)/ *
117 Perimeter Road
Nashua, NH 06063
7
Philip L. Jones Chief Operating 39,000/(8)/ *
203 Beaver Road Officer
Seuvickley, PA 15143
Gale D. Burnett Shareholder 691,000 16.2%
9191 Northwood Rd.
Lynden, WA 98264
Frank Goodhart, Jr. Shareholder 250,000 5.9%
1069 Old Forge
Crossing
Lancaster, PA 17601
All Directors and 1,433,900/(9)/ 28.5%
Officers as a Group
(7 persons)
* less than one
percent
____________________
/(1)/ Calculated pursuant to rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting and
investment power with respect to all such shares. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding
for the purpose of calculating the number and percentage owned by such
person, but are not deemed outstanding for the purpose of calculating the
percentage owned by each other person listed.
/(2)/ Includes warrants to purchase 270,000 of Common Stock.
/(3)/ Includes 19,800 shares issued in the name of Mr. Scott's wife. Also
includes warrants to purchase 45,000 shares of Common Stock issued to Mr.
Scott
/(4)/ Includes 30,000 shares held by the wife of Mr. Evans. Also includes
45,000 shares held in the name of Falco Enterprises, Inc., controlled by
Mr. Evans. Also includes 15,500 held by L&S Holding Co., controlled by
Mr. Evans. Also includes 5,000 shares held in a trust to which Mr. Evans
is trustee with sole voting and investment power over the shares. Also
includes warrants to purchase 65,000 shares of Common Stock.
/(5)/ Includes 330,000 warrants to purchase Common Stock.
/(6)/ Includes options to purchase 10,000 shares of Common Stock.
/(7)/ Consists entirely of options to purchase Common Stock.
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/(8)/ Includes 35,000 options to purchase Common Stock.
/(9)/ Assumes exercise of all warrants and options owned by all officers and
directors.
EXECUTIVE OFFICERS OF THE COMPANY
Certain information regarding the executive officers of the Company
follows:
Name Age Position Held With Company
---- --- --------------------------
Henry Gemino 50 Chief Executive Officer,
Chief Financial Officer
Murphy Evans 69 President
John Tsungfen Kuo 79 Chief Technology Officer
Philip L. Jones 59 Executive Vice President and
Chief Operating Officer
Philip L. Jones joined the Company on September 7, 2001 and is the
Company's Executive Vice President and Chief Operating Officer. Prior to that,
Mr. Jones served in various capacities with Consolidated Natural Gas Company, a
large integrated energy company, for more than 30 years, including six years as
Vice President for Marketing with CNG's exploration and production subsidiary,
CNG Producing Company. He received his law degree from West Virginia College of
Law in 1967 and his B.A. from Princeton University in 1964. Mr. Jones was a
Captain in the U.S. Army, 142/nd/ JAG Detachment.
There are no family relationships among the executive officers. There are
no arrangements or understandings between any officers and any other person
pursuant to which that officer was selected.
EXECUTIVE COMPENSATION
Employment Contracts.
--------------------
None of the executive officers are employed pursuant to employment
contracts. However, the Company has entered into confidentiality agreements
with each executive officer concerning the confidentiality of information in
connection with the Company's technology.
Cash Compensation.
-----------------
The following table shows all cash compensation paid or to be paid by the
Company as well as other compensation paid or accrued during the fiscal years
indicated to the chief
9
executive officer and the highest paid executive officers of the Company as of
the end of the Company's last fiscal year whose salary and bonus for such period
in all capacities in which the executive officer served exceeded $100,000.
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards
------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Annual Restricted Options/ LTIP All Other
Principal Compen- Stock SARs Payouts Compen-
position Year Salary($) Bonus($) sation($) Award(s) $ (#) ($) sation($)
-------- --- -------- ------- ------------ ---------- -------- ------- ---------
Henry Gemino 2001 $120,000 0 0 0 0 0 0
Chief Executive 2000 $120,000 0 0 0 0 0 0
Officer and 1999 $120,000 0 0 0 0 0 0
Chief
Financial
Officer (1)
G.L. Scott 2001 $ 24,000 0 0 0 0 0 0
Formerly Chief 2000 $ 24,000 0 0 0 0 0 0
Executive 1999 $ 24,000 0 0 0 0 0 0
Officer (2)
John Tsungfen 2001 $120,000 0 0 0 0 0 0
Kuo 2000 $120,000 0 0 0 0 0 0
Chief 1999 $120,000 0 0 0 0 0 0
Technology
Officer
____________
/(1)/ On October 9, 2000, Mr. Gemino became Chief Executive Officer. Prior to
that date, he served as Executive Vice President and Chief Operating
Officer. Throughout the most recent fiscal year, Mr. Gemino served as
Chief Financial Officer.
/(2)/ Mr. Scott served as Chief Executive Officer until October 9, 2000. Mr.
Scott remains Chairman of the Board.
Options/SAR Exercises and Holdings
----------------------------------
The following table sets forth information with respect to the named
executives, concerning the exercise of options and/or limited SARs during the
last fiscal year and unexercised options and limited SARs held as of the end of
the fiscal year June 30, 2001.
10
Aggregated Options/SAR Exercises in Last Fiscal Year and FY-End Options/SAR
Values:
(a) (b) (c) (d)/(1)/ (e)/(1)(2)/
Number of Securities Value of Unexercised
Unexercised Options/ In-the-Money Options/SARs at
Shares Acquired Value SARs at FY-End (#) FY End ($)
Name On Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ------------ ------------------------- ----------------------------
Henry Gemino --- --- 270,000/0 23,750/0
G.L. Scott --- --- 45,000/0 0/0
John Tsungfen Kuo --- --- 350,000/0 0/0
___________________
/(1)/ All Options/SARs are in the form of common stock purchase warrants.
/(2)/ The value calculations is based on the fair market value of the
underlying stock at year end, minus the exercise price.
There have been no awards of options, stock purchase warrants or SAR's, or
any adjustments or amendments to the exercise price of stock options or SARs
previously awarded to any of the named executive officers, whether through
amendment, cancellation or replacement grants or any other means during the last
fiscal year ended June 30, 2001.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1988 at the time Gale D. Burnett first transferred certain
technology, know-how and patent rights to the Company, a royalty interest of 4%
of all pre-tax profits derived from the technology and know-how thus transferred
was granted to Northwood Enterprises, Inc., a family owned company controlled by
Mr. Burnett. Northwoods Enterprises subsequently assigned such royalty interest
back to Mr. Burnett. In turn, Mr. Burnett, on April 8, 1996, assigned half of
this royalty interest (1 3/4%) as follows: to Mr. Henry E. Gemino, Chief
Executive Officer, Chief Financial Officer and director (1 1/4%); to Mr. G.L.
Scott, Chairman of the Board of Directors (1/2%). This royalty arrangement also
applies to all future patent rights and technology developed by Mr. Burnett and
assigned to the Company. To date, no royalty payments have been made or earned
under the above-described arrangement.
In March 1996 the Company granted a net pre-tax royalty on profits equal to
1% to Dr. John Kuo in return for his assignment of certain patent rights,
technological know-how and proprietary information and trade secrets. The
effect of these royalty interests is that a total of 5% of any net pre-tax
earnings of the Company derived from the use of said technology developed by Mr.
Burnett or Dr. Kuo is subject to distribution as above described. To date, no
royalty interest has been earned or distributed.
11
OTHER MATTERS TO BE VOTED UPON
Management does not know of any other matters to be brought before the
meeting. If any other matters not mentioned in the proxy statement are properly
brought before the meeting, the individuals named in the enclosed proxy intend
to vote such proxy in accordance with their best judgment on such matters.
COMPLIANCE WITH SECTION 16(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
The Company's executive officers and directors are required to file reports
of ownership and changes in ownership of the Company's securities with the
Securities and Exchange Commission as required under provisions of the
Securities Exchange Act of 1934. Based solely on the information provided to
the Company by individual directors and executive officers, the Company believes
that during the last fiscal year all directors and executive officers have
complied with applicable filing requirements.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG LLP as the independent certified
public accountants to audit the financial statements of the Company for its
fiscal year ended June 30, 2002. To the knowledge of management, neither such
firm nor any of its members has any direct or material indirect financial
interest in the Company nor any connection with the Company in any capacity
otherwise than as independent accountants.
A representative of KPMG LLP is expected to be present at the annual
meeting of shareholders to answer proper questions and will be afforded an
opportunity to make a statement regarding the financial statements.
Audit Fees. The Company incurred aggregate fees of $46,500 from KPMG LLP
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during the fiscal year ended June 30, 2001 for the annual audit and for review
of the Company's financial statements included in its Form 10-Qs for the past
fiscal year.
Financial Information Systems Design and Implementation Fees. The Company
------------------------------------------------------------
did not incur any fees from KPMG LLP for information technology services for the
past fiscal year.
All Other Fees. The Company incurred aggregate fees of $5,000 from KPMG LLP
--------------
for all other services, including tax management advisory services for the past
fiscal year. The Audit Committee has considered whether the non-audit services
provided by KPMG LLP are compatible with maintaining the independence of KPMG
LLP.
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STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2002 annual meeting
of Stockholders must be received by the Company on or before June 19, 2002, in
order to be eligible for inclusion in the Company's proxy statement and form of
proxy. To be so included, a proposal must also comply with all applicable
provisions of Rule 14a-8 under the Securities Exchange Act of 1934.
With respect to stockholder proposals not included in the Company's proxy
statement for the 2002 Annual Meeting, the persons named in the Board of
Directors' proxy for the 2002 Annual Meeting will be entitled to exercise the
discretionary voting power conferred by such proxy under the circumstances
specified in Rule 14a-4(c) under the Securities Exchange Act of 1934.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED JUNE 30, 2001, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, CAN
BE OPTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY, P.O. BOX 1574,
PEARL RIVER, NEW YORK 10965, ATTENTION: HENRY E. GEMINO.
BY ORDER OF THE BOARD OF DIRECTORS
Henry E. Gemino
Chief Executive Officer
October 12, 2001
13
EXHIBIT A
CHARTER OF THE AUDIT COMMITTEE
I. PURPOSE
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance, and ethics; and the
Corporation's auditing, accounting and financial reporting processes generally.
Consistent with this function, the Audit Committee should encourage continuous
improvements of, and should foster adherence to, the Corporation's policies,
procedures and practices at all levels. The Audit Committee's primary duties
and responsibilities are to:
Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent
accountants and the internal audit function.
Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal audit
function, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be composed of two or more directors, each of
whom shall be independent directors as that term is defined by the National
Association of Securities Dealers (NASD). A director who is not independent
according to the NASD definition may be appointed to the Audit Committee if the
Board, under exceptional and limited circumstances, determines that membership
on the Committee by the individual is in the best interests of the Corporation
and its shareholders, and the Board discloses in the next annual proxy statement
subsequent to the determination the nature of the relationship and the reasons
for the determination.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee shall
have accounting or related financial management expertise. Committee members
may enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Corporation or an outside consultant.
A-1
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors shall
be duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by a majority vote of the full
Committee.
III. MEETINGS
The Committee shall meet at least three times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the director of
internal auditing, and the independent accountants in separate executive
sessions to discuss any matters that the Committee or each of these groups
believe should be discussed privately.
Prior to the commencement of the annual audit, the Committee should be
advised by management and the external and internal auditors about:
. The audit scope and approach;
. Special areas needing attention;
. Significant planned changes in the Corporation's accounting principles,
policies, and practices; and
. Recent developments in accounting principles or reporting practices that
may affect the Corporation.
The Committee should meet annually with the independent auditors and
management to review the Corporation's annual financial statements consistent
with IV.2 below, and the Committee, or at least its Chair, should meet quarterly
with the independent auditors and management to review the Corporation's
quarterly report consistent with IV.4 below.
The Committee shall keep written minutes of its meetings. Copies of such
minutes shall be distributed to each member of the Board of Directors and filed
by the Secretary of the Corporation in the minute book of the Audit Committee.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the Corporation's annual financial statements and any reports or
other financial information submitted to any governmental body or the
public, including any certification, report, opinion, or review conducted
by the independent accountants.
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3. Review the regular internal reports to management prepared by the internal
auditor and management's response.
4. Review with financial management and the independent accountants the 10-Q
report prior to its filing or prior to the public release of earnings. The
Chair of the Committee may represent the entire Committee for purposes of
this review.
Independent Accountants
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness, and approve the
fees and other compensation to be paid to the independent accountants. On an
annual basis, the Committee should review and discuss with the accountants
all significant relationships the accountants have with the Corporation to
determine the accountants' independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accounts when the circumstances
warrants.
7. Periodically consult with the independent accountants out of the presence of
management about internal controls and the fullness and accuracy of the
Corporation's financial statements.
Financial Reporting Processes
8. In consultation with the independent accountants and the internal auditor,
review the integrity of the Corporation's financial reporting processes,
both internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting.
10. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditor.
Process Improvement
11. Establish regular and separate systems of reporting to the Audit Committee
by each of management, the independent accountants, and the internal auditor
regarding any significant judgments made in management's preparation of the
financial statements and the view of each as to the appropriateness of such
judgments.
12. Following completion of the annual audit, review separately, with each of
management, the independent accountants and the internal auditor any
significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
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13. Review any significant disagreement among management and the independent
accountants or the internal auditor in connection with the preparation of
the financial statements.
14. Review with the independent accountants, the internal auditor and
management to extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been
implemented.
Ethical and Legal Compliance
15. Establish, review, and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
16. Review management's monitoring of the Corporation's compliance with the
Ethical Code and ensure that management has the proper review system in
place to ensure that the Corporation's financial statements, reports and
other financial information disseminated to governmental bodies and the
public satisfy legal requirements.
17. Review activities, organizational structure, and qualifications of the
internal auditor.
18. Review, with the Corporation's counsel, legal compliance matters including
corporate securities trading policies.
19. Review, with the Corporation's counsel, any legal matter that could have a
significant impact on the Corporation's financial statements.
20. Perform any other activities consistent with this Charter, the
Corporation's By-Laws and the governing
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PROFILE TECHNOLOGIES, INC.
One Blue Hill Plaza
P. O. Box 1574
Pearl River, New York 10965
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 13, 2001
The undersigned having received the Annual Report to the Shareholders and the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement dated
October 12, 2001, hereby appoints Henry E. Gemino and G. L. Scott (each with
power to act alone and with power of substitution) as proxies and hereby
authorizes them to represent and vote, as directed below, all the shares of
common stock of Profile Technologies, Inc. held of record by the undersigned on
October 9, 2001, at the annual meeting of shareholders to be held on November
13, 2001, and any adjournments thereof.
(1) ELECTION OF DIRECTORS: [_] For all nominees below (except as [_] WITHHOLD AUTHORITY to vote for all
marked to the contrary) nominees below
Henry E. Gemino, G. L. Scott, Murphy Evans, Dr. John Tsungfen Kuo, Charles Christenson, William A. Krivsky
INSTRUCTION: To withhold authority to vote for any individual nominee, draw a
line through or otherwise strike out his name. If authority is
not withheld, the execution of this Proxy shall be deemed to
grant such authority.
(2) IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued and to be signed on reverse side)
This proxy, when properly executed, will be voted as directed. Where no
direction is given, this proxy will be voted FOR all nominees as director listed
above and FOR Proposal 2.
Any proxy or proxies previously given for the meeting are revoked.
Please sign your name(s) exactly as
shown below. If signer is a
corporation, please sign the full
corporate name by duly authorized
officer. If an attorney, guardian,
administrator, executor, or trustee,
please give full title as such. If a
partnership, please sign in
partnership name by authorized person.
Dated:__________________________, 2001
______________________________________
______________________________________
Please complete, date, sign, and
return this proxy promptly in the
enclosed envelope to Profile
Technologies, Inc., One Blue Hill
Plaza, P.O. Box 1574, Pearl River, NY
10965.