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
PERMA-TUNE ELECTRONICS, INC.
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(Name of Registrant As Specified In Its Charter)
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PERMA-TUNE ELECTRONICS, INC.
111 South Birmingham Street
Wylie, Texas 75098
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on July 24, 2002
To the stockholders of Perma-Tune Electronics, Inc.:
Notice is hereby given that an annual meeting of stockholders of
Perma-Tune Electronics, Inc. will be held on July 24, 2002 at 10:00 a.m. at 111
South Birmingham Street, Wylie, Texas 75098 for the following purposes:
1. Election of up to five Directors. The election of Lonnie Lenarduzzi, Linda
Decker, Larrie Lenarduzzi, Wayne Robertson, and Harold "Red" Smith.
2. Amendment of the Articles of Incorporation. Amendment of the Articles of
Incorporation to increase the number of authorized shares of common stock.
3. Ratification of the Appointment of Malone & Bailey, PLLC. as the
corporation's independent auditors for fiscal year 2002.
Common stockholders of record on the close of business on June 3, 2002 are
entitled to notice of the meeting. All stockholders are cordially invited
to attend the meeting in person.
By Order of the Board of Directors,
/s/ Lonnie Lenarduzzi
Lonnie Lenarduzzi
Chief Executive Officer and Director
July 1, 2002
PERMA-TUNE ELECTRONICS, INC.
111 South Birmingham Street
Wylie, Texas 75098
INFORMATION STATEMENT
July 1, 2002
This Information Statement is furnished by the Board of Directors of
Perma-Tune Electronics, Inc. (the "Company" or "Perma-Tune") to provide notice
of an annual meeting of stockholders of Perma-Tune which will be held on July
24, 2002.
The record date for determining stockholders entitled to receive this
Information Statement has been established as the close of business on June 3,
2002 (the "Record Date"). This Information Statement will be first mailed on or
about July 1, 2002 to stockholders of record at the close of business on the
Record Date. As of the Record Date, there were outstanding 2,312,700 shares of
the Company's Common Stock. The holders of all outstanding shares of Common
Stock are entitled to one vote per share of Common Stock registered in their
names on the books of the Company at the close of business on the Record Date.
The presence at the annual meeting of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the annual meeting is
necessary to constitute a quorum. The Board of Directors is not aware of any
matters that are expected to come before the annual meeting other than those
referred to in this Information Statement.
Directors are required to be elected by a plurality of the votes cast
at the annual meeting. Each of the other matters scheduled to come before the
annual meeting requires the approval of a majority of the votes cast at the
annual meeting. Therefore, abstentions and broker non-votes will have no effect
on the election of directors or any other matter. Lonnie Lenarduzzi and Linda
Decker own 1,566,600 shares, or 72.9% of our Common Stock as tenants in common,
and will be able to approve the matters presented in this Information Statement.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
Proposal 1
The election of up to 5 Directors
Five directors are to be elected to serve until the next annual meeting of the
shareholders and until their successors are elected and shall have qualified.
The Board of Directors has nominated Lonnie Lenarduzzi, Linda Decker, Larrie
Lenarduzzi, Wayne Robertson, and Harold "Red" Smith to serve as directors (the
"Nominees"). Each of the Nominees is currently serving as a director of the
Company. The Board of Directors has no reason to believe that any nominee will
be unable to serve or decline to serve as a director. Any vacancy occurring
between shareholders' meetings, including vacancies resulting from an increase
in the number of directors, may be filled by the Board of Directors. A director
elected to fill a vacancy shall hold office until the next annual shareholders'
meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
The following biographical information is furnished with respect to each of the
directors. The information includes the individual's present position with the
Company, period served as a director, and other business experience during the
past five years.
Directors
Lonnie Lenarduzzi, age 47, President, Chief Executive Officer and Director since
our incorporation in November 1989, received an associate degree from the
Pittsburgh Institute of Aeronautics (PIA) and worked in the machine tool
industry where he specialized in robotic manufacturing systems for the Mazak
Machine Tool Company. This experience allows him to function as a designer of
new products for the Company. As manufacturing engineer for Aero Design
Products, Inc. (1982-1989) he was responsible for the original production of
Perma-Tune. His first innovative design was the development of a solid state
ignition system for the aircraft engine based on the Perma-Tune design. When
Aero Design Products, Inc. was liquidated in 1989, Mr. Lenarduzzi purchased the
Perma-Tune product line. In 1990 he gained certification from Northrop for
manufacturing excellence in producing their military ignition system and he
invented the Coilless ignition system. Since moving the Company to Wylie, Texas,
Mr. Lenarduzzi has continued to invent and design automotive products for the
Company.
Linda Decker, age 45, Corporate Secretary and Director since our incorporation
in November 1989, had a 15 year career with IBM Corp. in sales, marketing and
product line management before starting the Company. Since 1989, she has
co-owned the Company and has used her marketing expertise to create targeted
advertising and brochures, to draft press releases, to formulate pricing and
customer service policies and to determine new market segments for the Company
to serve.
Larrie Lenarduzzi, age 44, Director since our incorporation in November 1989, is
a manufacturing engineer and has been the sales manager in charge of The Micro
Finishing product line for Masco Machine Inc., in Cleveland, Ohio. Larrie has an
Aerospace Engineering Technology degree from Kent State (1984). He also has an
Associate Degree (1981) from the Pittsburgh Institute of Aeronautics. Since 1989
he has assisted in the design and improvement of tooling used in manufacturing
the Company's products. Larrie is the brother of Lonnie Lenarduzzi.
Wayne Robertson, age 49, Director since our incorporation in November 1989, has
been a technician in charge of manufacturing silicone wafers used in computers
for the past four and one-half years and is employed by Micron Technologies,
Inc. in Boise, Idaho. From 1985 to 1989 he was employed as a manufacturing
supervisor at Aero Design Products, Inc. Previously, Wayne worked as an
electronics technician on locomotive engines for MK Rail of Boise, Idaho. Since
1989 he has assisted the Company by installing prototype Perma-Tune units on
test vehicles and in evaluating engine dynamometer test results.
Harold "Red" Smith, age 69, Director since our incorporation in November 1989,
is an aeronautical engineer with a Bachelor of Science degree from Southwestern
Methodist University and a Master of Science degree from the University of
Colorado. He is an entrepreneur who owns and operates four companies: R&D
Aeronautical (located in Wylie, Texas) manufactures unmanned military aircraft
to sell to the United States Air Force and NATO countries; Air Command
International (located in Caddo Mills, Texas) manufactures manned gyroplanes in
Kit and FAA certified form; Southwest Soaring Inc. (located in Caddo Mills,
Texas) is a glider school; and RS Systems Inc. dba Joans Hallmark (located in
Plano, Texas) has seven Hallmark franchises located in the north Dallas area.
All Directors of the Company will hold office until the next annual meeting of
the shareholders, and until their successors have been elected and qualified.
Officers of the Company are elected by the Board of Directors and hold office at
the pleasure of the Board.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors, executive officers and persons who own more than 10% of a
class of the Company's equity securities which are registered under the Exchange
Act to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of such registered securities.
Such executive officers, directors and greater than 10% beneficial owners are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms filed by such reporting persons.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on representations that no other reports
were required, no person required to file such a report failed to file on a
timely basis during fiscal 2001. Based on stockholder filings with the SEC, the
Company does not believe any other stockholders are subject to Section 16(a)
filing requirements.
Attendance of the Board of Directors
During the year ended December 31, 2001, the Board of Directors held four formal
meetings. Each director attended at least 75% of the aggregate of the total
number of meetings of the Board of Directors. We have no standing audit,
nominating, compensation committee, or any other committees of the Board of
Directors and therefore there were no committee meetings.
Executive Compensation
Compensation paid to Officers and Directors is set forth in the Summary
Compensation Table below. The Company may reimburse its Officers and Directors
for any and all out-of-pocket expenses incurred relating to the business of the
Company.
SUMMARY COMPENSATION TABLE
Name and Position Fiscal Year Salary
------------------------ ------------- ----------
Lonnie Lenarduzzi, President,
Chief Executive 2001 $45,800
Officer and Director 2000 $51,048
1999 $48,765
Linda Decker, Secretary, Chief Marketing
Officer and Director 2001 $17,400
2000 $ 6,613
1999 $ 2,025
For the fiscal year ending December 31, 2002 it is anticipated that the
compensation of Mr. Lenarduzzi will be $50,200, and compensation of Ms. Decker
will be $17,500.
Security Ownership of Management and Certain Security Holders
The following table sets forth information as of December 31, 2001, with respect
to the beneficial ownership of the common stock by (i) each director and officer
of the Company, (ii) all directors and officers as a group and (iii) each person
known by the Company to own beneficially 5% or more of the common stock:
Name and Address of Shares Owned % of Class
Beneficial Owner Beneficially(1) Owned
----------------------------- --------------- ---------------
Lonnie Lenarduzzi 1,566,600(2) 72.9%
111 South Birmingham St.
Wylie, Texas 75098
Linda Decker 1,566,600(2) 72.9%
111 South Birmingham St.
Wylie, Texas 75098
Larrie Lenarduzzi 6,000(3) *
6236 Tourelle Drive
Highland Heights, Ohio 44143
Wayne Robertson 78,764 3.68%
2652 No. McDermott Road
Kuna, Indiana 83634
Harold Smith 78,764 3.68%
P.O. Box 1983
Wylie, Texas 75098
Newport Capital Consultants 225,000(4) 10.02%
78740 Runaway Bay
Bermuda Dunes, California 92201
All Officers and Directors
as a Group (5 persons) 1,730,128 80.7%
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*Less than 1%
(1) The number of shares of common stock owned are those "beneficially
owned" as determined under the rules of the Securities and Exchange Commission,
including any shares of common stock as to which a person has sole or shared
voting or investment power and any shares of common stock which the person has
the right to acquire within 60 days through the exercise of any option, warrant
or right. As of December 31,2001, there were 2,312,700 shares of common stock
outstanding. As of such date there were 348,000 outstanding warrants to purchase
shares of common stock, exercisable until December 31, 2003 at $2.00 per share.
(2) Lonnie Lenarduzzi and Linda Decker hold these shares as tenants in
common. They are husband and wife.
(3) Includes 4,500 shares issuable upon exercise of warrants.
(4) Gary Bryant is the President and controlling person of Newport Capital
Consultants.
Certain Relationships and Related Transactions
Lonnie Lenarduzzi has entered into a Licensing Agreement to license to the
Company all technology developed by him for $1,000 per year. The Licensing
Agreement was entered into on November 30, 1996 and has a term of 25 years,
extending to November 30, 2021.
Proposal 2
Amendment of the Articles of Incorporation To Increase Authorized Shares
The Company's amended Articles of Incorporation, as currently in
effect, provide that the Company is authorized to issue 10,000,000 shares of
common stock with no par value per share. On May 15, 2002, the Company's Board
of Directors authorized an amendment to the Articles of Incorporation to
increase the number of authorized shares of common stock from 10,000,000 to
50,000,000 shares. Under the proposed amendment, the first paragraph of Article
Four of the Articles of Amendment would be amended to read as follows:
"The aggregate number of shares which the corporation shall have authority to
issue is Fifty Million (50,000,000) without par value."
The shares of common stock will continue to have no par value. This increase in
authorized shares is necessary to enable the Company to pursue various
transactions including potential merger candidates.
The Company currently has 2,312,700 shares of common stock issued and
outstanding. In addition, a total of 348,000 shares of common stock are reserved
for issuance upon exercise of outstanding warrants.
The principal purpose of the proposed amendment to the Articles of
Incorporation is to authorize additional shares of common stock to enhance
flexibility in the event the Board of Directors determines that it is
necessary or appropriate to raise additional capital through the sale of
securities, to acquire other companies or their businesses or assets or to
establish strategic relationships with corporate partners.
Prior negotiations in connection with a reverse merger transaction with a
company broke down due to the Company learning that the other company had no
assets and due to the lack of due diligence that was received. In connection
with this transaction, the other company would have wanted approximately
10,000,000 new shares issued. This prompted the board of directors to
approve increasing the authorized number of shares of common stock. The
board approved 50,000,000 shares not only to provide it the opportunity to
be in a position to complete a reverse merger, but also so that it would
have flexibility in the future.
We have been in discussions with a company for a merger transaction now for
several months and during this time we have received very little
information about this company in response to our due diligence requests.
The merger transaction contemplates the issuance of approximately
11,000,000 new shares to shareholders in the other company as well as
options and warrants to acquire approximately 5.8 million shares of the
Company at prices ranging from $.50 to $10.00 per share. Based on the lack
of due diligence that we have received as well as our dealings with this
company, we believe it is unlikely that a deal will be finalized. We are
not in discussions with any other companies.
The Board of Directors has no present agreement or arrangement to issue any
of the shares for which approval is sought. Our primary objective will be
to acquire complimentary businesses to further our prospects for
profitability. However, our Board of Directors will consider businesses in
other industries if it believes that shareholder value will be enhanced by
such transaction.
If the amendment is approved by the stockholders, the Board of Directors does
not intend to solicit further stockholder approval prior to the issuance of any
additional shares of common stock or securities convertible into common stock,
except as may be required by applicable law, including, but not limited to, a
statutory merger or a sale of substantially all of the assets.
The increase in authorized common stock will not have any immediate effect on
the rights of existing stockholders. However, the Board will have the authority
to issue authorized common stock without requiring future stockholder approval
of such issuances, except as may be required by applicable law. To the extent
that the additional authorized shares are issued in the future, they will
decrease the existing stockholders' percentage equity ownership and, depending
on the price at which they are, could be dilutive to the existing stockholders.
The holders of common stock have no preemptive rights.
The increase in the authorized number of shares of common stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company without further action by the
stockholders. Shares of authorized and unissued common stock could (within the
limits imposed by applicable law) be issued in one or more transactions which
would make a change in control of the Company more difficult, and therefore less
likely. Any such issuance of additional stock could have the effect of diluting
the earnings per share and book value per share of outstanding shares of common
stock, and such additional shares could be used to dilute the stock ownership or
voting rights of a person seeking to obtain control of the Company. The proposal
to increase the authorized shares of common stock is not in response to any
accumulation of stock or threatened takeover. The Company has no plans to
subsequently implement additional measures having anti-takeover effects.
Vote Required and Board of Directors' Recommendation
The affirmative vote of a majority of all outstanding shares of common
stock of the Company is required for approval of this proposal. Lonnie
Lenarduzzi and Linda Decker own 1,566,600 shares, or 72.9% of our Common Stock
as tenants in common, and will be able to approve this proposal. Therefore,
abstentions and broker non-votes will have no effect on the amendment of the
articles of incorporation to increase the number of authorized shares of common
stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT
TO THE ARTICLES OF INCORPORATION.
Proposal 3
Ratification of the appointment of Malone & Bailey, PLLC as the Company's
Independent Auditors
The Board of Directors has selected Malone & Bailey, PLLC as
independent auditors for the Company for fiscal year 2002 and recommends that
the shareholders vote for ratification of such appointment. Malone & Bailey
served in this capacity for fiscal year 2001.
The Company does not anticipate a representative from Malone & Bailey,
PLLC to be present at the annual shareholders meeting. In the event that a
representative of Malone & Bailey, PLLC is present at the annual meeting, the
representative will have the opportunity to make a statement if he/she desires
to do so and the Company will allow such representative to be available to
respond to appropriate questions.
For the fiscal years ended December 31, 2000, 1999 and 1998 and the
interim period subsequent to December 31, 2000, the firm of Travis Wolff and
Company, LLC ("Travis Wolff") served as the Company's auditors. Effective
January 17, 2002, the Board of Directors of the Company approved the change of
accountants. On January 17, 2002, management of the Company dismissed Travis
Wolff and engaged Malone & Bailey, PLLC of Houston, Texas, as its independent
public accountants to audit its financial statements for the fiscal year ended
December 31, 2001. At no time has the Company consulted Malone & Bailey, PLLC
regarding any accounting matters. The Company is completely satisfied with the
work performed by Travis Wolff; this change is being made solely to contain the
Company's costs associated with accounting services.
During the period of engagement of Travis Wolff, there were no
disagreements between the Company and Travis Wolff on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements (if not resolved to the satisfaction of Travis
Wolff) would have caused Travis Wolff to make reference in connection with their
report to the subject matter of the disagreements. The accountants' report on
the financial statements of the Company for the fiscal years ended December 31,
2000, 1999 and 1998 did not contain any adverse opinion or disclaimer of opinion
and was not qualified or modified as to uncertainty or audit scope or accounting
principles, except to express doubt as to the Company's ability to continue as a
going concern.
The Company requested Travis Wolff to furnish the Company with a letter
addressed to the Securities and Exchange Commission stating whether Travis Wolff
agrees with the above statements, which letter was attached to the filing filed
on Form 8-K on January 22, 2002.
Audit Fees
The aggregate fees billed by Malone & Bailey, PLLC for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2001 and the review of the financial statements
included in the Company's Quarterly Financial Report on Form 10-QSB for March
31, 2002 were $12,500. The Company paid Travis Wolff approximately $24,000 for
the review of the financial statements in the Company's Quarterly Financial
Reports on Form 10-QSB for the fiscal year 2001.
Financial Information Systems Design and Implementation Fees
Malone & Bailey, PLLC and Travis Wolff did not render any professional services
to the Company for financial information systems design and implementation, as
described in Paragraph (C)(4)(ii) of Rule 2-01 of Regulation S-X, during the
year ended December 31, 2001.
All Other Fees
There were no fees billed by Malone & Bailey, PLLC other than those fees
discussed in Audit Fees, but Travis Wolff billed approximately $17,000 for
assistance in responding to SEC comments in connection with various filings.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION
OF THE APPOINTMENT OF MALONE & BAILEY, PLLC AS INDEPENDENT ACCOUNTANTS OF THE
COMPANY.
Other Matters
The Board of Directors does not intend to bring any other matters
before the Annual Meeting and has not been informed that any other matters are
to be presented by others.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Lonnie Lenarduzzi
Lonnie Lenarduzzi, Chief Executive Officer and Director
July 1, 2002