SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
SPECTRUM LABORATORIES, INC.
(Name of Issuer)
SPECTRUM LABORATORIES, INC.
(Name of Person Filing Statement)
COMMON STOCK,
(Title of Class of Securities)
847 624 30 1
-------------------------------------
(CUSIP Number of Class of Securities)
JOHN J. DRISCOLL, ESQ.
COWAN, LIEBOWITZ & LATMAN, P.C.
1133 AVENUE OF THE AMERICAS
NEW YORK, NY 10036-6799
TEL: (212) 790-9200
FAX: (212) 575-0671
(Name, address and telephone number of person authorized to receive notices for
Spectrum Laboratories, Inc. and on behalf of persons filing statement)
THIS STATEMENT IS FILED IN CONNECTION WITH (CHECK THE APPROPRIATE BOX):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ ] None of the above.
CHECK THE FOLLOWING BOX IF THE SOLICITING MATERIALS OR INFORMATION REFERRED TO
IN CHECKING BOX (a) ARE PRELIMINARY COPIES: [X]
CHECK THE FOLLOWING BOX IF THE FILING IS A FINAL AMENDMENT REPORTING THE
RESULTS OF THE TRANSACTION: [ ]
CALCULATION OF FILING FEE
AMOUNT OF
TRANSACTION VALUATION (1) FILING FEE (2)
$287,918 $36.48
(1) For purposes of calculating the filing fee only. The filing fee was
calculated based on the purchase price of $2.56 per share or pro rata portion
thereof, before giving effect to a 1-for-25,000 reverse stock split as described
herein, for all issued and outstanding shares of the Company's common stock
acquired pursuant to this transaction.
(2) The amount of the filing fee, calculated in accordance with Section
13 of the Securities Exchange Act of 1934, as amended, equals .0001267
multiplied by the aggregate value of cash to be paid by Spectrum Laboratories,
Inc. for the common stock.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $_________________
Form or Registration No.: ________________
Filing Party: ____________________________
Date Filed: ______________________________
INTRODUCTION
This Schedule 13E-3 Transaction Statement is being filed by Spectrum
Laboratories, Inc., a Delaware corporation, ("Spectrum" or the "Company") and
relates to a 1-for-2,500 reverse stock split of Spectrum's outstanding common
stock.
The purpose of the reverse stock split is to decrease the total number of
Spectrum's Common Stockholders from approximately 900 to 3. By reducing the
number of stockholders below 300, Spectrum will be eligible to file a Form 15
with the Securities and Exchange Commission ("SEC") and terminate its
registration and reporting obligations under the Securities Exchange Act of
1934, as amended, (the "Exchange Act"). The going private transaction as
described herein, will enable Spectrum to save money being spent because of its
status as a reporting company, which Spectrum believes provides a limited
benefit to a small company like Spectrum.
The reverse stock split will be effected on or about October __, 2004. The
reverse stock split was unanimously approved by Spectrum's Board of Directors at
a meeting held on October 6, 2004. The holders of 98.5% of the Company's stock
on written consent have approved this transaction. No additional consent is
required from stockholders. The reverse stock split is being effected with the
specific intent to reduce the number of stockholders of Spectrum's common stock
to a level where Spectrum is no longer obligated to file reports under the
Exchange Act.
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ITEM 1. SUMMARY TERM SHEET
The information set forth under the caption "Summary of the Reverse Stock Split"
in the Information Statement is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION
(a) Spectrum's full name and the address and telephone number for its
principal executive offices are:
Spectrum Laboratories, Inc.
18617 Broadwick
Rancho Dominquez, California 90220
(310) 885-4600
(b) The exact title of Spectrum's class of security that is the subject
of this filing is the common stock. As of October 6, 2004, the most recent
practicable date before the date of this filing, Spectrum had 5,312,468 shares
of common stock outstanding.
(c) Trading Market and Price. The Company's common stock is traded on
the OCTBB. The following table sets forth for the periods indicated the high and
the low prices of the Company's Common Stock each quarter during the past two
years and during 2004 prior to the initial public announcement of the Reverse
Stock Split on October 12, 2004.
High Low
Year ended December 25, 2004
First Quarter $4.00 $1.70
Second Quarter 2.50 2.25
Third Quarter through October 12, 2004 2.10 2.05
Year ended December 27, 2003
First Quarter .55 .55
Second Quarter 2.95 .65
Third Quarter 2.25 2.15
Fourth Quarter 2.50 1.60
Year ended December 28, 2002
First Quarter 2.05 1.55
Second Quarter 1.25 1.25
Third Quarter 1.28 1.28
Fourth Quarter 1.50 .77
(d) Spectrum has not declared or paid cash dividends on its common
stock during the past two (2) years with respect to its common stock.
(e) Not applicable.
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(f) During the last two (2) years, Spectrum has not purchased any
shares of its common stock.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS
(a) Spectrum is the subject company. Its full name and the address and
telephone number of its principal executive offices is:
Spectrum Laboratories, Inc.
18617 Broadwick
Rancho Dominquez, California 90220
(310) 885-4600
(b) Not applicable.
(c) Information concerning Spectrum's directors and executive officers
as set forth under the caption "Security Ownership of Certain Beneficial Owners
and Management" in the Information Statement is as follows:
Amount and Nature Percent
Name and Address Of Beneficial Ownership (1) of Class
- --------------------------------------------------------------------------------
Roy T. Eddleman 4,320,128 81.3
18617 Broadwick Street
Rancho Dominguez, CA 90220
Thomas V. Girardi, J.D. 800,002 15.1
1126 Wilshire Blvd.
Los Angeles, CA 90017
Jay Henis, Ph.D. 14,000 (A) 0.3
501 Marford Drive
St. Louis, MO 63141
Walter J. Lack, J.D. 109,918 2.1
10100 Santa Monica Blvd.
Los Angeles, CA 90067
Jack Whitescarver, Ph.D. 14,000 (A) 0.3
4301 Massachusetts Ave., NW #6002
Washington, D.C. 20016
F. Jesus Martinez 265,524 (A) 4.8
18617 Broadwick Street
Rancho Dominquez, CA 90220
All directors and officers as a 5,523,672 (B) 98.5
Group (6 in number)
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(1) All amounts are amounts of ownership of common stock of the Company
unless otherwise indicated.
(A) Entire amount consists of exercisable stock options
(B) Includes 293,624, exercisable stock options
During the past five (5) years, none of the foregoing individuals has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the past five (5) years, none of the foregoing individuals
was a party to any judicial or administrative proceeding that resulted in a
judgment, decree or final order enjoining further violations of, or prohibiting
activities subject to, federal or state securities laws or a finding any
violation of federal or state securities laws. All of the persons named herein
are citizens of the United States.
ITEM 4. TERMS OF THE TRANSACTION
(a) The information set forth under the caption "Summary of the Reverse
Stock Split" and "Special Factors" in the Information Statement is incorporated
herein by reference.
(b) To eliminate fractional share holdings not divisible by 25,000 will
be eliminated by payment of a cash price of $2.56 per share. The following
securities will be purchased from officers and directors at $2.56 per share, as
follows:
Roy T. Eddleman 20,128
Chief Executive Office, Director
Thomas V. Girardi, Director 2
Walter Lack, Director 9,918
(c) The information set forth under the caption "Summary of the Reverse
Stock Split" and "Special Factors" in the Information Statement is incorporated
herein by reference.
(d) Stockholders have no appraisal rights under Delaware law or under
Spectrum's Certificate of Incorporation or Bylaws in connection with the reverse
stock split.
(e) Spectrum has not made any provision to grant unaffiliated security
holders access to Spectrum's corporate files and, other than the fairness
opinion described in Item 9 below, has not engaged, or made provision to obtain,
counsel or appraisal services for unaffiliated stockholders at its expense in
connection with the transaction described herein.
(f) Not applicable.
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ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
(a) The information set forth under the captions "Special Factors" in
the Information Statement is incorporated herein by reference.
(b) The information set forth under the caption "Special Factors" in
the Information Statement is incorporated herein by reference.
(c) The information set forth under the caption "Special Factors" in
the Information Statement is incorporated herein by reference.
(d) Not applicable.
(e) Not applicable.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
(a) Not applicable.
(b) The fractional shares of new common stock acquired by Spectrum in
the reverse stock split will be considered a purchase and retirement of its own
stock. The purchase will be treated as a reduction of stockholders' equity.
Spectrum has no plans to re-sell or dispose of the fractional shares acquired in
this transaction.
(c) (1) Not applicable.
(2) Not applicable.
(3) Not applicable.
(4) Not applicable. There are no current plans or proposals to
change the present Board of Directors or management of Spectrum or change any
material term of any agreement with any executive officer. The information under
the caption "Special Factors" in the Information Statement is incorporated by
reference.
(5) Not applicable.
(6) Market makers are not permitted to quote Spectrum's common
stock on the Over The Counter Bulletin Board ("OTCBB") if Spectrum is not
current in its filings with the SEC. Upon consummation of the reverse stock
split, Spectrum plans to file a Form 15 with the SEC to terminate its reporting
obligations under Section 15(d) of the Exchange Act. As a result, Spectrum's
common stock will be removed from quotation from the OTCBB.
(7) Upon consummation of the reverse stock split, Spectrum
plans to certify to the SEC that it has reduced its number of stockholders of
common stock to less than 300, and thereby terminate its registration under the
Exchange Act.
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(8) Upon consummation of the reverse stock split, Spectrum
plans to file a Form 15 with the SEC to terminate its reporting obligations
under Section 15(d) of the Exchange Act.
(9) Not applicable.
(10) Not applicable.
(d) Not applicable.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS
(a) The information under the caption "Questions and Answers about the
Reverse Stock Split and Special Factors" in the Information Statement is
incorporated herein by reference.
(b) The information under the captions "Questions and Answers about the
Reverse Stock Split and Special Factors" in the Information Statement is
incorporated herein by reference.
(c) The information under the captions "Questions and Answers about the
Reverse Stock Split and Special Factors" and "Reasons for the Reverse Stock
Split" in the Information Statement is incorporated herein by reference.
(d) The information under the caption "Federal Income Tax Consequences"
in the Information Statement is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION
(a) The information under the caption "Fairness of the Reverse Stock
Split" in the Information Statement is incorporated herein by reference.
(b) The information under the caption "Fairness of the Reverse Stock
Split" in the Information Statement is incorporated herein by reference.
(c) The transaction described herein is not structured to require
approval of at least of majority of unaffiliated stockholders. The information
under the caption "Fairness of the Reverse Stock Split" in the Information
Statement is incorporated herein by reference.
(d) Spectrum has not and does not intend to have a majority of its
non-employee directors retain an unaffiliated representative to act solely on
behalf of unaffiliated security holders for purposes of negotiation of the terms
of the transaction described herein or preparing a report concerning the
fairness of the reverse stock split. The information under the caption "Fairness
of the Reverse Stock Split" in the Information Statement is incorporated herein
by reference.
(e) The reverse stock split was unanimously approved by all the
directors of Spectrum, unanimously, including those who are not employees of
Spectrum.
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(f) There have been no other offers solicited or received by Spectrum
to purchase all of the Company's securities or to purchase securities to attempt
to exercise control of the Company.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
(a) The Board of Directors has received a fairness opinion from Seidman
and Co., Inc. ("Seidman") an investment banking firm, with respect to the
fairness of the consideration offered in the transaction described herein to
security holders who will hold fractional shares of the Company's common stock
after the reverse stock split. The information under the caption "Fairness of
Reverse Stock Split" in the Information Statement is incorporated herein by
reference.
(b) (1) The fairness opinion is being rendered by Seidman .
(2) Seidman is a nationally recognized investment banking firm
that is regularly engaged to render financial opinions in connection with
mergers and acquisitions, tax matters, corporate planning, and other purposes.
(3) Seidman was selected by Spectrum's Board of Directors. The
Board of Directors selected Seidman on the basis of (i) its experience in
valuing businesses and their securities, (ii) its experience in rendering
fairness opinions, and (iii) familiarity with Spectrum in that Seidman opined on
a merger with Invalid's Spectrum in 1998.
(4) There has been no material relationship during the past
two (2) years between Spectrum, its affiliates, directors or executive officers
and Seidman, its affiliates or unaffiliated representatives. Seidman received a
fee in the amount of $35,000 plus reimbursement of expenses in connection with
the issuance of its fairness opinion. There are no other current arrangements to
compensate Seidman, its affiliates or unaffiliated representatives for any
services rendered to Spectrum, its affiliates, directors or executive officers.
(5) The Board of Directors of Spectrum determined the amount
of consideration to be paid to fractional common stockholders in the reverse
stock split. Seidman was engaged to render an opinion as to whether the per
share price on which such consideration will be based was fair to the
stockholders who received fractional shares of the Company's common stock in the
reverse stock split from a financial viewpoint.
(6) The information set forth under the caption "Fairness of
Reverse Stock Split" in the Information Statement is incorporated herein by
reference.
(c) The fairness opinion report rendered by Seidman is attached as
Appendix A to the Information Statement. The report is available for inspection
and copying by Spectrum stockholders (or a representative designated in writing)
during Spectrum's regular business hours at Spectrum's principal executive
offices by contacting the Company's Secretary.
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ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information under the caption "PAYMENT" in the Information
Statement is incorporated herein by reference.
(b) Not applicable.
(c) The information under the caption "PAYMENT" in the Information
Statement is incorporated herein by reference.
(d) Not applicable.
ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) The information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" in the Information Statement is
incorporated herein by reference.
(b) Not applicable.
ITEM 12. THE SOLICITATION OR RECOMMENDATION
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Since each person or entity holds in excess of 25,000 shares of
Common Stock, the affiliates of Spectrum and its three (3) directors will remain
shareholders of Spectrum after the reverse stock split, except for fractional
shares of common stock resulting from the reverse stock split. The Directors of
Spectrum unanimously voted to approve the reverse stock split. The affiliates
owning 98.5% of the issued and outstanding shares by written consent approved
the transaction.
(e) Except for the vote to approve the reverse stock split by its
affiliates, directors and executive officers, Spectrum is not aware that any of
its affiliates, directors or executive officers has made a recommendation either
in support or opposed to the transaction described herein.
ITEM 13. FINANCIAL STATEMENTS
(a) Spectrum's financial statement information, included in its Annual
Report on Form 10-KSB for the year ended December 27, 2003, filed with the SEC
on March 26, 2004, is incorporated herein by reference. Spectrum's financial
statement information, attached to its Quarterly Report on Form 10-QSB for the
quarterly period June 26, 2004, filed with the SEC on August 10, 2004, is
incorporated herein by reference. The ratio of earnings to fixed charges (i) for
the year ended December, 2002, was 2.2, (ii) for the year ended December, 2003,
was 1.5, (iii) for the six months ended June 26, 2003, was 2.5, and (iv) for the
six months ended June 26, 2004, was 3.4. The book value per share of Spectrum's
common stock was $1.87 at December 27, 2003, and $2.00 at June 26, 2004.
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(b) Not applicable
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
(a) No persons have been retained to make solicitations or
recommendations in connection with the reverse stock split.
(b) Other than as set forth under Item 9 above, no officer, employee
or corporate assets has been or will be employed or used in connection with the
reverse stock split.
ITEM 15. ADDITIONAL INFORMATION
None.
ITEM 16. EXHIBITS
(a) Information Statement. Incorporated by reference to Spectrum's
Preliminary Schedule 14C Information Statement, filed with the SEC on October
12, 2004.
(b) Not applicable.
(c) Opinion of Seidman and Co., Inc. Incorporated by reference to
Appendix A of Spectrum's Preliminary Schedule 14C Information Statement.
(d) Not applicable.
(e) Not applicable.
(f) None.
(g) None.
(h) Not applicable.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
October 12, 2004
SPECTRUM LABORATORIES, INC.
By /S/ ROY T. EDDLEMAN
---------------------------------
ROY T. EDDLEMAN
Chief Executive Officer
By /S/ BRIAN WATTS
---------------------------------
BRIAN WATTS
Chief Financial Officer
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