Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
790 Bloomfield Avenue, Bldg. C-1, Clifton, NJ 07012 Tel: (973)
574-8559 Fax: (973) 574-8562
You are cordially invited
to attend our 2013 Annual Shareholders’ Meeting, or the Annual Meeting, which will be held at 9:00 a.m. Eastern Time, on
Thursday, December 12, 2013 at the corporate offices of Electronic Control Security, Inc., 790 Bloomfield Avenue, Bldg. C-1, Clifton,
New Jersey 07012. Driving directions are at the end of this proxy statement. For further details see “About the Annual Meeting.”
The proxy statement,
which follows this notice, fully describes these items. We have not received notice of other matters that may be properly presented
at the Annual Meeting.
Only shareholders of
record at the close of business on November 6, 2013 will be entitled to vote at the Annual Meeting and any postponement or adjournment
of the meeting. For ten days prior to the Annual Meeting, a list of shareholders will be available for inspection at our executive
offices. If you would like to view the stockholder list, please call our Investor Relations Department at 973-574-8555 to schedule
an appointment.
Your vote is important.
If you do not vote your shares, you will not have a say in the important issues to be voted on at the Annual Meeting. To ensure
that your vote is recorded promptly, please vote as soon as possible, even if you plan to attend the Annual Meeting. Shareholders
have two options for submitting their vote: (1) by mail (2) through the internet or (3) by casting a ballot at the Annual
Meeting. For further details see “How do I vote?” and “Can I change my vote or revoke my proxy?” on Pages
2 and 3.
We are making the Proxy
Statement for the Annual Meeting and the Annual Report on Form 10-K for the year ended June 30, 2013 available at
http://www.electroniccontrolsecurityinc.investorroom.com.
TABLE OF CONTENTS
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ABOUT THE ANNUAL MEETING
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1
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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4
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EXECUTIVE COMPENSATION
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6
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Summary of Compensation Table
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6
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Grants of Plan-Based Awards
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7
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Outstanding Equity Awards at Fiscal Year End
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7
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Employment Agreements with Executive Officers
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7
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Compensation of Directors
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7
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CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
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8
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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8
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PROPOSAL NO. 1
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9
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Information Concerning the Board of Directors and Executive Officers
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11
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Board Meetings
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11
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CODE OF CONDUCT AND ETHICS
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11
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BOARD LEADERSHIP STRUCTURE
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11
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Board of Directors Committees
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12
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Shareholder Communications
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12
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Audit Committee
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13
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Board’s Role in Risk Oversight
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13
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REPORT OF THE AUDIT COMMITTEE
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13
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Director Independence
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14
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EXECUTIVE OFFICERS
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14
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PROPOSAL NO. 2
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16
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FEES OF THE INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 2013
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16
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COST OF SOLICITATION OF PROXIES
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17
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SHAREHOLDER PROPOSALS
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17
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OTHER BUSINESS
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17
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ELECTRONIC CONTROL SECURITY,
INC.
790 Bloomfield Avenue
Clifton, New Jersey 07012
PROXY STATEMENT
November 15, 2013
This proxy statement is being furnished
to our shareholders beginning on or about November 15, 2013, in connection with the solicitation of proxies by the Board of Directors
of Electronic Control Security, Inc. (sometimes referred to as “ECSI” or “the Company”) to be used at our
Annual Meeting of Shareholders (sometimes referred to as the “Annual Meeting”) to be held on December 12, 2013, at
the Company’s principal offices located at 790 Bloomfield Ave, Bldg. C-1, Clifton, New
Jersey 07012, at 9:00 a.m.,
local time, and at any postponements or adjournments thereof.
ABOUT THE ANNUAL MEETING
What am I voting on?
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Proposal 1:
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The election of eight directors for terms expiring
in 2014
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Proposal 2:
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The ratification of the
appointment by the Audit Committee of the Company’s Board of Directors of Demetrius
&
Company, L.L.C. as our independent auditors for the fiscal year ending June 30, 2014.
|
We are not aware of any other matters requiring a vote. If a
matter does properly come before the Annual Meeting, the person(s) named as the proxy in the accompanying form of proxy will vote
the proxy at their discretion.
What is the Board’s voting recommendations?
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Our
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board of directors recommends a vote:
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·
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FOR each of the eight nominated directors;
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·
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FOR the ratification of the appointment of Demetrius
& Company, L.L.C. as our independent auditors for the fiscal year ending June 30, 2014.
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What is the vote required for each proposal?
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Proposal 1:
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The election of the eight nominated directors requires
the affirmative vote of the holders of a plurality of the votes present, or represented, at the Annual Meeting.
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Proposal 2:
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The ratification of the appointment of Demetrius &
Company, L.L.C. as our independent auditors for the fiscal year ending June 30, 2014 requires the affirmative vote of the holders
of a majority of the votes present, or represented, at the Annual Meeting.
|
Who can vote?
The record holders of our common stock and
Series A Convertible Preferred Stock (sometimes referred to as the “Series A Preferred Stock”), on the close of business
on November 6, 2013, the record date, are entitled to notice of and to vote at the Annual Meeting or any adjournments thereof.
Each outstanding share of common stock is entitled to one vote at the meeting on each matter to be voted upon at the meeting and
each outstanding share of Series A Preferred Stock is entitled to 1.14 votes at the meeting on each matter to be voted upon at
the Annual Meeting. The holders of common stock and the Series A Preferred Stock vote together as a single class. As of the record
date, there were 15,867,146 shares of common stock outstanding, entitling the holders thereof to cast an aggregate of 15,867,146
votes, and 300,000 shares of Series A Preferred Stock outstanding, entitling the holders to an aggregate of 342,000 votes. Accordingly,
a total of 16,209,146 votes are eligible to be cast at the Annual Meeting. A list of shareholders entitled to vote will be available
for inspection by any record shareholder at our corporate headquarters at 790 Bloomfield Ave, Bldg. C-1, Clifton, New
Jersey
during the ten days prior to and at our Annual Meeting.
What constitutes a quorum?
In order to conduct our Annual Meeting,
a majority of the votes entitled to be cast must be represented in person or by proxy for entitlement to vote. This is known as
a “quorum.” Abstentions and shares held in “street name” by brokers or nominees who indicate on their proxies
that they do not have discretionary authority to vote such shares for a particular matter, referred to as broker non-votes, will
count toward establishing a quorum.
How do I vote?
There are two convenient methods for registered
stockholders to direct their vote by proxy without attending the Annual Meeting:
·
Vote by Internet
. You can vote via the Internet.
The website address for Internet voting is provided on your proxy card. You will need to use the control number appearing on your
proxy card to vote via the Internet. You can use the Internet to transmit your voting instructions up until 11:59 P.M. Eastern
Time on December 11, 2012 Internet voting is available 24 hours a day. If you vote via the Internet you do NOT need to return a
proxy card.
·
Vote by Mail
. If you received a printed copy
of the proxy card, you can vote by marking, dating and signing it, and returning it in the postage-paid envelope provided. Please
promptly mail your proxy card to ensure that it is received prior to the closing of the polls at the Annual Meeting.
With respect to Proposal No. 1 (Election
of Directors),
please note that brokers may no longer vote on the election of directors in the absence of specific client instructions.
Shareholders who hold shares in a brokerage account are encouraged to provide voting instructions to their broker
. To
vote shares held in street name at the annual meeting, you should contact your broker before the annual meeting to obtain a proxy
form in your name. Abstentions may not be specified as to the election of directors, but you may withhold your vote as to any nominee.
With respect to Proposal No. 2 (Ratification
of the Appointment of the Independent Accountant), your broker is entitled to vote your shares on these matters if no instructions
are received from you. Abstentions will be counted as votes against Proposal No. 2.
What does it mean if I get more than one proxy?
It means your shares are held in more
than one account. Please vote all proxies to ensure all your shares are counted.
Can I change my vote or revoke my proxy?
You can change your vote or revoke your
proxy at any time prior to the closing of the polls, by:
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·
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Returning a later-dated proxy card;
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·
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Voting in person at our Annual Meeting; or
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·
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Notifying our Secretary by written revocation letter.
|
Our Secretary is Natalie Barchenko. Any
revocation of your proxy should be filed with her at our corporate headquarters at 790 Bloomfield Ave, Bldg. C-1, Clifton, New
Jersey 07012.
Attendance at our Annual Meeting will not
in itself constitute revocation of a proxy. All shares represented by properly completed proxies timely received and not revoked
will be voted as you direct. If no direction is given, the proxies will be voted as the Board recommends.
Who conducts the proxy solicitation?
ECSI’s Board of Directors is soliciting
these proxies. We will bear the cost of the solicitation of proxies. Our regular employees may solicit proxies by mail, by telephone,
personally or by other communications, without compensation apart from their normal salaries.
What if I do not specify how my shares are to be voted?
If you submit a proxy but do not indicate
any voting instructions, your shares will be voted in accordance with the Board's recommendations.
Broker/dealers, who hold their customers'
shares in street name, may, under the applicable rules of the exchanges and other self-regulatory organizations of which such broker/dealers
are members, sign and submit proxies for such shares and may vote such shares on routine matters without specific instructions
from the customer who owns such shares.
Who will count the votes?
Our Board of Directors will appoint one
or more persons to serve as the inspector(s) of elections to tabulate the votes cast by proxy or in person at the Annual Meeting.
The inspector(s) of elections will also determine whether or not a quorum is present.
Do I have any appraisal rights in connection with any
matter to be acted upon?
No. Our shareholders do not have appraisal
rights in connection with any matter to be acted upon.
Is cumulative voting allowed in the election of directors?
No. Each share is entitled to one vote in
the election of directors as on every other matter.
Where can I find the voting results of the Annual Meeting?
The Chairman will announce the results at
the Annual Meeting. In addition, we will publish them in a current report on Form 8-K within four business days after the Annual
Meeting is held.
Who can help answer my questions?
If you have any questions about the Annual
Meeting or the proposals to be voted on at the Annual Meeting, or if you need additional copies of this proxy statement or copies
of any of our public filings referred to in this proxy statement, you should contact our Secretary, Natalie Barchenko, at (973)
574-8555. Our public filings can also be accessed at the Securities and Exchange Commission’s website at www.sec.gov.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of the
record date, certain information with respect to the beneficial ownership of shares of our common stock by: (i) each person known
to us to be the beneficial owner of more than 5 percent of our outstanding shares of common stock, (ii) each director and officer
of our Company, and (iii) our directors and executive officers as a group.
|
Name Beneficial Owner (1)
|
|
Number of Shares (2)
|
|
|
Percent of Class (2)
|
|
|
Arthur Barchenko, Chairman, CEO, President and Director (3)
|
|
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3,685,179
|
|
|
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22.9
|
%
|
|
Natalie Barchenko, Secretary and Director (4)
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3,804,079
|
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23.8
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%
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Norman J. Barta, Director (5)
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60,000
|
|
|
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*
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Lt. General Gordon Fornell, (ret.) Director (6)
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90,000
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*
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Daryl Holcomb, Chief Financial Officer and Director (7)
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25,000
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*
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Thomas Isdanavich Vice President, Project Management (8)
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135,000
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*
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Stephen Rossetti, Director (9)
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112,500
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*
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Edward Snow, Director (10)
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127,500
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|
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*
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|
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Richard Stern Vice President, Manufacturing and Sales Support (11)
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110,000
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*
|
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Ronald Thomas, President, SEM Consultants III, Inc. and Director (12)
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425,000
|
|
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2.6
|
%
|
|
Directors and officers as a group (10 persons) (13)
|
|
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8,574,258
|
|
|
|
50.5
|
%
|
|
|
(1)
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Unless otherwise indicated, the address of each person listed is c/o Electronic Control Security
Inc., 790 Bloomfield Avenue, Building C-1, Clifton, New Jersey 07012.
|
|
|
(2)
|
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission
(the “SEC”) and generally includes voting or investment power with respect to securities. In accordance with SEC rules,
shares of Common Stock issuable upon the exercise of options or warrants which are currently exercisable or which become exercisable
within 60 days following the Record Date are deemed to be beneficially owned by, and outstanding with respect to, the holder of
such option or warrant. Except as indicated by footnote, and subject to community property laws where applicable, to the knowledge
of the Company, each person listed is believed to have sole voting and investment power with respect to all shares of Common Stock
beneficially owned by such person. The figures are based on 15,767,146 shares of Common Stock outstanding as of November 6, 2013,
the record date.
|
|
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(3)
|
Consists of 3,490,179 shares of common stock, which includes 817,712 shares
not registered in Mr. Barchenko's name but over which he has discretionary power and control, and options to purchase 195,000 shares
of common stock.
|
|
|
(4)
|
Consists of 3,659,079 shares of common stock, which includes 100,000 shares
not registered in Ms. Barchenko’s name but over which she has discretionary power and control, and options to purchase
145,000 shares of common stock
.
|
|
|
(5)
|
Consists of 20,000 shares of common stock and options to purchase 40,000 shares
of common stock
.
|
|
|
(6)
|
Consists of 10,000 shares of common stock and options
to purchase 80,000 shares of common stock.
|
|
|
(7)
|
Consists of 25,000 shares of common stock.
|
|
|
(8)
|
Consists of 35,000 shares of common stock and options
to purchase 100,000 shares of common stock.
|
|
|
(9)
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Consists of options to purchase 112,500 shares of common stock.
|
|
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(10)
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Consists of 15,000 shares of common stock and options to purchase 112,500 shares of common stock.
|
|
|
(11)
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Consists of 25,000 shares of common stock and options to purchase 85,000 shares of common stock.
|
|
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(12)
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Consists of 175,000 shares of common stock and options to purchase 250,000 shares of common stock.
|
|
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(13)
|
See Footnotes 3 through 14.
|
The following table sets forth, as of the
record date, certain information with respect to the beneficial ownership of shares of our Series A Preferred Stock by: (i) each
person known to us to be the beneficial owner of more than 5 percent of our outstanding shares of Series A Preferred Stock, (ii)
each director and officer of our Company, and (iii) our directors and executive officers as a group.
|
Name Beneficial Owner (1)
|
|
Number of Shares
|
|
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Percent of Class (2)
|
|
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Arthur H. & Barbara Lerner
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25,000
|
|
|
|
8.33
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%
|
|
Joseph D. Posillico, Jr.
|
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50,000
|
|
|
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16.66
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%
|
|
View Far Management Ltd.
|
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125,000
|
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41.66
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%
|
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Regency Resources, Inc.
|
|
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25,000
|
|
|
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8.33
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%
|
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John A. Gentile
|
|
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25,000
|
|
|
|
8.33
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%
|
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Richard Lippe
|
|
|
50,000
|
|
|
|
16.66
|
%
|
|
Arthur Barchenko
|
|
|
0
|
|
|
|
-0-
|
|
|
Natalie Barchenko
|
|
|
0
|
|
|
|
-0-
|
|
|
Daryl Holcomb
|
|
|
0
|
|
|
|
-0-
|
|
|
Thomas Isdanavich
|
|
|
0
|
|
|
|
-0-
|
|
|
Stephen Rossetti
|
|
|
0
|
|
|
|
-0-
|
|
|
Edward Snow
|
|
|
0
|
|
|
|
-0-
|
|
|
Richard Stern
|
|
|
0
|
|
|
|
-0-
|
|
|
Ronald Thomas
|
|
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0
|
|
|
|
-0-
|
|
|
|
|
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300,000
|
|
|
|
100.00
|
%
|
|
|
(1)
|
As used in this table, "beneficial ownership" means the sole or shared power to vote,
or to direct the voting of, a security, or the sole or shared investment power with respect to Series A Preferred Stock (i.e.,
the power to dispose of, or to direct the disposition of, a security). The address of each person is in care of the Company.
|
|
|
(2)
|
Based on 300,000 shares of Series A Preferred Stock outstanding as November 6, 2013.
|
EXECUTIVE
COMPENSATION
The following table sets forth all compensation
for the last three fiscal years awarded to, earned by, or paid to our Chief Executive Officer and our Vice President, Program Management,
who were the only executive officers serving as such at the end of 2013 whose total compensation exceeded $100,000 for the year
ended June 30, 2013.
SUMMARY COMPENSATION TABLE
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Option
|
|
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All Other
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
Compensation
|
|
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Total
|
|
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Name and Principal Position
|
|
|
Year
|
|
|
|
Salary ($)
(1)
|
|
|
|
Bonus ($)
|
|
|
|
($)
(2)
|
|
|
|
($)
(3)
|
|
|
|
($)
|
|
|
Arthur Barchenko
|
|
|
2013
|
|
|
$
|
156,000
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
1,500
|
|
|
$
|
157,500
|
|
|
President and
|
|
|
2012
|
|
|
$
|
156,000
|
|
|
|
--
|
|
|
$
|
3,640
|
|
|
$
|
2,500
|
|
|
$
|
162,140
|
|
|
Chief Executive Officer
|
|
|
2011
|
|
|
$
|
149,500
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
149,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald Thomas
|
|
|
2013
|
(5)
|
|
$
|
66,431
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
1,500
|
|
|
$
|
67,931
|
|
|
President,
|
|
|
2012
|
|
|
$
|
106,797
|
|
|
|
--
|
|
|
$
|
3,660
|
|
|
$
|
2,500
|
|
|
$
|
112,957
|
|
|
SEM Consultants III, Inc.
|
|
|
2011
|
|
|
$
|
101,000
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
101,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daryl Holcomb
|
|
|
2013
|
(5)
|
|
$
|
68,185
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
1,000
|
|
|
$
|
69,185
|
|
|
Chief Financial Officer
|
|
|
2012
|
(4)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
38,500
|
|
|
$
|
38,500
|
|
|
|
|
|
2011
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Of the amounts shown for Mr. Barchenko, $352,076, $324,200,
and $250,700 (representing unpaid salary amounts aggregated since 2006) had not yet been paid to Mr. Barchenko as of June 30, 2013,
2012, and 2011, respectively. Of the amounts shown for Mr. Thomas, $170,580, $103,315, and $69,315 (representing unpaid salary
amounts aggregated since 2007) had not yet been paid to Mr. Thomas as of June 30, 2013, 2012, and 2011, respectively. In addition,
the salary amount in 2013 and 2012 for Mr. Thomas includes earned, but unpaid, commissions of $-0- and $2,797, respectively. Of
the amounts shown for Mr. Holcomb, $79,235 and $31,000 (representing unpaid salary amounts and fees for prior accounting services)
had not yet been paid to Mr. Holcomb as of June 30, 2013 and 2012, respectively.
(2) Amounts in this column reflect the aggregate grant date
fair value computed in accordance with FASB ASC 718 with respect to employee stock options granted under our stock option plans.
The assumptions used to calculate the fair value of stock option grants are set forth in Note 9 (Shareholders Equity) to our financial
statements, which are included in the Annual Report on Form 10-K.
(3) All Other Compensation are the Directors’ cash fees
earned by the named officers and fees for prior accounting services for Mr. Holcomb.
(4) The salary reported above for Mr. Thomas and Mr. Holcomb
are at reduced amounts in Fiscal 2013 due to lower levels of operations in the year.
GRANTS OF PLAN-BASED AWARDS
There were no grants of plan-based awards
in during the fiscal year ended June 30, 2013 to our Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR
END
The following table sets forth information
concerning unexercised options and stock for the Named Executive Officer that are outstanding as of June 30, 2012:
|
|
|
Number of Stcurities
|
|
|
Number of Securities
|
|
|
Option
|
|
|
Option
|
|
|
|
|
Underlying Options
|
|
|
Underlying Options
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur Barchenko
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
1.00
|
|
|
|
1/2/2014
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
1.20
|
|
|
|
1/21/2015
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
0.21
|
|
|
|
11/9/2016
|
|
|
Ronald Thomas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
0.22
|
|
|
|
9/26/2018
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
0.75
|
|
|
|
1/1/2017
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
0.22
|
|
|
|
9/26/2018
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
0.07
|
|
|
|
12/19/2018
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
0.17
|
|
|
|
12/8/2019
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
0.17
|
|
|
|
12/8/2019
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
0.19
|
|
|
|
11/9/2021
|
|
|
Daryl Holcomb
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Company does not have a written employment
agreement with any of the Named Executive Officers.
COMPENSATION OF DIRECTORS
All directors receive
a $1,000 fee for attendance at Board meetings and $500 for telephonic participation in Board meetings. Outside directors were reimbursed
for out-of-pocket expenses for attendance at such meetings. It is expected that the Company’s directors will receive an annual
award of stock options under the Company’s equity incentive plan.
In addition to cash compensation, we compensate
our directors by the grant of options from our 2006 plans.
The following table summarizes data concerning
the compensation of our directors for the fiscal year ended June 30, 2013.
|
Name
|
|
Fees Earned or Paid
|
|
|
Option Awards
($)
(1)
|
|
|
All Other Compensation
($)
(2)
|
|
|
Total
($)
|
|
|
Natalie Barchenko
|
|
$
|
1,000
|
|
|
|
--
|
|
|
$
|
45,240
|
|
|
$
|
46,240
|
|
|
Norman Barta
|
|
$
|
1,500
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
1,500
|
|
|
Gordon Fornell
|
|
$
|
500
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
500
|
|
|
Stephen Rossetti
|
|
$
|
1,000
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
1,000
|
|
|
Edward Snow
|
|
$
|
1,000
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
1,000
|
|
(1)
Amounts in this column reflect the aggregate
grant date fair value computed in accordance with FASB ASC 718 with respect to stock options granted during the fiscal year ended
June 30, 2012 under our stock plans. The assumptions used to calculate the fair value of stock options granted are set forth in
Note 11 (Shareholders Equity) to our financial statements included in the Annual Report on Form 10K.
(2)
The amount of All Other Compensation for Mrs.
Barchenko is her salary.
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
At June 30, 2013 and 2012, amounts due
to related parties were $1,289,851 and $1,025,439, respectively. The amounts due to the related parties consisted of interest-bearing
advances, non-interest bearing advances and accrued compensation and other accrued costs. Related to an amendment of a loan agreement
between a subsidiary of the Company and its bank, three of the Company’s officers agreed to subordinate a total of $848,080
of these amounts due to those officers to amounts due by the subsidiary to the bank.
On March 1, 2013, we issued to Mr. Arthur
Barchenko, the CEO, President and Chairman of our company, 1,000,000 shares of our Common Stock in consideration of the conversion
of $50,000 of accrued costs owing to him.
On March 1, 2013, we issued to Ms. Natalie
Barchenko, the Secretary and Director of our company, and spouse of Mr. Barchenko, 1,000,000 shares of our Common Stock in consideration
of the conversion of $50,000 of accrued costs owing to her.
On October 18, 2012, we issued to Mr. Arthur
Barchenko, the CEO, President and Chairman of our company, 1,000,000 shares of our Common Stock in consideration of the conversion
of $80,000 of related party debt noted above owing to him.
On October 18, 2012, we issued to Ms. Natalie
Barchenko, the Secretary and Director of our company, and spouse of Mr. Barchenko, 1,000,000 shares of our Common Stock in consideration
of the conversion of $80,000 of related party debt noted above owing to her.
On February 17, 2012, we issued to Mr.
Ronald Thomas, President of SEM Consultants III, Inc. and Director of our company, 150,000 of our Common Stock in consideration
of the conversion of $15,000 of accrued compensation owing to him.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a)
of the Securities Act of 1934 requires our officers and directors, and greater than 10% shareholders, to file reports of ownership
and changes in ownership of our securities with the Securities and Exchange Commission. Based solely on review of the copies of
such forms received by the Company with respect to fiscal 2012, or written representations from certain reporting persons, the
Company believes that all filing requirements applicable to its directors and officers and persons who own more than 10% of the
common stock have been complied with
.
PROPOSAL NO. 1
The Board of Directors of the Company is
currently comprised of eight members. Effective with the 2013 Annual Meeting, the number of members will be reduced to six members.
Each director holds office until the annual meeting of shareholders following their election or appointment and until their respective
successors have been duly elected and qualified. Directors are elected by the affirmative vote of the holders of a majority of
our common stock present, or represented, at the Annual Meeting, as long as a quorum is present.
All of the directors standing for election
as directors currently serve on the Board of Directors. It is intended that, unless otherwise directed, the shares represented
by the enclosed proxy will be voted FOR the election of the directors nominated and named below. Each nominee has consented to
being nominated and to serve if elected. In the unlikely event that any nominee becomes unable to serve for any reason, the proxies
will be voted for a substitute nominee selected by our board of directors.
Nominees for Election of Directors
The table below sets forth the names of
each of the persons nominated to serve as directors of the Company, the year such person first became a director and each person’s
current position(s) with the Company, if applicable:
|
Name
|
|
Age
|
|
|
Year First
Became A Director
|
|
|
Position
|
Arthur Barchenko
|
|
|
80
|
|
|
|
1976
|
|
|
President, CEO and Director
|
Ronald Thomas
|
|
|
69
|
|
|
|
2007
|
|
|
President, SEM Consultants III, Inc. and Director
|
Edward Snow
|
|
|
75
|
|
|
|
2000
|
|
|
Director
|
Stephen Rossetti
|
|
|
64
|
|
|
|
2004
|
|
|
Director
|
Norman J. Barta
|
|
|
56
|
|
|
|
2009
|
|
|
Director
|
Daryl K. Holcomb
|
|
|
62
|
|
|
|
2012
|
|
|
Chief Financial Officer and Director
|
The business experience, principal occupations
and employment, as well as the periods of service, of each of the Company’s directors during at least the last five years
are set forth below.
Arthur Barchenko has been
our President since December 1976. Mr. Barchenko also participates in the management of our subsidiaries. From June 1952 to May
1972, he held various sales and marketing positions at Lightolier, Inc., a manufacturer of lighting fixtures, and served both as
its vice president of sales where he was responsible for a sales and support staff of approximately 200 persons, and as a member
of the board of directors and a member of the executive committee. Prior to organizing Electronic Control Security Inc., Mr. Barchenko
co-founded and directed the operations of Bajer Industries, a lighting manufacturing company that was subsequently sold to the
Charter Group. Mr. Barchenko is active with American Defense Preparedness Association, and the American Society of Industrial Security.
He also served on the RTCA Special Committee 183 for the upgrade of the Federal Aviation Regulation 107.14, focusing on access
control in civil aviation facilities. Presently, he serves on the RTCA Special Commission 207, addressing FAA regulations that
include access control and perimeter intrusion devices. Mr. Barchenko is married to Natalie Barchenko, a director and Secretary
and Treasurer of ECSI. Mr. Barchenko brings to our Board significant experience in the security industry, a deep knowledge of our
business and our customers, and contributes a perspective based on his years in leading the company.
Ronald Thomas is President, SEM Consultants
III, Inc. (a wholly-owned subsidiary of Electronic Control Security, Inc.) since April 2011, and a Director since December 2007.
Mr. Thomas has over 30 years of experience in engineering, management and marketing in the electronic security industry. Mr. Thomas
joined the Company in April 2007. He has held executive positions including President and CEO of Securacom, Incorporated, a security
systems integrator that specialized in the design and implementation of medium to large-scale projects for businesses and government;
Executive Vice President of SenTech, Inc. a company that provided business software to the security, fire and life safety industry;
and Vice President of Technology and Integrated Systems for ADT Security Systems. Mr. Thomas has a Master of Science, Electrical
Engineering from Polytechnic University in Brooklyn, NY and a Bachelor of Engineering, Electrical from City College/CUNY in New
York City. He is a member and past chairman of the American Society for Industrial Security, Council on Physical Security and a
member of several professional organizations including the Institute of Electrical and Electronic Engineers, the National Society
of Professional Engineers, and the National Fire Protection Association. Mr. Thomas has published numerous articles in various
trade journals on integrated security systems and is a frequent speaker at industry workshops and seminars. He has served on the
faculty of the U.S. General Services Administration, Federal Protective Service, and Physical Security Academy. Mr. Thomas’
background and executive experience provides the Board with a business perspective and insight that is beneficial to our Company,
especially when establishing relationships and negotiating agreements with the larger contractors.
Edward Snow has been a
director of ECSI since June 2000 and a member of the Audit Committee since 2002. From October 1996 to October 1999, he was a co-owner
and operator of Phoenix Fiber Optics Inc., a manufacturer and marketer of fiber optic products. From October 1999 to October 2000,
he had served as the Assistant to the President of Space America Corp. Since 1996, he has been a private consultant to the government
and industry. Mr. Snow’s experience in managing and overseeing a diversified business practice equips him with the skill
set needed by our Board.
Stephen Rossetti
joined the Board
in October 2004.
Mr. Rossetti currently serves as the President of Zegato Solutions, Inc. and Markquest, Inc., positions
he has held since 2003 and 2001, respectively. Zegato is an information technology company based in Lanham, Maryland that engages
in software development and systems integration services for the U.S. Government. Markquest is a consulting and lobbying organization.
He is also the chairman and chief executive officer of Government Internet Systems and is a corporate advisor of NOW Solutions,
Inc., both subsidiaries of Vertical Computer Systems, Inc., a multinational provider of Web services, underpinning Web technologies,
and administrative software services. From August 2003 to January 2004, he served as president of Applied DNA Sciences, Inc., a
provider of DNA-embedded security solutions that protect corporate and government intellectual property from counterfeiting and
fraud. Mr. Rossetti served in the Office of the Secretary of Defense from August 2003 to January 2004 and from 1987 to 1996 served
on the Professional Staff of the Armed Services Committee, U.S. House of Representatives where he had an established reputation
as a strident government reform advocate. From November 1998 through January 2001, Mr. Rossetti worked for the United States Department
of Defense as the Director of Defense Integrated Travel. As director of the Readiness Subcommittee staff, he was responsible for
the oversight of the Department of Defense infrastructure and combat readiness, including special operations forces, National Guard
and Reserve preparedness, chemical and biological weapons preparedness and response, and missions other than war such as counter-drug
and counter-terror. Mr. Rosetti’s background with corporate entities which deal with the federal government adds to the Board’s
experience.
Norman J. Barta currently
serves as president of a marketing and sales organization that is teamed with the Company in developing and marketing our anti-piracy
technology (APT) as well as our perimeter security technologies. He is President and CEO of Balinor International, LLC, a global
technology marketing company with offices in the United States and Greece focused on leading-edge innovations that present new
frontiers in their respective technology domains. Formerly, Mr. Barta was President and CEO and served on the board of Nephros,
Inc., a medical products company developing and marketing high-performance products related to end-stage renal disease therapy
and water ultra-filtration. Mr. Barta was instrumental in transitioning the corporation from an innovative, privately-held startup
to a publicly traded research, development, marketing and sales organization, including new product creation and development, domestic
and international business negotiation for product licensing and distribution, financing the corporation, maintaining long-term
relationships with the investor and investment banking communities, and developing vital legislative support for the company’s
products and research. Mr. Barta has additional experience in operations research, large systems development, accounting and financial
management and planning. Mr. Barta has a B.S. degree in mathematics and economics from Carnegie-Mellon University and an MBA from
the University of Chicago. Mr. Barta brings to our Board significant experience in marketing and new product development.
Daryl Holcomb joined us
as our company’s chief financial officer in July 2012. He had provided us with accounting services from October 2011 through
June 2012. Previously, Mr. Holcomb was the chief financial officer of RCLC, Inc., formerly known as Ronson Corporation, from 1995
through October 2011. He had been Ronson’s corporate controller from 1988 to 1995. Ronson had been a publicly-held manufacturer
and distributor of consumer products and provided aircraft services. Prior to his employment by Ronson, Mr. Holcomb had been the
controller for a metals company and an accountant for a CPA firm. Mr. Holcomb received his MBA in 1997 and a CPA certificate in
1976. Mr. Holcomb brings to our Board significant experience in accounting and financial oversight.
Arthur Barchenko and Natalie
Barchenko are husband and wife; other than that, there are no family relationships between any of the above executive officers
or directors or any other person nominated or chosen to become an executive officer or director. All directors hold office until
the next Annual Meeting of stockholders and the election and qualification of a successor.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO ELECT THE EIGHT DIRECTORS THAT HAVE BEEN NOMINATED TO THE BOARD OF DIRECTORS.
Information Concerning
the Board of Directors and Executive Officers
Board Meetings
The Board of Directors
met formally two times during the fiscal year ended June 30, 2013.
The Board does not have
a formal policy with respect to Board members attendance at annual stockholder meetings, although it encourages directors to attend
such meetings. Three of the non-employee directors attended the 2012 Annual Meeting of Shareholders.
CODE OF CONDUCT AND ETHICS
We have adopted a code of conduct and ethics
that applies to our directors, officers and all employees. The code of business conduct and ethics may be obtained free of charge
by writing to Electronic Control Security, Inc., Attn: Arthur Barchenko, 790 Bloomfield Avenue, Building C, Suite 1, Clifton, New
Jersey 07012.
BOARD LEADERSHIP STRUCTURE
Mr. Barchenko has served as Chief Executive
Officer and Chairman since January 1976. The Board of Directors believes that its current leadership structure, in which the positions
of Chairman and Chief Executive Officer are held by Mr. Barchenko, is appropriate at this time and provides the most effective
leadership for our company in a highly competitive and rapidly changing technology industry. Our Board believes that combining
the positions of Chairman and Chief Executive Officer under Mr. Barchenko allows for focused leadership of our organization which
benefits us in our relationships with investors, customers, suppliers, employees and other constituencies. We believe that any
risks inherent in that structure are balanced by the oversight of our otherwise independent Board. Given Mr. Barchenko’s’s
past performance in the roles of Chairman of the Board and Chief Executive Officer, at this time the Board believes that combining
the positions continues to be the appropriate leadership structure for our Company and does not impair our ability to continue
to practice good corporate governance.
Board of Directors Committees
We have a standing audit committee. We do
not have standing committees whose functions include nominating directors or establishing the compensation of our employees and
consultants. Due to the small size of the Company and its Board of Directors, the Company believes that this is appropriate.
Nominations for directors are considered
by the entire Board. Our directors take a critical role in guiding our strategic direction and oversee the management of our Company.
Board candidates are considered based on various criteria, such as their broad based business and professional skills and experiences,
a global business and social perspective, concern for long term interests of shareholders, and personal integrity and judgment.
In addition, directors must have available time to devote to Board activities and to enhance their knowledge of the industry.
Accordingly, we seek to attract and retain
highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to our Company.
Recent developments in corporate governance and financial reporting have resulted in an increased demand for such highly qualified
and productive public company directors.
Our Board will consider the recommendations
of shareholders regarding potential director candidates. In order for shareholder recommendations regarding possible director candidates
to be considered by our Board:
|
|
·
|
such recommendations must be provided to the Board, c/o Arthur Barchenko, Electronic Control Security,
Inc., 790 Bloomfield Avenue, Building C-1, Clifton, New
Jersey 07012, in writing at least 120 days prior to the date of
the next scheduled annual meeting;
|
|
|
·
|
the nominating shareholder must meet the eligibility requirements to submit a valid shareholder
proposal under Rule 14a-8 of the Securities Exchange Act of 1934, as amended; and
|
|
|
·
|
the shareholder must describe the qualifications, attributes, skills or other qualities of the
recommended director candidates.
|
While the Board of Directors does not have
a formal policy with respect to diversity, the Board of Directors believes that it is essential that Board members represent diverse
business backgrounds and experience and include individuals with a background in related fields and industries. In considering
candidates for the Board of Directors, the Board considers the entirety of each candidate’s credentials in the context of
these standards. We believe that the backgrounds and qualifications of our directors, considered as a group, should and do provide
a composite mix of experience, knowledge and abilities that will allow the Board of Directors to fulfill its responsibilities.
Shareholder Communications
Shareholders may send communications to
our Board of Directors, or to individual directors, by mailing communications in writing c/o Arthur Barchenko, Electronic Control
Security Inc., 790 Bloomfield Avenue, Building C-1, Clifton, New
Jersey 07012.
Audit Committee
The Audit Committee of the Board of Directors
selects our independent public accountants with whom the Audit Committee reviews the scope of audit and non-audit assignments and
related fees, the accounting principles that we use in financial reporting, internal financial auditing procedures, and the adequacy
of our internal control procedures. The members of our Audit Committee are Edward Snow and Stephen Rossetti. The Board believes
that each of Mr. Snow and Mr. Rossetti meets the independence criteria set out in Rules 5605(a)(2) and 5605 (a)(2) of the NASDAQ
Stock Market. The Board of Directors believes that Stephen Rossetti meets the requirements of an "audit committee financial
expert" as defined in the rules of the SEC. Security holders should understand that this designation is a disclosure requirement
of the SEC relating to Mr. Rossetti’s experience and understanding with respect to certain accounting and auditing matters.
The designation does not impose on Mr. Rossetti any duties, obligations or liability that is greater than is generally imposed
on him as a member of the Audit Committee and Board of Directors, and his designation as an audit committee financial expert pursuant
to this SEC requirement does not affect the duties, obligations or liability of any other member of the Audit Committee or Board
of Directors.
The Audit Committee held four meetings in
fiscal 2013, all of which were attended by each member of the Audit Committee.
We adopted an Audit Committee Charter in
October 2002, a copy of which was attached as an exhibit to our definitive proxy statement filed on October 24, 2006 in connection
with our 2006 Annual Stockholders Meeting.
Board’s Role in Risk Oversight
Management is responsible for the day-to-day
management of risks the Company faces, while the Board, as a whole and through its committees, has responsibility for the oversight
of material risk management. In its risk oversight role, the Board of Directors reviews significant individual matters as
well as risk management processes designed and implemented by management with respect to risk generally. Additionally, members
of our senior corporate management and senior executives regularly attend Board meetings and are available to address Board inquiries
on risk oversight matters. Separate and apart from the periodic risk reviews and other communications between senior executives
and the Board, many actions that potentially present a higher risk profile, such as acquisitions, material changes to our capital
structure, or significant investments, require review or approval of our Board or its committees as a matter of oversight and corporate
governance.
REPORT OF AUDIT COMMITTEE OF THE BOARD
OF DIRECTORS
The Audit Committee consults with our principal
accounting officer and other key members of management and with our independent auditors with regard to the plan of audit; reviews,
in consultation with the independent auditors, their report of audit, or proposed report of audit and the accompanying management
letter, if any; and consults with our principal accounting officer and other key members of management and with our independent
auditors with regard to the adequacy of the internal accounting controls.
In fulfilling its responsibilities, the
Audit Committee selected Demetrius & Company, L.L.C. as ECSI’s independent accountants for purposes of auditing our financial
statements for the fiscal year ending June 30, 2013. The Audit Committee has reviewed and discussed with management and the
independent auditors our audited financial statements; discussed with the independent auditors the matters required to be discussed
by Codification of Statements on Auditing Standards No. 61; received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1; and discussed with the independent accountants their independence
from our Company.
Based on the reviews and discussions with
management and Demetrius & Company, L.L.C., the Audit Committee recommended to the Board that our audited consolidated financial
statements be included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2013, filed with the Securities and
Exchange Commission.
The Board of Directors evaluated the independence
of each member of the Audit Committee. As part of its evaluation, the Board of Directors determined, in the exercise of its business
judgment, that Messrs. Rossetti, Snow, and Barta are independent under Rule 4350(d) of the Nasdaq Stock Market Listing Standards
and are financially literate each in his own capacity.
Based upon its work and the information
received in the inquiries outlined above, the Audit Committee is satisfied that its responsibilities under the charter for the
period ended June 30, 2013, were met and that our financial reporting and audit processes are functioning effectively.
Submitted by the Audit Committee
of the Board of Directors:
|
|
Edward Snow
|
|
|
Stephen Rossetti
|
DIRECTOR INDEPENDENCE
The Board of Directors of the Company has
concluded that each of Messrs. Snow, Rossetti and Barta is “independent” based on the listing standards of the NASDAQ
Stock Market, if the Company were listed thereon (which it is not), having concluded that any relationship between such director
and the Company, in its opinion, does not interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. The Board of Directors of the Company has also concluded that the directors serving on the audit committee, namely
Mr. Snow and Mr. Rossetti, are “independent” based on the more stringent independence standard of the NASDAQ
Stock Market applicable to directors serving on audit committees.
EXECUTIVE OFFICERS
The Company’s executive officers are:
|
Name
|
|
Position
|
|
Age
|
|
|
Arthur Barchenko
|
|
President, CEO and Director
|
|
|
80
|
|
|
Ronald Thomas
|
|
President, SEM Consultants III, Inc.
and Director
|
|
|
69
|
|
|
Daryl Holcomb
|
|
Chief Financial Officer
|
|
|
62
|
|
|
Richard Stern
|
|
Vice President, Manufacturing and
Sales Support
|
|
|
64
|
|
|
Thomas Isdanavich
|
|
Vice President, Project Management
|
|
|
64
|
|
|
Natalie Barchenko
|
|
Secretary, Treasurer
|
|
|
80
|
|
Arthur and Natalie Barchenko
are husband and wife.
Our officers are appointed annually by our
Board of Directors and serve at the discretion of the Board of Directors. Three of our executive officers, Arthur Barchenko, Ronald
Thomas, and Daryl Holcomb are also directors of the Company. See the section above entitled "Election of Directors" for
biographical information about these individuals. Set forth below is biographical information regarding our executive officers
who are not directors or nominees to serve as a director.
Natalie Barchenko has
been a Director and the Secretary and Treasurer of ECSI since 2001. Over the last ten years, she has been actively responsible
for the day to day operations of the Company in the areas of human resources, order entry, invoicing, advertising and sales materials.
She is married to Arthur Barchenko, a director and the President and CEO of ECSI. Ms. Barchenko brings to our executive management
significant experience in the operational side of the business.
Richard Stern has served as our Vice President
of Manufacturing from December 1, 1997 to December 2002. He is now responsible for the overall management of our marketing and
sales support department, which includes overseeing all proposals, submittal drawings and field test personnel including the review
and evaluation of new and existing products; oversight of maintenance personnel; mechanical design of new products including the
development of test procedures; and field labor reports. Prior to joining ECSI, Mr. Stern spent 25 years in data communication
and temperature processing fields. He has held managerial positions in manufacturing, engineering, quality control, and customer
service, as well as having been involved in the design and development of the product lines within these fields.
Thomas Isdanavich has been Vice President
of Project Management at ECSI since
July 1997. He conducts site surveys, determines the application
of technologies for specific threats, supervises installation and training support requirements for in-house and field applications.
His responsibilities include threat and technology analysis planning and coordination of all administrative phases of project and
program engineering support services. Mr. Isdanavich was employed by Beall Technologies, Inc. a manufacturer of matrix switching
equipment for IBM compatible mainframe computers, from 1973 to 1997. Prior to entering private industry, Mr. Isdanavich served
in the U.S. Navy for four years.
Equity Compensation Plan Information
.
The following table sets forth additional
information as of June 30, 2013, concerning shares of our common stock that may be issued upon the exercise of options and other
rights under our existing equity compensation plans and arrangements, divided between plans approved by our shareholders and plans
or arrangements not submitted to our shareholders for approval. The information includes the number of shares covered by and the
weighted average exercise price of, outstanding options and other rights and the number of shares remaining available for future
grants excluding the shares to be issued upon exercise of outstanding options, warrants, and other rights.
Equity Compensation Plan Information
|
Plan Category
|
|
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights
|
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
|
|
|
Number of securities available
for future issuance under equity
compensation plans excluding
securities reflected in column (a))
|
|
Equity compensation
plans approved
by security holders
|
|
|
1,475,000
|
|
|
$
|
.54
|
|
|
|
2,370,000
|
|
Equity compensation
plans not approved
by security holders
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Total
|
|
|
1,475,000
|
|
|
$
|
.54
|
|
|
|
2,370,000
|
|
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Board of Directors is seeking stockholder
ratification of the appointment by the Audit Committee of the Board of Directors of Demetrius & Company, L.L.C. (“Demetrius
& Co.”) to serve as our independent registered public accounting firm for the fiscal year ending June 30, 2014. Demetrius
& Co. served as our independent registered public accounting firm with respect to the audit of our financial statements for
the fiscal year ended June 30, 2013.
Shareholder ratification of the appointment
of Demetrius & Co. as our independent registered public accounting firm is not required by our bylaws or otherwise. However,
the Board is submitting the appointment of Demetrius & Co. to our shareholders for ratification as a matter of good corporate
practice. If our shareholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain the
firm. Even if the appointment is ratified, the Audit Committee in their discretion may direct the appointment of a different independent
accounting firm at any time during the year if they determine that such a change would be in our best interests and the best interests
of our shareholders.
A representative of Demetrius & Co.
is expected to attend the Annual Meeting with the opportunity to make a statement if he or she desires to do so, and is expected
to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS
FEES OF THE INDEPENDENT PUBLIC ACCOUNTANTS
FOR FISCAL 2013
Audit Fees
The aggregate fees billed by Demetrius &
Co., L.L.C. for professional services related to the audit of the Company's consolidated financial statements during the fiscal
year ended June 30, 2013 were $35,000. The review of the consolidated condensed financial statements included in the Company's
quarterly reports on Forms 10-Q for the fiscal year ended June 30, 2013 were performed by Demetrius & Company, L.L.C. The fees
billed by Demetrius & Company, L.L.C. for those services were $10,500. The aggregate fees billed by Demetrius & Company,
L.L.C. in connection with the year end audit and quarterly reviews for the fiscal year ended June 30, 2012 were $58,000.
Audit Related Services
There were no aggregate fees billed
by Demetrius & Co., L.L.C. for audit related services for the fiscal year ended June 30, 2013.
The aggregate fees billed by Demetrius & Co., L.L.C. for audit related services for the fiscal year ended
June 30, 2012 were $1,500.
Tax Services
The aggregate fees billed
by Demetrius & Company, L.L.C. for tax services during the fiscal years ended June 30, 2013 and 2012 were $7,500
and $14,000, respectively.
All Other Services
During 2013 and 2012, there were no fees
for other services billed by Demetrius & Company, L.L.C.
ANNUAL REPORT
Enclosed is the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 2013, including audited financial statements. This Annual Report on Form 10-K does
not form any part of the material for the solicitation of proxies.
COST OF SOLICITATION
OF PROXIES
ECSI will pay the cost of this solicitation.
We may request persons holding shares in their names for others to forward soliciting materials to their principals to obtain authorization
for the execution of proxies, and we will reimburse such persons for their expenses in so doing.
SHAREHOLDER PROPOSALS
A shareholder proposal intended for inclusion
in the proxy statement and form of proxy for the Annual Meeting of Shareholders of the Company to be held in 2013 must be received
by the Company before August 1, 2014, at its executive offices located at 790 Bloomfield Avenue, Building C-1, Clifton, New
Jersey 07012, Attention: Arthur Barchenko. Any shareholder proposal submitted outside the processes of Rule 14a-8 under the
Securities Exchange Act of 1934 for presentation at our 2014 Annual Meeting will be considered untimely for purposes of Rule 14a-4
and 14a-5 if notice thereof is received by us after August 1, 2014.
OTHER BUSINESS
The Board of Directors does not intend to
present, and has no knowledge that others will present, any other business at the Annual Meeting. If, however, any other matters
are properly brought before the Annual Meeting, it is intended that the persons named in the enclosed proxy will vote the shares
represented thereby in accordance with their best judgment.
MISCELLANEOUS
Only one Proxy Statement is being delivered
to multiple stockholders sharing an address unless we have received contrary instructions from one or more of the stockholders
sharing such address. We undertake to deliver promptly upon request a separate copy of this Proxy Statement to any stockholder
at a shared address to which a single copy of this Proxy Statement was delivered and provide instructions as to how the stockholder
can notify us that the stockholder wishes to receive a separate copy of this Proxy Statement or other communications to the stockholder
in the future. In the event a stockholder desires to provide us with such a request, it may be given verbally by telephoning
our offices at (973) 574-8555 or by mail to our address at 790 Bloomfield Avenue, Bldg. C-1, Clifton, New Jersey, 07012 Attn: Ms.
Natalie Barchenko. In addition, stockholders sharing an address can request delivery of a single copy of annual reports
or proxy statements if you are receiving multiple copies upon written or oral request to the Corporate Secretary at the address
and telephone number stated above.
We file annual, quarterly and current reports,
proxy statements and registration statements with the SEC. These filings are available to the public over the Internet
at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC without charge at
the public reference facility maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may
also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference facilities.
WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, PLEASE SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE OR VOTE AT
THE INTERNET ADDRESS SPECIFIED ON YOUR PROXY CARD AS PROMPTLY AS POSSIBLE.
|
|
By Order of the Board of Directors
|
|
|
|
|
|
/s/ ARTHUR BARCHENKO
|
|
|
Arthur Barchenko
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
November 15, 2013
|
|
Directions to ECSI International, Inc.
790 Bloomfield Avenue
Building C, Suite 1
Clifton, NJ 07012
973-574-8555
From New York City:
Exit the Lincoln Tunnel and take Route 495 to Route 3 West.
Proceed on Route 3 West to the Bloomfield Avenue, Clifton
exit.
Turn right at the bottom of the exit ramp and
*
proceed
to round-about. Go half-way around circle and past Home Depot on the right.
Continue straight through the traffic light. You will see
Atlantic Casting (flagpole in front) on the left. Just beyond Atlantic Casting, there is an orange brick building. Immediately
beyond the building, there is a driveway and white sign for 790 Bloomfield Avenue.
Make a left into the driveway and go toward the rear of the
industrial complex.
The Company is located on the left in the white building
with blue letters ‘ECSI’.
Traveling East on Route 3:
Via Parkway:
Take Exit 53 (Sports Arena) onto Route 3 East.
**
Take
the Bloomfield Ave. exit. At bottom of ramp make a right onto Bloomfield Ave. and follow directions from
*
above.
Via Route 46 East:
Follow to Route 3 East and
**
directions
above.
Via Route 80 East:
Follow Route 46 East to Route 3 East and follow
**
directions
above.
Via Rt. 80 West:
Follow to Route 46 West to Route 3 East and follow
**
directions
above.
Via NJ Turnpike North:
Exit 16W (GW Bridge). Follow signs for
Route 3 West (Sports Complex) to Bloomfield Avenue exit on right.
Follow
*
directions
above.
|
PROXY
ELECTRONIC CONTROL SECURITY, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
December 12, 2013
The undersigned hereby constitutes and
appoints each of ARTHUR BARCHENKO and STEPHEN ROSSETTI with full power of substitution, attorney and proxy to represent and to
vote all shares of Common Stock and Series A Convertible Preferred Stock of ELECTRONIC CONTROL SECURITY, INC. (the “Company”)
that the undersigned would be entitled to vote, with all powers the undersigned would possess if personally present, at the Annual
Meeting of Stockholders of the Company, to be held on December 12, 2013, and at any adjournment thereof, on the matters set
forth below and on the reverse side and such other matters as may properly come before the meeting.
(Continued and to be signed and dated
on the reverse side)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .
Please mark your vote like this
x
1. ELECTION OF DIRECTORS.
Nominees: ARTHUR BARCHENKO, RONALD THOMAS,
EDWARD SNOW, STEPHEN ROSSETTI, NORMAN BARTA,
AND DARYL HOLCOMB
(Mark only one of the following boxes.
)
¨
For all nominees except _____________________________
¨
VOTE WITHHELD
from all nominees.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DEMETRIUS & COMPANY,
LLC, AS THE COMPANY’S INDEPENDENT PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30, 2014.
£
FOR
¨
AGAINST
¨
ABSTAIN
In their discretion, upon any other business that may properly
come before the meeting or any adjournment thereof.
IF NO CHOICE IS SPECIFIED, THE PERSONS NAMED AS PROXIES INTEND
TO VOTE FOR THE ELECTION OF THE NAMED NOMINEES AND FOR ALL OF THE OTHER PROPOSED ACTIONS.
COMPANY ID:
PROXY NUMBER:
ACCOUNT NUMBER:
Signature: _______________________________ Print Name:
_____________________Date: _____________, 2011
…………………………………………………………………………………………………………………………...
Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting of Stockholders to be held December 12, 2013.
…………………………………………………………………………………………………………………………..
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