SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
PRISM SOFTWARE CORPORATION
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(Name of Registrant As Specified In Charter)
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[X] No fee required.
[ ] 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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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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NOTE:
Where any item, other than Item 4, calls for information with respect to any
matter to be acted upon at the meeting or, if no meeting is being held, by
written authorization or consent, such item need be answered only with respect
to proposals to be made by the registrant. Registrants and acquirees that meet
the definition of "small business issuer" under Rule 12b-2 of the Exchange Act
shall refer to the disclosure items in Regulation S-B and not Regulation S-K .
If there is no comparable disclosure item in Regulation S-B, small business
issuers need not provide the information requested. Small business issuers shall
provide the financial information in Item 310 of Regulation S-B in lieu of any
financial statements required by Item 1 of Rule 14c-101.
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PRISM SOFTWARE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 2004
TO OUR STOCKHOLDERS:
The 2004 annual meeting of stockholders of Prism Software Corporation
will be held at the Company's offices 23696 Birtcher, Lake Forest, California on
Thursday May 20, 2004, beginning at 11:00 a.m. local time. At the meeting, the
stockholders of the company will act on the following:
(1) To elect three directors for a one-year term.
(2) Ratify the selection of Independent Auditors, Cacciamatta
Accountancy Corporation
(3) Any other matters that properly come before the meeting.
All holders of record of shares of Prism's common and preferred stock
at the close of business on April 15, 2004 are entitled to vote at the meeting
or any postponements or adjournments of the meeting.
By order of the Board of Directors,
/s/ Conrad von Bibra
--------------------
Conrad von Bibra
SECRETARY
APRIL 26, 2004
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INFORMATION STATEMENT
WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
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This Information Statement contains information related to the annual meeting of
stockholders of Prism Software Corporation to be held on Thursday May 20, 2004,
beginning at 11:00 a.m., at the company premises. Proxies are NOT being
solicited by the Company. The approximate date on which this Information
Statement is first sent to security holders is April 26, 2004.
VOTING INFORMATION
With respect to the election of directors, the persons receiving a majority of
the votes cast by the shares entitled to vote for the position being filled
shall be elected. On any other item that should come before the meeting, the
matter shall be decided by a majority of the votes cast by the shares entitled
to vote at the meeting.
The By-Laws of the Company require, for a quorum, the presence at the meeting in
person or by proxy, of the holders of a majority of the shares of capital stock
of the Company entitled to vote.
Since certain members of the Board of Directors own, in the aggregate, more than
50% of the outstanding shares, a quorum is available without the company
incurring the expense of soliciting proxies. All holders of record of Prism's
common and preferred stock at the close of business on April 15, 2004 are
entitled to vote at the meeting.
Election of Directors
The affirmative vote of a plurality of the votes cast at the meeting is required
for the election of the directors. Members of the Board of Directors holding
more than 50% of the outstanding shares have announced their intention to vote
for the three nominees identified in this Information Statement. Accordingly,
the three will be elected to the Board of Directors.
The Board of Directors does not have standing audit, nomination, or compensation
committees. The Board met four times in 2003 and all three directors attended
each meeting.
NOMINEES
Three directors are to be elected at the Annual Meeting, each to hold office
until the next annual meeting and until his successor is elected and qualified.
The following table sets forth certain information furnished to the Company
regarding the persons who are nominees for the election as directors of the
Company.
Name Age Director Since
---- --- --------------
Carl S. von Bibra 42 2003
David Ayres 49 2004
Conrad von Bibra 74 2003
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Carl S. von Bibra has served the Company as a director and Chairman since
October 31, 2003. From March 1993 through May 1994, Mr. von Bibra was a board
member of ADcom Information Services, Inc. and, since December 1992, has been
corporate secretary of OCI Communication, Inc. Mr. von Bibra received his
engineering degree from Stanford University. Carl von Bibra is the son of Conrad
von Bibra and is a private investor.
David Ayres joined the Company in May 2002. He has over thirteen years of
experience in the printer industry, and over twenty years in senior management
positions. Prior to joining the Company he was CEO of an industry-leading
supplier to the OEM printer market. He was also Senior Product Group Manager for
Canon in their Canon Computers Systems division. He has served as President of
the Company since January 23, 2004 and as a director since February 13, 2004.
Conrad von Bibra was born and raised in Los Angeles, graduating from Stanford
University with a degree in chemical engineering. From 1962 to 1984, he served
as President of Exeter Oil Company Ltd., a drilling and production company whose
stock was listed on the American Stock Exchange in 1981. He is now a private
investor. He is the father of Carl S. von Bibra. He became a director and
Secretary of the Company on October 31, 2003.
OFFICERS
The following table sets forth information about the officers of the Company:
Name Age Position
- ---- --- --------
Carl S. von Bibra 42 Director and Chairman
David Ayres 49 Director and President
Conrad von Bibra 74 Director and Secretary
Michael Cheever 35 Controller
(For biographical information about Carl von Bibra, David Ayres and Conrad von
Bibra, see "Nominees", above)
Michael Cheever joined the Company in October 1993 and became an officer on
October 31, 2003. He has over thirteen years of accounting experience and was
formerly with the accounting firm of Deloitte & Touche LLP.
DIRECTORS' COMPENSATION
The members of the Board of Directors do not receive any cash compensation for
their service as directors, but are eligible for reimbursement of their expenses
incurred in connection with attendance at Board meetings in accordance with
Company policy.
AUDIT COMMITTEE
The Company does not have an Audit Committee. This function is fulfilled by the
Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that directors and officers of the
Company and persons who beneficially own more than 10% of the Common Stock file
with the SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of the Common Stock of the Company. Directors, officers and
greater than 10% beneficial owners are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
The Company received no copies of any Section 16(a) forms filed by officers,
directors or 10% beneficial owners during 2003, other than the Form 4 Reports to
the SEC filed during 2003 by Conrad von Bibra and Carl von Bibra and Form 3 and
Form 4 Reports covering purchases in 2003 filed by David Ayres following his
election to President in 2004. Based solely on its review of the copies of the
Section 16(a) forms received by it, and on representations from certain
reporting persons, the Company believes that, during the last fiscal year, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except that, to the
knowledge of the Company, E. Ted Daniels, its former President and a director,
did not file a Form 4 with respect to the shares acquired by him during 2003
upon exercise of options.
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CODE OF ETHICS
The Company is in the process of preparing a Code of Ethics for its officers and
directors and will discuss it at the next meeting of its Board of Directors. It
will be attached as an exhibit to the first quarterly report on Form 10-QSB that
the Company will file after adopting the Code.
EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation awarded or paid by the
Company to its executive officers during the fiscal years ended December 31,
2003, December 31,2002 and December 31, 2001. No other executive officer's total
annual salary and bonus for services to the Company exceeded $100,000.
LONG-TERM COMPENSATION
-----------------------------------------------
Annual Compensation Awards Payouts
--------------------------------------------- -------------------------------- -------------
Other All
Annual Securities Other
Compen- Stock Underlying Compen-
Name and Fiscal Salary (1) Bonus sation (2) Awards Options (#) sation
Principal Position Year ($) ($) ($) ($) (3) ($)
- ------------------------ --------- ---------------- ------------ -------------- --------------- ---------------- -------------
E. Ted Daniels (1) 2003 $178,435 $0 $16,203 $16,000 0 $0
Past President and 2002 $172,273 $0 $14,607 $0 0 $0
Chief Executive Officer 2001 $224,280 $0 $12,246 $0 1,688,456 $0
David Ayres 2003 $137,551 $0 $0 $0 500,000 $0
President 2002 $89,640 $0 $0 $0 0 $0
Michael Cheever 2003 $66,054 $0 $0 $0 100,000 $0
Controller
(1) The salary amounts shown for Mr. Daniels do not include additional
amounts totaling approximately $171,000 (through his last day of
employment on January 23, 2004) for past wages being claimed by Mr.
Daniels and disputed by the Company. (See "Legal Proceedings" of 2003
10KSB)
(2) Includes auto allowances, insurance and other fringe benefits.
(3) Includes shares of Common Stock issuable upon exercise of options
granted to Mr. Daniels. Prior to January 23, 2004, Mr. Daniels had
exercised options to acquire an aggregate of approximately 4,130,000
shares of the Company's Common Stock, of which 2,000,000 shares were
acquired at no cost by Mr. Daniels in 2003. (Also see "Legal
Proceedings" of 2003 10KSB and "Management Options of E. Ted Daniels")
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Show below is information with respect to the number of shares of the Company's
common Stock acquired upon the exercise of options during the fiscal year ended
December 31, 2003, the value realized therefor, the number of unexercised
options at December 31, 2002 and the value of unexercised in-the-money options
at December 31, 2003 for the Company's executive officers in the Summary
Compensation Table above. The Company's executive officers did not hold any
stock appreciation rights ("SARs") during the fiscal year ended December 31,
2003.
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NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL OPTIONS AT FISCAL
ACQUIRED ON VALUE YEAR-END (#) YEAR-END ($)
NAME EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------- ------------- -------------- --------------------------- ---------------------------
E. Ted Daniels 2,000,000 $16,000 0/0 $0/$0
David Ayres 0 $0 500,000/0 $0/$0
Michael Cheever 0 $0 240,000/0 $0/$0
EMPLOYMENT AGREEMENTS
There are currently no employment agreements between the Company and any of its
directors, officers or significant employees. See "Legal Proceedings" regarding
the former employment of past President and Chief Executive Officer E. Ted
Daniels.
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STOCK OPTION PLANS
1993 STOCK OPTION PLAN
In February 1993, the Board of Directors adopted the Company's 1993 Stock Option
Plan. Due to subsequent changes to the Internal Revenue Code (the "Code") and
for other reasons, the Board of Directors decided to amend many provisions of
this plan. As a consequence, the Board of Directors adopted an Amended and
Restated 1993 Stock Option Plan (the "1993 Plan") in May 1996. The 1993 Plan
authorized the granting of options to purchase up to a maximum 630,000 shares of
Common Stock to qualified officers, key employees, directors and employees of
companies that do business with the Company. As of December 31, 2003, options
for 62,500 shares of Common Stock available for grant under the 1993 Plan had
been exercised and approximately 80,000 shares of Common Stock were reserved for
issuance upon exercise of outstanding options. Except as to options previously
granted and outstanding under it, the 1993 Plan terminated at midnight on
February 1, 2003.
The 1993 Plan provided for the grant of both incentive stock options ("ISOs")
and non-qualified stock options ("NQOs"). ISOs granted under the 1993 Plan are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Code of 1986, as amended. NQOs granted under the 1993 Plan are
intended not to qualify as ISOs under the Code. Options granted under the 1993
Plan generally have a term of not more that 10 years and vest no sooner than 6
months after the date of grant.
No ISO could be granted under the 1993 Plan to any person who, at the time of
the grant, owned (or was deemed to own) stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
affiliate of the Company, unless the option exercise price was at least 110% of
the fair market value of the stock subject to the option on the date of grant,
and the term of the option did not exceed five years from the date of grant. For
incentive stock option grants, the aggregate fair market value, determined at
the time of grant, of the shares of Common Stock with respect to which such
options were exercisable for the first time by an optionee during any calendar
year (under all such plans of the Company and its affiliates) may not exceed
$100,000.
The Company did not grant any options to its executive officers under the 1993
Plan during the fiscal year ended December 31, 2003 nor during the fiscal year
ended December 31, 2002.
1996 STOCK OPTION PLAN
In May 1996, the Board of Directors adopted the 1996 Stock Option Plan (the
"1996 Plan"). The 1993 Plan authorizes the granting of options to purchase up to
a maximum 600,000 shares of Common Stock to qualified officers, key employees,
directors and employees of companies that do business with the Company. As of
December 31, 2003, none of the options available for grant under the 1996 Plan
had been exercised and no shares of Common Stock were reserved for issuance upon
exercise of outstanding options. The 1996 Plan terminated at midnight on
February 1, 2003.
The Company did not grant any options to its executive officers under the 1996
Plan during the fiscal year ended December 31, 2003 nor during the fiscal year
ended December 31, 2002.
2000 NONSTATUTORY STOCK OPTION PLAN
In May 2000, the Board of Directors adopted the Prism Software Corporation 2000
Nonstatutory Stock Option Plan (the "2000 Plan"). The 2000 Plan authorizes the
granting of options to purchase up to a maximum of 3,000,000 shares of Common
Stock to qualified employees and directors of the Company.
As of December 31, 2003, none of the options available for grant under the 2000
Plan had been exercised, approximately 1,720,000 shares of Common Stock were
reserved for issuance upon exercise of outstanding options and approximately
1,280,000 shares of Common Stock remained available for grant thereunder. Except
as to options previously granted and outstanding under it, the 2000 Plan will
terminate on May 4, 2010, unless sooner terminated by the Board of Directors.
The 2000 Plan provides only for the grant of non-qualified stock options.
Options granted under the 2000 Plan generally have a term of not more that 10
years. Vesting periods, if any, are at the discretion of the Board of Directors
at the time of grant. The exercise price of options granted under the 2000 Plan
is to be at least 85% of the fair market value of the Company's Common Stock at
the date of grant, as determined by the Board of Directors. The 2000 Plan
provides for "cashless exercise" of the options, so the optionee has the choice
of paying cash to exercise the options, surrendering Common Stock owned by him
with a value equal to the exercise price, or issuing a promissory note for the
exercise price.
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The Company granted options to purchase 600,000 shares of its Common Stock to
its executive officers under the 2000 Plan during the fiscal year ended December
31, 2003. The Company did not grant any options to its executive officers under
the 2000 Plan during the fiscal year ended December 31, 2002.
MANAGEMENT OPTIONS OF E. TED DANIELS
Under his employment agreement, and distinct from the Company's other option
plans, Mr. Daniels had been granted non-qualified options to purchase shares of
the Company's Common Stock, such as to maintain ownership of 8% of the Company's
fully-diluted Common Stock (subject to certain anti-dilution adjustments).
Except for options to purchase 2,000,000 shares that were subsequently exercised
in 2003, as of December 31, 2002, Mr. Daniels had voluntarily cancelled all
rights to such options that had previously been granted and any additional such
options that would have otherwise been granted to him in the future under his
employment agreement, therefore no such options existed as of December 31, 2003.
However, in February 2004, Mr. Daniels claimed that he is still entitled to
receive replacement options (that would expire in October 2004) on modified
terms that would be similar to the ones he had previously cancelled. (Also see
"Legal Proceedings" of 2003 10KSB)
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
The following table sets forth information regarding the beneficial ownership of
the Common Stock of the Company as of April 15, 2004, by (i) each person known
by the Company to beneficially own 5% or more of the outstanding Common Stock of
the Company; (ii) each of the Company's directors; (iii) each of the Company's
Executive Officers; and (iv) all directors and Executive Officers of the Company
as a group.
COMMON STOCK TOTAL NUMBER OF PERCENTAGE OF
PERCENTAGE OF EQUIVALENTS OF SHARES SHARES OF COMMON
NAME AND ADDRESS OF OUTSTANDING COMMON SHARES OPTIONS OR BENEFICIALLY STOCK BENEFICIALLY
BENEFICIAL OWNER STOCK OUTSTANDING NOTES OWNED (1) OWNED (1)
- -----------------------------------------------------------------------------------------------------------------------
E. Ted Daniels
42240 Adams Street
Bermuda Dunes, CA 92201 4,440,000 3% 0 4,440,000 3%
David Ayres
c/o Prism Software
Corporation
23696 Birtcher
Lake Forest, CA 92630 615,000 * 500,000 1,115,000 1%
Carl S. von Bibra
1637 Spruce Street
South Pasadena, CA 91030 33,607,500 24% 272,639,461 306,246,961 74%
The Conrad von Bibra
Revocable Trust
1415 Milan Ave.
South Pasadena, CA 91030 60,880,856 43% 497,228,225 558,109,081 87%
Michael Cheever
c/o Prism Software
Corporation
23696 Birtcher
Lake Forest, CA 92630 20,000 * 240,000 260,000 *
All Directors and
Executive Officers of the
Company as a Group (5
persons) 99,563,356 70% 770,607,686 870,171,042 95%
* Less than 0.5%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to securities currently convertible, or convertible within 60
days after April 15, 2004, are deemed to be outstanding in calculating
the percentage ownership of a person or group but are not deemed to be
outstanding as to any other person or group. Except as indicated by
footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned
by them. Currently, there are 300,000,000 shares of Common Stock
authorized, of which 141,591,534 are issued and outstanding. The
percentage column of common stock beneficially owned shows the percent
each person would own if he exercised all his conversion or option
privileges and all of the others did not.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
REPURCHASE OF COMMON STOCK
In December 2002, the Company repurchased 500,000 shares of its Common Stock
from Carl von Bibra for $2,500, or $0.005 per share. Mr. von Bibra is affiliate
of the Company by virtue of his beneficial ownership of more than 5% of the
Company's outstanding Common Stock.
CERTAIN NOTES AND NOTE CONVERSIONS
From January 2002 to February 2003, the Company borrowed approximately
$1,014,000 from the Conrad von Bibra Revocable Trust ("Conrad von Bibra"), and
approximately $732,000 from Carl von Bibra. All such debt was restructured under
a Loan Agreement in March 2003 (see below).
In March 2003, the Company refinanced most of its debt and related accrued
interest with Conrad von Bibra and Carl von Bibra under a Loan Agreement, and
entered into a Credit Agreement with Conrad von Bibra. From March to December
2003, the Company borrowed approximately $1,060,000 from Conrad von Bibra under
the Credit Agreement. All debt under these agreements are due upon demand, bear
interest at the rate of 8% per annum and were convertible into shares of Common
Stock at the initial rate of $0.05 per share (subject to certain anti-dilution
adjustments) at the option of the holder. In accordance with the anti-dilution
provisions of these agreements, the conversion rate on this debt was
subsequently adjusted to $0.01 per share upon the issuance of a separate note in
March 2003 (see below). In addition, these agreements included provisions for
warrants that were subsequently waived by Conrad von Bibra and Carl von Bibra in
light of the conversion rate being reduced to $0.01 per share. Borrowings made
under the Credit Agreement are secured by the Company's assets in accordance
with a related Security Agreement.
Also in March 2003, the Company borrowed an additional $100,000 from Conrad von
Bibra under a separate Convertible Promissory Note that is secured by the
Company's assets. This debt is due upon demand, bears interest at the rate of 8%
per annum and is convertible into shares of Common Stock at the rate of $0.01
per share (subject to certain anti-dilution adjustments) at the option of the
holder.
No commissions were paid in connection with any of these transactions. Conrad
von Bibra and Carl von Bibra are affiliates of the Company by virtue of their
beneficial ownership of more than 5% of the Company's outstanding Common Stock.
The Company believes that such transactions were exempt from the registration
requirements of the Securities Act of 1933, as amended, by virtue of Section
4(2) thereof or Regulation D promulgated thereunder, as a transaction by an
issuer not involving a public offering.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Company incurred Audit Fees of $38,400 with its principal accountant in the
fiscal year ended December 31, 2003. The Company incurred Audit Fees of $38,400
with its principal accountant in the fiscal year ended December 31, 2002. The
Company incurred no other fees with its principal accountant in either of the
two fiscal years referenced.
The Company has no audit committee. The Board of Directors' policy is to
pre-approve all audit and permissible non-audit services provided by the
independent auditors. These services may include audit services, audit-related
services, tax services and other services. Pre-approval would generally be
provided for up to one year and any pre-approval would be detailed as to the
particular service or category of services, and would be subject to a specific
budget. The independent auditors and management are required to periodically
report to the Board of Directors regarding the extent of services provided by
the independent auditors in accordance with this pre-approval, and the fees for
the services performed to date. The Board of Directors may also pre-approve
particular services on a case-by-case basis.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Cacciamatta Accountancy Corporation as
independent auditors for the year ending December 31, 2004, subject to
ratification by the stockholders at the Annual Meeting. Representatives of
Cacciamatta Accountancy Corporation, LLP will be invited to attend the Annual
Meeting, and if they attend will be afforded an opportunity to make a statement
if they desire to do so, and will be available to respond to appropriate
questions by shareholders.
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