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EXHIBIT 99
NEW SYSTEMS, INC.
5 Clancy Lane South
Rancho Mirage, California 92270
INFORMATION STATEMENT
This Information statement ("Information Statement") is furnished to the
shareholders of NEW SYSTEMS, INC. (the "Company"), in connection with the
consent of its shareholders ("Shareholder Consent") to certain action. This
Information Statement is first being mailed to shareholders on April 9, 1999.
Pursuant to the Shareholder Consent of certain shareholders of the
Company, who collectively represent in excess of fifty percent (50%) of the
votes eligible to be cast, the following resolutions were approved and through
actions of the Company's officers the relevant transactions were completed,
(the "Closing Date") and the recapitalization and name change effective on
March 2, 1999, (the "Effective Date"):
1. The amendment to the Company's Certificate of Incorporation
changing the name of the Company to New Systems, Inc. from "Municipal Systems,
Inc."
2. A recapitalization pursuant to which the issued and outstanding
shares of the Company's common stock was reverse split, or consolidated, on a
1-for-250 basis so that shareholders will receive one (1) share of the
Company's common stock for each two hundred fifty (250) shares now held.
3. The election of Lloyd T. Rochford as director of the Company to
serve in accordance with the provisions of the Company's Certificate of
Incorporation and bylaws and until his successor is elected and qualified.
Management solicited the Shareholder Consent from holders of record of
the Company's 250,000,000 shares of common stock, $0.001 par value,
outstanding as of February 23, 1999, (the "Record Date"). Each shareholder
had the right to one vote for each share of the Company's common stock owned.
There was no cumulative voting. Holders of 138,746,000 shares representing
55% of the 250,000,000 issued and outstanding shares of the Company's common
stock approved the above resolutions.
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THE COMPANY
HISTORY
New Systems, Inc. (the "Company") was incorporated under the laws of the
State of Nevada on December 10, 1987, under the name of Municipal Systems,
Inc., for the purpose of acquiring all of the issued and outstanding common
stock of CSH Corporation, a Utah corporation (formerly, Computer Systems House
Corporation and hereinafter referred to as "CSH"), from its stockholder. The
Company was initially capitalized with $50,000 from its organizers.
Subsequently, a public offering was undertaken by the Company for the purpose
of raising sufficient capital to acquire the common stock of CSH and to raise
operating capital for CSH. The Company filed a registration statement on Form
S-18 with the Securities and Exchange Commission ("SEC") which became
effective in September, 1988 (the "IPO" or "Offering"). The Company sold a
total of 40,000 units, at a price of $7.50 per unit, each unit consisting of
300 shares of $0.001 par value, common stock; 900 Class A Warrants and 600
Class B Warrants. Each warrant of either class was exercisable for one share
of common stock at a predetermined price; however, no warrants of either class
were exercised prior to their expiration date and currently there are no
Warrants issued and outstanding. Before deducting any underwriting commissions
or other costs of the public offering, gross proceeds from the public offering
amounted to $300,000.
Upon completion of the Offering, in 1988, the Company completed its
acquisition of all issued and outstanding stock of CSH for total consideration
of $100,000. After the acquisition of the CSH stock, CSH was operated as a
wholly owned subsidiary. CSH was primarily engaged in the developing,
manufacturing and marketing of four specialized accounting software programs
(the "CSH Software") principally for school district funding and secondary
school activity funding. At the time of the Company's initial investment in
CSH, the CSH Software was being sold in limited quantities while further
development and program refinements were being undertaken. CSH's principal
executive offices were located in Wilmington, Delaware, from where its
marketing and sales efforts originated, with satellite offices in Provo, Utah,
from where research, development and technical support activities were
conducted. Several months after the Company's initial investment in CSH, the
Delaware offices were closed and all of CSH's activities were conducted from
the Provo, Utah, offices. Eventually, when projected revenue from the sale of
the CSH Software failed to materialize, the principal business and technical
support offices of CSH were relocated to the Company's offices in Salt Lake
City, Utah.
The CSH Software was targeted for sales to "secondary schools" within the
numerous school districts across the United States. The Company had utilized
$100,000 of the public offering proceeds to acquire CSH and an additional
amount of approximately $150,000 had been expended through April, 1989, for
marketing and further development of the CSH Software. By April of 1989 it
became apparent that the CSH Software sales had not been profitable and the
reality of obtaining additional funding was not likely unless the
organizational structure of CSH was changed.
In order to provide the possibility of such a change, the Company's
stockholders voted on April 28, 1989, to adopt resolutions which had the
following effect on the Company and its stockholders: 1] Certain stockholders
of the Company contributed a total of 7,800,000 shares of the Company's common
stock previously purchased by them, back to the Company for cancellation. In
exchange, these stockholders received shares of CSH's common stock, which
effectively reduced the Company's 100% ownership interest in CSH; 2] The
Company's shares of common stock, representing its remaining ownership
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interest in shares of common stock was placed into escrow with the intent to
distribute the CSH common stock to the Company's stockholders upon a
registration statement relative to those shares of common stock being declared
effective by the SEC; 3] The Company's Articles of Incorporation were
amended to increase the authorized number of shares of common stock to
250,000,000; and 4] The Company's former president during the Company's IPO,
Denny Nestripke, was retained as a consultant to the Company for the purpose
of providing an office location for the Company and to assist the Company with
respect to matters relating to its publicly held ownership. Before the actual
reorganization of CSH could be accomplished, the Chief Executive Officer of
CSH abruptly, and without prior notice, returned to Wilmington, Delaware,
unwilling to continue any association with CSH. Additionally, the stockholder
from whom the Company purchased CSH, and who subsequently provided the
leadership and direction to further develop the CSH Software, resigned from
CSH and relocated to the eastern part of the United States. The departure of
these two individuals resulted in CSH remaining operational for only a short
period of time before its business operations were discontinued and
settlements with CSH's creditors were negotiated. By November of 1991, the
distribution of the shares of CSH's common stock held in escrow for the
Company's stockholders had not occurred and CSH had ceased operations. Even
though CSH had not entered into any form of bankruptcy proceedings, on
November 1, 1991, the Utah State Department of Commerce issued a Certificate
of Involuntary Dissolution to CSH.
ACTIVITIES SUBSEQUENT TO CSH
The Company did not engage in any business activities other than the
operation of its subsidiary, CSH, from the time it acquired CSH through the
end of 1991. Subsequent thereto several proposed reorganizations involving the
Company were review by then existing management; however, it was determined
that none of the proposals presented would provide a realistic opportunity for
the Company to become a viable operating entity. By the end of 1991, the
Company's common stock had ceased to actively trade on the over-the-counter
market and the Company's board of directors, elected at the aforementioned
April, 1989 meeting, didn't have any clear direction as to what business
activities the Company should pursue. During this two year period, active
participation from the elected directors diminished and they resigned from
their positions as directors.
By the end of 1991, Mr. Denny W. Nestripke, who originally organized the
Company and was its president during the period of its IPO, was appointed its
new director and president. As the sole officer and director of the Company,
Mr. Nestripke acted for and on behalf of the Company in effecting the
following: 1) shareholders who had contributed shares of common stock to the
Company for shares of CSH had their shares returned to them to the extent that
they acted in good faith; 2) any shares of CSH common stock issued for
services, or for cash, were allowed to be exchanged for shares of the
Company's common stock; 3) rather than receiving cash consideration for
consulting services, as provided in the April 1989 meeting, Mr. Nestripke was
issued shares of the Company's common stock; and 4) authorization was given to
issue shares of the Company's common stock for the purpose of: a) paying any
cost and expenses which the Company may incur in order to maintain its
corporate existence; b) having sufficient capital for the Company to
investigate possible reorganization; and c) to pay such fees and costs as Mr.
Nestripke deemed appropriate.
In December of 1997, due to health reasons, Mr. Nestripke brought another
individual, Mr. Lloyd T. Rochford, into the leadership of the Company,
effective upon Mr. Nestripke's resignation. Mr. Lloyd T. Rochford has now
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assumed the position of director of the Company and is the Company's chief
executive and financial officer. In addition, the financial consulting firm of
KM Financial, Inc. was retained, effective concurrent with Mr. Rochford's
appointment.
By consent resolution of a majority of the Company's stockholders,
approval for the following action became effective March 2, 1999: a) Mr. Lloyd
T. Rochford was elected as a director of the Company; b) the Company's name
was changed to New Systems, Inc. ("New Systems"); c) a reverse split of the
Company's outstanding common stock on the basis of one share of New Systems to
be issued for each 250 shares of the Company's common stock outstanding prior
thereto.
CURRENT BUSINESS OF THE COMPANY
The Company is currently not engaged in any business operation other than
seeking to locate an existing business or business assets ("Target Corp.")
with which the Company could enter into a merger or acquisition. There are no
set guidelines on the type of Target Corp. Management will have broad
discretion in seeking a Target Corp. and structuring a reorganization. At the
present time the Company has not entered into any formal discussions with any
corporation or individuals representing a corporation or other entity or
assets.
The utilization of an existing public corporation in a reorganization
with an existing business operation or in conjunction with a business plan, is
highly speculative. Furthermore, no assurance can be given that after a
reorganization has taken place that the acquired entity will be able to
maintain or achieve any earnings. There is also no assurance that the
Company's securities will achieve acceptance by the investing public or
supported in the marketplace by broker/dealers, investment advisors or others
who can or could influence the price of the Company's securities in the
marketplace.
The Company intends to comply with the reporting requirements of the SEC
and state securities regulators. Such compliance requires that its financial
statements be audited by an independent certified public accounting firm and
will also require that legal counsel review and assist in the compliance
process of a public entity. This will require that the Company seek adequate
financing for such purposes. The Company has no full time employees. Mr.
Lloyd T. Rochford, chief executive officer, chief financial officer and
director of the Company will devote such time to the Company as he deems
necessary. Mr. Rochford received shares of the Company's common stock from the
Company upon accepting an appointment to serve the Company in the positions
mentioned. Subsequent to such appointment Mr. Rochford has not received any
compensation and it is not intended that any compensation will be paid to Mr.
Rochford at any future time.
Security Ownership of Certain Beneficial Owners
The following table provides information relative to the Company's common
stock held by any person or any group known to the Company to be the
beneficial owner of more than five percent of the Company's issued and
outstanding common stock as of March 10, 1999. This table has taken into
account a reverse split of the Company's common stock which took effect on
March 2, 1999. This reverse split in one share of New Systems, Inc. being
issued for 250 shares of Municipal Systems, Inc.
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Title of Name and Address Shares Beneficially Percent of
Class of Beneficial Owner Owned Class
-------- -------------------- ------------------ ----------
Common Lloyd T. Rochford 295,392 29.5 %
5 Clancy Lane South
Rancho Mirage, CA 92270
Common Stanley McCabe 60,296 (1) 6.0 %
5922 South Atlanta Place
Tulsa, OK 74105
Common William Parsons 189,296 (2) 18.9 %
6350 E. Thomas Rd., # 240 --------- -----
Scottsdale, AZ 85251
TOTAL 544,984 54.5 %
========= =====
(1) Includes shares owned by Stanton Oil & Gas Ltd. of which Mr. McCabe's wife
is the sole stockholder.
(2) Includes shares registered in the name of K M Financial, Inc.; Mr.
Parsons's wife; and shares held by Mr. Parsons as a custodian.
ITEM 1
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
CHANGE IN THE NAME OF THE COMPANY
General
The Company amended its certificate of incorporation to change its name
to New Systems, Inc. from Municipal Systems, Inc. The directors recommended
and the shareholders approved the name change to reflective the Company's new
role and to represent a separation from its prior business.
ITEM 2
REVERSE SPLIT
The board of directors adopted resolutions and a majority of the
Company's shareholders approved such resolutions providing for a
recapitalization (the "Recapitalization") pursuant to which the issued and
outstanding shares of the Company's common stock, par value $0.001 per share
(the "Common Stock"), were reversed split, or consolidated, on a 1-for-250
basis, so that shareholders will own one share of common stock (hereinafter
the "Consolidated Common Stock") for each 250 shares of Common Stock now held
by the shareholder. No fractional shares will be issued in connection with
such recapitalization and any fractional shares will be rounded down to the
nearest whole number. Under the Recapitalization the 250,000,000 issued and
outstanding shares of Common Stock were reversed to 1,000,002 shares of Common
Stock.
Reasons for the Plan of Recapitalization
Management believes that the Company needed to reduce its large number of
shares of outstanding stock in order to be better able to pursue new business
opportunities which pursuit is especially important now that the Company no
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longer has any operations. The reduction in shares will hopefully provide the
Company the flexibility to structure potential business opportunities by the
issuance of shares or bring in new investors by the sale of shares.
Management feels this flexibility will provide the catalyst with which to
infuse new business opportunities and capital into the Company that may
improve the future value of the Consolidated Common Stock. It is management's
belief that by reducing the outstanding shares, a private company would be
more interested in merging with the Company providing value to the shares of
Common Stock held by shareholders whom currently have little or no
recognizable value. The reduction in outstanding shares of Common Stock will
also assist any new company merging with the Company in establishing a trading
market, and in raising further capital. The reduction may also facilitate the
Company's ability to become listed on a recognized exchange or the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
Management believes it is important for the Company's stock to be listed on a
recognized exchange or NASDAQ to provide more liquidity to shareholders and to
facilitate the raising of capital. Management feels there are more investors
willing to buy the stock of a company listed on a recognized exchange or
NASDAQ than would buy the stock of a company which is traded in the over the
counter markets due to the recognition and exposure a recognized exchange or
NASDAQ provide. Additionally, management believes there are more broker
dealers willing to provide assistance in raising capital to companies that are
on a recognized exchange or NASDAQ.
The rights of existing shareholders will not be altered and no
shareholder will be eliminated as a result of the reverse split. It is
possible, however, that shareholders holding less than 100 shares (otherwise
known as "Odd Lots") of the Common Stock may have difficulty in disposing of
their shares in that the commissions charged to sell such shares may exceed
the value of the shares.
Certificate Transfer
In order to effectuate the reverse split, each shareholder will be
entitled to submit his or her old stock certificate (any certificate issued
prior to the effective date of the reverse split), to the Company's transfer
agent, Cottonwood Stock Transfer, 5899 South State Street, Salt Lake City,
Utah 84107 and be issued in exchange therefor, one new certificates
representing one (1) share for each two hundred fifty (250) shares reflected
in the old certificates, rounded down to the nearest whole share. All
exchange request must be accompanies by a check payable to Colonial Stock
Transfer Company in the amount of $15 per certificate to be issued. Any share
total less than one (1) will be rounded up to one (1). To eliminate confusion
in the transactions of the Common Stock, management urges shareholders to
exchange their existing certificates for certificates of the Consolidated
Common Stock which also reflects the Company's new name; however, shareholders
are not required to do so.
ITEM 3
ELECTION OF DIRECTORS
Pursuant to the consent of shareholders, Lloyd T. Rochford was elected as
a director of the Company. Mr. Rochford was also appointed president,
secretary and treasure of the Company by Denny Nestripke the Company's former
sole director. Mr. Rochford will serve as a director of the Company for a
term of one year or until a successor is duly qualified and elected.
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Mr. Rochford currently serves as a director of Elligent Consulting Group,
Inc., a position which he has held since 1997. In addition to the foregoing,
from its inception to June, 1997, Mr. Rochford also served as a director of
Magnum Hunter Resources, Inc., a natural resource corporation listed on the
American Stock Exchange. In addition to serving in the capacities mentioned,
Mr. Rochford is an independent financial consultant and administers his own
investment portfolio, comprised of investments in securities, real estate and
natural resource properties.
NEW SYSTEMS, INC.
By: /s/ Lloyd T. Rochford, President and Director