SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[_]Confidential, for use of the
[_]Preliminary information statement Commission only (as permitted by
Rule 14c-5(d)(2))
[X]Definitive information statement
Avery Communications, Inc.
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(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
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[_]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:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_]Fee paid previously with preliminary materials.
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[_]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:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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AVERY COMMUNICATIONS, INC.
190 South LaSalle Street, Suite 1710
Chicago, Illinois 60603
November 16, 2001
Dear Stockholder:
This information statement is being furnished to the holders of common stock
of Avery Communications, Inc. in connection with the proposal to amend our
Certificate of Incorporation to effect a one-for-eight reverse stock split of
our common stock which may allow us to meet the listing criteria for our
common stock to be listed on the Nasdaq SmallCap Market.
Our Board of Directors unanimously supports the reverse stock split. In
addition, our controlling stockholders have consented in writing to the
amendment to our Certificate of Incorporation to effect a one-for-eight
reverse stock split. This action by the controlling stockholders is sufficient
to ensure that a majority of our stockholders approve the amendment without
the vote of any other stockholder. Accordingly, your approval is not required
and is not being sought.
This information statement and the attached document provide you with
detailed information about the reverse stock split. Please read these
documents carefully in their entirety. You may also obtain information about
us from publicly available documents that have been filed with the Securities
and Exchange Commission.
We appreciate your support.
Very truly yours,
/s/ Patrick J. Haynes, III
PATRICK J. HAYNES, III
Chairman of the Board, President and
Chief Executive Officer
AVERY COMMUNICATIONS, INC.
190 South LaSalle Street, Suite 1710
Chicago, Illinois 60603
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
This information statement is being furnished to the holders of common
stock, par value $0.01 per share, of Avery Communications, Inc. in connection
with the proposal to amend our Certificate of Incorporation to effect a one-
for-eight reverse stock split which may allow us to meet the listing criteria
for our common stock to be listed on the Nasdaq SmallCap Market.
Our Board of Directors unanimously supports the reverse stock split. In
addition, our controlling stockholders have consented in writing to the
amendment to our Certificate of Incorporation to effect a one-for-eight
reverse stock split. This action by the controlling stockholders is sufficient
to ensure that a majority of our stockholders approve the amendment without
the vote of any other stockholder. Accordingly, your approval is not required
and is not being sought.
This information statement is dated November 16, 2001, and is first being
mailed to Avery's stockholders on or about November 16, 2001.
TABLE OF CONTENTS
Page
----
SUMMARY.................................................................. 1
AMENDMENT TO CERTIFICATE OF INCORPORATION TO EFFECT ONE-FOR-EIGHT REVERSE
STOCK SPLIT............................................................. 2
General................................................................ 2
Required Vote.......................................................... 2
Background and Reasons for the Reverse Stock Split..................... 2
Effects of the Reverse Stock Split..................................... 3
Certain United States Federal Income Tax Consequences of the Reverse
Stock Split........................................................... 4
Procedure for the Reverse Stock Split.................................. 4
Abandonment of the Reverse Stock Split................................. 5
No Appraisal Rights.................................................... 5
WHERE YOU CAN FIND MORE INFORMATION...................................... 5
Appendix A--Certificate of Amendment to the Certificate of Incorporation
of Avery Communications, Inc............................................ A-1
i
AVERY COMMUNICATIONS, INC.
190 South LaSalle Street, Suite 1710
Chicago, Illinois 60603
INFORMATION STATEMENT
SUMMARY
Q: WHAT IS BEING PROPOSED?
A: We are proposing an amendment to our Certificate of Incorporation to
effect a one-for-eight reverse stock split of our common stock which may
allow us to meet the listing criteria for our common stock to be listed on
the Nasdaq SmallCap Market.
Q: WHAT IS THE REASON FOR THE REVERSE STOCK SPLIT?
A: Our board of directors believes the reverse stock split will increase the
per share market price of our common stock which may allow us to meet the
listing criteria for our common stock to be listed on the Nasdaq SmallCap
Market. See "Background and Reasons for the Reverse Stock Split."
Q: WHAT VOTE OF STOCKHOLDERS IS REQUIRED TO APPROVE THE REVERSE STOCK SPLIT?
A: The amendment to our Certificate of Incorporation to effect the one-for-
eight stock split must be approved by a majority of the holders of our
outstanding shares. Our controlling stockholders have consented in writing
to the amendment. This action by our controlling stockholders is
sufficient to obtain the stockholder vote necessary to approve the
amendment without the approval of any other stockholder. Accordingly, you
are not required to vote and your vote is not being sought.
Q: DO I HAVE APPRAISAL RIGHTS IN CONNECTION WITH THE REVERSE STOCK SPLIT?
A: No. You do not have appraisal rights in connection with the reverse stock
split.
Q: WHOM DO I CALL IF I HAVE QUESTIONS?
A: If you have any questions, require assistance, or need additional copies
of this information statement or other related materials, you should call
Scot M. McCormick, our Vice President and Chief Financial Officer, at
(312) 419-0077.
1
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO EFFECT ONE-FOR-EIGHT REVERSE STOCK SPLIT
General
Our Board of Directors has declared advisable, authorized and approved an
amendment to our Certificate of Incorporation to effect a one-for-eight
reverse stock split of our common stock as soon as practicable. The amendment
to the text of Article Four of our Certificate of Incorporation is attached as
Appendix A.
On the effective date of the reverse stock split, each eight shares of
common stock will be converted automatically into one share of common stock.
The effective date of the reverse stock split will be the date on which the
amended certificate is filed with the Secretary of State of Delaware, which we
plan to do twenty-one days after the date of this information statement.
Please note that the reverse stock split will not change your proportionate
equity interests in Avery, except as may result from fractional shares.
Required Vote
The affirmative vote of a majority of the holders of our shares entitled to
vote is required to approve the amendment of our Certificate of Incorporation
to effect a one-for-eight reverse stock split. Our controlling stockholders
have consented in writing to the amendment. This action by our controlling
stockholders is sufficient to obtain the stockholder vote necessary to approve
the amendment without the approval of any other stockholders. Accordingly, you
are not required to vote and your vote is not being sought.
Background and Reasons for the Reverse Stock Split
Our board of directors believes the reverse stock split is desirable for
several reasons. It is intended to allow us to meet the listing criteria for
our common stock to be listed on the Nasdaq SmallCap Market which may increase
the acceptance of our common stock by the financial community and the
investing public and, accordingly, enhance stockholder value.
The reverse stock split will decrease the number of shares outstanding and
presumably increase the per-share market price for our new common stock. One
of the requirements for listing on the Nasdaq SmallCap Market is that our
common stock maintain a minimum bid price of at least $4.00 per share for
ninety days. Although our common stock is currently quoted on the OTC Bulletin
Board, an increase in the per share market price may allow us to meet the
minimum bid price and price per share listing criteria to allow our new common
stock to be listed on the Nasdaq SmallCap Market. There is no assurance,
however, that any such listing will or can be effected.
On November 14, 2001, the closing sale price of a share of our common stock
listed on the OTC Bulletin Board was $0.33. Many investors look upon low-
priced stocks, such as those listed on the OTC Bulletin Board, as unduly
speculative in nature and, as a matter of policy, avoid investments in such
stocks. These investors may believe that low stock prices reflect companies
that are of low quality or poor performance. Accordingly, our board of
directors believes that the per share price of our common stock reduces the
marketability of our shares because of the reluctance of many brokerage firms
to recommend low-priced stocks to their clients.
Although there can be no assurance that the price of our new common stock
after the reverse stock split will actually increase in an amount
proportionate to the decrease in the number of outstanding shares, the
proposal is intended to result in a price level for our new common stock that
will broaden investor interest and provide a market that will reflect more
closely its underlying value.
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There can be no assurance that any or all of these results will occur,
including, without limitation, that the market price per share of our new
common stock after the reverse stock split will be eight times that of the
market price per share of our currently outstanding common stock or that the
new price will either exceed or remain in excess of the current market price.
Further, there is no assurance that the market for our new common stock after
the reverse stock split will reflect more closely its underlying value.
Once our Certificate of Incorporation is amended, eight shares of our common
stock, par value $.01 per share, issued and outstanding immediately prior to
the effective time of the reclassification amendment, will be reclassified and
converted into one share of our common stock, par value $.01 per share.
Effects of the Reverse Stock Split
The principal effect of the reverse stock split will be to decrease the
number of outstanding shares from 10,142,076 to approximately 1,267,760 based
on outstanding share information as of November 14, 2001. The reverse stock
split would not affect the proportionate equity interest in Avery of any
holder of common stock, except as may result from the provisions for the
elimination of fractional shares. The reverse stock split will not affect the
registration of our common stock under the Securities Exchange Act of 1934. We
expect to have approximately the same number of record holders after giving
effect to the reverse stock split as before the reverse stock split. The
relative rights and preferences of our new common stock after the reverse
stock split will be identical to the relative rights and preferences of our
currently issued and outstanding common stock.
The reverse stock split will also entitle the holders of all outstanding
options and warrants the right to purchase, upon exercise of their options or
warrants, one-eighth of the number of shares of common stock which such
holders would have been able to purchase upon exercise of their options and
warrants immediately preceeding the reverse stock split at an exercise price
equal to eight times the exercise price specified prior to the reverse stock
split, resulting in the same aggregate price being required to be paid upon
exercise of such options and warrants immediately prior to the reverse stock
split. The holders of securities convertible into shares of our common stock
will be entitled to convert their convertible securities at a ratio of one
share for eight shares which such holders would have been able to purchase
prior to the reverse stock split.
The reverse stock split will not affect the par value of our common stock.
As a result, on the effective date of the reverse split, the stated capital on
our balance sheet attributable to the common stock will be reduced to up to
one-eighth of its present amount, and the additional paid-in capital account
shall be credited with the amount by which the stated capital is reduced. The
per share net income or loss and net book value of our common stock will be
increased because there will be fewer shares of our common stock outstanding.
We will not issue fractional shares in connection with the reverse stock
split. Instead, any holder who would otherwise be entitled to receive a
fraction of a share, after aggregating all fractional shares to which any such
holder would otherwise be entitled to receive as a result of the reverse stock
split, shall be entitled to receive one whole share. See "Procedure for
Reverse Stock Split."
When implemented, the proposal is likely to leave some stockholders with
"odd lots" of our new common stock (i.e., stock in amounts of less than 100
shares). These odd lots may be more difficult to sell, or require greater
transaction costs per share to sell, than shares in even multiples of 100.
The following table illustrates the principal effects of the reverse stock
split, based on share information as of November 14, 2001, discussed in the
preceding paragraphs:
Prior to Upon
Reverse Reverse
Stock Stock
Number of Shares of Common Stock Split Split
- -------------------------------- ---------- ----------
Authorized.............................................. 20,000,000 20,000,000
Issued and outstanding.................................. 10,142,076 1,267,760
Reserved for issuance under outstanding options......... 705,493 88,187
Reserved for issuance upon conversion of convertible
securities............................................. 7,154,493 894,312
Available for future issuance or sale by action of the
board of directors..................................... 1,997,938 17,749,741
3
Certain United States Federal Income Tax Consequences of the Reverse Stock
Split
The discussion of United States federal income tax consequences set forth
below is for general information only and does not purport to be a complete
discussion or analysis of all potential tax consequences which may apply to
our stockholders. Our stockholders are strongly urged to consult their tax
advisors to determine the particular tax consequences to them of the reverse
stock split, including the applicability and effect of federal, state, local,
foreign and other tax laws.
The following discussion sets forth the principal United States federal
income tax consequences of the reverse stock split to our stockholders. The
following disclosure addresses only the United States federal income tax
consequences to our stockholders who hold our shares as a capital asset. The
following disclosure does not address all of the federal income tax
consequences that may be relevant to particular stockholders based upon their
individual circumstances or to stockholders who are subject to special rules,
such as financial institutions, tax-exempt organizations, insurance companies,
dealers in securities, foreign holders or holders who acquired their shares
pursuant to the exercise of employee stock options or otherwise as
compensation. The following disclosure is based upon the Internal Revenue Code
of 1986, as amended, laws, regulations, rulings and decisions in effect as of
the date hereof, all of which are subject to change, possibly with retroactive
effect, and to differing interpretations. The following disclosure does not
address the tax consequences to our stockholders under state, local and
foreign laws. We have neither requested nor received a tax opinion from legal
counsel with respect to any of the matters discussed herein. No rulings have
been or will be requested from the IRS with respect to any of the matters
discussed herein. There can be no assurance that future legislation,
regulations, administrative rulings or court decisions would not alter the
consequences set forth below.
Our stockholders generally will not recognize income, gain or loss for
United States federal income tax purposes as a result of the reverse stock
split. Each such stockholder's aggregate tax basis in our shares after the
reverse stock split will equal his, her or its aggregate tax basis in our
shares before the reverse stock split, except as may result from the provision
for the elimination of fractional shares. The holding period of our shares
after the reverse stock split will include the holding period of our shares
before the reverse stock split. No gain or loss will be recognized by us as a
result of the reverse stock split.
Procedure for the Reverse Stock Split
We will promptly file an amendment to our Certificate of Incorporation with
the Delaware Secretary of State twenty-one days after the date of this
information statement. The amendment shall reclassify and convert the common
stock into new shares of common stock, on the basis of one share of common
stock for eight outstanding shares of common stock. Additionally, the
amendment will set forth the effect of the reverse split on the stated capital
as described under "Effects of the Reverse Stock Split." The reverse stock
split will become effective on the date of filing the amendment, which we will
refer to as the "effective date." Beginning on the effective date, each
certificate representing pre-reverse split shares will be deemed for all
corporate purposes to evidence ownership of post-reverse split shares.
Stockholders of record as of the effective date of the reverse stock split
will be furnished the necessary materials and instructions for the surrender
and exchange of stock certificates at the appropriate time by our transfer
agent. Stockholders will not have to pay a transfer fee or other fee in
connection with the exchange of certificates. STOCKHOLDERS SHOULD NOT SUBMIT
ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
As soon as practicable after the effective time of the reverse stock split,
our transfer agent will send a letter of transmittal to each stockholder who
holds physical stock certificates advising such holder of the procedure for
surrendering stock certificates in exchange for new certificates representing
ownership of our new common stock. No fractional shares shall be issued. In
lieu thereof, any holder who would otherwise be entitled to receive a fraction
of a share, after aggregating all fractional shares to which any such holder
would otherwise be entitled to receive as a result of the reverse stock split,
shall be entitled to receive one whole share upon the surrender of
certificates representing pre-stock split shares as described below.
Any stockholders whose certificates for current issued and outstanding
common stock have been lost, destroyed or stolen will be entitled to issuance
of a certificate representing the shares of our new common stock
4
into which such shares will have been converted upon compliance with such
requirements as we and our transfer agent customarily apply in connection with
lost, stolen or destroyed certificates.
Abandonment of the Reverse Stock Split
Our board of directors will have the right to abandon the reverse stock
split before the effective time of the reverse stock split, even after
stockholder approval, if for any reason the board of directors determines that
it is not advisable to proceed with the reverse stock split.
No Appraisal Rights
Stockholders have no appraisal rights under Delaware law or under our
Certificate of Incorporation or Bylaws in connection with the reverse stock
split.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or
other information we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-
SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS INFORMATION STATEMENT. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS
INFORMATION STATEMENT. THIS INFORMATION STATEMENT IS DATED NOVEMBER 16, 2001.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THE INFORMATION
STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND THE MAILING OF
THIS INFORMATION STATEMENT TO STOCKHOLDERS SHALL NOT CREATE ANY IMPLICATION TO
THE CONTRARY.
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APPENDIX A
CERTIFICATE OF
AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF
AVERY COMMUNICATIONS, INC.
AVERY COMMUNICATIONS, INC. (the "Corporation") a corporation organized and
existing under and by virtue of the Delaware General Corporate Law ("DGCL")
does hereby certify:
FIRST: That the Board of Directors of the Corporation, by the unanimous
written consent of its members, filed with the minutes of the Board,
adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of the Corporation:
RESOLVED, that to effectuate the Reverse Stock Split, Article 4 of
the Certificate of Incorporation, as amended and in effect on the
date hereof (the "Certificate of Incorporation"), be amended by
adding the following paragraphs thereto:
Upon this Certificate of Amendment to the Certificate of
Incorporation of the Corporation becoming effective in accordance
with the General Corporation Law of the State of Delaware (the
"Effective Time"), each eight (8) shares of Common Stock, par value
$.01 per share ("Old Common Stock"), of the Corporation issued and
outstanding immediately prior to the Effective Time shall be,
without any action of the holder thereof, automatically reclassified
as and converted into one (1) share of Common Stock, par value $.01
per share ("New Common Stock"), of the Corporation.
Notwithstanding the immediately preceding paragraph, no fractional
shares of New Common Stock shall be issued to the holders of record
of Old Common Stock in connection with the foregoing
reclassification of shares of Old Common Stock, and no certificates
or scrip representing any such fractional shares shall be issued. In
lieu of such fraction of a share, and upon surrender of the
certificate or certificates representing the Old Common Stock as
provided below, any holder of Old Common Stock who would otherwise
be entitled to receive a fraction of a share of New Common Stock,
after aggregating all fractional shares of New Common Stock to which
any such holder would otherwise be entitled, shall be entitled to
receive one whole share of New Common Stock.
A-1
Each stock certificate that, immediately prior to the Effective
Time, represented shares of Old Common Stock shall, from and after
the Effective Time, automatically and without the necessity of
presenting the same for exchange, represent that number of whole
shares of New Common Stock into which the shares of Old Common Stock
represented by such certificate shall have been reclassified. Each
holder of record of a certificate that represented shares of Old
Common Stock shall receive, upon surrender of such certificate, a
new certificate representing the number of whole shares of New
Common Stock into which the shares of Old Common Stock represented
by such certificate shall have been reclassified.
SECOND: That in lieu of a meeting and vote of the stockholders of the
Corporation, a majority of the stockholders of the Corporation have given
their written consent to said amendment in accordance with the provisions
of Section 228 of the DGCL, and written notice of the adoption of the
amendment has been given as provided in Section 228 of the DGCL to every
stockholder entitled to such notice.
THIRD: That the foregoing amendment of the Certificate of Incorporation
was duly adopted in accordance with the provisions of Section 242 of the
DGCL.
[Remainder of Page Intentionally Left Blank. Signature Page Follows.]
A-2
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment
to be executed on this day of November , 2001.
Avery Communications, Inc.
/s/ Scot M. McCormick
By: _________________________________
SCOT M. MCCORMICK
Vice President
A-3