SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No.)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
Moneyzone.com, Inc.
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(Name of Registrant as Specified in Charter)
Moneyzone.com, Inc.
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(Name of Person(s) Filing the Information Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock, par value $.15 per share
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2) Aggregate number of securities to which transaction applies:
25,000,000 shares of Common Stock Outstanding
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
N/A
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee Paid.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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1
MONEYZONE.COM, INC.
INFORMATION STATEMENT
Mailing Date: 2002
We are not asking you for a proxy and you are
requested not to send us a proxy
This Information Statement has been filed with the Securities and
Exchange Commission and is being mailed or otherwise furnished to the registered
stockholders of Moneyzone.com, Inc. (the "Company") in connection with the prior
approval by the board of directors of the Company, and receipt by the board of
approval by written consent of the holders of a majority of the Company's
outstanding shares of Common Stock, of resolutions to,
1. Forward split the shares of Common Stock of the Company on a
five for one basis.
2. To approve the Agreement and Plan of Reorganization (the
"Agreement") and the transactions contemplated thereby, by and among the Company
and Quicktest 5, Inc. ("Quicktest"); that the Company merge with Quicktest and
take all necessary actions to complete such transaction (the "Merger"),
including but not limited to the filing of the appropriate merger documents with
the State of Delaware.
3. Amend the Certificate of Incorporation of the Company to
increase the total amount of the Company's authorized Common Stock, from
25,000,000 shares to 100,000,000 shares (the "Capital Stock Increase").
4. Amend the Certificate of Incorporation of the Company to
change the name of the Company to "QT 5, Inc.", or, if the new name is
unacceptable to the applicable regulators having jurisdiction over the affairs
of the Company, to any such other name that is approved by the board of
directors in its sole discretion.
5. That, upon the closing and effectiveness of the merger,
Timothy J. Owens, Steven H. Reder, and Michael Kessler be nominated to serve on
the Board of Directors of the Company until the next annual meeting of
shareholders.
The Company has obtained all necessary corporate approvals in
connection with the foregoing actions and your consent is not required and is
not being solicited in connection with the approval of the foregoing actions.
Section 228 of the Delaware General Corporation Law and the By-laws of the
Company provide that any action required or permitted to be taken at a meeting
of the stockholders may be taken without a meeting if stockholders holding at
least a majority of the voting power sign a written consent approving the
action.
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We are sending this Information Statement to the Company's stockholders
of record who owned common stock of the Company as of July 29, 2002 (the "Record
Date"). As of the Record Date, the Company had 600,000 shares of common stock
issued and outstanding, and each share of Common Stock is entitled to one vote.
The actions will not become effective until (i) 21 days from the date
this Information Statement is first mailed to the stockholders, or, (ii) such
later date as approved by the board of directors, in its sole discretion.
This Information Statement is dated ________, 2002 and is first being
mailed to stockholders on or about ______, 2002.
All expenses incurred in connection with the preparation and mailing of
this Information Statement will be borne by the Company. This Information
Statement is prepared and distributed by the Company.
We Are Not Asking You For a Proxy and You Are Requested Not To Send Us
A Proxy.
Interest of Certain Persons in Matters to Be Acted Upon
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No director, executive officer, nominee for election as a director,
associate of any director, executive officer or nominee or any other person has
any substantial interest, direct or indirect, by security holdings or otherwise,
resulting from the actions set forth herein, which is not shared by all other
stockholders pro-rata, and in accordance with their respective interests.
Certain Questions and Answers
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Q: What am I being asked to Approve?
A: You are not being asked to approve anything. This Information Statement
is being provided to you solely for your information. Stockholders holding a
majority of the outstanding voting common stock of the Company have already
agreed:
1. Forward split the shares of Common Stock of the Company on a
five for one basis.
2. To approve the Agreement and Plan of Reorganization (the
"Agreement") and the transactions contemplated thereby, by and among the Company
and Quicktest 5, Inc. ("Quicktest"); that the Company merge with Quicktest and
take all necessary actions to complete such transaction (the "Merger"),
including but not limited to the filing of the appropriate merger documents with
the State of Delaware.
3. Amend the Certificate of Incorporation of the Company to
increase the total amount of the Company's authorized Common Stock, from
25,000,000 shares to 100,000,000 shares (the "Capital Stock Increase").
4. Amend the Certificate of Incorporation of the Company to
change the name of the Company to "QT5, Inc.", or, if the new name is
unacceptable to the applicable regulators having jurisdiction over the affairs
of the Company, to any such other name that is approved by the board of
directors in its sole discretion.
5. That, upon the closing and effectiveness of the merger,
Timothy J. Owens, Steven H. Reder, and Michael Kessler be nominated to serve on
the Board of Directors of the Company until the next annual meeting of
shareholders.
Q: Why have the board of directors agreed to approve these actions?
A: All of these actions are necessary to accomplish the terms of the
Agreement.
Q: What are the basic terms of the transaction with Quicktest?
A: The Company will merge with and into Quicktest. In exchange for
all the capital stock of Quicktest, the stockholders of Quicktest will receive
such number of shares of our Common Stock representing approximately 90% of the
outstanding shares of our Common Stock after giving effect to the terms of the
Agreement. You will retain all of your present stockholdings in the Company and
are not required to do anything.
Q: Will I recognize a gain or loss in connection with the transaction with
Quicktest?
A: No.
Q: Do I have appraisal rights?
A: No. you are not entitled to appraisal rights under Delaware Law.
Q: Are there any conditions to the transactions with Quicktest?
A: Yes. There are several conditions, including the following:
The Company must file all reports that are required to be filed with the
Securities and Exchange Commission; The approval of the stockholders of the
Company voting in favor of the Merger Agreement and the transactions
contemplated thereunder; The Company shall have not less than $300,000 of cash;
Approval of the increase in authorized capital stock of the Company; and The
Company shall change its name to QT5, Inc.
Q: What business is conducted by Quicktest?
A: Quick Test, incorporated in the state of Delaware, intends to
market and sell, under private label, to the "Retail Over the Counter (O.T.C.)
Consumer" A Nicotine Replacement Water Based Beverage, Urine Analysis Drug
Detection products, together with proprietary Human Resource Services to the
Business and Government Markets.
Q: Are there risks involved in the transaction with Quicktest?
A: Yes. After the transaction is completed, our success will be
totally dependent on the success of Quicktest. Quicktest is a development stage
company and only recently started taking its products to market. There are no
assurances that Quicktest's operations will be profitable after the closing of
the transaction.
Q: When do you expect to complete the transaction with Quicktest?
A: Within approximately one month after the date of this
Information Statement. As mentioned previously, there are several conditions to
the closing of the transaction.
3
Principal Stockholders
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The board of directors of the Company approved the actions on July 16,
2002. At that time and as of the date of this Information Statement, the
directors and officers of the Company owned an aggregate of 3,000 shares of
Common Stock of the Company and, accordingly, do not have a substantial interest
in the Proposals.
The following table sets forth information available to the Company, as
of July , 2002 with respect to the beneficial ownership of the outstanding
shares of the Company's Common Stock by (i) any holder of more than five percent
(5%) of the outstanding shares; (ii) the Company's officers and directors; and
(iii) the Company's officers and directors as a group (the table has been
prepared based on information provided to the Company by each shareholder):
Name and Address of Shares of Common Percentage (%) of
Beneficial Owner Stock Owned Common Stock
------------------- ----------- ------------
John Iannetta (1) 2,000 *
Halla Moran (2) 1,000 *
Robert Moore (3) 76,781 12.8
William Bossung (4) 195,135 32.5
Todd Sanders (5) 195,136 32.5
Global Capital Partners Inc. (6) 69,659 11.6
All officers and directors as a
group (two (2) persons) 2,000 *
* Less than one percent.
(1) John Iannetta is President and a member of our Board of Directors. The
address for John Iannetta is 3260 North Hayden, Ste 209, Scottsdale,
Arizona 85251.
(2) Halla Moran is Secretary and a member of our Board of Directors. The
address for Halla Moran is 235 South Camella Street, Anaheim, California
92804.
(3) The address for Robert Moore is 2875 E. Patrick Lane Suite G, Las Vegas, NV
89120
(4) The address for William Bossung is19100 Von Karman Ave, Ste 450, Irvine,
California 92612.
(5) The address for Todd Sanders is 19100 Von Karman Ave, Ste 450, Irvine,
California 92612
(6) The address for Global Capital Partners, Inc. is 15105 John J. Delaney
Drive, #341, Charlotte, North Carolina 28277.
Forward Split
General
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The Board of Directors and holders of a majority of the outstanding
Common Stock of the Company authorized and approved by written consent a Forward
Stock Split of five for one of the Company's outstanding Common Stock (the
"Forward Stock Split") whereby each holder of our Common Stock will receive five
shares of our Common Stock for each share of our Common Stock held on the
effective date of the Forward Stock Split to effectuate the Merger.
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The intent of the Forward Stock Split is to increase the marketability
and liquidity of the Common Stock. The Board of Directors believes that the
limited number of shares outstanding limits the marketability of the Common
Stock. However, shareholders are cautioned that there can be no assurance that
this will come to pass. Although the Forward Stock Split would not, by itself,
impact our assets or business, the Forward Stock Split could result in an
increase in the aggregate market value of our equity capital. The Board of
Directors believes that this risk is outweighed by the benefits of the Forward
Stock Split.
Effectiveness
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The Forward Stock Split will become effective as soon as practicable
after the filing with the Secretary of State of the State of Delaware of a
Certificate of Amendment to our Certificate of Incorporation in substantially
the form annexed hereto. Upon the effectiveness of the Forward Stock Split, the
number of shares of our Common Stock issued and outstanding would be increased
to a number that would be equal to the number of shares of our Common Stock
issued and outstanding immediately prior to the effectiveness of the Forward
Stock Split, multiplied by five. The actual number of authorized shares of our
Common Stock would not be changed.
With the exception of the number of shares issued and outstanding, the
rights and preferences of the shares of our Common Stock prior to and subsequent
to the Forward Stock Split would remain the same. After the effectiveness of the
Forward Stock Split, we do not anticipate that our financial condition or any
aspect of our business would materially change as a result of the Forward Stock
Split.
Commencing at the close of business, following the filing of the
Forward Stock Split Amendment with the Secretary of State of the State of
Delaware (the "Effective Time"), each stock certificate representing shares of
our Common Stock before such date (the "Pre-Effective Stock") would be deemed
for all corporate purposes without any action on the part of the shareholders to
evidence ownership of the increased number of shares of our Common Stock
resulting from the Forward Stock Split (the "Post-Effective Stock"). As soon as
practicable after such date, stockholders would be notified as to the
effectiveness of the Forward Stock Split and instructed as to how and when to
surrender their certificates representing shares of Pre-Effective Stock in
exchange for certificates representing shares of Post-Effective Stock. We intend
to use American Stock Transfer & Trust Company as our exchange agent in
effecting the exchange of certificates following the effectiveness of the
Forward Stock Split.
The Forward Stock Split alone will increase the number of outstanding
shares of Common Stock to approximately 3,000,000 shares. The number of shares
of capital stock authorized by the Certificate of Incorporation will not change
as a result of the Forward Stock Split. The Common Stock issued pursuant to the
Forward Stock Split will be fully paid and non-assessable. The Forward Stock
Split will not alter the voting and other rights that presently characterize the
Common Stock.
Fractional Shares
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No fractional shares of our Common Stock will be issued to stockholders
as a result of the Forward Stock Split.
Merger
General
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The Company has entered into the Agreement, which sets forth the terms
and conditions of a proposed business combination among the Company and
Quicktest. Pursuant to the Agreement, the holders of Quicktest common stock will
exchange their shares for shares of the Company's Common Stock, with the Company
as the surviving corporation. It is currently anticipated that the consummation
of the Merger will occur no sooner than twenty (20) days after the date this
Information Statement is first mailed to our current stockholders.
Quicktest, incorporated in the state of Delaware, intends to market and
sell, under private label, to the "Retail Over the Counter (O.T.C.) Consumer" a
Nicotine Replacement Water Based Beverage, Urine Analysis Drug Detection
products, together with proprietary Human Resource Services to the Business and
Government Markets. The principal executive offices of Quicktest are located at
5655 Lindero Canyon Road, Suite 120, Westlake Village, California 91362, and the
telephone is (866) 508-8378.
Consent Required
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Approval of the Agreement requires the consent of the holders of a
majority of the outstanding shares of our Common Stock entitled to vote at any
annual meeting of stockholders as of the Record Date. A majority of the
outstanding shares of our Common Stock as of the Record Date, has given its
consent to approve the Agreement and the transactions contemplated thereby and
accordingly, the requisite stockholder approval was obtained by the execution of
the written consent in favor of the Agreement.
Reasons for Approval
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The Board of Directors has given careful consideration to the Merger,
the existing business operations of Quicktest, the future potential and plans of
Quicktest, the interest of our stockholders, and the risks of the Merger to our
existing stockholders. Based on the foregoing considerations, the Board of
Directors, together with the holders of a majority of the outstanding shares of
our Common Stock, believe the transactions contemplated by the Agreement,
including, but not limited to, the name change, the forward stock split, and
increase in authorized shares, are fair and in our best interests.
5
Terms of the Agreement
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The following describes the material terms of the Agreement.
This summary is qualified in its entirety to the full text of the Agreement,
which is attached hereto and such Agreement is incorporated into this
Information Statement by reference. You are urged to read the entire Agreement.
Completion of the Merger
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The Merger will be consummated and become effective when the articles
of merger are filed with the Delaware Secretary of State or at such other time
as specified in the articles of merger. The Company and Quicktest anticipate
that the Merger will be completed as soon as possible after all of the
conditions to the Merger contained in the Agreement are satisfied, or where
permissible, waived, or such later time as mutually agreed.
Directors of the Company after the Merger
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As discussed herein as a condition to the Merger we have agreed to
appoint certain nominees to our Board of Directors (See Action 5).
Manner and Basis of Converting Shares of Quicktest common stock into our Common Stock
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Under the terms of the Merger Agreement, upon completion of the Merger,
each outstanding share of Quicktest common stock will be converted into the
right to receive 1.33 shares of our Common Stock.
As soon as reasonably practicable after the effective time of the
Merger, the exchange agent will mail to holders of Quicktest common stock, a
letter of transmittal and instructions for use in exchanging Quicktest common
stock certificates for certificates representing shares of our Common Stock. In
addition, as soon as reasonably practicable after the exchange agent receives
from holders of Quicktest common stock certificate(s) their respective Quicktest
common stock certificate(s), the letter of transmittal and any other documents
that are required by the letter of transmittal, they will be entitled to receive
the Merger consideration in the form of a certificate or certificates
representing the appropriate number of shares of our Common Stock.
After consummation of the Merger, until surrendered and exchanged, each
Quicktest share certificate will be deemed to evidence the right to receive that
number of shares of our Common Stock. We will not pay dividends or other
distributions on any shares of our Common Stock to be issued in exchange for
Quicktest common stock certificates that are not surrendered until such
Quicktest common stock certificate is properly surrendered.
6
Quicktest Appraisal Rights
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Stockholders of Quicktest who have neither voted in favor of the Merger
nor consented thereto in writing pursuant to Section 228 of the Delaware General
Corporation Law may be entitled to demand appraisal rights with respect to
shares of Quicktest common stock outstanding immediately prior to the effective
time of the Merger by properly demanding the "fair value" for such shares in
accordance with applicable Delaware law, and accordingly such shares will not be
converted into the right to receive our Common Stock, unless the stockholder
fails to perfect or withdraw or otherwise loses the right to appraisal rights.
If after the effective time of the Merger, a stockholder fails to perfect or
withdraw or loses the right to exercise appraisal rights, each such share of
Quicktest common stock will be treated as if it had been converted as of the
effective time into the right to receive the shares of our Common Stock.
Quicktest has agreed to give the Company prompt notice of any demands received
for appraisal rights, and we may participate in all negotiations and proceedings
with respect to such demands. Quicktest will not be permitted, without our prior
written consent, to make any payment with respect to, or settle or offer to
settle, any such demands.
Representations and Warranties
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Representations of Quicktest
----------------------------
The Merger Agreement contains representations and warranties of
Quicktest regarding, among other matters:
* the corporate organization and existence of Quicktest, including
that it has been duly organized, is validly existing and in good
standing with the corporate power and authority to own, operate
and lease its assets, to perform its obligations under certain
material agreements and to carry on its businesses as currently
conducted;
* the corporate power and authority of Quicktest to execute and
deliver the Agreement and related documents and to consummate the
Merger and other contemplated transactions;
* the adoption by Quicktest 's board of directors of a resolution
adopting the Agreement and the Merger and recommending approval of
the Agreement by the stockholders of Quicktest;
* the accuracy of Quicktest's financial reports delivered to the
Company;
* the validity and enforceability of intellectual property owned by
Quicktest;
* the filing and accuracy of Quicktest's tax returns, the lack of
pending or threatened proceedings, deficiencies or audits with
respect to taxes, and certain related tax matters;
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* Quicktest's employee benefit plans and related matters, including
that such plans have been operated and administered in accordance
with applicable law;
* the absence of material claims, actions, suits, proceedings and
specified judgments, decrees and injunctions;
* the stockholder vote required to approve the Agreement and the
Merger;
* the compliance of the Merger Agreement and related documents with
Quicktest's certificate of incorporation and bylaws, applicable
laws, and material agreements, including the absence of events of
default or breach thereunder;
Representations of the Company
- -------------------------------
The Agreement contains representations and warranties of the Company
regarding, among other matters:
* the capitalization of the Company, including the number of shares
of capital stock authorized, the number of shares and rights to
acquire shares outstanding, and the number of shares reserved for
issuance;
* the absence of material misstatements or omissions in the
information provided by the Company in its filings with the SEC
and the accuracy and compliance of the Company's financial
statements contained therein.
Conduct of Quicktest's Business Before the Completion of the Merger
- -------------------------------------------------------------------
The Agreement contemplates that, until the effective time of the Merger,
Quicktest will operate its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, to pay the debts and
taxes when due, pay or perform other obligations when due, and, to the extent
consistent with such business, use its commercially reasonable efforts
consistent with past practice and policies to preserve intact Q5's present
business organizations, keep available the services of its present officers and
key employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it,
all with the goal of preserving unimpaired Quicktest's goodwill and ongoing
businesses. The Agreement also contemplates that, until the effective time of
the Merger, Quicktest will not, without the prior written consent of the
Company:
* declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect
of any of its capital stock, or split, combine or reclassify
any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in
substitution for shares of capital stock, or repurchase,
redeem or otherwise acquire, directly or indirectly, any
shares of the capital stock (or options, warrants or other
rights exercisable therefore) except for repurchases of shares
its common stock from its employees in connection with the
termination of their employment with Quicktest; provided,
however, that Quicktest may issue or authorize the issuance of
its securities to the extent that the fully diluted outstanding
shares of it's capital stock following such issuance does not
exceed 19,000,000 shares;
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* issue, grant, deliver, or sell any shares of its capital stock
or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue or purchase
any such shares or other convertible securities, or accelerate
the vesting of any stock options, except for the issuance of
shares of Quicktest common stock upon the exercise or conversion
of options, warrants or other rights, or convertible securities
outstanding on the date hereof, and except for the grant of
additional stock options, warrants, or other convertible
securities at a per share exercise price of at least 85% of the
fair market value; provided, however, that Quicktest may issue,
grant, deliver, or sell any shares of its capital stock or
securities convertible into, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of
any character obligating it to issue or purchase any such shares
or other convertible securities, or accelerate the vesting of
any stock options to the extent that the fully diluted
outstanding shares of Quicktest's capital stock following such
issuance shall not exceed 19,000,000 shares of Quicktest Common
Stock;
* acquire or agree to acquire by merging or consolidating with,
or by purchasing any assets or equity securities of, or by any
other manner, any business or any corporation, partnership,
association or other business organization or division thereof,
or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to Quicktest's
business; provided, however, that Quicktest may acquire, merge
into, consolidate with, or purchase the assets of any entity to
the extent that the fully diluted outstanding shares of
Quicktest's capital stock following such acquisition, merger,
consolidation, or asset purchase does not exceed 19,000,000
shares of Quicktest Common Stock;
* sell, lease, license or otherwise dispose or agree to do the
same with respect to any of its material properties or assets,
except properties or assets which are not Intellectual Property
and commercial licenses of Quicktest's software in the ordinary
course of business and consistent with past practices;
* accelerate the vesting schedule of any of the outstanding
Quicktest Options or Quicktest common stock;
* change its methods of accounting or change its fiscal year; or
* take, or agree in writing or otherwise to take, any of the
actions described above, or any other action that would prevent
Quicktest from performing or cause Quicktest not to perform its
covenants hereunder, or any other action not in the ordinary
course of Quicktest's business and consistent with past practice.
Conduct of the Company Before Completion of the Merger
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The Merger Agreement contemplates that, until the effective time of the Merger,
the Company, will carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, to pay its
debts and Taxes when due, to pay or perform other obligations when due, and, to
the extent consistent with such business, use its commercially reasonable
efforts consistent with past practice and policies to preserve intact the
present business organizations, all with the goal of minimizing any liabilities.
The Agreement also contemplates that, until the effective time of the Merger,
the Company will not, without the prior written consent of Quicktest:
* declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect
of any of its capital stock, or split, combine or reclassify
any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or repurchase, redeem or
otherwise acquire, directly or indirectly, any shares of the
capital stock (or options, warrants or other rights exercisable
therefore) except for repurchases of shares of it's Common Stock
from employees, in connection with the termination of their
employment;
* issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose
the purchase of, any shares of capital stock or securities
convertible into, or subscriptions, rights, warrants or options
to acquire, or other agreements or commitments of any character
obligating the Company to issue or purchase any such shares or
other convertible securities, or accelerate the vesting of any
stock options, except for the issuance of shares of Company
Common Stock upon the exercise or conversion of those options,
warrants or other rights, or convertible securities that are
outstanding on the date hereof and set forth on Disclosure
Schedule (subject to no more than 3,000,000 shares of Company
Common Stock being outstanding as of the effective date of the
Merger);
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* acquire or agree to acquire by merging or consolidating with,
or by purchasing any assets or equity securities of, or by any
other manner, any business or any corporation, partnership,
association or other business organization or division thereof;
* grant any loans to others or purchase debt securities of others
or amend the terms of any outstanding loan agreement;
* grant any severance or termination pay to any director, officer,
employee, or service provider;
* adopt any employee benefit plan, or enter into any employment
contract, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the
salaries or wage rates of its employees;
* make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, enter into
any closing agreement, settle any claim or assessment in respect
of Taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect
of Taxes;
* accelerate the vesting schedule of any of the outstanding stock
options;
* take, or agree in writing or otherwise to take, any of the
actions described above, or any other action that would
prevent the Company from performing or cause the Company not
to perform its covenants hereunder, or any other action not in
the ordinary course of the business or inconsistent with past
practice.
Reasonable Efforts to Complete the Merger
- -----------------------------------------
The Company and Quicktest are required to use reasonable efforts to make all
filings required and to use reasonable efforts to take all further actions
necessary or desirable to effect the transactions contemplated by the Agreement
and the Merger.
Conditions to the Merger
- ------------------------
The obligations of the Company and Quicktest to complete the Merger are subject
to the satisfaction or waiver of the following conditions:
* Each party shall have obtained the requisite approval of its
shareholders to approve the Merger, and the transactions
contemplated hereby.
* All approvals from government authorities, including any
requisite Blue Sky approvals, which are appropriate or
necessary for the consummation of the Merger and the other
transactions contemplated, shall have been obtained.
* No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect, nor shall
any proceeding brought by an administrative agency or commission
or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall
there be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal or
otherwise prohibits consummation of the Merger.
* No Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the
effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
10
Conditions to Obligations of Quicktest
- --------------------------------------
The obligations of Quicktest to consummate and effect the Merger and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by Quicktest:
* The representations and warranties of the Company shall be true
and correct in all respects on and as of the Effective Time
as though such representations and warranties were made on and
as of such time and the Company shall have performed and complied
in all respects with all covenants and obligations of the
Agreement required to be performed and complied with by it as
of the Effective Time, except to the extent that any such
inaccuracy or noncompliance would not result in a Material
Adverse Effect.
* Quicktest shall have been provided with a certificate of the
Company's Secretary relating to the organization, existence
and good standing of Company and the authorization of the
Agreement and the transactions contemplated hereby and other
customary matters, all in form and substance satisfactory to
Quicktest and its counsel.
* There shall be no bona fide action, suit, claim or proceeding
of any nature pending against the Company, their respective
properties or any of their officers or directors, arising out
of, or in any way connected with, the Merger or the other
transactions contemplated by the terms of this Agreement that
would reasonably be expected to have a Material Adverse Effect.
* As of the Closing Date, the Company's cash balance shall be at
least $300,000.
* The outstanding shares of the Company's Common Stock shall not
exceed 3,000,000 shares.
* Quicktest shall have received from the Company written
resignations from all of the officers and directors of the
Company; such resignations to be effective upon the Closing.
The Company shall have taken any and all necessary steps, as
determined by Quicktest in its sole discretion, to insure the
election of Quicktest's nominees to the Company's Board of
Directors, and the appointment of Quicktest's nominees as
officers of the Company, including but not limited to, the
amendment of the Certificate of Incorporation and Bylaws of the
Company, such elections and appointments to be effective upon
the Closing.
* Prior to the Closing, the Company shall only have one class of
stock outstanding, being the Common Stock.
Conditions to the Obligations of the Company.
- --------------------------------------------
The obligations of the Company to consummate and effect the Agreement and the
transactions contemplated thereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by the Company:
* The representations and warranties of Quicktest shall be true
and correct in all respects on and as of the Effective Time
as though such representations and warranties were made on and
as of the Effective Time and Quicktest shall have performed and
complied in all respects with all covenants and obligations
of this Agreement required to be performed and complied with by
them as of the Effective Time except to the extent that any such
non-compliance or inaccuracy would not result in a Material
Adverse Effect.
* There shall not have occurred any event or condition of any
character that has had or is reasonably likely to have a
Material Adverse Effect.
* The Company shall have been provided with a certificate of
Quicktest's Secretary relating to the organization, existence
and good standing of Quicktest and the authorization of the
Agreement and the transactions contemplated thereby and other
customary matters, including certification that 95% of the
voting securities of Quicktest shall have approved the Merger,
all in form and substance satisfactory to the Company and its
counsel.
* There shall be no bona fide action, suit, claim or proceeding
of any nature pending against the Company, their respective
properties or any of their officers or directors, arising out
of, or in any way connected with, the Merger or the other
transactions contemplated by the terms of the Agreement that
would reasonably be expected to have a Material Adverse Effect.
* The forward stock split shall have been effectuated.
11
Termination of the Agreement
- ----------------------------
The Agreement is subject to termination prior to the effective time of the Merger:
* by mutual consent;
* by either party if it is not in material breach of its
obligations under the Agreement;
* by either party if an event having a Material Adverse Effect
shall have occurred after the date of the Agreement;
* by either party if the other party fails to obtain approval of
the Merger;
* by Quicktest if there is an action pending or threatened against
the Company by the OTC BB with respect to any intention to delist
the Company's Common Stock.
* by either party in the event that such other party is the subject
of any litigation, claim, suit, action or proceeding, or to
such party's Knowledge is aware of the threat of such litigation,
claim, suit, action or proceeding, the subject of which are the
transactions contemplated in the Agreement.
Change of Control
- -----------------
The merger of the Company and Quicktest will result in a change of control of
the Company with the stockholders and management of Quicktest acquiring
25,000,000 shares of the Company's Common Stock out of a then total of
28,000,000 shares of Common Stock. It is currently anticipated that the
consummation of the Merger will occur no sooner than twenty (20) days after the
date this Information Statement is first mailed to our current stockholders.
Due to the issuance of the Merger Consideration and the change in the directors
of the Company, both of which will become effective on the date of the
consummation of the Merger, which is currently expected to occur no sooner than
twenty (20) days after the date this Information Statement is first mailed to
our stockholders, a change in control of the Company will occur on the date of
such consummation.
Dissenters' Rights of Appraisal.
- -------------------------------
There are no dissenters' rights of appraisal applicable to the Agreement or
the closing of the Merger.
Tax Aspects of the Merger
- -------------------------
The proposed Merger is intended to qualify as a tax-free reorganization under
the Internal Revenue Code of 1986. If the Merger qualifies as a tax-free
reorganization, no gain or loss will be recognized for income tax purposes by
either party as a result of the Merger. There will not be any material tax
effects on any party's existing stockholders as a result of the Merger. However,
neither the Company nor Quicktest has requested a tax ruling from the Internal
Revenue Service with respect to the Merger. Accordingly, no assurance can be
given that the Merger will qualify as a tax-free reorganization. If the Merger
does not qualify for tax free treatment, the Quicktest stockholder will be
deemed to have sold his shares for Company Common Stock and be taxed on the
difference between his basis in Quicktest common stock and the value of the
Company Common Stock. The Company stockholders should have no tax affect since
they are not receiving any new shares.
Restricted Nature of Securities.
- -------------------------------
The shares of the Company's common stock to be issued to the Quicktest
stockholders in connection with the Merger will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), and will be deemed
"restricted securities" as that term is defined in Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act. Accordingly, such
shares will be issued in reliance on the exemption from such registration
requirements provided by the Securities Act. Such shares will be "restricted
securities," and the certificate will bear legends restricting their subsequent
resale in the absence of registration under the Securities Act or the
availability of an exemption therefrom.
12
Capital Stock Increase
The Board of Directors and holders of a majority of the outstanding Common Stock
of the Company authorized and approved by written consent an amendment of the
Certificate of Incorporation of the Company to increase the total amount of the
Company's authorized Common Stock, from 25,000,000 shares to 100,000,000 shares
(the "Capital Stock Increase"). This increase will be effected pursuant to an
amendment of the Company's Certificate of Incorporation (the "Amendment"). A
copy of the Amendment is attached . The Amendment will be filed with
the Delaware Secretary of State as soon as reasonably practicable as allowed
pursuant to applicable laws.
The Capital Stock Increase, if it occurs, may affect any given stockholder's
proportionate equity interest in the Company, but will not affect the relative
rights, preferences, privileges or priorities of any stockholder.
Effect of Increase in Total Authorized Common Stock of the Company
- ------------------------------------------------------------------
The principal effect of the Capital Stock Increase will be to increase the total
amount of authorized Common Stock of the Company from 25,000,000 shares to
100,000,000 shares. The respective voting rights and other rights that accompany
the Common Stock will not be altered by the increase, and the par value of the
Common Stock will remain at $0.15 per share. The Board of Directors, in
connection with the Merger, agreed to issue an aggregate of approximately
25,000,000 shares of Common Stock (post split), such issuances facilitated the
need to increase the number of authorized shares of Common Stock. Consequently,
the Board of Directors effectively will have the authority to issue 72,000,000
more shares of Common Stock than it had the authority to issue prior to the
Capital Stock Increase. After giving effect to the Capital Stock Increase, the
number of outstanding shares of Common Stock (as of the Record Date) would
remain the same but the number of shares of Common Stock which would be
available for issuance by the Company would increase to 72,000,000 shares.
All authorized but unissued shares of Common Stock will be available for
issuance from time to time for any proper purpose approved by the Board of
Directors including the financing of future operations (including issuances in
connection with stock-based employee benefit plans, stock splits or dividends
and issuances to raise capital or effect acquisitions).
Stockholders do not have any preemptive or similar rights to subscribe for or
purchase any additional shares of Common Stock that may be issued in the future,
and therefore, future issuances of Common Stock may, depending on the
circumstances, have a dilutive effect on the earnings per share, voting power
and other interests of the existing stockholders.
Reasons for the Capital Stock Increase
- --------------------------------------
The Agreement pursuant to which the Company merges with Quicktest obligates the
Company to increase its authorized shares of common stock.
The Board of Directors believes it will be beneficial to the Company to
authorize additional common stock, in order to position the Company to take
advantage of future opportunities for the issuance of equity securities in
connection with financings, possible future acquisitions, other programs to
facilitate expansion and growth, and for other general corporate purposes,
including stock dividends, stock splits and employee benefit plans, without the
delay and expense incident to the holding of a special meeting of stockholders
to consider any specific issuance. The additional authorized shares of common
stock could be issued in public or private offerings in order to raise capital
for various purposes. Authorized shares may be issued at such times, to such
persons, and for such consideration as the Board of Directors determines at the
time to be in the best interests of the Company, without further authorization
from the Stockholders, subject to the listing rules of any securities exchange
or automated quotation system to which the Company's common stock may be subject
at any time in the future.
The authorization of additional shares of common stock will not, by itself, have
any effect on the right of holders of existing shares of common stock. Any new
shares of common stock, when issued, would have the same rights and privileges
as the shares of common stock presently outstanding.
The Capital Stock Increase, may affect any given stockholder's proportionate
equity interest in the Company, but will not affect the relative rights,
preferences, privileges or priorities of any stockholder.
13
Name Change
Reasons for the Name Change
- ---------------------------
The Company's Board of Directors agreed to change the name of the Company in
connection with the closing of the Merger and believe that the change of the
Company's name is desirable in view of the change in the character and strategic
focus of the Company's business resulting from the Merger described below
herein.
The change in corporate name will not affect the status of the Company or the
rights of any stockholder in any respect, or the validity or transferability of
stock certificates presently outstanding. The Company's stockholders will not be
required to exchange stock certificates to reflect the new name. If a
stockholder's shares of common stock are represented currently by a physical
certificate, that certificate will continue to represent such stockholder's
ownership of such shares.
In connection with the name change, the Company intends to apply for a new
trading symbol. The trading symbol will become effective as soon as practicable
after the effective date of the action.
Directors
In accordance with the terms of the Agreement, the current directors of the
Company have agreed to tender their resignation and to appoint nominees of
Quicktest to the Board of Directors. Quicktest has nominated Timothy J. Owens,
Steven H. Reder, and Michael Kessler to serve on the Board of Directors. The
individuals, when elected, will serve until the next annual stockholders'
meeting and until their successors are duly elected and qualified. Certain
persons who own in excess of a majority of our outstanding voting securities
have agreed to vote in favor of all of the proposals, which include the election
of these persons to the Board of Directors. Biographical information on the
nominees is set forth below.
Board of Directors and Officers
- -------------------------------
Name Age Position
- ------------------------------------------------------------------------------
Timothy J. Owens 47 Director, CEO, CFO
Steven H. Reder 44 President, Secretary
Michael Kessler 46 Vice President
Mr. Timothy J. Owens
- --------------------
For the past 21 years, Mr. Owens has operated a financial consulting firm,
Timothy J. Owens and Associates, both in Washington State and California. Since
1994, Mr. Owens has used the proceeds of his successful financial services
practice to fund product development for business and Human Resource (H.R.)
automation and delivery. Mr. Owens' received his Masters of Science Degree in
Finance from La Salle University, Louisiana. Mr. Owens' also received letters of
academic excellence in engineering from President Gerald R. Ford and President
James Carter in 1976 and 1978.
Steven Reder
- ------------
Mr. Reder has over 18 years experience in manufacturing as the Vice President of
finance. Along with other achievements, he developed many innovative new
directions for Delta Lithograph Co, a Bertlesmann Company. He was responsible
for acquisitions along with generating investment inquiries. He set up company
annual budgets as well as a proprietary budget system for all cost centers. In
1994, Mr. Reder was presented with the opportunity to take over a company from
that was being reposed from the IRS. He took this company from bankruptcy to
profitable status within one year Mr. Reder recently sold this company to join
Quicktest.
Michael Kessler
- ---------------
Mr. Kessler has over 25 years experience in clinical research, executive level
marketing, merchandising, retail site development, public relations, and product
development. He was in charge of General Nutrition Centers Corporate Marketing
and Research Division, Vice President of Marketing for Diet Centers, and
Executive Vice President of American Health & Diet Corporation and the Executive
Vice President of Sales and Marketing for Omni Nutraceuticals.
Special Note Regarding Forward-Looking Statements.
- -------------------------------------------------
This Information Statement contains certain forward-looking statements with
respect to the financial condition, results of operations, business strategies,
operating efficiencies or synergies, competitive positions, growth opportunities
for existing products, plans and objectives of management, markets for stock and
other matters. Statements in this Information Statement that are not historical
facts are hereby identified as "forward-looking statements.' Such
forward-looking statements, including, without limitation, those relating to the
future business prospects, revenues and income, wherever they occur in this
Information Statement, are necessarily estimates reflecting the best judgment of
the management of the Company and Quicktest and involve a number of risks and
uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. Such forward-looking statements
should, therefore, be considered in light of various important factors,
including those set forth in this Information Statement. Words such as
`estimate', `project', `acquisition', `intend', `expect', `believe' and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are found at various places throughout this
Information Statement. The Company's stockholders are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date they were made.
14
