SCHEDULE 14-C INFORMATION STATEMENT
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Securities Exchange Act of 1934
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PRECISION AEROSPACE COMPONENTS, INC.
(Name of Registrant as Specified In Its Charter)
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PRECISION AEROSPACE COMPONENTS, INC.
NOTICE OF MAJORITY SHAREHOLDERS CONSENT
IN LIEU OF 2010 ANNUAL MEETING OF SHAREHOLDERS
May 11, 2010
To Our Shareholders:
Notice is hereby given that consent by the vote of the majority shareholders will be obtained in lieu of the 2010 Annual Meeting of Shareholders of Precision Aerospace Components, Inc., a Delaware corporation (the "Company").
The consent will be obtained as permitted pursuant to Pursuant to Section 228 of the Delaware General Corporation Law and Section 9 of the Company’s by-laws.
The following actions were approved as of this date by the holders of 73.4% of the shares outstanding:
| 1. | The election of the following as directors of the Corporation, to serve until their replacement is elected: |
Robert Adler
Donald Barger
Alexander Kreger
Andrew S. Prince
David Walters
| 2. | The ratification of the selection of Friedman, LLC as the Company’s registered public accounting firm for the current fiscal year. |
Since the proposals will each already be adopted by the action of the holders of 73.4% of the issued and outstanding shares of common stock entitled to vote thereon, your vote is not required and this information is being provided as a matter of record. Nonetheless, all shareholders of record at the close of business on April 9, 2010 are entitled to notice of this consent.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
THIS NOTICE IS FOR INFORMATION PURPOSES ONLY.
| | By Order of the Board of Directors | |
| | | |
| | | |
| | Andrew S. Prince | |
| | President and Chief Executive Officer | |
Staten Island, New York
April 14, 2010
PRECISION AEROSPACE COMPONENTS, INC.
INFORMATION STATEMENT
Table of Contents
| | | PAGE |
| | | |
| INTRODUCTION | | 3 |
| | | |
| PROPOSAL 1: Election of Directors | | 4 |
| | | |
| PROPOSAL 2: Ratification of Accountants | | 8 |
| | | |
| | | |
| ADDITIONAL INFORMATION | | 9 |
INTRODUCTION
This Information Statement, dated April 14, 2010, is furnished in connection with the May 11, 2010 Majority Shareholders Consent in lieu of the Annual Meeting of Shareholders of Precision Aerospace Corporation, Inc. (the "Meeting"), for the purposes set forth in the notice of the consent.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
THIS NOTICE IS FOR INFORMATION PURPOSES ONLY.
This Information Statement was mailed to shareholders on or about April 23rd, 2010.
The complete mailing address of the Company's principal executive office is 2200 Arthur Kill Road, Staten Island, NY 10309.
At the date of the consent, at which date the annual meeting would have been held, the following voting shares of the Company will be outstanding:
| | CLASS | | SHARES OUTSTANDING | | VOTING | |
| | | | | | | |
| | Common Shares | | 2,825,079 | | 2,825,079 | |
Each common share is entitled to one vote. The common shares are the only shares of the Company entitled to a vote.
The 3 holders of 2,072,788 common shares (73.4% of the total outstanding shares) will vote together to approve each of the proposals.
Appraisal rights are not available to shareholders with respect to any matter approved.
The annual report on Form 10-K of the Company for the year ended December 31, 2009 (the "Annual Report"), including the Company's audited consolidated financial statements for the year ended December 31, 2009 is being mailed to the Company's shareholders with this Information Statement. Shareholders are encouraged to read the Annual Report with special care since the information contained therein is integral to this Information Statement and is hereby incorporated by reference. The Annual Report is not to be regarded as proxy soliciting material or as a communication by means of which a solicitation of proxies is to be made.
THE COMPANY IS NOT SOLICITING PROXIES IN CONNECTION WITH THE MATTERS DESCRIBED IN THIS INFORMATION STATEMENT, AND NO VOTE OR OTHER ACTION BY THE COMPANY'S STOCKHOLDERS IS REQUIRED TO BE TAKEN IN CONNECTION WITH THIS INFORMATION STATEMENT.
More specifically, this Information Statement is being furnished to the holders of record on April 12, 2010, of the outstanding shares of common stock, $.001 par value, of the Company.
This Information Statement is being provided solely for informational purposes and is NOT being provided in connection with a vote of the Company's stockholders.
PROPOSAL 1: ELECTION OF DIRECTORS
The board consists of six members, four of whom are independent by the definitions utilized by the Company. Mr. Phillips serves as the Company’s Secretary, although he is not employed by the Company; since he is an officer of the Company he is not considered independent, although in all other respects he is. Our bylaws provide that the board of directors will be no less than five nor more than nine. Each director holds office until the next annual meeting of stockholders and until the director’s successor has been elected and qualified or the director resigns, unless sooner removed.
The following table sets forth the name, age and position of each of the persons nominated for appointment to the Company’s Board of Directors, additional information follows the table:
| Name | | Age | | Position | | With Company Since |
| Alexander Kreger | | 66 | | Director and Chairman of the Board, | | 2006 |
| Andrew S. Prince | | 66 | | President and CEO, Principal Financial Officer, and Director | | 2006, Officer since 2007 |
| Robert Adler | | 75 | | Director | | 2006 |
| Donald Barger | | 67 | | Director | | 2008 |
| David Walters | | 47 | | Director | | 2006 |
Alexander Kreger
Mr. Kreger served as the President of Kreger Truck Renting Company, Inc. from 1999 through 2008. Mr. Kreger has a BS in accounting and finance from the Wharton School, University of Pennsylvania.
Mr. Kreger is a member of the Company’s Audit and Compensation Committees.
Andrew S. Prince
Mr. Prince is presently President and Chief Executive Officer of the Company. Mr. Prince is, and for the last five years has been, a principal of Prince Strategic Group LC, a strategic advisory and merchant-banking group. Prince Strategic Group’s focus is strategic planning, acquisition/disposition advice, financial restructuring and providing crisis and interim CEO, COO management. Mr. Prince assists large and small organizations to develop and implement their business strategies and refine their operations. He has extensive experience in corporate financing, strategic relationship and acquisition transactions, including their financial and strategic analysis, structuring and negotiations, strategic planning and management development activities as well as background in all facets of o perations in both small and large organizations. Mr. Prince is former Deputy Assistant Secretary of the Navy (1981-1986); Mr. Prince is a director of Gibbs and Cox, a naval architectural engineering firm. From June 1, 2004-June 1, 2006, Mr. Prince was a director of CDKnet.com. Mr. Prince is a graduate of the United States Naval Academy, Harvard Law School and Harvard Business School.
Mr. Prince is a member of the Company’s Compensation Committee.
Robert I. Adler
From 2000 to 2002, Mr. Adler was Managing Director for ING Furman Selz Asset Management. From 1991 to 2000, he was Vice President, Senior Investment Officer for BHF Securities Corp. He is currently a member of the Board of Directors of China Medicine Company, a distributor of pharmaceutical products, including traditional Chinese herbal medicine, and SinoEnergy Holding Co., a manufacturer of stainless steel vessels for liquid and compressed natural gas (“CNG”) and a developer and operator of CNG filling stations.
Mr. Adler is Chairman of the Company’s Audit Committee.
Donald G. Barger Jr.
From September 2007 until his retirement in February 2008, Mr. Barger served as advisor to the CEO of YRC Worldwide Inc. (“YRCW”), a publicly held company specializing in the transportation of goods and materials; until September 2007, he was Executive Vice President and Chief Financial Officer of YRCW. He joined YRCW’s predecessor company, Yellow Corporation (“Yellow”), in December 2000 as Senior Vice President and Chief Financial Officer. Prior to joining Yellow, he served as Vice President and Chief Financial Officer of Hillenbrand Industries Inc. (“Hillenbrand”), a publicly held company serving the healthcare and funeral services industries, from March 1998 until December 2000. Mr. Barger was also Vice President, Chief Financial Officer of Worthington Industries, Inc., a publicly held manufacturer of metal and plastic products and processed steel products, from September 1993 until joining Hillenbrand. Mr. Barger is a director of Quanex Building Products Corporation, a publicly held manufacturer of engineered materials and components for the U.S. building products markets; Globe Specialty Metals, Inc., a publicly held producer of silicon metal and silicon-based specialty alloys; and Gardner Denver a designer, manufacturer, and marketer of compressor and vacuum products, and fluid transfer products. Mr. Barger has a B.S. degree from the United States Naval Academy and an M.B.A. from the University of Pennsylvania, Wharton School of Business.
David Walters
Mr. Walters co-founded Monarch Bay Associates, LLC, a FINRA registered broker dealer, in 2006. Prior to Monarch Bay Associates, Mr. Walters was a principal with Monarch Bay Capital Group, LLC, a firm that provided advisory services and capital for emerging growth companies. From 1992 through 2000, he was Executive Vice President and Managing Director in charge of capital markets for Roth Capital (formerly Cruttenden Roth), where he managed the Capital Markets group and led over 100 financings (public and private), raising over $2 billion in growth capital. Additionally, Mr. Walters oversaw a research department that covered over 100 public companies and was responsible for the syndication, distribution and after-market trading of the public offerings. He managed the public offerings for Cruttenden Roth, which was the most prolific public underwriter in the U.S. for deals whose post-offering market cap was less than $100 million. Mr. Walters sat on Roth's Board of Directors from 1994 through 2000. Previously, he was a Vice President for both Drexel Burnham Lambert and Donaldson Lufkin and Jenrette in Los Angeles, and he ran a private equity investment fund. Mr. Walters also serves as Chairman of the Board of Directors and Chief Executive of Management Energy, Inc., Monarch Staffing, Inc. and STI Group, Inc., as Chairman of the Board of Directors of Remote Dynamics, Inc., and a member of the Board of Directors of Trans-Pacific Aerospace Company, Inc. Mr. Walters earned a Bachelor of Science in Bioengineering from the University of California, San Diego.
Mr. Walters is Chairman of the Company’s Compensation Committee .and a member of the Company’s Audit Committee.
ADDITIONAL INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES
Certain Relationships and Related Transactions
None
Independence of Directors
The Board consists of 6 members of whom 5 are non-management directors. Determination as to the qualifications of an independent directors are determined under the definition of Independent director as set forth in the NASDAQ Manual. The independence guidelines and the Company’s categorical standards include a series of objective tests, such as the director is not an employee of the Company and has not engaged in various types of business dealings involving the Company, which would prevent a director from being independent.
Only Mr. Prince, the Company’s President and CEO, is a management director and non-independent.
Board Meetings
For the fiscal year ended December 31, 2009 (“Fiscal 2009”), the Board of Directors held four meetings. All Board members attended at least 75% of the aggregate number of Board meetings and applicable committee meetings held while such individuals were serving on the Board of Directors, or such committees. Each director is expected to dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties, including attending meetings of the shareholders of the Company, the Board of Directors and committees of which he or she is a member.
Code of Ethics and Committee Charters
The Company’s Code of Ethics has been approved by the Company’s Board of Directors and appears on the Company’s web site. Drafts of committee charters for the Audit and Compensation committees have been prepared and are under review by the Board of Directors but have not been formally adopted.
Audit Committee
The Audit Committee makes such examinations as are necessary to monitor the corporate financial reporting and the external audits of the Company, to provide to the Board of Directors (the “Board”) the results of its examinations and recommendations derived there from, to outline to the Board improvements made, or to be made, in internal control, to nominate independent auditors, and to provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require Board attention.
Compensation Committee
The compensation committee is authorized to review and make recommendations to the Board regarding all forms of compensation to be provided to the executive officers and directors of the Company, including stock compensation, and bonus compensation to all employees. Officers of the Company serving on the Compensation committee do not participate in discussions regarding their compensation.
Nominating Committee
The Company does not have a Nominating Committee and the full Board acts in such capacity.
Code of Ethics
The Code of Ethics applies to the Company’s directors, officers and employees. It is available on the Company’s website.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires that the Company’s directors and executive officers and persons who beneficially own more than ten percent (10%) of a registered class of its equity securities, file with the SEC reports of ownership and changes in ownership of its common stock and other equity securities. Executive officers, directors, and greater than ten percent (10%) beneficial owners are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports that they file. Based solely upon a review of the copies of such reports furnished to us or written representations that no other reports were required, the Company believes that, for transactions during 2009, all filing requirements applicable to its executive officers, directors, and greater than ten percent (10%) beneficial owners were in the process of being met by the date of filing of this report.
Compensation of Directors
The following table sets forth information with respect to director’s compensation for the fiscal year ended December 31, 2009:
DIRECTOR COMPENSATION
| Name | | | Fees Earned or Paid in Cash ($) | | Stock Awards ($) | | Options Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Nonqualified Deferred Compensation Earnings | | All Other Compensaton ($) | | Total ($) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| (1) | Mr. Phillips resigned as a Director on April 14, 2010 and is not standing for re-election. |
Non-employee Directors of the Company were paid $2,500 per meeting for board meeting attendance in person and $1,500 per meeting for board meeting attendance by phone and $1,500 per meeting for each committee meeting.
THE REQUISITE MAJORITY OF SHAREHOLDERS HAS VOTED IN FAVOR OF THE ELECTION OF THESE DIRECTORS. NO PROXY IS REQUIRED OR REQUESTED. VERY SPECIFICALLY, YOU ARE REQUESTED NOT TO SEND US YOUR PROXY.
THIS NOTICE IS FOR INFORMATION PURPOSES ONLY.
PROPOSAL 2: THE RATIFICATION OF THE SELECTION OF FRIEDMAN, LLC AS THE COMPANY’S REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR.
The Board of Directors intends to appoint Friedman, LLC as the Company’s independent registered public accounting firm to act in such capacity for the fiscal year ending December 31, 2010. Although the submission of this matter is not legally required, the Board believes that such submission is consistent with the best practices and is an opportunity for shareholders to provide direct feedback to the Board on an important issue of corporate governance.
Audit Fees
The aggregate fees billed or to be billed for professional services rendered by our independent registered public accounting firms for the audit of our annual financial statements, review of financial statements included in our quarterly reports and other fees that are normally provided by the accounting firms in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2009 and 2008 were: $91,694 for 2009 and $81,258 for 2008.
Audit Related Fees
The aggregate fees billed or to be billed for audit related services by the Company’s independent registered public accounting firms that are reasonably related to the performance of the audit or review of our financial statements, other than those previously reported in this Item 14, for the fiscal years ended December 31, 2009 and 2008 were $-0- in 2009 and $-0-in 2008.
Tax Fees
The aggregate fees billed for professional services rendered by the Company’s independent registered public accounting firms for tax compliance, tax advice and tax planning for the fiscal year ended December 31, 2009 and 2008 were and $15,000-in 2009 and $5,000 in 2008.
All Other Fees
The aggregate fees billed for products and services provided the Company’s independent registered public accounting firms for the fiscal years ended December 31, 2009 and 2008 were $ 0- in 2009 and $-50,000-in 2008.
Audit Committee
Our Audit Committee implemented pre-approval policies and procedures for our engagement of the independent auditors for both audit and permissible non-audit services. Under these policies and procedures, all services provided by the independent auditors must be approved by the Audit Committee or Board of Directors prior to the commencement of the services, subject to certain de-minimus non-audit service (as described in Rule 2-01(c)(7)(C) of Regulation S-X) that do not have to be pre-approved as long as management promptly notifies the Audit Committee of such service and the Audit Committee or Board of Directors approves it prior to the service being completed. All of the services provided by our independent auditors have been approved in accordance with our pre-approval policies and procedures.
THE REQUISITE MAJORITY OF SHAREHOLDERS HAS VOTED IN FAVOR OF THIS PROPOSAL.
NO PROXY IS REQUIRED OR REQUESTED.
VERY SPECIFICALLY, YOU ARE REQUESTED NOT TO SEND US YOUR PROXY.
THIS NOTICE IS FOR INFORMATION PURPOSES ONLY.
ADDITIONAL INFORMATION
Voting Securities; Beneficial Ownership of the Company's Common Stock
The Company's common stock is the only class of voting equity securities that is currently outstanding and entitled to vote at a meeting of the Company's stockholders. Each share of common stock entitles the holder thereof to one (1) vote. As of April 12, 2010, 2,825,079 shares of the Company's common stock were outstanding.
The Company also has Series A convertible preferred shares outstanding. These shares are non voting (until converted into common shares).
The following table sets forth certain information with respect to the beneficial ownership of the Common Stock of the Company as of April 12, 2010, for: (i) each person who is known by the Company to beneficially own more than 5 percent of the Company’s Common Stock, (ii) each of the Company’s directors, (iii) each of the Company’s Named Executive Officers, and (iv) all directors and executive officers as a group. As of April 12, 2010, the Company had 2,825,079 shares of Common Stock outstanding.
Name and Address of Beneficial Owner (1) | | Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned | | | Percentage of Total Voting Power | | | Position |
| | | | | | | | | | | | | | | |
| | | | | | | | 5 | | | | % | | President and Chief Executive Officer & Director |
| | | | | | | | | | | | | | Executive Chairman & Director |
| | | | | | | | | | | | | | | |
BGRS 12333 Fairy Hill Road Rydal, PA 19046 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Richard Kreger 134 Lords Highway Weston, CT 06883 | | | | | | | | % | | | | % | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Directors and Executive Officers as a Group (6 persons) | | | | | | | | | | | | | | |
| (1) | Except where otherwise indicated, the address of the beneficial owner is deemed to be the same address as the Company. |
| (2) | Mr. Phillips resigned as a Director on April 14, 2010 and is not standing for re-election. |
Executive Compensation
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the Company’s principal executive officer and all of the other executive officers with annual compensation exceeding $100,000, who served during the fiscal year ended December 31, 2009, for services in all capacities to the Company:
SUMMARY COMPENSATION TABLE
| Name & Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Nonqualified Deferred Compensation Earnings ($) | | All Other Compensation ($) |
| | | | | | | | | | | | | | | | | | |
Andrew Prince President, CEO and Director(1) | | | | | | | | | | | | | | | | | |
(1) Mr. Prince serves as a director of the Company, but without compensation for his director services.
Other Compensation Information
The Company, as reported in its 8-K filed on April 13, 2010, reported that it had approved an employment and compensation agreement with Andrew S. Prince, its President and CEO, which is to run through September 30, 2010.
Other than the foregoing, the Company does not presently have any Stock Option Plan, long term compensation agreement, other option or SAR agreements or grants or pension or profit sharing arrangements.
Annual Report, Financial and Additional Information.
The Annual Financial Statements and Review of Operations of the Company for fiscal year 2009 can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
The Company’s filings with the SEC are all accessible by following the links to “Investor Info” on the Company’s website at precaeroinc.com. The Company will furnish without charge a copy of the Company’s Annual Report on Form 10-K, including the financial statements and schedules thereto, to any person requesting in writing and stating that he or she is the beneficial owner of Common Shares of the Company.
Requests and inquiries should be addressed to:
| | Investor Relations |
| | Precision Aerospace Components, Inc. |
| | 2200 Arthur Kill Road |
| | Staten Island, NY 10309 |
| | By Order of the Board of Directors |
| | |
| | |
| | Andrew S. Prince |
| | President and Chief Executive Officer |
Dated: April 14, 2010
