SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __________)
Filed by the Registrant [x]
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e) (2))
[x] Definitive Proxy Statement
[x] Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-
12
Creative Technologies Corp.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rule 14a-
6(i)(4)
and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(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.
(1) Amount Previously Paid:
(2) Form, Schedule or registration Statement No.:
(3) Filing Party:
(4) Date Filed
Schedule 14A
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 4, 1996
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Creative Technologies Corp.
(the "Company")will be held at the offices of the Company, 170 53rd Street,
Brooklyn, New York on September 4, 1996 at 10:00 A.M. New York time, to
consider the following proposals:
1. To elect directors, each to serve for a term of one year or until his
respective successor is elected and qualifies;
2. To ratify the appointment of Richard A. Eisner & Company as
independent accountants of the Company;
3. To authorize a one for three reverse stock splitof the Companys Common
Stock;
4. To transact such other business as may properly come before the meeting.
Shareholders of record on the books of the Company at the close of business on
July 24, 1996 will be entitled to vote at the meeting or any adjournment
thereof. A copy of the annual report containing the financial statements of
the Company for the year 1995 is enclosed.
All shareholders are cordially invited to attend the meeting. Whether or not
you expect to attend, you are requested to sign, date and return the enclosed
proxy promptly. Shareholders who execute proxies retain the right to revoke
them at any time prior to the voting thereof. A return envelope which requires
no postage if mailed in the United States is enclosed for your convenience.
By Order of the Board of Directors
Dated: New York, New York David Selengut July 2, 1996
Secretary
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 4, 1996
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Creative Technologies Corp. (the "Company") of proxies
in the enclosed form for the Annual Meeting of Shareholders to be held at the
offices of the Company, 170 53rd Street, Brooklyn, New York on September 4,
1996, at 10:00 A.M. local time, and for any adjournment or adjournments
thereof, for the purposes set forth in the foregoing Notice of Annual Meeting
of Shareholders.
At the Annual Meeting the Shareholders will vote to:
1. Elect the directors of the Company;
2. Ratify the selection of Richard A. Eisner and Company as the
Companys independent auditors;
3. Authorize a one for three reverse stock split of the Companys Common
Stock;
4. Transact such other business as may properly come before the meeting.
The Company knows of no other matters to be presented at the Annual Meeting.
If any additional matters should be properly presented, proxies shall be voted
in accordance with the judgment of the proxy holders.
Each shareholder of the Company is requested to complete, sign, date and return
the enclosed proxy without delay in order to ensure that the shares owned by
such shareholder are voted at the Annual Meeting. Any shareholder may revoke
a proxy at any time before it is voted by: (i) delivering a written notice to
the Secretary of the Company, at the address of the Company set forth above,
stating that the proxy is revoked; (ii) executing a subsequent proxy and
delivering it to the Secretary of the Company, or (iii) attending the Annual
Meeting and voting in person. Each properly executed proxy returned will be
voted as directed. In addition, if no directions are given or indicated, the
persons named in the accompanying proxy intend to vote proxies in favor of
the foregoing proposals.
The Company will bear the cost of soliciting proxies. Directors, officers and
employees of the Company may solicit proxies personally or by telephone,
telegram or mail. Such directors, officers and employees will not be
additionally compensated for such solicitation but may be reimbursed for
reasonable out-of-pocket expenses incurred in connection therewith.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of proxy material to the beneficial
owners of the Common Stock held of record by such persons and the Company will,
upon request, reimburse such custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred in connection therewith.
The principal executive offices of the Company are located at 170 53rd Street,
Brooklyn, New York 11232. The approximate date on which this Proxy Statement
and the accompanying form of Proxy will first be sent or given to the Company's
shareholders is July 24, 1996.
VOTING SECURITIES
Only holders of Shares of Common Stock, par value $.03 per share (the Shares),
of record as at the close of business on July 24, 1996 are entitled to notice
of and to vote at the Annual Meeting or any adjournment thereof. On the record
date there were issued and outstanding 7,834,183 Shares. Each outstanding
Share is entitled to one vote upon all matters to be acted upon at the
meeting. The holders of a majority of the outstanding Shares shall
constitute a quorum. The affirmative vote of a majority of the Shares issued
and outstanding is necessary to approve the change of name of the Company and
the one for three reverse stock split. The affirmative vote of the holders of
the majority of Shares present at the Annual Meeting and voting is necessary
to approve each other resolution.
Votes withheld will not count against the approval of any resolution. Brokers
do not have discretionary authority to vote on the proposals to approve the one
for three reverse stock split.
The holders of Shares are entitled to receive such dividends, if any, as may be
declared, from time to time, by the Board of Directors from funds legally
available therefore, subject to the dividend preferences of the Preferred
Stock, if any. Upon liquidation or dissolution of the Company, the holders
of Shares are entitled to share ratably in all assets available for
distribution after payment of liabilities and liquidation preferences of the
Preferred Stock, if any. Holders of Shares have no preemptive rights, no
cumulative voting rights and no rights to convert their Shares into any other
securities.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of June 30, 1996, certain information
as to the stock ownership of each person known by the Company to own
beneficially 5% or more of the Company's outstanding Shares, by each
director of the Company who owns any Shares of the Company and by all
officers and directors as a group:
Name of beneficial Number of shares of Percentage of class
owner common stock owned (1) as of June 30, 1996
Bonnie Septimus (2) 509,133 6.5%
72 Lord Avenue
Lawrence, New York
David Guttmann (3) 737,332 9.4%
170 53rd Street
Brooklyn, NY 11232
Benjamin Sporn (4) 95,541 1.2%
170 53rd Street
Brooklyn, NY 11232
Richard Helfman (5) 118,333 1.5%
170 53rd Street
Brooklyn, NY 11232
All officers and directors
as a group(5 persons)(6) 951,206 11.9%
(1) Except as otherwise indicated, all Shares are
beneficially owned and sole voting and investment power is held by the persons
named.
(2) A portion of the Shares is owned by Mrs. Septimus as nominee for
certain members of her family.
(3) A portion of the Shares is currently being held by Mr. Guttmann as
nominee for certain members of his immediate family. Includes 50,000 shares
issuable upon exercise of stock options.
(4) Includes 50,000 Shares underlying immediately exercisable installments
of options.
(5) Includes 50,000 Shares underlying immediately exercisable options.
(6) Includes the Shares described in footnotes (3), (4) and (5) above.
DIRECTORS OF THE COMPANY
The Directors and Executive Officers of the Company are as follows:
Name Age Title
Benjamin Sporn 57 Chairman of the Board
David Refson 50 Vice Chairman and
Director
David Guttmann 49 Director and Chief
Executive Officer
Richard Helfman 49 Director and President
David Selengut 40 Secretary
Benjamin Sporn has been a Director of the Company since January 1985 and
Chairman of the Board since March 1990. Mr. Sporn has been an attorney in
private practice since January 1990 and Vice President - Legal of Applied
Microbiology, Inc. since 1992. From 1964 until December 1989, Mr. Sporn was an
attorney with AT&T and retired as General Attorney for Intellectual Property
matters. Mr. Sporn is Chairman of the Board of Micel Corp.
David Refson has been Vice Chairman and a Director of the Company since
January 1985. Mr. Refson is the President and principal stockholder of
Newmarket Co. Limited of Liberia ("Newmarket"), which invests in various
entities. Mr. Refson has been a private investor for more than the past
five years and in his capacity as President of Newmarket acts as a
consultant to a number of foreign companies.
David Guttmann has been a director and Chief Executive Officer of the
Company since May 1994. From June 1983 until May 1994 Mr. Guttmann was
Chief Executive Officer of Applied Microbiology Inc., and was its
Chairman until October 1995. Mr. Guttmann also serves as Chairman of Ace
Surgical Supply Co., Inc. (Ace), a supplier of disposable surgical
materials to the health care field.
Richard Helfman has been a Director of the Company since April 1990 and
President since March 1990. From May 1987 to June 1989, Mr. Helfman
was a commercial lending officer at The First New York Bank for
Business, and from 1979 until May 1987, was a commercial lending officer
at Extebank.
David Selengut was elected Secretary of the Company in September 1987.
Mr. Selengut has been a partner at the law firm of Singer, Bienenstock,
Zamansky, Ogele & Selengut, LLP. since May 1995. That firm has acted as
counsel to the Company with respect to certain matters. From May 1988
until April 1995 he was an Associate in the law firm of Neiman Ginsburg
& Mairanz P.C., New York, New York.
Each of the Company's Directors has been elected to serve until the
next annual meeting of the stockholders. The Company's executive
officers are appointed annually by the Company's Directors. Each of the
Company's Directors and executive officers continues to serve until his
successor has been elected and qualified. Pursuant to a management
agreement with Ace, Ace has the right to appoint two members of the
Board of Directors. Ace has never exercised this right. The Company
has an audit committee consisting of Benjamin Sporn and David Refson.
To the Company's knowledge, there were no delinquent 16(a) filers for
transactions in the Company's securities during the year ended December
31, 1995.
To the Companys knowledge, there was no material proceedings to which
any Director or executive officer of the Company, or any associate of
any such Director or executive officer, is a party adverse to the
Company or has an interest adverse to the Company. Each of the
directors attended each of the Board of Directors meetings in 1995.
EXECUTIVE COMPENSATION
The compensation paid to the Company's Chief Executive Officer and to
each of the other executive officers whose total compensation exceeded
$100,000 during each of the preceding three fiscal years is as follows:
1995 SUMMARY COMPENSATION TABLE
Annual Long term
compensation Other Annual compensation
compensation Awards Options
Name & principal position Year ($) ($) (#)
David Guttmann,
Chief Executive Officer 1995 $128,218(1) 50,000
1994 88,269(1) 0
Richard Helfman,
President 1995 $187,692 0 50,000(4)
1994 $234,576
1993 $175,000 $30,000(3) 0
Benjamin Sporn,
Director 1995 0 0 50,000(4)
Alan Miller,
Chief Financial Officer 1995 $77,308(2)
1994 $94,606(2) 30,000
(1) Represents compensation since May 1994. David Guttmann was being
compensated at the rate of $150,000 per annum. Mr. Guttmann voluntarily reduced
his salary to $50,000 per annum during the latter part of 1995.
(2) Represents compensation and consulting fees in 1994. Mr. Miller was
compensated at the rate of $120,000 per annum. Mr. Miller ceased being
employed by the Company in July, 1995.
(3) Compensation received under the profit sharing plan
(4) Represents options previously granted with the exercise price lowered
to $.685 on April 30, 1996.
OPTION GRANTS IN 1995
Percent of total
Options Options granted to Excersize Expirqation
Name Granted Employees in fiscal year Price Date
(a) (b) 1995 $
David Guttmann,
Chairman of the Board 50,000(1) 17% 1.82 May 26, 2004
Richard Helfman 50,000(1) 17% 1.82 May 25, 2004
Benjamin Sporn 50,000(1) 17% 1.82 June 10, 2003
(1) Represents options previously granted with the exercise price lowered to
$.685 per Share on April 30, 1996.
AGGREGATED OPTION EXERCISES IN 1995 AND FOR YEAR-END OPTION VALUES
Name
(a)
Shares
Acquired on
Exercise (#)
(b)
Value
Realized
($)
(c) Number of
Unexercised
Options
at Fiscal
Year-End
(#)
Exercisable/
Unexercisable
(d)
Value of
Unexercised
in-the-Money
Options
at Fiscal
Year-End ($)
Exercisable/
Unexercisable
(e)
David Guttmann 0 0 50,000/0 0
Benjamin Sporn 0 0 50,000/0 0
Richard Helfman 31,333 0 25,000/25,000 0
The Company maintained a Qualified Retirement Plan and Trust for
qualified employees effective as of January 1, 1993. Under the plan, a
profit sharing plan, the Company's contributions are discretionary.
The Company did not make contributions for the Plan Year 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barry Septimus and David Guttmann, the shareholders of Ace, personally
guaranteed certain indebtedness of the Company in the amount of $1,980,000.
In addition, Mr. Guttmann guaranteed a term loan of $1,000,000 issued to
Shawmut Capital Corporation (Shawmut). Pursuant to a workout arrangement
with Shawmut in March 1996, David Guttmann agreed to repay the remainder of the
term loan in the amount of $333,333. The Company agreed as part of the
Companys private placement in March 1996, to issue a total of 333,333 Shares to
his designees in consideration of the assumption of this debt. Mr. Guttmann
also purchased 10,000 shares at $1.00 per share in that private placement.
In March 1993 the Company borrowed $600,000 from an affiliated entity of David
Refson, a Director of the Company. In January 1995 the Company borrowed an
additional $400,000 from that entity. Interest on these loans is 18% per
annum and are due September 30, 1996. These loans are also guaranteed by David
Guttmann and Barry Septimus.
In June 1991 the Company moved its executive offices and in December 1991 moved
its assembly line into a building at 170 53rd Street, Brooklyn, New York, which
the Company leases from Ace, an entity owned by Barry Septimus and David
Guttmann. The Company executed a 10-year lease with Ace which provides for
minimum annual rent of $467,000 for the first three years and thereafter annual
rents will be negotiated between the parties based on the then-current economic
conditions including rents for comparable space in the local area in each year
thereafter. The Company is also responsible for its share of real estate tax
assessment. The Company believes that the rent is not higher than would be paid
to a non-affiliated company.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, four Directors will be elected by the shareholders to
serve until the next annual meeting of the shareholders or until their
successors are elected and shall qualify. The accompanying form of Proxy will
be voted for the re-election as Directors of Benjamin Sporn, David Refson,
Richard Helfman and David Guttmann, unless the Proxy contains contrary
instructions. See Directors of the Company for a description of such
nominees business experience. Proxies cannot be voted for a greater number
of persons than the number of nominees named in the Proxy Statement.
Management has no reason to believe that any of the nominees will not be a
candidate or will be unable to serve. However, in the event that any of the
nominees should become unable or unwilling to serve as a Director, the Proxy
will be voted for the election of such person or persons as shall be
designated by the Directors.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE ABOVE NAMED NOMINEES. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
PROPOSAL 2
APPROVAL OFAPPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Richard A. Eisner & Company, independent
public accountants, to audit the accounts of the Company for the fiscal year
ending December 31, 1996. Richard A. Eisner & Company was initially appointed
by the Board of Directors in March 1987 in connection with the audit of the
Company's accounts for the fiscal year ended December 31, 1986, and was
subsequently appointed auditors of the Company's accounts for fiscal years
ended December 31, 1987 through 1995. Richard A. Eisner & Company has
advised the Company that neither the firm nor any of its members or
associates has any direct financial interest in the Company other than as
auditors. Although the selection and appointment of independent auditors is
not required to be submitted to a vote of shareholders, the Directors deem it
desirable to obtain the shareholders' ratification and approval of this
appointment.Representatives of Richard A. Eisner & Company are expected to be
present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and are expected to be available to respond to
appropriate questions. Approval of the proposal requires the affirmative
vote of a majority of the Shares voted with respect thereto. In the event
the proposal is not approved, the Board will consider the negative vote as a
mandate to appoint other independent auditors of the Company for the next
fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT
OF THE AUDITORS
PROPOSAL 3
AUTHORIZATION OF A ONE FOR THREE REVERSE STOCK SPLIT
The Board of Directors of the Company has adopted a proposal declaring
advisable an amendment to the Certificate of Incorporation of the Company to
effect a one-for-three reverse stock split of all of the authorized and
outstanding Common Stock. As of June 1, 1996, the Company had authorized
20,000,000 shares of Common Stock, $.03 par value. As of that date, there
were issued and outstanding 7,834,183 shares of Common Stock. Except for the
receipt of cash in lieu of fractional interest, the proposed reverse stock split
will not affect any shareholders proportionate equity interest in the Company.
The Company also had 5,000,000 shares of Preferred Stock authorized of which
1,725 were previously issued, but none were outstanding. The Preferred Stock
will not be affected by this proposed reverse split.
The amendment will not have any material impact on the aggregate capital
represented by the Shares for financial statement purposes. Adoption of the
reverse stock split will reduce the number of presently outstanding Shares,
as indicated on the table below and will provide for a corresponding increase
in the par value from $.03 per Share to $.09 per Share. In connection with the
reverse stock split, current shareholders would receive one share of, or cash
for any resulting fractional share, or both, in exchange for three currently
outstanding Shares.
Class of Stock Outstanding Before Split
Outstanding After Split
Common Stock 7,834,183
2,611,394
The number of outstanding shares after the reverse stock split is approximate.
Except for changes resulting from the reverse stock split and the increase in
the par value from $.03 to $.09 par value, the rights and privileges of holders
of Shares of Common Stock will remain the same, both before and after the
proposed reverse stock split.
Reasons for the Reverse Stock Split
The Company has been advised by the National Association of Securities Dealers,
Inc. Automated Quotation System ("Nasdaq") that it is not in compliance with
the qualification for continued listing of securities on the Nasdaq system
since the bid price has been less than $1.00 per share for more than ten
consecutive trading days. The closing bid price on July 22, 1996 was $.625.
It is expected that the proposed reverse stock split will enable the Company's
Shares to meet this requirement.
Quotations for the Company's Shares have appeared on Nasdaq since June 1986.
Pursuant to Rule 15c2-6 (the "Rule") adopted by the Securities and Exchange
Commission ("Commission") under the Securities Exchange Act of 1934,
broker-dealers are required to implement certain supplemental sales practice
requirements when recommending and selling "designated securities" to customers
in transactions not exempt under the Rule. The Rule was directed at the
elimination of certain practices in connection with the sale of certain low
priced securities. The Rule exempts from its requirements the securities of
issuers listed on national securities exchanges and on Nasdaq. Management of
the Company believes that the market for the Company's Shares will be improved
by maintaining its listing on Nasdaq, thereby maintaining the exemption of its
Common Stock from the impact of the Rule.
The decrease in the number of Shares of Common Stock outstanding as a
consequence of the proposed reverse stock split should increase the per Share
price of the Common Stock, which may encourage greater interest in the Common
Stock and possibly promote greater liquidity for the Company's shareholders.
However, the increase in the per Share price of the Common Stock as a
consequence of the proposed reverse stock split may be proportionately less
than the decrease in the number of Shares outstanding. In addition, any
increased liquidity due to an increased per Share price could be partially or
entirely offset by the reduced number of Shares outstanding after the proposed
reverse stock split. Nevertheless, the proposed reverse stock split could
result in a per Share price that adequately compensates for the adverse-impact
of the market factors noted above. There can, however, be no assurance that
the favorable effects described above will occur, or that any increased per
Share price of the Common Stock resulting from the proposed reverse stock
split, if attained, will be maintained for any period of time. The
management of the Company does not currently intend to engage in any future
transactions or business combinations which would qualify the Company for
deregistration of the Common Stock from the reporting and other requirements of
Federal securities laws.
The amendment, if adopted, will also increase the par value per share of the
Company's authorized Shares of Common Stock from $.03 to $.09. The increase in
the par value per Share is intended to maintain the Company's capital stock
accounts at current levels.
It is expected that if the shareholders authorize this amendment that the
filing of the Certificate of Amendment will occur as soon as practical after
the date of the shareholders meeting. The proposed reverse stock split will
become effective on the effective date of that filing (the "Effective Date").
Commencing on the Effective Date, each currently outstanding certificate will
be deemed for all corporate purposes to evidence ownership of the reduced
number of Shares resulting from the reverse stock split. Currently outstanding
certificates do not have to be surrendered in exchange for new certificates in
connection with the reverse stock split. Rather, new stock certificates
reflecting the number of Shares resulting from the stock split will be issued
only as currently outstanding certificates are transferred. However, the
Company will provide shareholders with instructions as to how to exchange their
certificates and encourage them to do so. The company will obtain a new CUSIP
number for its Shares.
To the extent a shareholder holds a number of Shares that would result in a
residual fractional interest, the Company will pay, as soon as is practicable
after the Effective Date, $.625 for each Share of Common Stock outstanding
prior to the reverse stock split that comprises the factional interest.
Shareholders will not have the opportunity on or after the Effective Date to
round off their shareholdings to avoid resulting fractional interest. The
$.625 price per Share figure for the Common Stock purchased pursuant to the
retirement of resulting interests is based on the closing bid price of the
Common Stock as reported on Nasdaq on July 22, 1996. In view of this, the
management of the Company believes that the $.625 price per Share figure is
fair to all of the shareholders whose fractional interests are retired, the
other shareholders of the Company and the Company. As of June 3, 1996, the
Company has 293 shareholders of record and believes that the approximate total
number of beneficial holders of the Common Stock of the Company to be
approximately 1,200 based on information received from the transfer agent and
those brokerage firms who hold the Company's securities in custodial or
"street" name. The Company estimates that, based on the shareholdings as of
June 3, 1996, it will continue to have approximately the same number of
shareholders after the reverse stock split is effected as it did prior to the
reverse split.
There can be no assurance that the market price of the Shares after the
proposed reverse stock split will be triple the market price before the
proposed reverse stock split, or that such price will either exceed or remain
in excess of the current market price.
Warrants, Options and Preferred Stock
The Company currently has outstanding warrants owned by four persons
exercisable to purchase 124,805 Shares. In addition, there are stock options
outstanding under the Companys stock option plans to purchase approximately
432,000 Shares. After approval of the reverse stock split, the number of
Shares to be issued upon exercise of the outstanding warrants and options will
be reduced to onethird of the previous amount and the per Share price will
triple.
Federal Income Tax Consequences
The federal income tax consequences of the proposed reverse stock split will
be as set forth below. The following information is based upon existing law
which is subject to change by legislation, administrative action and judicial
decision and is therefore necessarily general in nature. Therefore,
shareholders are advised to consult with their own tax advisors for more
detailed information relating to their individual tax circumstances.
{autonumout} The proposed reverse stock split will be a tax-free
recapitalization of the Company and its shareholders to the extent that
currently outstanding shares of stock are exchanged for other shares of stock
after the split.
{autonumout} The new shares of Common Stock in the hands of a shareholder
will have an aggregate basis for computing gain or loss equal to the
aggregate basis of shares of stock held by that shareholder immediately prior to
the proposed reverse stock split if no fractional shares are present. If
fractional shares are present as a result of the split, and the shareholder
realizes a gain on the exchange, the shareholder will recognize a taxable
gain equal to the lesser of the cash received or the gain realized. If
fractional shares are present and a loss is realized on the exchange, the
loss is not recognized, but rather the loss must be deferred until the
shareholder disposes of the new stock in a taxable transaction. The
stockholder's basis in the new stock is equal to the basis in the stock
exchanged, less any cash received plus gain recognized, if any.
{autonumout} Shareholders who receive cash for fractional shares will be
treated as if they had received such fractional shares and then sold them to
the Company. Such shareholders will recognize gain or loss equal to the
difference between the amount of cash received and their basis in the stock
exchanged.
Approval Required
The approval of a majority of the outstanding stock entitled to vote will be
necessary to approve the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO EFFECT A ONE
FOR THREE REVERSE STOCK SPLIT.
The Company will provide without charge to each person being solicited by this
Proxy Statement, on written request of any such person, a copy of the Annual
Report of the Company on Form 10-KSB for the year ended December 31, 1995
(as filed with the Securities and Exchange Commission), including financial
statements. All such requests should be directed to Henry Lam at Creative
Technologies Corp., 170 53rd Street, Brooklyn, New York 11232.
All proposals of shareholders intended to be included in the proxy statement
to be presented in the 1997 Annual Meeting materials must be received by the
Company's executive offices in Brooklyn, New York, no later than February 1,
1997.
By Order of the Board of Directors Dated: July 24, 1996
David Selengut
Secretary
PROXY
This Proxy is Solicited
on Behalf of the Board of Directors
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
The undersigned hereby appoints David Selengut and Henry Lam as Proxies, each
with the power to appoint his or her substitute, and hereby authorizes them to
represent and to vote, as designated below, all the Shares of the Shares of
Creative Technologies Corp. held of record by the undersigned on July 24, 1996
at the Annual Meeting of Shareholders to be held on September 4, 1996 or any
adjournment thereof.
1. Election of Directors FOR all nominees listed below
(except as marked to the contrary below)
WITHHOLD AUTHORITY
to vote for all nominees below
(INSTRUCTION: To withhold authority to vote
for any individual nominee strike a line
through the nominee's name in the list below)
Benjamin Sporn, David Refson, Richard Helfman, David Guttmann
2. To ratify the appointment of Richard A. Eisner & Company as the
independent auditors for the Company for the fiscal year ending December 31,
1996.
FOR ___ AGAINST ___ ABSTAIN ___
3. Authorization of a reverse split of the Companys Shares on the basis of
one Share for each three Shares issued and outstanding.
FOR ___AGAINST ___ ABSTAIN ___
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for Proposals 1, 2, 3, 4 and 5.
Please sign exactly as name appears below. When Shares are held by joint
tenants, both must sign.
Dated: , 1996
Signature
Signature if held jointly
When signing as attorney, executor administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.