UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
(RULE 14c-101)
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
INFINITY CAPITAL GROUP, INC.
- -------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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INFINITY CAPITAL GROUP, INC.
80 BROAD STREET, 5TH FLOOR
NEW YORK, NEW YORK 10004
(212) 962-4400
INFORMATION STATEMENT
APRIL 9, 2010
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
This information statement is being provided on behalf of the board of directors
(the "Board") of Infinity Capital Group, Inc. (the "Company") to record holders
of shares of our common stock ("Shareholders") as of the close of business on
the record date of April 6, 2010. This information statement provides notice
that the Board has recommended, and holders of a majority of the voting power of
our outstanding common stock have voted, to approve the following items:
PROPOSAL 1: Authorization to the Board to withdraw the Company's
election to be treated as a business development company ("BDC") under
the Investment Company Act of 1940, as amended (the "1940 Act").
PROPOSAL 2: Authorization to reverse split the common stock on up to a
ten for one basis, by which each ten shares shall become one share; and
the appropriate Articles of Amendment to implement the reverse split.
Fractional shares will be rounded up to the next whole share.
This information statement describes, in more detail, the actions being taken
and the circumstances surrounding the Board's recommendation of the actions.
The actions for Proposal 1 will become effective as of the filing of the Form
N-54C by the Company with the Securities and Exchange Commission (the "SEC").
The actions for Proposal 2 will become effective approximately sixty days
following the date of the mailing and subject to FINRA approval.
The Company will bear the expenses relating to this information statement,
including expenses in connection with preparing and mailing this information
statement and all documents that now accompany or may in the future supplement
it.
Only one information statement is being delivered to multiple shareholders
sharing an address, unless the Company has received contrary instructions from
one or more of the shareholders. The Company will undertake to deliver promptly
upon written or oral request a separate copy of the information statement to a
shareholder at a shared address to which a single copy of the information
statement was delivered. You may make a written or oral request by sending a
written notification to the Company's principal executive offices stating your
name, your shared address and the address to which the Company should direct the
additional copy of the information statement or by calling the Company's
principal executive offices. If multiple shareholders sharing an address have
received one copy of this information statement and would prefer the Company
mail each shareholder a separate copy of future mailings, you may send
notification to or call the Company's principal executive offices. Additionally,
if current shareholders with a shared address received multiple copies of this
information statement and would prefer us to mail one copy of future mailings to
shareholders at the shared address, notification of that request may also be
made by mail or telephone call to the Company's principal executive offices. A
copy of this information statement can be downloaded by going to our website
WWW.INFINITYBDC.COM.
The information statement is being provided to you for informational purposes
only. Your vote is not required to approve the actions described above. This
information statement does not relate to an annual meeting or special meeting in
lieu of an annual meeting. You are not being asked to send a proxy and you are
requested not to send one. The approximate mailing date of this information
statement is April 9, 2010.
We appreciate your continued interest in Infinity Capital Group, Inc.
Very truly yours,
/s/Gregory H. Laborde
Gregory H. Laborde, President, Chief Executive Officer and Chairman of the Board
INFORMATION STATEMENT
INFINITY CAPITAL GROUP, INC.
80 BROAD STREET, 5TH FLOOR
NEW YORK, NEW YORK 10004
(212) 962-4400
BOARD MEETING
The Board of the Company determined that it was in the best interest of the
Company and its shareholders to withdraw its election to be regulated as a
business development company ("BDC") under the Investment Company Act of 1940,
as amended (the "1940 Act"). The holders of a majority of the voting power of
the Company's outstanding common stock have voted to approve the recommendation
of the Board. This information statement is being provided to shareholders to
inform them of the circumstances surrounding and the reasons for the actions
being taken.
PROPOSAL 1:
WITHDRAWAL OF THE COMPANY'S ELECTION TO BE TREATED AS A BUSINESS
DEVELOPMENT COMPANY ("BDC") UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE "1940 ACT").
On May 31, 2005, the Company filed a notification of election to be regulated as
a BDC under the 1940 Act on Form N-54A. The Company elected BDC status intending
to provide equity and debt investment capital to fund growth, acquisitions and
recapitalizations of small market companies primarily located in the United
States.
At the time it became a BDC, the Company determined that it was necessary to
raise additional capital to carry out the Company's business plan. Accordingly,
from the time the Company became a BDC to the present, the Company has conducted
several offerings of shares of its common stock pursuant to Regulation E under
the Securities Act of 1933, as amended (the "Securities Act"), and filed
offering circulars and related notifications on Form 1-E with the Securities and
Exchange Commission (the "SEC"). The staff of the SEC (the "SEC Staff") reviewed
the Company's offering circulars and related notification on Form 1-E and issued
comment letters. As a result, the Company understands that it may have been out
of compliance with certain of the rules and regulations under the 1940 Act
relating to BDCs. The SEC Staff also informed the Company that its Form 1-E
filings failed to include all of the information required to be communicated to
potential investors, including all of the financial statements required by Form
1-E and that the Company's financial reporting system was inadequate. The
Company failed to file the custodial contract required by Rule 17f-1 under the
Investment Company Act of 1940 (the "1940 Act). The Company failed to nominate a
functioning Chief Compliance Officer ("CCO") mandated by Rule 38a-1 under the
1940 Act which requires the Company to adopt and implement written policies and
procedures reasonably designed to prevent violation of the federal securities
laws by the Company and the designation of a chief compliance officer to be
responsible for administration of policies and procedures.
The Company has taken several steps to comply with SEC comments but deems that
continuation as a BDC is too expensive in today's environment.
Moreover, given that the Company has not undertaken a detailed examination of
its compliance with the 1940 Act, it is possible that the Company may not be in
compliance with other provisions of the 1940 Act.
The Board of Directors, including the Directors who are not interested persons
of the Company, reviewed the facts surrounding these compliance failures and
their implications for the Company. Accordingly, after careful consideration of
the 1940 Act requirements applicable to BDCs, an evaluation of the Company's
ability to operate as a going concern in an investment company regulatory
environment, the costs associated with complying with the 1940 Act, the
Company's past difficulty in complying with the 1940 Act and a thorough
assessment of potential alternative business models, the Board has determined
that continuation as a BDC is not in the best interest of the Company and its
shareholders at the present time. A majority of the voting power of the
Company's outstanding common stock has voted to approve the recommendation of
the Board, that the Company file a Form N-54C and withdraw its election to be
registered as a BDC. The Board will file a Form N-54C to effect the withdrawal
at such time as the Board determines that it is in the best interest of the
Company and its shareholders to do so. As of the date hereof, the Board believes
that the Company meets the requirements for filing the notification to withdraw
its election to be regulated as a BDC.
Subsequent to the filing of the Form N-54C with the SEC, the Company intends to
pursue other business opportunities. The Company will at all times conduct its
activities in such a way that it will not be deemed an "investment company"
subject to regulation under the 1940 Act. Thus, it will not hold itself out as
being engaged primarily in the business of investing, reinvesting or trading in
securities. In addition, the Company will conduct its business in such a manner
as to ensure that it will not own or propose to acquire investment securities
having a value exceeding 40 percent of the Company's total assets at any one
time.
It is anticipated that the Company's current executive officer and directors
will continue in such capacities following the Company's filing of the Form
N-54C with the SEC.
To the extent that the Company violated certain rules and regulations under the
1940 Act or the Securities Act, such violations may cause the Company to incur
certain liabilities. Importantly, the filing of a Form N-54C in order to
withdraw the Company's election to be regulated as a BDC does not absolve the
Company from liability with respect to any such violations. Such liabilities
cannot be estimated by management as of this time. However, such liabilities, if
incurred, could have a significant impact on the Company's ability to continue
as a going concern.
RISKS ASSOCIATED WITH THE WITHDRAWAL OF ELECTION
TO BE REGULATED AS A BDC
When the Company ceases to be a BDC, the shareholders will lose certain
protections, including the following:
o The Company will no longer be subject to the requirement that it
maintain a ratio of assets to senior securities of at least 200%;
o The Company will no longer be prohibited from protecting director or
officer against any liability to the Company or Company's shareholders
arising from willful malfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved the conduct of that person's
office;
o The Company will no longer be required to provide and maintain bond
issued by a reputable fidelity insurance company to protect against
larceny and embezzlement;
o The Company will no longer be required to ensure that a majority the
directors are persons who are not "interested persons," as term is
defined in Section 2(a)(19) of the 1940 Act, and persons that would be
prevented from acting in the capacity employee, officer or director of
the Company if it were a BDC (as persons convicted of certain
malfeasance) will be able to on the Company's board;
o The Company will no longer be subject to provisions of the 1940 Act
regulating transactions between BDCs and certain affiliates
restricting the Company's ability to issue warrants and options;
o The Company will no longer be prohibited from issuing its shares for
services;
o The Company will be able to change the nature of its business without
having to obtain the approval of its shareholders;
o The Company will no longer be subject to provisions of the 1940 Act
prohibiting the issuance of securities at below net asset value book
value; and
o The Company will no longer be required to disclose its net value per
share on the face of its financial statements.
o The Company will no longer be subject to the other provisions
protections set forth in Sections 55 through 64 of the 1940 Act and
the rules and regulations promulgated thereunder.
However, the Board will still be subject to customary principles of fiduciary
duty under the Maryland General Corporation Law with respect to the Company and
its shareholders.
In addition, withdrawal of the Company's election to be treated as a BDC will
not affect the Company's registration under Section 12(g) of the Securities
Exchange Act of 1934 (the "Exchange Act"). Under the Exchange Act, the Company
is required to file periodic reports on Form 10-K, Form 10-Q, Form 8-K, proxy
statements and other reports required under the Exchange Act.
EFFECT ON THE FINANCIAL STATEMENTS AND TAX STATUS
The withdrawal of the Company's election to be regulated as a BDC will result in
a change in its method of accounting. BDC financial statement presentation and
accounting uses the value method of accounting used by investment companies,
which allows BDCs to value their investments at value as opposed to historical
cost. In addition, entities in which the Company owns majority ownership stakes
are not consolidated; rather, investments in those entities are reflected on the
balance sheet as an investment in a majority-owned portfolio company at value.
Currently the Company owns a minority equity investment in one company.
Operating companies use either the fair-value or historical-cost methods of
accounting for financial statement presentation and accounting for securities
held, depending on how the investment is classified and how long the company
intends to hold the investment. In addition, operating companies consolidate the
accounts of majority-owned entities.
The Company does not believe that withdrawing its election to be regulated as a
BDC will have any impact on its federal income tax status, because the Company
never elected to be treated as a regulated investment company under Subchapter M
of the Internal Revenue Code. Instead, the Company has always been subject to
corporate level federal income tax on its income (without regard to any
distributions it makes to its shareholders) as a "regular" corporation under
Subchapter C of the Internal Revenue Code.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except in their capacity as shareholders (which interest does not differ to that
of other shareholders), none of the Company's officers, directors, or any of
their respective affiliates has any interest in the withdrawal of the Company's
election to be regulated as a BDC.
PROPOSAL 2:
REVERSE SPLIT OF COMMON STOCK ISSUED AND OUTSTANDING
A majority of shareholders have given written consent to approve a pro-rata
reverse split of our common stock, by which up to each ten shares would become
one share. Fractional shares will be rounded up to the next whole share. The
effective date of the reverse split will be effective approximately sixty days
following the date of the mailing and subject to FINRA approval. This is not a
"going private" transaction, and no shareholders will be reduced to less than
one share.
We believe the recent per share price of the common stock has had a negative
effect on the marketability of the existing shares, the amount and percentage of
transaction costs paid by individual stockholders, and impairs the potential
ability of the Company to raise capital by issuing new shares due to the low
price.
We believe that reverse split will be advantageous to us and to all
shareholders, because it may provide the opportunity for higher share prices
based upon fewer shares. It is also a factor that most brokerage houses do not
permit or favor lower-priced stocks to be used as collateral for margin
accounts. Certain policies and practices of the securities industry may tend to
discourage individual brokers within those firms from dealing in lower-priced
stocks. Some of those policies and practices involve time-consuming procedures
that make the handling of lower priced stocks economically unattractive. The
brokerage commissions on the purchase or sale of lower priced stocks may also
represent a higher percentage of the price than the brokerage commission on
higher priced stocks.
Shareholders should note that, after the reverse split, the number of our
authorized shares will remain unchanged, while the number of issued and
outstanding shares of our company will be reduced by the factor of the reverse,
i.e. up to one for ten shares. It is important to realize that the issuance of
additional shares is in the discretion of the Board of Directors, in their best
business judgment, and our shareholders will have no right to vote on future
issuances of shares except in the event of a merger under Maryland law. This
means that, effectively, our shareholders will have no ability or capacity to
prevent dilution by the issuance of substantial amounts of additional shares for
consideration that could be considerably less than what our existing
shareholders paid for their shares. In many events, control of our company could
effectively be changed by issuances of shares without shareholder approval.
As a general rule, potential investors who might consider making investments in
our company will refuse to do so when the company has a large number of shares
issued and outstanding with no equity. In other words, the "dilution" which new
investors would suffer would discourage them from investing, as general rule of
experience. A reduction in the total outstanding shares may, without any
assurance, make our capitalization structure more attractive.
Once the reverse split has occurred, the Company may then be better structured
to seek equity financing, because investors shy away from the very high dilution
which would occur if an investment were made in the current structure. There is
no assurance that the Company will have any success in seeking equity financing.
FUTURE DILUTIVE TRANSACTIONS
It is emphasized that management of the Company may effect transactions having a
potentially adverse impact upon the Company's stockholders pursuant to the
authority and discretion of the Company's management to complete share issuances
without submitting any proposal to the stockholders for their consideration.
Holders of the Company's securities should not anticipate that the Company
necessarily will furnish such holders with any documentation concerning the
proposed issuance prior to any share issuances. All determinations (except
involving a merger where the number of shares of common stock of the Company
issued will equal more than 20% of the issued and outstanding shares of common
stock of the Company prior to the transaction) involving share issuances are in
the discretion and business judgment of the Board of Directors in their exercise
of fiduciary responsibility, but require a determination by the Board that the
shares are being issued for fair and adequate consideration.
The issuance of additional shares in future transactions will allow the
following types of actions or events to occur without the current stockholders
being able to effectively prevent such actions or events:
1. Dilution may occur due to the issuance of additional shares. The
percentage ownership of the Company by the existing shareholders may be diluted
from 100% after the reverse split, now to as little as 1% or less, depending on
the market conditions, the type of acquisitions, and how many years into the
future one projects this dilution calculation.
2. Control of the Company by stockholders may change due to new issuances.
3. The election of the Board of Directors will be dominated by new large
stockholders, effectively blocking current stockholders from electing directors.
4. Business plans and operations may change.
5. Mergers, acquisitions, or divestitures may occur which are approved by
the holders of the newly issued shares.
In the future event that the Board continues to issue shares for capital,
services, or acquisitions, the present management and stockholders of the
Company most likely will not have control of a majority of the voting shares of
the Company.
It is likely that the Company may acquire other compatible business
opportunities through the issuance of common stock of the Company. Although the
terms of any such transaction cannot be predicted, this could result in
substantial additional dilution in the equity of those who were stockholders of
the Company prior to such issuance. There is no assurance that any future
issuance of shares will be approved at a price or value equal to or greater than
the price which a prior stockholder has paid, or at a price greater than the
then current market price. Typically, unregistered shares are issued at less
than market price due to their illiquidity and restricted nature as a result of,
among other things, the extended holding period and sales limitations which such
shares are subject to.
TABLE SHOWING EFFECT OF MAXIMUM REVERSE SPLIT OF UP TO TEN FOR ONE
SHARES SHARES SHARES SHARES
PRE-REVERSE POST-REVERSE PRE-REVERSE POST-REVERSE
- --------------- ----------------- -------- ------------------ -------------
10 1 1,000 100
20 2 2,000 200
30 3 5,000 500
40 4 10,000 1,000
50 5 20,000 2,000
100 10 30,000 3,000
200 20 40,000 4,000
300 30 50,000 5,000
400 40 100,000 10,000
500 50
There is no assurance that any effect of the price of our stock will result, or
that the market price for our common stock, immediately or shortly after the
proposed changes, if approved, will rise, or that any rise which may occur will
be sustained. Market conditions obey their own changes in investor attitudes and
external conditions. We are proposing the steps we deem the best calculation to
meet the market attractively, however we cannot control the markets reaction.
Dissenting shareholders have no appraisal rights under Maryland law if the
concurrently proposed reverse split is completed, or pursuant to our constituent
documents of incorporation or bylaws, in connection with the proposed reverse
split.
Fractional Shares. Fractional shares will be rounded up to the next whole share.
The reverse stock split may leave certain stockholders with one or more "odd
lots" of new common stock, i.e., stock in amounts of less than 10 shares. These
odd lots may be more difficult to sell or require greater transaction cost per
share to sell than shares in even multiples of 10. There are frequently
situations where transaction costs for odd lots in penny stocks exceed the net
proceeds realized from a sale of the odd lot, effectively rendering the odd lot
valueless to the holder.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Although shareholders are not being asked to approve or disapprove or otherwise
vote on any matter discussed in this information statement, the following
generally describes voting rights of shareholders.
As of the record date, April 6, 2010, there are 6,547,391 shares of common stock
outstanding. Each share represents one vote. There are currently no arrangements
known to the Company, the operation of which may result in a change in control
of the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table indicates all persons who, as of April 6, 2010, the record
date, are known by us to own beneficially more than 5% of any class of our
outstanding voting securities. As of April 6, 2010, there were 6,547,391 shares
of our common stock outstanding. Except as otherwise indicated below, to the
best of our knowledge, each person named in the table has sole voting and
investment power with respect to the securities beneficially owned by them as
set forth opposite their name.
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS NUMBER OF SHARES % TOTAL
BENEFICIALLY OWNED
==================================================== ================== ============================= ======================
Gregory H. Laborde Common Restricted 2,957,250 45.6%
(through GHL Group, Ltd.)
CEO, President, Director and Chairman
55 Corbin Avenue, Suite 34
Jersey City, NJ 07306
Theodore A. Greenberg Common Restricted 1,100,000 16.8%
Chief Investment Officer
CFO, Secretary and Director
80 Broad Street, 5th Floor
New York, NY 10004
Wulf Rehder Common Restricted 415,758 6.3%
4636 Timber Lane
Occidental, CA 95465
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates the beneficial ownership of our voting securities
of all Directors of the Company and all Executive Officers who are not Directors
of the Company, and all officers and directors as a group, as of April 6, 2010,
the record date. As of April 6, 2010, there were 6,547,391 shares of our common
stock outstanding.
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF NUMBER OF SHARES % TOTAL
CLASS BENEFICIALLY OWNED
========================================== ============== ======================= ==================
Gregory H. Laborde (a) Common 2,957,250 45.6%
(through GHL Group, Ltd.) Restricted
CEO, President, Director and Chairman
55 Corbin Avenue, Suite 34
Jersey City, NJ 07306
Theodore A. Greenberg (a) Common 1,100,000 16.8%
Chief Investment Officer Restricted
CFO, Secretary and Director
80 Broad Street, 5th Floor
New York, NY 10004
Pierce McNally, Director (b) Options 156,000 2.4%
c/o Gray Plant Mooty
500 IDS Center
80 South 8th Street
Minneapolis, MN 55402
Conrad R. Huss, Director (b) Options 137,000 2.1%
20 Rebel Run Drive
East Brunswick, NJ 08816
Ernest D. Chu, Director (b) Options 111,000 1.7%
1234 S. Military Trail, #1812
Deerfield Beach, FL 33443
- ------------------------------------------ -------------- -----------------------
(a) An "interested person" of the Company, as such term is defined in Section
2(a)(19) of the 1940 Act.
(b) Not an "interested person" of the Company, as such term is defined in
Section 2(a)(19) of the 1940 Act.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten percent stockholders are
required by regulation to furnish to the Company copies of all Section 16(s)
forms they file.
The following persons failed to file forms on a timely basis during the past two
fiscal years as required under Section 16(a) as follows:
None.
SHAREHOLDER PROPOSALS
As a general matter, the Company does not hold annual meetings of shareholders,
and, therefore, the anticipated date of a meeting of shareholders cannot be
provided. Any shareholder proposal that properly may be included in proxy
solicitation materials for a meeting of shareholders must be received by the
Company a reasonable time prior to the date voting instructions or proxy
materials are mailed to shareholders.
MORE INFORMATION
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM
10-K AND ITS MOST RECENT QUARTERLY REPORT ON FORM 10-Q TO A SHAREHOLDER, UPON
REQUEST TO GREGORY H. LABORDE, 80 BROAD STREET, 5TH FLOOR, NEW YORK, NEW YORK
10004 OR BY CALLING 212-962-4400, BY FIRST CLASS MAIL, WITHIN THREE BUSINESS
DAYS OF RECEIPT OF THE REQUEST. A COPY OF THIS INFORMATION STATEMENT CAN BE
DOWNLOADED BY GOING TO OUR WEBSITE WWW.INFINITYBDC.COM.
INQUIRIES
Shareholders may make inquiries by contacting Gregory H. Laborde at
212-962-4400.