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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
Mooney Aerospace Group, Ltd.
----------------------------
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 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:
[ ] Fee paid previously with preliminary materials.
[ ] 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:
___________________________________________________________________________
MOONEY AEROSPACE GROUP, LTD.
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 2, 2003
NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Stockholders
(the "Meeting") of Mooney Aerospace Group, Ltd. (the "Company") will be held at
New York Athletic Club located at 180 Central Park South, New York, New York on
Thursday, October 2, 2003, at 10:00 a.m., local time, to consider and act upon
the following matters:
1. The election of four (4) directors of the Company to serve as
the Board of Directors until the next annual meeting of
stockholders and until their successors are duly elected and
qualified;
2. A proposal to ratify the action of the Board of Directors in
appointing Stonefield Josephson, Inc. as the Company's
independent public accountants for the fiscal year ending
December 31, 2003;
3. The approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
the Company's Class A Common Stock, par value $.0001, from
625,000,000 to 3,000,000,000 shares; and
4. The transaction of such other business as may properly come
before the Meeting or any adjournment or postponement thereof.
Information regarding the matters to be acted upon at the Meeting is
contained in the accompanying Proxy Statement.
The close of business on August 15, 2003 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting and any adjournment or postponement thereof. A list of such
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting at the executive offices of the Company at Louis
Schreiner Field, Kerrville, Texas.
By Order of the Board of Directors,
J. Nelson Happy,
Vice Chairman, President,
Chief Financial Officer and Secretary
Kerrville, Texas
August 27, 2003
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. EACH STOCKHOLDER
IS URGED TO SIGN, DATE AND RETURN THE ENCLOSED FORM OF PROXY WHICH IS BEING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. AN ENVELOPE ADDRESSED TO THE
COMPANY'S TRANSFER AGENT IS ENCLOSED FOR THAT PURPOSE AND NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
MOONEY AEROSPACE GROUP, LTD
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 2, 2003
The Board of Directors of Mooney Aerospace Group, Ltd., a Delaware
corporation (the "Company"), is furnishing this proxy statement in connection
with the solicitation of proxies for the 2003 Annual Meeting of Stockholders of
the Company and at any meetings held upon adjournment or postponement thereof
(the "Annual Meeting"). The Annual Meeting will be held at the New York Athletic
Club located at 180 Central Park south, New York, New York on October 2, 2003,
at 10:00 a.m. local time. The record date for the Annual Meeting is the close of
business on August 15, 2003 (the "Record Date"). Only holders of record of the
Company's Class A common stock, par value $.0001 per share ("Class A Stock"),
Class B common stock, par value $.0001 per share ("Class B Stock"), Class E-1
common stock, par value $.0001 per share ("Class E-1 Stock"), and Class E-2
common stock, par value $.0001 per share ("Class E-2 Stock" and, together with
Class A Stock, Class B Stock and Class E-1 Stock, the "Common Stock"), on the
Record Date, are entitled to notice of, and to vote at, the Annual Meeting or
any adjournments or postponements thereof.
The approximate mailing date of this Proxy Statement is August 27,
2003.
A proxy card is enclosed herewith. Whether or not you plan to attend
the Annual Meeting in person, to ensure that your shares will be voted at the
Annual Meeting please mark, date, sign and return the enclosed proxy card as
promptly as possible in the envelope provided, which requires no postage if
mailed in the United States. If you hold shares directly in your name and attend
the Annual Meeting, you may vote your shares in person even if you previously
submitted a proxy card. Your proxy may be revoked at any time before it is voted
by submitting a written revocation or a proxy bearing a later date to the
Secretary of the Company, or by attending and voting in person at the Annual
Meeting. If you hold your shares in "street name" you may revoke or change your
vote by submitting new instructions to your broker or nominee. Unless contrary
instructions are given, any proxy, if not revoked, will be voted at the Annual
Meeting FOR the following proposals:
1. The election of four (4) directors to serve on the Company's
Board of Directors until the next annual meeting of
stockholders or until their successors are duly elected and
qualified;
2. The ratification of the appointment of Stonefield Josephson,
Inc. as the Company's independent accountants for the fiscal
year ending December 31, 2003; and
3. The approval of an amendment to the Company's Certificate of
Incorporation to increase the authorized Class A Stock of the
Company from 625,000,000 to 3,000,000,000 shares.
At the Record Date, there were 284,280,930 shares of our Class A Stock
outstanding, 1,013,572 shares of our Class B Stock outstanding, 3,680,647 shares
of our Class E-1 Stock outstanding and 3,480,647 shares of our Class E-2 Stock
outstanding, which are the only classes of our voting securities issued and
outstanding. Each share of our Class A Stock outstanding on the Record Date will
be entitled to one vote on all matters to come before the Annual Meeting. Each
share of our Class B Stock, Class E-1 Stock and Class E-2 Stock outstanding on
the record date will be entitled to five votes on all matters to come before the
annual Meeting. Cumulative voting is not permitted. No other voting securities
of the Company were outstanding at the Record Date.
The cost, if any, for soliciting proxies on behalf of the Board of
Directors will be borne by the Company. In addition to solicitation by mail,
proxies may be solicited in person or by telephone, telefax or cable by
personnel of the Company who will not receive any additional compensation for
such solicitation. The Company may reimburse brokers or other persons holding
stock in their names or the names of their nominees for the expenses of
forwarding soliciting material to their principals and obtaining their proxies.
Each director will be elected by a plurality of the votes cast by the
stockholders present in person or represented by proxy at the Annual Meeting.
The ratification of the appointment of the independent accountants (Proposal 2)
and the approval of an amendment to the Company's Certificate of Incorporation
to increase the authorized common stock of the Company (Proposal 3) must be
approved by the holders of a majority of the stock present in person or
represented by proxy at the Annual Meeting and empowered to vote for such
matter.
The presence, either in person or by proxy, of persons entitled to vote
a majority of the Company's outstanding Common Stock is necessary to constitute
a quorum for the transaction of business at the Annual Meeting. Proxies
submitted which contain abstentions and broker non-votes will be deemed present
at the Annual Meeting for determining the presence of a quorum. Shares
abstaining with respect to any matter will be considered as votes represented,
entitled to vote and cast with respect to that matter. Shares subject to broker
non-votes with respect to any matter are considered as not having been voted
with respect to that matter.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding our Common
Stock beneficially owned on July 14, 2003 by (i) each person who is known by us
to own beneficially or exercise voting or dispositive control over 5% or more of
our Common Stock, (ii) each Director and (iii) all executive officers and
Directors as a group. Except as otherwise indicated, all stockholders have sole
voting and investment power with respect to the shares listed as beneficially
owned by them, subject to the rights of spouses under applicable community
property laws.
Number of Shares Percentage of
Name and Address (1) of each class of Common Beneficial Ownership of Each
of Beneficial Owner Stock Class of
Identity of Group Beneficially Owned (2) Common Stock
----------------- ---------------------- ------------
Sholom Babad (3) (11) Class A 6,066,935 2.81%
C.M. Cheng (4) (5) Class A 15,000 <1%
Class B 1,013,572 53%
Class E-1 2,027,144 51%
Class E-2 2,027,144 51%
Lewis Family Investments Pty Ltd. (6) Class A 16,028,180 6.91%
Samuel Rothman ( 7) (11) Class A 6,066,935 2.81%
Class E-1 1,653,503 41%
Class E-2 1,453,503 36%
J. Nelson Happy (8) Class A 6,066,935 2.81%
N. Chabbert (9) Class A 300,000 <1%
Harpa limited (5) Class B 1,013,572 53%
Class E-1 2,027,144 51%
Class E-2 2,027,144 51%
Shih Jen Yeh (5) Class B 1,013,572 53%
Class E-1 2,027,144 51%
Class E-2 2,027,144 51%
Chyao Chi Yeh (5) Class B 1,013,572 53%
Class E-1 2,027,144 51%
Class E-2 2,027,144 51%
Alpha Capital (10) (12) Class A 21,381,124 9.99%
Akteingesellschaft
Amro International(12) Class A 12,238,640 5.36%
Libra Finance, S.A.(13) Class A 20,891,255 9.05%
Bristol Capital Advisors, LLC(14) Class A 21,381,124 9.99%
Guaranty & Finance(12) Class A 21,381,124 9.99%
TRW (12) Class A 16,028,180 6.91%
Austinvest Anstalt Balzars(15) Class A 18,199,777 8.14%
Renaissance(12) Class A 21,381,124 9.99%
Stonestreet Limited Partnership(16) Class A 33,953,152 11.94%
All directors and officers Class A 7,236,736 7.90%
as a group (5 persons) Class E-1 1,653,503 41%
Class E-2 1,453,503 36%
3
(1) Except as otherwise indicated, the address of each principal
stockholder is c/o Mooney at Louis Schreiner Field, Kerrville, TX
78028. We believe that all persons named have sole voting power,
subject to community property laws where applicable.
(2) The Common Stock of Mooney is divided into four classes. Each share of
Class B. Stock, Class E-1 Stock and Class E-2 Stock is entitled to five
votes per share, and Class A Stock is entitled to one vote per share.
The shares of Class E Common Stock are subject to redemption by us if
we do not achieve certain income or market price levels.
(3) We entered into a consulting agreement pursuant to which Mr. Babad will
be granted a 3% interest in Mooney which is nondilutable.
(4) Includes 5,067,860 shares of Common Stock held by Harpa Limited, a
Cayman Island Corporation (Harpa). C.M. Cheng is a director of Harpa
and has sole voting and investment control over the shares of Common
Stock held by Harpa and thus may be deemed to beneficially own such
shares. Mr. Cheng disclaims beneficial ownership of such shares. The
address of Harpa is c/o Coutts Co. (Cayman) Ltd., Coutts House, P.O.
Box 707, West Bay Road, Grand Cayman, Cayman Islands.
(5) The voting stock of Hepa is currently held equally by Shih Jen Yeh and
Chyao Chi Yeh, who are the children of Song Gen Yeh, the former
Chairman and principal stockholder of Mooney. See "Certain
Transactions." The address of Mr. Shih Jen Yeh and Mr. Chyao Chi Yeh is
14th Floor, No 55, Section 2, Chung-Cheng Road, Shih-Lin District,
Taipei, Taiwan.
(6) The address for the Lewis Family Trust Pty Ltd. is Box 283, Beecroft,
NSW 2119, Australia.
(7) We entered into a consulting agreement pursuant to which E&S Investment
Group will be granted a 3% interest in Mooney which is nondilutable.
Mr. Rothman disclaims beneficial ownership of the shares underlying the
3% interest which will all be issued in his wife's name. Mr. Rothman's
wife Tova Rothman, controls E&S Investment Group. Mr. Rothman holds an
irrevocable proxy from Dr. Chen to vote the Class E-1 and Class E-2
shares Dr. Chen previously controlled. This amount includes an
estimated 2,578,198 shares of common stock issuable upon conversion of
$170,775 in convertible debentures and warrants outstanding as of
September 30, 2002.
(8) There is an employment agreement pursuant to which Mr. Happy will be
granted a 3% interest in Mooney which is nondilutable for three years.
(9) Includes 300,000 shares of Class A Common Stock issuable upon the
exercise of options which are currently exercisable.
(10) The address for Alpha Capital Aktiengesellscraft is Pradafant 7,
Furstentums 9490, Vaduz, Liechtenstein. Includes an estimated
21,381,124 shares of Class A Common Stock issuable upon the conversion
or exercise of debentures and warrants.
4
(11) The consulting agreement between Mooney and E&S Investment Group
(controlled by Mr. Rothman's wife), Mr. Babad, Mr., Rabinowitz and
Libra Finance, S.A., Grants these consultants a nondilutable 12%
ownership interest in Mooney which will be divided equally among the
four consultants. This 12% interest will be calculated based upon
Mooney's issued and outstanding common stock as of May 31, 2003.
(12) All shares of common stock listed are issuable upon the conversion of
debentures.
(13) Includes 14,824,320 shares issuable upon the conversion of debentures.
(14) The address for Bristol Capital Advisors is 6363 Sunset Boulevard,
Hollywood, California 90028. Includes 9,143,767 shares issuable upon
the conversion of debentures.
(15) The address for Austinvest Anstalt Balzars is Landstrasse 938, 9494
Furstentums, Balzars, Lichtenstein. Includes an estimated 18,199,777
shares issuable upon the conversion of Series A Preferred Stock.
(16) The address for Stonestreet Limited Partnership is c/o Canaccord
Capital Corporation, 320 Bay Street, Suite 1300, Toronto, ON M5H 4A6
Canada.
5
---------------------------------------------
PROPOSAL 1
ELECTION OF DIRECTORS
---------------------------------------------
At the Annual Meeting, our stockholders will elect four (4) directors
who will constitute the entire Board of Directors.
Each nominee has advised us of his willingness to serve as a director
and we have no reason to expect that any of the nominees will be unable to stand
for election at the date of the Annual Meeting. In the event that a vacancy
among the original nominees occurs prior to the Annual Meeting, the proxies will
be voted for a substitute nominee or nominees, if any are named by our Board of
Directors, and for the remaining nominees.
INFORMATION ABOUT NOMINEES
The following table sets forth the name, age and current position with
the Company of each nominee:
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
Sam Rothman 49 Director and Chairman of the Board
J. Nelson Happy 59 Director, Vice Chairman of the Board, Chief
Executive Officer, President, Chief
Financial Officer and Secretary
Sholom Babad 28 Director and Consultant
Sol Mayer 49 Director
All directors hold office until their respective successors are
elected, or until death, resignation or removal. Officers hold office until the
meeting of the Board of Directors following each Annual Meeting of Stockholders
and until their successors have been chosen and qualified.
SAM ROTHMAN has served as a director of Mooney since December 2001. He was
elected Chairman of the Board on August 19, 2002. Mr. Rothman has been
self-employed in real estate and security investments during the past five
years.
J. NELSON HAPPY has served as President and Chief Executive Officer, Chief
Financial Officer and Secretary of the Company since November 14,2002. Prior to
that he was named Vice Chairman of the companies board on August 19, 2002. Prior
to that he served as Executive Vice President and General Counsel since January
8, 2002. He was previously the CEO of Cenco Refining Company from September 1999
to December 2001. From September 1993 to August 1999, he served as the Dean of
Regent University School of Law. Mr. Happy received his B.S. Degree from
Syracuse University in 1964 and his JD Degree from Columbia University School of
Law in 1967.
SHOLOM BABAD is a consultant to Mooney and was appointed as a director in April
2002. He has been self-employed as a consultant in fundraising and security
investments during the past five years.
SOL MAYER is an investment manager and entrepreneur with a background in
marketing. He was appointed to the board in April 2002.
6
BOARD MEETINGS AND COMMITTEES
Our Board of Directors is responsible for management of the Company.
During the fiscal year ended December 31, 2002, our Board of Directors held five
(5) meetings and did not act by unanimous written consent. Each incumbent
director attended at least 75% of all meetings of the Board and committees on
which the person served which were held during the year.
Our Board of Directors has an audit committee. The audit committee is
composed of Messrs. Babad and Rothman. The function of the Audit Committee is to
nominate independent auditors, subject to approval of the Board of Directors,
and to examine and consider matters related to the audit of the Company's
financial affairs and accounts, the scope of the independent accountants'
engagement and their compensation, the effect on the Company's financial
statements of any proposed changes in generally accepted accounting principles,
disagreements, if any, between the Company's independent accountants and
management, and matters of concern to the independent accountants resulting from
their audit, including the results of the independent accountants' review of
internal accounting controls. The Audit Committee is governed by a written
charter approved by the Board of Directors. The Audit Committee met twice and,
from time to time, conducted informal discussions during the Company's fiscal
year ended December 31, 2002. Further information regarding functions performed
by the Audit Committee during the fiscal year ended December 31, 2002 is set
forth in the "Report of the Audit Committee" included in this proxy statement.
REPORT OF THE AUDIT COMMITTEE
- -----------------------------
The Audit Committee functions as an independent and objective monitor
of the Company's financial reporting process and internal control system. The
Audit Committee reviews and appraises the audit efforts of the Company's
independent accountants and provides an open avenue of communication among the
independent accountants, financial and senior management and the Board of
Directors. In assisting the Board in fulfilling its oversight responsibility
with respect to the fiscal year ended February 1, 2003, the Audit Committee:
o Reviewed and discussed the audited financial statements for the
fiscal year ended December 31, 2002 with management and Stonefield
Josephson, Inc., the Company's independent public accountants;
o Discussed with Stonefield Josephson the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to
the conduct of the audit; and
o Received the written disclosures and the letter from Stonefield
Josephson regarding its independence as required by Independence
Standards Board Standard No. 1, "Independence Discussions with
Audit Committees". The Audit Committee also discussed Stonefield
Josephson's independence with Stonefield Josephson and considered
whether the provision of non-audit services rendered by Stonefield
Josephson was compatible with maintaining its independence under
SEC rules governing the independence of a company's outside
auditors (see "Proposal No. 2: Ratification of the Appointment of
Independent Accountants," below).
Based on the foregoing review and discussions, the Audit Committee
recommended to the Board that the Company's audited financial statements for the
fiscal year ended December 31, 2002 be included in the Company's Annual Report
on Form 10-K filed with the SEC for that year. The foregoing report is provided
by the following directors, who constitute the Audit Committee:
Sholom Babad
Sam Rothman
7
EXECUTIVE COMPENSATION
The following table sets forth information the remuneration of our chief
executive officers and our four most highly compensated executive officers who
earned in excess of $100,000 per annum during any part of our last three fiscal
years:
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION
AWARDS PAYOUTS
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL FISCAL COMPENSA- AWARD(S) OPTIONS/ PAYOUTS COMPENSA-
POSITION YEAR SALARY ($) BONUS ($) TION($) ($) SARS (#) ($) TION($)
-------- ---- ---------- --------- ------- -------- -------- --- -------
J. Nelson Happy, 2002 200,000 - - - - - -
Vice Chairman,
CEO, CFO and
Secretary
Nicolas Chabbert, 2002 150,000 - - - - - -
Executive Vice
President
Carl L. Chen, 2002 150,000 - - - 2,000,000 - -
PhD, Former 2001 200,000 - 39,248 - - - -
Chairman, 2000 200,000 - 39,248 - - - -
President and
CEO
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER OF SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SARs OPTIONS/SARs GRANTED TO EXERCISE OR BASE PRICE
NAME GRANTED(#) EMPLOYEES IN FISCAL YEAR ($/SH) EXPIRATION DATE
---- ---------- ------------------------ ------ ---------------
J. Nelson Happy, - - - -
Vice Chairman, CEO, CFO
and Secretary
Nicolas Chabbert, 300,000 - 0.20 No expiration
Executive Vice President
Carl L. Chen, PhD, Former 2,000,000 N/A 0.25 1/8/07
Chairman, President and
CEO
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS/SARs AT FISCAL THE-MONEY OPTIONS/SARs
YEAR END (#) AT FISCAL YEAR END ($)
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ------------ ----------------- ------------- -------------
J. Nelson Happy, - - - -
Vice Chairman, CEO,
CFO and Secretary
Nicolas Chabbert, - - 300,000/-0- -0-/-0-
Executive Vice
President
Carl L. Chen, PhD, - - 2,000,000/-0- -0-/-0-
Former Chairman,
President and CEO
8
COMPENSATION OF DIRECTORS
Directors do not receive compensation but are reimbursed for their expenses for
each meeting of the board that they attend.
EMPLOYMENT CONTRACTS
We have entered into three-year employment agreements with J. Nelson Happy, Vice
Chairman, President and Chief Financial Officer and Nichols Chabbert, Executive
Vice President of Sales and Marketing. Mr. Happy receives an annual salary of
$200,000 plus reimbursement of expenses. Over the three year period he will vest
ownership of three percent of the outstanding shares of Mooney. Mr. Chabbert
receives an annual salary of $125,000 plus a bonus based on the number of
aircraft sold and delivered. He has also received 300,000 stock options with an
exercise price of $0.20.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 2001, we entered into a consulting agreement to issue a 6% nondilutable
interest in Mooney to a group of consultants, two of whom (Messrs. Babad and
Rabinowitz) later became members of our Board of Directors and one of whom is an
entity controlled by the spouse of Mr. Rothman, the Chairman of the Company. The
Company issued 845,678 shares of Class A Common Stock at that time with a fair
value of $344,000 in exchange for consulting services provided. In October 2001,
this agreement was amended to increase the nondilutable interest in Mooney to be
issued to the consultants to 12%. The consultant agreement between Mooney and
E&S Investment Group (controlled by Mr. Rothman's wife), Mr. Babad, Mr.
Rabinowitz and Libra Finance, S.A., grants these consultants a nondilutable 12 %
ownership in Mooney which will be divided equally among the four consultants.
This 12 % interest will be calculated based on Mooney's issued and outstanding
common stock as of October 26, 2003.
Mr. Babad, a director, received $29,032 in finder's fees in 2001 and has a
consulting agreement with us that provides for payments to him of $10,000 a
month from December 2001 through March 2002, and $7,000 a month from April 2002
through December 31, 2002.
Mr. Rothman has consulting agreements with us that provide for monthly payments
of $5,000 beginning in December 2001. At December 31, 2002, $65,000 was due to
Mr. Rothman under this agreement.
Mr. Rabinowitz has consulting agreements with us that provide for monthly
payments of $5,000 beginning in January 2003.
In 2002, Mr. Rothman, Mr. Rabinowitz and Mr. Babad loaned us an aggregate of
$975,000 in the form of promissory notes. As of December 31, 2002, an aggregate
of $675,000 was still outstanding on these promissory notes.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers and directors, and persons who beneficially own more than 10%
of our common stock, to file initial reports of ownership and reports of changes
of ownership with the Securities and Exchange Commission and furnish copies of
those reports to us. Based solely on a review of the copies of the reports
furnished to us to date, or written representations that no reports were
required, we believe that all reports required to be filed by such persons with
respect to our fiscal year ended December 31, 2002 were timely made.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF EACH OF
THE NOMINEES TO SERVE ON THE BOARD OF DIRECTORS OF THE COMPANY
9
------------------------------------------------------------
PROPOSAL 2
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------------------------
The firm of Stonefield Josephson, Inc. audited our financial statements
for the fiscal year ended December 31, 2002. The Board of Directors has, subject
to ratification by our stockholders, appointed that firm to act as our
independent public accountants for the fiscal year ending December 31, 2003.
Accordingly, management will present to the Annual Meeting a resolution
ratifying the appointment of Stonefield Josephson, Inc. as our independent
public accountants for the fiscal year ending December 31, 2003. A
representative of Stonefield Josephson, Inc. is not expected to be present at
the Annual Meeting.
AUDIT FEES
Audit Fees billed to the Company by Stonefield Josephson, Inc. for its
audit of the Company's financial statements for the year ended December 31, 2002
and for its review of the financial statements included in the Company's
Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission
for that year totaled approximately $115,000.
In connection with the recently revised standards for independence for
the Company's independent public accountants promulgated by the SEC, the Audit
Committee has considered whether the provision of such services is compatible
with maintaining the independence of Stonefield Josephson, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS
PROPOSAL.
10
--------------------------------------------------------------
PROPOSAL 3
TO APPROVE AN AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED COMMON STOCK OF
THE COMPANY
--------------------------------------------------------------
The Board of Directors has unanimously approved, for submission to
stockholders, an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of the Company's Class A Common Stock,
par value $.0001 per share ("Class A Stock"), to 3,000,000,000 shares. The
Certificate of Incorporation presently authorizes 625,000,000 shares of Class A
Stock. The text of the proposed amendment is attached hereto as Appendix A.
As of August 15, 2003, 215,970,953 shares of Class A Stock were issued
and outstanding. An additional 84,281,250 shares were reserved for issuance upon
exercise of outstanding Series A Preferred Stock and 1,533,577,289 shares were
reserved for issuance upon conversion of convertible debentures. Accordingly, if
all outstanding Series A Preferred Stock and convertible debentures were
converted, an aggregate of 1,617,858,539 shares of Class A Stock would be issued
and outstanding. The issuance of the Series A Preferred Stock and the
convertible debentures is more fully described below.
At the time we issued the preferred stock and convertible debentures,
we had a sufficient number of authorized shares of common stock to honor
conversions of all of our outstanding convertible securities. Since our last
issuance of convertible debentures on September 10, 2002, however, the market
price of our common stock has declined significantly. All of our outstanding
preferred stock and convertible debentures convert at a fixed dollar value. As a
result, as the market price of our common stock declines each of our debentures
our preferred stock convert into a greater number of shares of our common stock.
Due to the decline in the market price of our common stock, we need to increase
the number of shares of common stock authorized by our certificate of
incorporation in order to honor conversions of our outstanding convertible
securities.
CONVERTIBLE SECURITIES
The disclosure set forth below regarding our issuance of preferred stock and
convertible debentures reflects the terms of those instruments on the date of
issuance. Please note that on May 31, 2003, all of the debentures described
below were amended such that:
o our secured convertible debentures now have fixed conversion price
of $0.0192 per share; and
o our unsecured convertible debentures now have a fixed conversion
price of $0.384 per share and accrue interest at a rate of three
percent (3%) per annum.
Preferred Stock
We entered into a series of subscription agreements for the sale of up to
$10,000,000 of 5% Cumulative Convertible Series A Preferred Stock, pursuant to
which:
o in March 2000 we issued 50,000 shares of our Series A Preferred
Stock and warrants to purchase 1,085,000 shares of class A common
stock with exercise prices ranging from $3.87 to $5.16;
o in June 2000 we issued 25,000 shares of our Series A Preferred
Stock and warrants to purchase 530,000 shares of our common stock
with exercise prices ranging from $3.87 to $5.16;
o in November 2000 we issued 4,800 shares of our Series A Preferred
Stock and warrants to purchase 102,000 shares of our common stock,
with exercise prices ranging from $3.87 to $5.16;
o in January 2001 we issued 3,350 shares of our Series A Preferred
Stock and warrants to purchase 71,000 shares of our common stock,
with exercise prices ranging from $3.87 to $5.16; and
o in February 2001 we issued 7,935 shares of our Series A Preferred
Stock and warrants to purchase 983,000 shares of our common stock,
with exercise prices ranging from $3.87 to $5.16.
We received aggregate net proceeds of $8,265,000 from the sale of our Series A
Preferred Stock.
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Convertible Notes
On March 27, 2001, we consummated an agreement with certain investors for the
sale of up to $10,000,000 of 5% Secured Convertible Debentures ("5% Debentures")
pursuant to which:
o on March 27, 2001 we issued $4,126,000 of 5% Debentures;
o on June 27, 2001, we issued $1,000,000 of 5% Debentures; and
o on July 25, 2001, we issued $1,080,000 of 5% Debentures.
The 5% Debentures (i) mature five years after the date of issuance and (ii) are
convertible into shares of our common stock at the lesser of $0.25 or 80% of the
three lowest closing prices for sixty trading days prior to conversion.
Between October 26, 2001 and April 11, 2002, we consummated a series of
subscription agreements with certain investors pursuant to which:
o on October 26, 2001 we issued $8,417,000 of 8% Secured Convertible
Notes;
o on February 27, 2002 we issued (i) $2,475,000 of 8% Secured
Convertible Notes and (ii) $3,734,000 of 8% Unsecured Convertible
Notes;
o on March 26, 2002 we issued $1,595,000 of 8% Unsecured Convertible
Notes; and
o on April 11, 2002, we issued $1,045,000 of 8% Unsecured
Convertible Notes.
Both the 8% Secured Convertible Notes and the 8% Unsecured Convertible Notes (i)
have a maturity date of October 26, 2006 and (ii) were convertible into shares
of our common stock commencing 120 days after the date of issuance at a
conversion price equal to the lesser of $0.35 or 70% of the average of the three
lowest closing bid prices for our common stock for the thirty days prior to
conversion. Between May 16, 2002 and September 10, 2002, we closed on a series
of subscription agreements with certain investors pursuant to which:
o on May 16, 2002 we issued $802,000 of 8% Unsecured Convertible
Notes;
o on June 6, 2002 we issued $358,000 of 8% Unsecured Convertible
Notes;
o on June 10, 2002 we issued $550,000 of 8% Unsecured Convertible
Notes;
o on June 28, 2002 we issued $2,000,000 of 8% Unsecured Convertible
Notes;
o on July 10, 2002 we issued $275,000 of 8% Unsecured Convertible
Notes;
o on July 31, 2002 we issued $300,000 of 8% Unsecured Convertible
Notes; and
o on September 10, 2002 we issued $2,160,000 of 8% Unsecured
Convertible Notes.
Each of the 8% Unsecured Convertible Notes issued between May 16 and September
10, 2002 (i) matured five (5) years from the date of issuance and (ii) were
convertible into shares of our common stock commencing 120 days after the date
of issuance at a conversion price equal to the lesser of $0.35 or 70% of the
average of the three lowest closing bid prices for our common stock for the
thirty days prior to conversion.
All of the securities described herein were issued to fund working capital and
to raise the funds necessary to make scheduled cash payments to Congress
Financial Corporation pursuant to the terms of secured promissory notes held by
Congress Financial in the aggregate amount of $10,214,408.71.
All of the securities described herein were issued to accredited investors, as
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, in reliance on the exemption from registration provided by Section 4(2) of
the Securities Act and Rule 506 promulgated thereunder. Substantially all of our
assets have been pledged as collateral to secure the repayment of the secured
debentures.
RECOMMENDATION
The Board of Directors believes that the additional 2,375,000,000
shares of Class A Stock that would become available if the proposal is approved
would afford the Company greater flexibility in meeting its future capital
requirements and other corporate needs which may arise, including the issuance
of shares of Class A Stock to holders of the Company's options, warrants and
debentures.
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Although the Board of Directors does not consider the amendment to
increase the authorized number of shares of Class A Stock of the Company to be
an anti-takeover proposal, it may be considered to be one. The availability of
additional shares of Class A Stock may make it more difficult for a corporation
or other entity to gain control of the Company. In the event of a proposed
merger, tender offer or proxy contest that is not approved by incumbent
management, the Board of Directors may be able to authorize the issuance of
Class A Stock on terms that could impede the completion of such a transaction.
The Company's officers and directors as a group own approximately 6.57% of the
Company's outstanding shares of Class A Stock.
The affirmative vote of the holders of a majority of the outstanding
Common Stock of the Company is required under Delaware law for the adoption of
the amendment to the Company's Certificate of Incorporation. If the amendment is
approved by the stockholders of the Company, the Board of Directors intends to
file an amendment to the Company's Certificate of Incorporation substantially in
the form set forth on Appendix A of this Proxy Statement, subject to any changes
as may be required by law or otherwise deemed advisable.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE AMENDMENT
TO INCREASE THE AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK.
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MISCELLANEOUS
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's Annual
Meeting to be held in 2004 must be received by the Company for inclusion in the
Company's proxy statement relating to that meeting not later than April 29,
2004. Such proposals should be addressed to Secretary, Mooney Aerospace Group,
Ltd., Louis Schreiner Field, Kerrville, Texas 78028. Notices of stockholder
proposals submitted outside the processes of Rule 14a-8 of the Exchange Act
(relating to proposals to be presented at the meeting but not included in the
Company's proxy statement and form of proxy), will be considered untimely, and
thus the Company's proxy may confer discretionary voting authority on the
persons named in the proxy with regard to such proposals, if received after July
13, 2004.
INFORMATION INCORPORATED BY REFERENCE
The Company incorporates the following documents by reference in this
Proxy Statement and such documents should be considered part of this Proxy
Statement:
o The Company's Annual Report on Form 10-KSB for the year ended
December 31, 2002 (the "Annual Report"); and
o The Company's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2003 (the "Quarterly Report").
The Annual Report and the Quarterly Report are being furnished herewith
to each stockholder of record as of the Record Date. The Company will furnish,
upon payment of a reasonable fee to cover any reproduction and mailing expenses,
a copy of any exhibit to the Company's Annual Report or Quarterly Report and any
amendments thereto requested by any person solicited hereunder.
OTHER MATTERS
Management does not intend to bring before the Annual Meeting for
action any matters other than those specifically referred to above and is not
aware of any other matters which are proposed to be presented by others. If any
other matters or motions should properly come before the Annual Meeting, the
persons named in the proxy intend to vote thereon in accordance with their
judgment on such matters or motions, including any matters or motions dealing
with the conduct of the Annual Meeting.
PROXIES
All stockholders are urged to fill in their choices with respect to the
matters to be voted upon, sign and promptly return the enclosed form of proxy.
By Order of the Board of Directors,
J. Nelson Happy
Vice Chairman, President,
Chief Financial Officer and Secretary
August 27, 2003
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APPENDIX A
The first paragraph of Article 4 of the Corporation's Certificate of
Incorporation is amended to read entirely as follows:
"4. The total number of shares of stock which the corporation
shall have authority to issue is 3,023,000,000 consisting of
3,000,000,000 shares of Class A Common Stock, par value
$0.0001 per share (the "Class A Common Stock"), 10,000,000
shares of Class B Common Stock, par value $0.0001 per share
(the "Class B Common Stock"), 4,000,000 shares of Class E-1
Common Stock, par value $0.0001 per share (the "Class E-1
Common Stock"), 4,000,000 shares of Class E-2 Common Stock,
par value $0.0001 per share (the "Class E-2 Common Stock" and,
with the Class E-1 Common Stock, the "Class E Common Stock"),
and 5,000,000 shares of Preferred Stock, par value $0.0001 per
share (the "Preferred Stock")."
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PROXY PROXY
MOONEY AEROSPACE GROUP, LTD.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - OCTOBER 2, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned, SAM
ROTHMAN and J. NELSON HAPPY, or either of them, with full power of substitution,
to vote all shares of the capital stock of Mooney Aerospace Group, Ltd. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held on Thursday, October 2, 2003, at 10:00
a.m., local time, at the New York Athletic Club located at 180 Central Park
South, New York, New York, receipt of Notice of which meeting and the Proxy
Statement accompanying the same being hereby acknowledged by the undersigned,
and at any adjournment or postponement thereof, upon the matters described in
the Notice of Meeting and Proxy Statement and upon such other business as may
properly come before the meeting or any adjournment or postponement thereof,
hereby revoking any proxies heretofore given.
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE ON THE REVERSE SIDE HEREOF. WHERE NO DIRECTION TO VOTE ON A
SPECIFIC MATTER IS GIVEN, THE PROXIES WILL BE DEEMED AUTHORIZED TO VOTE FOR EACH
LISTED NOMINEE TO SERVE AS A DIRECTOR, FOR PROPOSALS 2 AND 3, AND WITH
DISCRETION ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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MOONEY AEROSPACE GROUP, LTD
A VOTE FOR EACH NOMINEE AND FOR PROPOSALS 2 AND 3
IS RECOMMENDED BY THE BOARD OF DIRECTORS.
1. ELECTION OF DIRECTORS - For Withhold For All
Nominees: Sam Rothman, J. Nelson Happy, All All Except
Sholom Babad and Sol Mayer |_| |_| |_|
______________________________________
(Except Nominee(s) written above)
FOR AGAINST ABSTAIN
2. To ratify the appointment of Stonefield |_| |_| |_|
Josephson, Inc. as the Company's independent
accountants for the fiscal year ending
December 31, 2003.
FOR AGAINST ABSTAIN
3. To authorize the amendment to the Company's |_| |_| |_|
Articles of Incorporation to increase the
authorized Class A Common Stock of the
Company from 625,000,000 to 3,000,000,000
shares.
4. The transaction of such other business as
may properly come before the meeting.
Dated ____________, 2003
Signature(s)__________________________
______________________________________
NOTE: Please sign your name or names
exactly as set forth hereon. If
signing as attorney, executor,
administrator, trustee or guardian,
please indicate the capacity in which
you are acting. Proxies executed by
corporations should be signed by a
duly authorized officer and should
bear the corporate seal.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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