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SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
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[X] Definitive Information Statement
NANNACO, INC.
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(Name of Registrant As Specified in Charter)
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NANNACO, INC.
2935 Thousand Oaks #261
San Antonio, Texas 78247
(210) 545-3570
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To Our Stockholders:
The purpose of this letter is to inform you that we intend to take the
following action by written consent of our stockholders:
To amend our Articles of Incorporation to effectuate a
reverse split of the Company's common stock on a 1:5 basis. As such, the total
number of shares of the Company's common stock, par value $.001 per share, shall
be reduced from 33,957,600 shares to 6,791,520 shares of common stock.
Notice is hereby given that the holders of more than 50% of the
outstanding shares of Common Stock of Nannaco, Inc. ("NNCO") have agreed to take
action by written consent to approve an amendment to NNCO's Certificate of
Incorporation to effect a 1-for-5 reverse stock split. The reverse stock split
will have the effect of reducing the total number of shares of Common Stock
issued and outstanding from 33,957,600 to 6,791,520. Details of the reverse
stock split are described in the information Statement accompanying this Notice.
The reverse split will be effected by the filing of an amendment to the
Company's Amended Certificate of Incorporation with the Secretary of State of
the State of Texas (the "Amendment"). The record date for the reverse split is
October 3, 2003. Holders of a majority of our outstanding common stock owning
approximately 55.5% of the outstanding shares of our Common Stock (the "Majority
Stockholders"), have executed a written consent in favor of the actions
described above. This consent will satisfy the stockholder approval requirement
for the proposed action. Pursuant to Rule 14c-2 under the Securities Exchange
Act of 1934, as amended, the proposals will not be adopted until a date at least
20 days after the date on which this Information Statement has been mailed to
the stockholders. The Company anticipates that the actions contemplated herein
will be effected on or about the close of business on November 5, 2003.
The Company has asked or will ask brokers and other custodians, nominees
and fiduciaries to forward this Information Statement to the beneficial owners
of the Common Stock held of record by such persons and will reimburse such
persons for out-of-pocket expenses incurred in forwarding such material.
WE ARE NOT ASKING FOR YOUR PROXY. Because the written consent of the
Majority Stockholders satisfies any applicable stockholder voting requirement of
the Texas Law and our Articles of Incorporation and By-Laws, we are not asking
for a proxy and you are not requested to send one.
The accompanying Information Statement is for information purposes only and
explains the terms of the amendment to our Amended Articles of Incorporation.
Please read the accompanying Information Statement carefully.
By Order of the Board of Directors,
/s/ Andrew DeVries, III
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Andrew DeVries, III,
Chief Financial Officer
Please note that you are not being asked to send a proxy, and you are
requested not to send one.
INFORMATION STATEMENT
Notice is hereby given that the holders of more than 50% of the outstanding
shares of Common Stock of Nannaco, Inc. ("NNCO") have agreed to take action by
written consent to approve an amendment to NNCO's Certificate of Incorporation
to effect a 1-for-5 reverse stock split. The reverse stock split will have the
effect of reducing the total number of shares of Common Stock issued and
outstanding from 33,957,600 to 6,791,520. Details of the reverse stock split are
described in the information Statement accompanying this Notice.
The reverse split will be effected by the filing of an amendment to the
Company's Amended Certificate of Incorporation with the Secretary of State of
the State of Texas (the "Amendment"). The record date for the reverse split is
October 3, 2003. Holders of a majority of our outstanding common stock owning
approximately 55.5% of the outstanding shares of our Common Stock (the "Majority
Stockholders"), have executed a written consent in favor of the actions
described above. This consent will satisfy the stockholder approval requirement
for the proposed action. Pursuant to Rule 14c-2 under the Securities Exchange
Act of 1934, as amended, the proposals will not be adopted until a date at least
20 days after the date on which this Information Statement has been mailed to
the stockholders. The Company anticipates that the actions contemplated herein
will be effected on or about the close of business on November 5, 2003.
The Company has asked or will ask brokers and other custodians, nominees
and fiduciaries to forward this Information Statement to the beneficial owners
of the Common Stock held of record by such persons and will reimburse such
persons for out-of-pocket expenses incurred in forwarding such material.
WE ARE NOT ASKING FOR YOUR PROXY. Because the written consent of the
Majority Stockholders satisfies any applicable stockholder voting requirement of
the Texas Law and our Articles of Incorporation and By-Laws, we are not asking
for a proxy and you are not requested to send one.
WE ARE NOT ASKING YOU FOR A PROXY, AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL HOLDERS
To the knowledge of NNCO, the following table sets forth, as of October 3,
2003 information as to the beneficial ownership of NNCO's voting securities by
(i) each person known to NNCO as having beneficial ownership of more than 5% of
NNCO's voting securities, (ii) each person serving NNCOas a Director on such
date, (iii) each person serving NNCO as an executive officer on such date who
qualifies as a named executive officer, as defined in Item 402(a)(2) of
Regulation S-B under the Securities Exchange Act of 1934, and (iv) all of the
Directors and executive officers of NNCO as a group.
Number of Shares of Percentage
Common Stock of Common Stock
Name and Address Beneficially owned Outstanding(1)
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Security Ownership of Officers
and Directors:
Andrew DeVries, III 19,000,000 55.95%
President, CEO and Chairman
807 Arizona Ash
San Antonio, TX 78232
Linda Morton 0 0
Director
1305 Woodbranch
San Antonio, TX 78232
Mark Triesch 29,000(*) *
Director
353 South Hackberry Ave
New Braunfels, TX 78130
All Executive Officers and Directors
- Less than one
-
AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT
REASONS FOR THE REVERSE STOCK SPLIT
Management of NNCO believes that it is in the best interests of NNCO and
its stockholders that NNCO undertake a 5-for-1 reverse stock split in order to
increase the stock price of the Common Stock to a level that will make it more
attractive to many investors. Management believes that the current low per share
trading price of the Common Stock has reduced the marketability and liquidity of
the Common Stock because of the reluctance of many large brokerage firms to
recommend low-priced stocks to their clients. Management also believes that many
investors look upon low-priced stocks as unduly speculative in nature and often
avoid investing in such stocks.
The reverse stock split is designed to increase the per share price of the
stock by decreasing the number of shares of Common Stock issued and outstanding.
Management hopes that the resulting anticipated increased price level will
enhance investor interest in NNCO and help the investment community realize the
true value of the Common Stock. There can be no assurance, however, that the
trading market for the Common Stock will be improved, nor can the Board of
Directors predict what effect, if any, the reverse split will have on the market
price of the Common Stock. See, "Possible Disadvantages."
In conjunction with the reverse split, NNCO's Certificate of Incorporation
will be amended to reflect the reduction in the issued outstanding shares of
Common Stock due to the reverse split.
POSSIBLE DISADVANTAGES
We are hopeful that the decrease in the number of shares of Common Stock
outstanding will stimulate interest in our Common Stock and possibly promote
greater liquidity. However, the possibility does exist that such liquidity may
be adversely affected by the reduced number of shares which would be outstanding
if the proposed reverse stock split is effected. Fewer publicly held shares may
result in lower trading volume which may reduce financial community interest in
the Common Stock. A lower trading volume for the Common Stock may also depress
the Common Stock market price.
While management expects that the decrease in the number of outstanding
shares will result in a corresponding increase in the price of the Common Stock,
NNCO can give no assurance that, upon completion of the reverse stock split,
there will be a corresponding proportionate increase in the price of the Common
Stock or that the post-split adjusted stock price will not drift down
immediately or shortly after the split. It is not unusual to see some downward
movement in a stock's price following a reverse stock split. The trading price
of NNCO's Common Stock depends on many factors, many of which are beyond the
company's control.
In addition, the liquidity of NNCO's Common Stock may be adversely affected
by the reduced number of shares outstanding after the reverse stock split. The
reverse stock split will cause the number of "odd-lot" holders to go up and
cause the number of "round-lot" holders of the Common Stock to go down. An
odd-lot is fewer than 100 shares. The number of round-lot holders is a common
measure of a stock's distribution, and a lower number may reflect more
negatively on NNCO's shares. In addition, the new odd-lot holders may become
reluctant to trade their shares because of any stigma or higher commissions
associated with odd-lot trading. Stockholders who hold odd-lots may experience
an increase in the cost of selling their shares and may have greater difficulty
in making sales. This may negatively impact the average trading volume and
thereby diminish interest in the Common Stock by some investors and advisors.
Notwithstanding these potential disadvantages, the Board of Directors
believes that the reverse stock split is in the best interest of NNCO for the
reasons set forth above.
EFFECTS OF REVERSE STOCK SPLIT
The reverse split will be effected by the filing of an amendment to the
Company's Amended Certificate of Incorporation with the Secretary of State of
the State of Texa (the "Amendment").
After giving effect to the foregoing modifications to the number of
authorized and issued shares and the par value thereof, all other designations,
powers, preferences and relative participating, optional or other special rights
and the qualifications, limitations and restrictions thereof in respect of each
class of capital stock of the Company shall remain as in effect immediately
prior to the Amendment.
Since the proportion of authorized shares to issued and outstanding shares
is not being affected by the reverse stock split, the reverse stock split is not
expected to create any additional anti-takeover measures which the Board of
Directors could use to thwart anti-takeover efforts by outsiders. The Board of
Directors is not aware of any such current takeover efforts, and the reverse
split is not being proposed as an anti-takeover measure.
STOCK CERTIFICATES AND FRACTIONAL SHARES
The reverse stock split will automatically occur upon the filing of the
Amendment with the Texas Secretary of State, which is expected to take place on
or about November 5, 2003. No further action is required by the stockholders.
However, following consummation of the reverse stock split, NNCO's Transfer
Agent, will send to each stockholder of record information regarding replacement
of the old stock certificates with stock certificates that state the number of
shares on a post-reverse stock split basis. Until so surrendered, each current
certificate representing shares of Common Stock will be deemed for all purposes
after the effective date to evidence ownership of shares of the new Common Stock
in the appropriately reduced number.
NNCO will not issue fractional shares resulting from the reverse stock
split. In lieu of fractional shares, fractional shares will be settled by
rounding up to the nearest whole share.
REQUIRED VOTE
To effect the reverse stock split, NNCO is required to amend its
Certificate of Incorporation. The affirmative vote of a majority of the
outstanding shares entitled to vote thereon is required to approve such an
Amendment. NNCO obtained the required votes by obtaining the written consent of
stockholders holding an aggregate of a majority of the outstanding shares.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion generally describes certain federal income tax
consequences of the proposed reverse stock split to stockholders of the Company.
The following does not address any foreign, state, local tax or alternative
minimum income, or other federal tax consequences of the proposed reverse stock
split. The actual consequences for each stockholder will be governed by the
specific facts and circumstances pertaining to such stockholder's acquisition
and ownership of the Common Stock. Each stockholder should consult his or her
accountants for more information in this regard.
However, it may generally be said that the proposed reverse stock split will
have the following income tax effects:
1. A stockholder will not recognize taxable gain or loss as a result of
the reverse stock split, except to the extent a stockholder receives cash in
lieu of fractional shares. Cash payments in lieu of a fractional share of new
Common Stock should be treated as if the fractional share were issued to the
stockholder and then redeemed by the Company for cash. Generally, a stockholder
receiving such payment should recognize gain or loss equal to the difference, if
any, between the amount of cash received and the stockholder's basis in the
fractional share. Such gain or loss generally will be capital gain or loss.
2. In the aggregate, the stockholder's basis in new Common Stock will
equal his basis in the shares of old Common Stock exchanged therefore (but not
including the basis allocated to a fractional share for which the stockholder is
entitled to receive cash), and such stockholder's holding period for new Common
Stock will include the holding period for old Common Stock exchanged therefore
if the shares of old Common Stock were capital assets in the hands of such
stockholder.
3. The proposed reverse stock split will constitute a reorganization
within the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986,
as amended (the "Code"), and the Company will not recognize any gain or loss as
a result of the reverse stock split.
ADDITIONAL INFORMATION
The Company's annual report on Form 10-KSB for the fiscal year ended
September 30, 2002 and quarterly report on Form 10-QSB for the quarter ended
June 30, 2003 are being delivered to you with this Information Statement.
The Company will furnish a copy of any exhibit thereto or other information upon
request by a stockholder to the Company's principal offices at NANNACO, INC.,
Attention: Andrew DeVries, III, 9739 Cobb Street, #1, San Antonio, Texas 78217,
or call (210) 545-3570.
By Order of the Board of Directors,
/s/ Andrew DeVries, III
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Andrew DeVries, III
San Antonio, Texas
October 3, 2003
EXHIBIT A
Certificate of Amendment of the Certificate of Incorporation
Of
NANNACO, INC.
______________________
The undersigned, being all of the directors of NANNACO, INC. (the
"Corporation"), a Texas corporation, hereby certifies:
FIRST: The name of the Corporation is NANNACO, INC.
SECOND: The Corporation's original Certificate of Incorporation was filed
with the Department of State of Texas on October 20, 1998 and subsequently
amended.
THIRD: Upon effectiveness of a one-for-five reverse stock split of the
Corporation's Common Stock, all issued and outstanding shares, as of the
effective date, shall be consolidated to the extent that the issued and
outstanding shares of Common Stock shall be reduced from 33,957,600 prior to the
reverse split to 6,791,520 following the reverse stock split. All fractional
shares shall be rounded up to the next whole number of shares. The capital of
the Corporation will not be reduced under or by reason of any amendment herein
certified.
FIFTH: This Certificate of Amendment to the Certificate of Incorporation was
authorized by the members of the Board of Directors on October 3, 2003, and by
the affirmative vote of the holders of a majority of all of the outstanding
shares of the Common Stock of the Corporation entitled to vote.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this 3rd
day of October, 2003 and affirm that the statements contained herein are true
under penalties of perjury.
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/s/ Andrew DeVries, III
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/s/ Linda Morton
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/s/ Mark A. Triesch