DEFINITIVE SCHEDULE 14C INFORMATION
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| o | | Preliminary Information Statement | | | Confidential, for Use of the Commission Only (as permitted by Rule 14c-5 (d)(2)) |
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NORTHEAST AUTOMOTIVE HOLDINGS, INC.
(Name of Registrant As Specified In Charter)
______________________________
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THIS INFORMATION STATEMENT IS BEING PROVIDED TO
YOU BY THE BOARD OF DIRECTORS OF THE COMPANY
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
NORTHEAST AUTOMOTIVE HOLDINGS, INC.
2174 Hewlett Avenue
Merrick, New York 11566
INFORMATION STATEMENT
(Definitive)
May 27, 2008
GENERAL INFORMATION
This Information Statement has been filed with the Securities and Exchange Commission and is being furnished, pursuant to Section 14C of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to the holders (the “Stockholders”) of the common stock, par value $.0001 per share (the “Common Stock”), of Northeast Automotive Holdings, Inc., a Nevada Corporation (the “Company”), to notify such Stockholders that on or about May 6, 2008, the Company received written consents in lieu of a meeting of Stockholders from holders of 5,000,000 shares representing approximately 30% of the 16,618,586 shares of the total issued and outstanding shares of voting common stock, and a shareholder holding 10,000,000 Series A Convertible Preferred shares which represent 30,000,000 voting shares of common stock. William Solko is the holder of 10,000,000 Series A Convertible Preferred shares outstanding. As the holder of the Series A Convertible Preferred shares, Mr. Solko has the right to vote 30 times the number of shares of common stock that the Series A Convertible Preferred is convertible into on all matters submitted to the shareholders. The Series A Convertible Preferred shares are each convertible into one share of common stock. Therefore the 10,000,000 Series A Convertible Preferred shares are convertible into 10,000,000 common shares and William Solko has the right to vote thirty times the number of shares pursuant to the rights designated to the Series A Convertible Preferred Shares and has voted such amount in favor of approving of the Company (the “Majority Stockholders”) to effect a 30-for-1 reverse stock split (pro-rata reduction of outstanding shares) of our issued and outstanding shares of Common Stock (the “Reverse Stock Split”). There will not be an increase or decrease in authorized shares.
On May 6, 2008, the Board of Directors of the Company approved the Reverse Stock Split, subject to Stockholder approval. The Majority Stockholders approved the Reverse Stock Split by written consent in lieu of a meeting on May 6, 2008 in accordance with the Nevada General Corporation Law (“NGCL”). Accordingly, your consent is not required and is not being solicited in connection with the approval of the Amendments.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company (the "Board") believes that the stockholders of the Company will benefit from the Reverse Stock Split because it will attract potential investment from outside investors which will create a more liquid public market for its common stock. In order to facilitate such transaction, the Board has determined that the capitalization structure of the Company should be simplified. No assurances can be given that such investors will be found.
Accordingly, it was the Board's opinion that the restructuring transactions described above would better position the Company to attract potential business candidates and provide the stockholders of the Company with the greatest potential return. The Board approved the above actions on May 6, 2008 and stockholders holding a voting majority of the outstanding voting capital stock of the Company approved the above actions on May 6, 2008.
ACTIONS TO BE TAKEN
This Information Statement contains a brief summary of the material aspects of the actions approved by the Board and the holders of the majority of the outstanding voting capital stock of the Company.
DECREASE THE NUMBER OF ISSUED AND OUTSTANDING SHARES OF OUR COMMON STOCK
GENERAL
The Board approved a resolution to effect a 30-for-1 reverse stock split. Under this reverse stock split each 30 shares of our Common Stock will be converted automatically into 1 share of Common Stock. To avoid the issuance of fractional shares of Common Stock, the Company will issue an additional share to all holders of fractional shares. The effective date of the reverse stock split will be on or about June 17, 2008.
PLEASE NOTE THAT THE REVERSE STOCK SPLIT WILL NOT CHANGE YOUR PROPORTIONATE EQUITY INTERESTS IN THE COMPANY, EXCEPT AS MAY RESULT FROM THE ISSUANCE OR CANCELLATION OF SHARES PURSUANT TO THE FRACTIONAL SHARES.
PLEASE NOTE THAT THE REVERSE SPLIT WILL HAVE THE EFFECT OF SUBSTANTIALLY INCREASING THE NUMBER OF SHARES THE COMPANY WILL BE ABLE TO ISSUE TO NEW OR EXISTING SHAREHOLDERS BECAUSE THE NUMBER OF AUTHORIZED SHARES WILL REMAIN THE SAME WHILE THE NUMBER OF SHARES ISSUED AND OUTSTANDING WILL BE REDUCED THIRTY-FOLD.
PURPOSE AND MATERIAL EFFECTS OF THE REVERSE STOCK SPLIT
The Board of Directors believe that, among other reasons, the number of outstanding shares of our Common Stock have contributed to a lack of investor interest in the Company and has made it difficult to attract new investors and potential business candidates. The Board of Directors has proposed the Reverse Stock Split as one method to attract business opportunities in the Company.
When a company engages in a reverse stock split, it substitutes one share of stock for a predetermined amount of shares of stock. It does not increase the market capitalization of the company. An example of a reverse split is the following. A company has 10,000,000 shares of common stock outstanding. Assume the market price is $.01 per share. Assume that the company declares a 1 for 5 reverse stock split. After the reverse split, that company will have 1/5 as many shares outstanding or 2,000,000 shares outstanding. The stock will have a market price of $0.05. If an individual investor owned 10,000 shares of that company before the split at $.01 per share, he will own 2,000 shares at $.05 after the split. In either case, his stock will be worth $100. He is no better off before or after. Except that such company hopes that the higher stock price will make that company look better and thus the company will be a more attractive merger target for potential business. There is no assurance that that company's stock will rise in price after a reverse split or that a suitable merger candidate will emerge.
We believe that the reverse stock split may improve the price level of our Common Stock and that the higher share price could help generate interest in the Company among investors and other business opportunities. However, the effect of the reverse split upon the market price for our Common Stock cannot be predicted, and the history of similar stock split combinations for companies in like circumstances is varied. There can be no assurance that the market price per share of our Common Stock after the reverse split will rise in proportion to the reduction in the number of shares of Common Stock outstanding resulting from the reverse split. The market price of our Common Stock may also be based on our performance and other factors, some of which may be unrelated to the number of shares outstanding.
The reverse split will affect all of our stockholders uniformly and will not affect any stockholder's percentage ownership interests in the Company or proportionate voting power, except to the extent that the reverse split results in any of our stockholders owning a fractional share. All stockholders holding a fractional share shall be issued an additional share. The principal effect of the reverse split will be that the number of shares of Common Stock issued and outstanding will be reduced from 16,618,586 shares as of May 6, 2008 to approximately 553,952 shares (depending on the number of fractional shares that are issued or cancelled). The number of authorized shares of Common Stock will not be affected. The following chart depicts the capitalization structure of the Company, both, pre- and post-split (the post-split issued shares may differ slightly based on the number of fractional shares):
Pre-Reverse Stock Split
| Authorized Shares | Issued Shares | Authorized but Unissued |
| 300,000,000 | 16,618,586 | 283,381,414 |
Post-Reverse Stock Split
| Authorized Shares | Issued Shares | Authorized but Unissued |
| 300,000,000 | 553,952 | 299,446,048 |
The reverse split will not affect the par value of our Common Stock. As a result, on the effective date of the reverse split, the stated capital on our balance sheet attributable to our Common Stock will be reduced to less than the present amount, and the additional paid-in capital account shall be credited with the amount by which the stated capital is reduced. The per share net income or loss and net book value of our Common Stock will be increased because there will be fewer shares of our Common Stock outstanding.
The reverse split will not change the proportionate equity interests of our stockholders, nor will the respective voting rights and other rights of stockholders be altered, except for possible immaterial changes. The Common Stock issued pursuant to the reverse split will remain fully paid and non-assessable. The reverse split is not intended as, and will not have the effect of, a "going private transaction" covered by Rule 13e-3 under the Securities Exchange Act of 1934. We will continue to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934.
Stockholders should recognize that they will own a fewer number of shares than they presently own (a number equal to the number of shares owned immediately prior to the filing of the certificate of amendment divided by 30). While we expect that the reverse split will result in an increase in the potential market price of our Common Stock, there can be no assurance that the reverse split will increase the potential market price of our Common Stock by a multiple equal to the exchange number or result in the permanent increase in any potential market price (which is dependent upon many factors, including our performance and prospects). Also, should the market price of our Common Stock decline, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would pertain in the absence of a reverse split. Furthermore, the possibility exists that potential liquidity in the market price of our Common Stock could be adversely affected by the reduced number of shares that would be outstanding after the reverse split. In addition, the reverse split will increase the number of stockholders of the Company who own odd lots (less than 100 shares). Stockholders who hold odd lots typically will experience an increase in the cost of selling their shares, as well as possible greater difficulty in effecting such sales. Consequently, there can be no assurance that the reverse split will achieve the desired results that have been outlined above.
Anti-Takeover Effects of the Reverse Stock Split
THE OVERALL EFFECT OF THE REVERSE STOCK SPLIT MAY BE TO RENDER MORE DIFFICULT THE ACCOMPLISHMENT OF MERGERS OR THE ASSUMPTION OF CONTROL BY A PRINCIPAL STOCKHOLDER, AND THUS MAKE DIFFICULT THE REMOVAL OF MANAGEMENT.
The effective increase in our authorized shares could potentially be used by management to thwart a take-over attempt. The over-all effects of this proposal might be to render it more difficult or discourage a merger, tender offer or proxy contest, or the assumption of control by a holder of a large block of the Company’s securities and the removal of incumbent management. The proposal could make the accomplishment of a merger or similar transaction more difficult, even if, it is beneficial to shareholders. Management might use the additional shares to resist or frustrate a third-party transaction, favored by a majority of the independent stockholders that would provide an above market premium, by issuing additional shares to frustrate the take-over effort.
As discussed below, the reason the Reverse Stock Split is being proposed is to increase the amount of shares the Company is able to issue in order to attract potential investors and conduct a financing. This proposal is not the result of management’s knowledge of an effort to accumulate the issuer’s securities or to obtain control of the issuer by means of a merger, tender offer, solicitation or otherwise.
Neither the Company’s charter nor its by-laws presently contain any provisions having anti-takeover effects and this proposal is not a plan by management to adopt a series of amendments to the Company’s charter or by-laws to institute an anti-takeover provision. The Company does not have any plans or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences.
The advantage of the Reverse Stock Split will be to permit the Company to pursue financing from investors and issue shares of common stock in exchange for the financing. This is the main purpose for the Reverse Stock Split and if the Reverse Stock Split is not completed, the Company would not be able to issue additional shares sufficient to complete a financing. The main disadvantage to the Reverse Stock Split is that it may have an anti-takeover effect and discourage any potential mergers or tender offers.
As discussed above, the Reverse Stock Split was the subject of a unanimous vote by the Board of Directors approving the Reverse Stock Split. There are no rules or practices on any stock exchange that permit such exchange to reserve the right to refuse to list or to de-list any stock which completes a reverse stock split.
PLANS, PROPOSALS OR ARRANGEMENTS TO ISSUE NEWLY AVAILABLE SHARES OF COMMON STOCK
The main purpose of completing this Reverse Stock Split is to increase the amount of shares available in order to have the ability to issue shares and attract investors for a future financing. The Company currently has no financing agreements pending.
PROCEDURE FOR EXCHANGE OF STOCK CERTIFICATES
The reverse split will become effective on or about June 17, 2008, which we will refer to as the "effective date." Beginning on the effective date, each certificate representing pre-reverse split shares will be deemed for all corporate purposes to evidence ownership of post-reverse split shares.
Our transfer agent, Olde Monmouth Stock Transfer Co., Inc., will act as exchange agent for purposes of implementing the exchange of stock certificates. We refer to such person as the "exchange agent." Holders of pre-reverse split shares are asked to surrender to the exchange agent certificates representing pre-reverse split shares in exchange for certificates representing post-reverse split shares in accordance with the procedures set forth in the letter of transmittal enclosed with this Information Statement. No new certificates will be issued to a stockholder until that stockholder has surrendered the stockholder's outstanding certificate(s) together with the properly completed and executed letter of transmittal.
Our stockholders are not entitled to appraisal rights under the Nevada General Corporation Law in connection with the reverse stock split.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE AND SHOULD NOT SUBMIT ANY CERTIFICATES WITHOUT THE LETTER OF TRANSMITTAL.
FRACTIONAL SHARES
We will not issue fractional certificates for post-reverse split shares in connection with the reverse split. Instead, an additional share shall be issued to all holders of a fractional share. To the extent any holders of pre-reverse split shares are entitled to fractional shares as a result of the Reverse Stock Split, the Company will issue an additional share to all holders of fractional shares.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE AND SHOULD NOT SUBMIT ANY CERTIFICATES WITHOUT THE LETTER OF TRANSMITTAL.
SUMMARY OF REVERSE STOCK SPLIT
Below is a brief summary of the reverse stock split:
| | o | The issued and outstanding Common Stock shall be reduced on the basis of 1 post-split share of the Common Stock for every 30 pre-split shares of the Common Stock outstanding. The consolidation shall not affect any rights, privileges or obligations with respect to the shares of the Common Stock existing prior to the consolidation. |
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| | o | Stockholders of record of the Common Stock as of May 6, 2008 shall have their total shares reduced on the basis of 1 post-split share of Common Stock for every 30 pre-split shares outstanding. |
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| | o | As a result of the reduction of the Common Stock, the pre-split total of issued and outstanding shares of 16,618,586 shall be consolidated to a total of approximately 553,952 issued and outstanding shares (depending on the number of fractional shares that are be issued or cancelled). |
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| | o | The Company's authorized number of common stock shall remain at 300,000,000 shares of the Common Stock. |
This action has been approved by the Board and the written consents of the holders of the majority of the outstanding voting capital stock of the Company.
The entire cost of furnishing this Information Statement will be borne by the Company. The Company will request brokerage houses, nominees, custodians, fiduciaries and other like parties to forward this Information Statement to the beneficial owners of the Common Stock held of record by them and will reimburse such persons for their reasonable charges and expenses in connection therewith. The Board of Directors has fixed the close of business on May 6, 2008, as the record date (the “Record Date”) for the determination of Stockholders who are entitled to receive this Information Statement.
You are being provided with this Information Statement pursuant to Section 14C of the Exchange Act and Regulation 14C and Schedule 14C thereunder, and, in accordance therewith, the Reverse Stock Split will not be filed with the Secretary of State of the State of Nevada or become effective until at least 20 calendar days after the mailing of this Information Statement.
This Information Statement is being mailed on or about May 27, 2008 to all Stockholders of record as of the Record Date.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith files reports, proxy statements and other information including annual and quarterly reports on Form 10-K and 10-Q (the “1934 Act Filings”) with the Securities and Exchange Commission (the “Commission”). Reports and other information filed by the Company can be inspected and copied at the public reference facilities maintained at the Commission at Room 1024, 450 Fifth Street, N.W., Washington, DC 20549. Copies of such material can be obtained upon written request addressed to the Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site on the Internet (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Commission through the Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).
The following documents as filed with the Commission by the Company are incorporated herein by reference:
| 1. | | Annual Report on Form 10-K for the year ended December 31, 2007 |
| 2. | | Periodic Report on Form 10-Q for the quarter ended May 31, 2008 |
OUTSTANDING VOTING SECURITIES
As of the date of the Consent by the Majority Stockholders, May 6, 2008, the Company had 16,618,586 shares of Common Stock issued and outstanding, and there were 10,000,000 shares of Preferred Stock issued and outstanding. Each share of outstanding Common Stock is entitled to one vote on matters submitted for Stockholder approval and the holders of our Series A Convertible Preferred Stock are entitled to vote thirty (30) times for each share of Series A Convertible Preferred Stock held on all matters submitted to the shareholders. However, because the stockholders holding at least a majority of the voting rights of all outstanding shares of capital stock as of the Record Date have voted in favor of the foregoing actions by resolution; and having sufficient voting power to approve such proposals through their ownership of the capital stock, no other consents will be solicited in connection with this Information Statement.
On May 6, 2008 the holders of 5,000,000 shares (or approximately 30% of the 16,618,586 shares of Common Stock then outstanding), and shareholders holding 10,000,000 shares of Series A Convertible Preferred Stock entitled to 30 votes per share, a total of 30,000,000 votes, executed and delivered to the Company a written consent approving the reverse split. Since the reverse split has been approved by the Majority Stockholders, no proxies are being solicited with this Information Statement.
On May 6, 2008, pursuant to Nevada Revised Statutes (“NRS”) 78.315, the Board of Directors of the Company approved the above-mentioned action, subject to Stockholder approval. According to NRS 78.2055, a majority of the outstanding shares of voting capital stock entitled to vote on the matter is required in order to decrease the number of issued and outstanding shares of a class or series. The Majority Stockholders approved the action by written consent in lieu of a meeting on May 6, 2008, in accordance with NRS 78.315. Accordingly, your consent is not required and is not being solicited in connection with the approval of the action.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information table sets forth certain information regarding the Company’s common stock owned on May 27, 2008 by (i) each who is known by the Company to own beneficially more than 5% of its outstanding Common Stock, (ii) each director and officer, and (iii) all officers and directors as a group:
Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class(2)(3) | |
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| Common Stock | | | William Solko (1) Michael Shaw (1) | | | 5,000,000 2,000,000 | | | 30.08 12.03 | % % |
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| Preferred Stock | | | William Solko(1) | | | 10,000,000 | | | 100 | % |
| (1) | Unless otherwise indicated in the footnotes to the table, (1) the individuals listed have sole voting and sole investment control with respect to the shares they beneficially own and (2) the address of each beneficial owner listed is c/o the Company, 2174 Hewlett Avenue, Suite 206, Merrick, New York 11566. |
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| (2) | Based on 300,000,000 shares of Common Stock authorized, 16,618,586 shares issued and outstanding. |
| (3) | Based on 10,000,000 shares of Preferred Stock authorized, 10,000,000 shares issued and outstanding |
DISSENTER’S RIGHTS OF APPRAISAL
The Stockholders have no right under the Nevada General Corporation Law, the Company’s articles of incorporation consistent with above or By-Laws to dissent from any of the provisions adopted in the Amendments.
EFFECTIVE DATE OF REVERSE SPLIT
Pursuant to Rule 14c-2 under the Exchange Act, thus reverse split shall not be effective until a date at least twenty (20) days after the date on which this Information Statement has been mailed to the Stockholders. The Company anticipates that the actions contemplated hereby will be effected on or about the close of business on June 17, 2008.
| By Order of the Board of Directors | | | |
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| /s/ William Solko | | | |
William Solko | | | |
| Chief Executive Officer & Director | | | |
