INFORMATION STATEMENT PURSUANT TO
SECTION 14(c) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
|X| Preliminary Information Statement.
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2).
|_| Definitive Information Statement.
WORLD ENVIROTECH, INC.
--------------------------------------------------------------
(Name of Registrant As Specified In Its Charter)
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WORLD ENVIROTECH, INC.
789 W. Pender Street, Suite 830
Vancouver, BC Canada V6C 1H2
January 4, 2002
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
World Envirotech, Inc. scheduled for ______________________, 2002, at the
offices of World Envirotech, Inc. at ______ p.m.
Please review the enclosed Notice of Meeting and Information Statement,
which describe the matters to be acted upon at the meeting.
Thank you for your continued support.
Sincerely,
----------------------------
Ernest Cheung, President
WORLD ENVIROTECH, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Date: ____________________, 2002
Time: ________ p.m.
Place: World Envirotech, Inc.
789 W. Pender Street
Vancouver, BC Canada V6H 1H2
Matters to be voted on:
Note: For purposes of this Notice, "the Company" refers to World Envirotech,
Inc.
1) To authorize the reverse split (pro-rata reduction of outstanding shares) of
the issued and outstanding common shares of the Company, at the ratio of one new
share of common stock for each 4 shares of common stock now issued and
outstanding (to be effective ten days following the meeting) and to amend the
Articles of Incorporation as necessary to reflect the reverse split. No
shareholder will be reduced below fifty shares of common stock. There will not
be a reduction in authorized shares.
2) To authorize the Directors to amend the Articles of Incorporation to change
the name of the Company to a name to be determined in the discretion of the
Board of Directors.
3) To authorize the Directors to amend the Articles of Incorporation to
authorize the increase of the authorized common stock to 100,000,000 common
shares @ $.001 per share.
You have the right to receive this notice and vote at the Special Meeting
if you were a shareholder of record at the close of business on the date of this
notice.
--------------------------
Ernest Cheung, President
January 4, 2002
WORLD ENVIROTECH, INC.
INFORMATION STATEMENT
TABLE OF CONTENTS
General Information............................................................1
Voting ........................................................................1
(Proposal No. 1)...............................................................2
(Proposal No. 2)...............................................................7
(Proposal No. 3)...............................................................7
The Board of Directors ........................................................8
Security Ownership.............................................................9
Executive Compensation........................................................10
Board of Directors Report............................................10
Executive Compensation Tables........................................10
Certain Transactions..........................................................10
Section 16(a) Beneficial Ownership Reporting Compliance.......................10
Other Business................................................................11
Copies of this information statement is available to shareholders
at no charge upon request directed to:
WORLD ENVIROTECH, INC.
789 W. Pender Street, Suite 830
Vancouver, BC Canada V6C 1H2
(604) 632-9638
FAX: (604) 689-7654
GENERAL INFORMATION
INFORMATION STATEMENT
Management of World Envirotech, Inc. ("WEI") is providing this information
statement to inform you about things to be voted on at the Special Meeting of
our Shareholders scheduled for _______________, 2002. The matters or proposals
to be voted upon are the following: 1) authorization of a stock reverse split;
2) authorization of a name change for the Company; and 3) authorization of
increase in the number of common shares of the Company. We are not soliciting
proxies as one party holding voting control of, in the aggregate, over 70% of
the votes entitled to be cast at the meeting have indicated that they will vote
in favor of the above three proposals.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT REQUESTED TO US SEND A PROXY.
COSTS OF INFORMATION STATEMENT
We will pay the cost of preparing and sending out this information
statement. It will be sent to most shareholders via regular mail. A few will
receive it by personal delivery or facsimile.
VOTING
SHAREHOLDERS ENTITLED TO VOTE
Holders of record of common stock at the close of business on the date of
mailing of this information statement will be entitled to vote at the Special
Meeting of Shareholders. As of this date, approximately 19,900,700 shares of
common stock were issued and outstanding. Each shareholder is entitled to one
vote for each share of common stock held by such shareholder.
QUORUM AND VOTE NECESSARY TO ADOPT PROPOSALS
In order to transact the business proposed at the Special Meeting, a quorum
consisting of a majority of all outstanding shares entitled to vote must be
present. Once a share is represented for any purpose at the Special Meeting, it
will be deemed present for quorum purposes for the entirety of the meeting.
The affirmative vote of at least 51% of the aggregate number of votes
represented at the Special Meeting in person or by proxy is required to adopt
the proposals set forth above. Please note that XIN NET Corp., holder of 92% of
the outstanding shares, will vote in favor or the proposals.
INTEREST OF PERSONS IN MATTERS TO BE ACTED UPON
None. No director or shareholder owning 10% or more of the outstanding
shares has indicated his or her intent to oppose any action to be taken at the
meeting. No officer or director or shareholder has any interest in any matter to
be voted upon.
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PROPOSED AMENDMENTS TO ARTICLES OF INCORPORATION AND
CHANGES IN CORPORATE CAPITALIZATION
I. CHANGE OF OUTSTANDING SHARES
(Proposal No. 1)
PROPOSED REVERSE STOCK SPLIT
The Board of Directors of the Company recommends a pro rata reverse split
of the issued and outstanding shares of common stock and is asking stockholders
to authorize a reverse split of the Company's issued and outstanding common
shares, (pro rata reduction in outstanding shares), such ratio to be one new
common stock share for every 4 shares of common stock issued and outstanding in
the hands of shareholders. No shareholder will be reduced to less than fifty
shares of stock.
The effective date of the reverse split shall be one day after date of
shareholders meeting. The Board believes that such reverse split of the
Company's capital shares will lend itself better to the Company's organization
and capitalization and allow it to make capital placements.
Management Discussion of the Proposal
-------------------------------------
General
The Company proposes to effect a recapitalization through the adoption of
the reverse stock split. If the reverse split is approved by the stockholders,
each four shares of common stock outstanding on the Effective Date will be
converted automatically into one share of new common stock, and the number of
outstanding shares of common stock will be reduced from __________ to
______________ plus an estimated number of shares (1,000) to those shareholders
whose shares are being rounded up to fifty shares. To avoid the existence of
fractional shares of new common stock, shareholders who would otherwise be
entitled to receive fractional shares of new common stock shall receive whole
shares rounded up to the whole share. No shareholder will be reversed to less
than 50 shares. No cash payments will be made in lieu of shares or fractions.
The effective date of the reverse stock split will be 10 days following the date
of the meeting.
Background and Reasons for the Reverse Stock Split
On December 26, 2001, the Board of Directors adopted resolutions approving
the reverse split, calling the meeting, and directing that the reverse split be
placed on the agenda for the consideration of the stockholders of the meeting.
Management believes that the reverse split will be advantageous to the
Company, because it may provide the opportunity for higher share prices based
upon fewer shares outstanding, although no such assurance is made.
Most brokerage houses do not permit lower-priced stocks to be used as
collateral for margin accounts or to be purchased on margin. Further, the Board
of Directors believes that the current per share price of the common stock may
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investors to recommend lower-priced stocks to their clients or to hold them in
their own portfolios. 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 stock economically
unattractive. The brokerage commission on the purchase or sale of a lower priced
stock may also represent a higher percentage of the price than the brokerage
commission on a higher priced issue.
As a general rule, potential investors who might consider making
investments in the Company stock will refuse to do so when the Company has such
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 in the Company. A reduction in the total outstanding shares may,
without any assurance, make the Company capitalization picture somewhat more
attractive.
The Board of Directors is optimistic that the decrease in the number of
share of common stock outstanding as a consequence of the proposed reverse stock
split and the potential for a resulting increased price level will encourage
greater interest in the common stock by the financial community and the
investment public in conjunction with a new business focus.
Management of the Company also believes that the proposed reverse split
will make the Company better able to comply with NASDAQ's ever changing listing
requirements by reducing the outstanding shares in the Company. The Company
currently has 100 million shares outstanding with no net worth and no market
capitalization. It is highly unlikely that even if the Company's assets made it
otherwise NASDAQ eligible, that the trading price of shares of a 100 million
share capitalized company would ever meet the NASDAQ trading price requirements
even if a successful business were built or acquired. As a OTCBB stock, the
Company is at a major disadvantage to NASDAQ or Exchange listed companies to
raise capital, or expand, or acquire business if such were found.
Current NASDAQ "Small Cap" listing requirements are:
a) Net Tangible Assets $ 4,000,000
or
Market Capitalization $ 50,000,000
or
Net Income $ 750,000
(in latest fiscal year or
2 of last 3 fiscal years)
b) Public Float (shares) 1,000,000
c) Market Value of Public $ 5,000,000
d) Minimum Bid Price $ 4.00
e) Market Makers (minimum) 3
3
f) Shareholders - (round lots) 300
g) Market History 1 Year
h) Corporate Governance -
Standards Yes
At the current date, the Company would not meet any of the NASDAQ criteria.
Once the reverse split has occurred, the Company will 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.
TABLE SHOWING EFFECT OF REVERSE SPLIT ONE FOR 4
Shares Pre-Reverse Post Reverse Shares
- ------------------ -------------------
100 50
200 50
300 75
400 100
500 125
600 150
700 175
800 200
900 225
1000 250
There can be no assurances, however, that any effect of the price of the
stock will occur or that the market price of the Company's common stock
immediately after implementation of the proposed reverse stock split will rise,
and if it rises, no assurance that such rise can be maintained for any period of
time, or that such market price will approximate four times the market price
before the proposed reverse stock split.
Dissenting stockholders have no appraisal rights under Colorado law or
under the Company's Certificate and Bylaws in connection with the reverse stock
split.
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The Company's common stock is traded on the OTC Bulletin Board under the
trading symbol WDEV. The following table sets forth the quarterly high and low
closing sale prices per share for the common stock as reported by OTC BB for the
Company's past two fiscal years.
2001 High Bid Low Bid
---- -------- -------
1st quarter * *
2nd quarter * *
3rd quarter * *
4th quarter * *
* No trades or Bid/Ask
For the reasons stated above, the Board of Directors unanimously recommends that
all stock holders vote FOR the approval of the reverse split.
Effects of the Reverse Stock Split
General Effects. If the Amendment is approved by the stockholders, the
principal effect of the reverse stock split will be to decrease the number of
outstanding shares from 19,900,700 shares to approximately 4,975,175 shares,
based on share information as of December 31, 2001, after adjustment for the
provision not to reverse any shareholder to less than 50 shares. The reverse
split will not change the number of authorized common shares.
In order that the Company may avoid the expense and inconvenience of
issuing and transferring fractional shares of new common stock, stockholders who
would otherwise be entitled to receive a fractional share of new common stock
shall receive shares rounded 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 100 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 100.
The reverse stock split will not have the effect of taking the Company
private, and the Company will retain its shareholders who will all hold more
than 50 shares each.
Effect on Market for Common Stock. On December 31, 2001, the closing bid
price of the common stock on OTCBB was $.00 per share. By decreasing the number
of shares of common stock outstanding, without altering the aggregate economic
interest in the Company represented by such shares, the Board of Directors
believes that the trading price might have the opportunity to be increased to a
price more appropriate for an exchange listed security; however, there can be no
assurance that this will occur. The new common stock will continue to be traded
on OTCBB under a new symbol to be assigned by NASD Market Integrity, Inc.
5
Effect on Outstanding Options, Warrants, and Convertible Securities of the
Company. As of December 31, 2001, the Company had no outstanding options and
warrants to purchase shares of common stock.
Changes in Stockholders' Equity. The balance sheet will also be affected by the
reverse split but only by a change in the categories of "Shareholders Equity" -
(decrease)and Additional paid in capital (increase). The net shareholders equity
or deficit will not be effected.
6
II. AMENDMENTS TO ARTICLES OF INCORPORATION
(Proposal #2)
Corporate Name. The Board is asking shareholders to authorize a name change
of the corporation to a name to be determined in the discretion of the Board of
Directors and to approve an amendment to the Articles of Incorporation
therefore.
(Proposal #3)
Authorized Additional Shares: The corporation shall be authorized to issue
up to 100 million shares (100,000,000) of common stock @ $.0001 par value.
Management recommends the amendments to the Articles of Incorporation be
approved and recommends a vote "for" Proposals #2 and #3.
DISCUSSIONS OF REASONS FOR AMENDMENTS TO ARTICLES OF
INCORPORATION REGARDING SHARES AUTHORIZED, NAME CHANGE, AND REVERSE SPLIT
The Company was originally incorporated in 1996.
The Company has requested that the shareholders approve amendments to the
Articles of Incorporation to allow:
a. name change to a name to be determined in the discretion of the Board of
Directors, and
b. to amend the Articles to increase the authorized common stock to 100
million shares @ $.0001 par value.
c. to amend the Articles, if necessary, to reflect the consolidation
(reverse split) of the issued and outstanding shares on a one for four basis.
(Proposal #1)
The Company believes these changes to be in the best interest of the
shareholders, because the expanded authorized shares of the Company will allow
it to seek other business opportunities.
Shareholders should be advised the Board of Directors may make decisions
about acquisitions and stock issuances for assets, upon which the shareholders
will not have any right to vote. Under the Colorado Business Corporation Act, in
the event of a forced merger or a share exchange with shareholders of another
corporation which results in issuance of voting shares totaling 20% or more of
the shares outstanding prior to the merger or share exchange, the shareholders
may, under limited circumstances, have the right to vote on the merger or share
exchange. If the Directors and principal shareholders have no interest in the
other merger constituent before merger, and the deal is voluntary and is
approved by the Board, shareholder vote may be avoided.
The Board will be granted authority to change the name of the Company, at
the Board's discretion.
7
THE BOARD OF DIRECTORS
COMPOSITION OF THE PRESENT BOARD OF DIRECTORS
World Envirotech, Inc. is governed by a board of directors that meets
throughout the year. There are no standing committees. All matters (including
election of officers, executive compensation, and selection of auditors) are
approved by the board acting as a committee of the whole. Our by-laws call for a
board of directors consisting of from one to five members. The board presently
consists of two members.
The names, background, and periods of service of the present directors
are as follows:
Period of
Service As
An Officer Or
Name Age Position(s) Director
- ---------------------------- ----------- --------------------- ---------------
Ernest Cheung 51 President & Director Annual
Maurice Tsakok 49 Director Annual
The directors of the Company hold office until the next annual meeting
of the shareholders and until their successors have been duly elected and
qualified. The officers of the Company are elected at the annual meeting of the
Board of Directors and hold office until their successors are chosen and
qualified or until their death, resignation, or removal. The Company presently
has no executive committee or audit committee.
The principle occupations of each director and officer of the Company
for at least the past five years are as follows:
ERNEST CHEUNG, President and Director, age 51, has been Secretary of XIN
NET Corp. since May 1998. He received a B.A. in Math in 1973 from University of
Waterloo Ontario. He received an MBA in Finance and Marketing from Queen's
University, Ontario in 1975. From 1991 to 1993 he was Vice President of Midland
Walwyn Capital, Inc. of Toronto, Canada, now known as Merrill Lynch Canada. From
1992 until 1995 he served as Vice President and Director of Tele Pacific
International Communications Corp. He has also served as President for Richco
Investors, Inc. since 1995. He has been a director of our Company since 1996. He
is currently a Director of Agro International Holdings, Inc. since 1997, Spur
Ventures, Inc. since 1997, Richco Investors, Inc. since 1995 and Drucker, Inc.
since 1997. In 2000, he became President and a Director of China NetTV Holdings,
Inc.
MAURICE TSAKOK, has been a Director of XIN NET Corp. (since 1997) and
Drucker, Inc. since 1998, age 49, was employed from 1994 to 1996 by Sagit Mutual
Funds, a mutual fund company, who as a vice-president was responsible for
computer operations and research on global technology companies. From 1997 to
present, he acted as a consultant on the high-tech industry and provides
technical analysis on high-tech companies. He holds a Mechanical Engineering
degree (1974 University of Minnesota) as well as an MBA specializing in
Management Information Systems (MIS) (1976 Hofstra University). In 2000, he
became a Director of China NetTV Holdings, Inc.
There is no family relationship between or among any of the officers and
directors.
COMPENSATION OF DIRECTORS
We pay no director compensation and have no retirement plan for directors.
8
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE
OFFICERS
COMMON STOCK. The following tables set forth, as of January 4, 2002, the
ownership of our common stock by
o each existing director and named executive officer of the company,
o all executive officers and directors of the company as a group, and
o all persons known by us to beneficially own more than 5% of our common
stock.
DIRECTORS AND OFFICERS TABLE
Common
Stock
Title Name and Amount and Percent
of Address of Nature of of
Class Beneficial Owner Beneficial Interest Class*
- ------- ------------------- ------------------- --------
Common Ernest Cheung (1) 18,382,700 92%
President & Director
Common Maurice Tsakok 18,382,700 92%
Director
- -----------
Officers and Directors as a group 18,382,700 92%
(1) Ernest Cheung, President, is a Director and Secretary of Xin Net Corp, which
is the owner of 18,382,700 shares.
(2) Maurice Tsakok is a Director of XIN NET Corp. which owns 18,382,700 shares.
MORE THAN 5% OWNERSHIP TABLES
COMMON STOCK TABLE
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership(1) Percent of Class
------------------------------------ ----------------------- ----------------
Xin Net Corp. 18,382,700 92%
789 W. Pender Street, Suite 830
Vancouver, BC Canada V6C 1H2
Mark Urich 1,029,134 5.1%
8385 S. Cobblestone Street
Highlands Ranch, CO 80126
9
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
The following table contains the title and name of each executive officer
of World Envirotech, Inc.:
NAME TITLE SERVED SINCE
----- ---- ------------
Ernest Cheung President January 2002
Maurice Tsakok Secretary January 2002
(See biographical information under "Directors")
EXECUTIVE COMPENSATION TABLES
Annual Compensation Long Term Compensation
- ------------------------------------------------ ----------------------------------------
Awards
--------------------------
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary Bonus Compensation Awards Options Compensation
- ------------------- ---- ------ ----- ------------ ------ ------- ------------
Ernest Cheung 2001 0 0 0 0 0 0
President
- -----------------------------------------------------------------------------------------------------------------------------------
Maurice Tsakok 2001 0 0 0 0 0 0
Secretary
- -----------------------------------------------------------------------------------------------------------------------------------
Carl Urich (resigned) 2001 0 0 0 0 0 0
former President
- -----------------------------------------------------------------------------------------------------------------------------------
Edna Urich (resigned) 2001 0 0 0 0 0 0
former Secretary
- -----------------------------------------------------------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires
officers, directors and more than ten percent shareholders to report their
holdings and transactions in the Company's equity securities to the Securities
and Exchange Commission on a timely basis. All of our officers, directors and
more than ten percent shareholders were delinquent in all required filings in
2001.
10
OTHER BUSINESS
SPECIAL MEETING OF SHAREHOLDERS
At the date of this information statement, no other matter will be
presented for action at the special meeting. Only those matters presented in the
Notice and Information Statement may be voted upon at the Special Meeting.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Shareholders may propose matters to be presented at shareholders' meetings
and also may nominate directors. Shareholder proposals must conform to the
standards set out by the Securities and Exchange Commission and must be received
at our principal offices on or before March 31, 2002 in order to be included in
the proxy materials for presentation at our annual meeting of shareholders in
2002, which is anticipated in early July, 2002.
REPORT AVAILABLE
SHAREHOLDERS MAY OBTAIN A COPY OF OUR FORM 10-SB AS FILED IN 2001, WITHOUT
CHARGE, BY WRITING TO US AT: 789 W. PENDER STREET, SUITE 830, VANCOUVER, BC
CANADA V6C 1H2.
----------------------------
Ernest Cheung
President
January 11, 2001
11