SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF
THE SECURITIES EXCHANGE ACT OF 1934
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TANGIBLE ASSET GALLERIES, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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2
TANGIBLE ASSET GALLERIES, INC.
3444 VIA LIDO
NEWPORT BEACH, CA 92663
INFORMATION STATEMENT
INTRODUCTION
This information statement is being mailed or otherwise furnished to
stockholders of Tangible Asset Galleries, a Nevada corporation (the "Company"),
in connection with the prior receipt by the Board of Directors of approval by
written consent of the holders of a majority of the Company's common stock (the
"Voting Capital Stock") of proposals (the "Proposals") to:
(i) approve an amendment (the "Articles Amendment") to the Articles of
Incorporation to increase the authorized capital stock to 265,000,000 shares
from 115,000,000 shares, which will include an increase of the authorized shares
of common stock, par value $0.001 per share, to 250,000,000 shares from
100,000,000 shares. The number of authorized shares of preferred stock, par
value $0.001 per share will remain at 15,000,000 shares; and
(ii) approve an amendment (the "Bylaws Amendment") to the Company's Bylaws
reducing the number of authorized Directors from seven (7) to five (5). Both
the Articles Amendment and the Bylaws Amendment shall collectively be referred
to as the "Amendments."
The Company recently entered into a financing agreement with an unrelated
third party for an equity investment in the Company (as described below). In
order to provide for such investment, the Board of Directors believes that it is
advisable and in the best interests of the Company to have available additional
authorized but unissued shares of common stock in an amount adequate to provide
for current and future needs. Additionally, as a result of the recent
resignations of two of the Company's directors, and to accommodate the terms of
the financing, the Board and a majority of the stockholders of the Company
believe it advisable to reduce the number of authorized Directors to five (5).
This information statement is being first sent to stockholders on or about
May 27, 2002. The Company anticipates that the Amendments will become
effective on or about June 17, 2002.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
VOTE REQUIRED
The vote which was required to approve the Proposals was the affirmative
vote of the holders of a majority of the Company's Voting Capital Stock. Each
holder of common stock is entitled to one (1) vote for each share held.
The record date for purposes of determining the number of outstanding
shares of common stock of the Company, and for determining stockholders entitled
to vote, is the close of business on March 27, 2002 (the "Record Date"). As of
the Record Date, the Company had outstanding 41,211,463 shares of common stock.
Holders of the shares have no preemptive rights. All outstanding shares are
fully paid and nonassessable. The transfer agent for the common stock is Stock
Transfer Agency of Lake Tahoe.
VOTE OBTAINED - SECTION 78.320 OF THE NEVADA GENERAL CORPORATION LAW
A written consent in lieu of a meeting of Stockholders of the Corporation
(the "Consent to Action") adopting and approving the Amendments has been
executed by the holders of a majority of the outstanding shares of common stock
of the Company. The written consent taken pursuant to Section 78.320 of the
Nevada General Corporation Law, which permits any action that may be taken at a
meeting of the stockholders to be taken by the written consent to the action by
the holders of the number of shares of voting stock required to approve the
action at a meeting.
All necessary corporate approvals in connection with the matters referred
to herein have been obtained. This Information Statement is being furnished to
all stockholders of the Company pursuant to Section 14(c) of the Securities and
Exchange Act of 1934 ("Exchange Act")and the rules thereunder solely for the
purpose of informing stockholders of these corporate actions before they take
effect. In accordance with Rule 14c-2 under the Exchange Act, the Consent to
Action and the approval of the matters thereunder will be effective 20 calendar
days following the mailing of this Information Statement. This Information
Statement is intended to provide such notice. No dissenters' or appraisal
rights under the Nevada Law are afforded to the Company's stockholders as a
result of the approval of the Proposals.
PROPOSAL TO INCREASE THE AUTHORIZED
CAPITAL STOCK OF THE COMPANY
GENERAL
On March 27, 2002 the Board of Directors approved, subject to stockholder
approval, an Amendment to the Company's Articles of Incorporation to increase
the authorized capital stock to 265,000,000 shares from 115,000,000 shares,
which will include an increase of the authorized shares of common stock, par
value $0.001 per share, to 250,000,000 shares from 100,000,000 shares. The
number of authorized shares of preferred stock, par value $0.001 shall remain at
15,000,000 shares. On March 27, 2002, the Proposal was approved by written
consent of a holders of a majority of the Company's Voting Stock.
INCREASE IN AUTHORIZED CAPITAL STOCK
The Board of Directors of the Company approved, declared it advisable and
in the Company's best interests and directed that there be submitted to the
holders of a majority of the Company's common stock for action by written
consent the proposed amendment to Article 4 of the Company's Articles of
Incorporation to increase the authorized capital stock from 115,000,000 shares
to 265,000,000 shares by virtue of an increase in the authorized shares of
common stock to 250,000,000 shares from 100,000,000 shares. The number of
authorized shares of preferred stock, par value $0.001 shall remain at
15,000,000 shares. The Board of Directors has fixed the close of business on
March 27, 2002 as the record date for the determination of stockholders who are
entitled to give consent and receive this information statement. As of the
Record Date, the Company had outstanding 41,211,463 shares of common stock held
by approximately 200 stockholders of record. A copy of the Company's proposed
Articles of Amendment effectuating the increase is attached hereto as Appendix
A.
The Company recently entered into a financing agreement for the sale of
3,000,000 shares of a newly created Series B $1.00 convertible preferred stock
("Series B Convertible Preferred") and three warrants, each to purchase
10,000,000 shares of common stock of the Company (the "Warrants") to an
unrelated third-party investor, which will result in gross proceeds of
$3,000,000 to the Company. Each share of the Series B Convertible Preferred
would have no dividends but be convertible into 10 shares of common stock of the
Company at the option of the holder. The Warrants are exercisable for five years
at the option of the holder with exercise prices of $0.10, $0.15 and $0.25 per
share, respectively. Additionally, the financing agreement provided for the
sale of 400,000 shares of the Series B Convertible Preferred and 7,000 shares of
Series C $100 9 % Redeemable Convertible preferred stock (the "Series C
Convertible Preferred") to the Company's Chief Executive Officer and Chairman,
Mr. Silvano DiGenova in exchange for $700,000 owed to Mr. DiGenova by the
Company. The Series C Convertible Preferred is convertible into shares of
common stock at the rate of $0.22 per share.
Accordingly, the proposed Series B Convertible Preferred, Series C Convertible
Preferred and Warrants are convertible into up to 67,181,818 shares of the
Company's common stock. In order to provide sufficient amounts of authorized
common stock in the potential event of such conversion, the Board of Directors
of the Company believe it necessary and in the best interests of the Company to
increase the number of authorized shares of common stock. Additional details
regarding the financing are contained within the Company's Current Report on
Form 8-K filed with the Commission on or about April 15, 2002.
The additional shares also will be available for issuance from time to time
by the Company in the discretion of the Board of Directors, normally without
further stockholder action (except as may be required for a particular
transaction by applicable law, requirements of regulatory agencies or by stock
exchange rules), for any proper corporate purpose including, among other things,
future acquisitions of property or securities of other corporations, stock
dividends, stock splits, stock options, convertible debt and equity financing.
The availability of additional authorized but unissued shares will be achieved
by the increase in authorized common as described in this Information Statement.
In the judgment of the Board of Directors, this increase is necessary in order
to carry out the Company's business objectives.
CERTAIN MATTERS RELATED TO THE PROPOSAL
The Amendment will become effective upon filing the Amendment to the
Company's Articles of Incorporation, anticipated to be approximately 20 days
after this Information Statement has been distributed to the Company's
stockholders.
PROPOSAL TO AMEND THE BYLAWS
TO DECREASE THE NUMBER OF
AUTHORIZED DIRECTORS TO FIVE
GENERAL
On March 27, 2002 the Board of Directors approved, subject to stockholder
approval, an Amendment to the Company's Bylaws decreasing the number of
authorized directors from seven (7) to five (5). On March 27, 2002, the
Proposal was approved by written consent of a holders of a majority of the
Company's common stock.
AMENDMENT TO BYLAWS
The Board of Directors of the Company approved, declared it advisable and
in the Company's best interests and directed that there be submitted to the
holders of a majority of the Company's common stock for action by written
consent the proposed amendment to Article II, Section 2 of the Company's Bylaws
reducing the number of authorized directors to five. The Board of Directors has
fixed the close of business on March 27, 2002 as the record date for the
determination of stockholders who are entitled to give consent and receive this
information statement. As of the Record Date, the Company had outstanding
41,211,463 shares of common stock held by approximately 200 stockholders of
record. As a result, Article II Section 2 of the Corporation's Bylaws shall be
amended to read as follows:
"Section 2. Number of Directors. The authorized number of Directors of
the Corporation shall be five (5) until changed by a duly adopted amendment to
the Articles of Incorporation or by an amendment to this Section 2 of Article II
of these Bylaws, adopted by the vote or written consent of Stockholders entitled
to exercise majority voting power as provided in the Act."
A copy of the Company's proposed Amendment to the Bylaws is attached hereto
as Appendix B. Previously, Richard Viola and Yvonne E. Wong Chester, Robert
Escobio, and Arthur Marcus, four directors of the Company resigned as of
February 8, 2002, February 28, 2002, April 10, 2002 and April 10, 2002,
respectively. Currently, there remains two directors on the Company's Board.
As described above, the Company recently entered into a financing agreement with
an unrelated third party relating to an equity investment in the Company. In
order to facilitate certain terms of that financing, the Board of Directors is
believe it necessary and in the best interests of the Company to reduce the size
of the Company's board to five (5) members.
CERTAIN MATTERS RELATED TO THE PROPOSAL
The Bylaw Amendment will become effective approximately 20 days after this
Information Statement has been distributed to the Company's stockholders.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of each class of the Company's voting
securities as of March 27, 2002, by (a) each beneficial owner of more than 5% of
the Company's common stock, (b) the executive officers of the Company; (c) each
director of the Company and (d) all directors and executive officers of the
Company as a group. Except as otherwise indicated, each person has sole voting
and investment power with respect to all shares shown as beneficially owned,
subject to community property laws where applicable.
Amount and
Title of Nature of Percent of
Class Name and Address of Beneficial Owner1 Beneficial Class2
Ownership2
- ----------- -------------------------------------- ---------- ----------
Silvano DiGenova3
Common 3444 Via Lido
Stock Newport Beach, CA 92663 16,883,274 43.3%
Michael R. Haynes4
Common 3444 Via Lido
Stock Newport Beach, CA 92663 75,000 <1%
Richard Viola5
Common 13 Excalibur Lane
Stock Nesconset, NY 11767 1,148,078 3.1%
Robert Escobio6
Common 4101 Albambra Circle
Stock Coral Gables, FL 33146 848,750 2.3%
Yvonne E. Wong Chester7
Common 3444 Via Lido
Stock Newport Beach, CA 92663 9,000 <1%
Arthur Marcus8
Common 101 E. 52nd Street
Stock New York, NY 10022-6018 0 0%
Steven Bayern9
Common Five Cedarwood Court
Stock Laurel Hollow, NY 11791 3,266,648 8.7%
Patrick Kolenick10
Common 35 Elizabeth Drive
Stock Laurel Hollow, NY 11743 3,266,648 8.7%
Andrew M. Denis11
Common 11 Fairwind Court
Stock Northport, NY 11768 2,325,593 6.2%
Tonni Giovanetti12
Common 11 Fairwind Court
Stock Northport, NY 11768 2,340,312 6.2%
Common All Directors and Officers as a group
Stock (six persons) 18,964,102 47.4%
1) Except as set forth above, the address of each individual is 3444 Via Lido,
Newport Beach, California 92663.
2) Based upon information furnished to the Company by the directors and
executive officers or obtained from the Company's stock transfer books. The
Company is informed that these persons hold the sole voting and dispositive
power with respect to the common stock except as noted herein. For purposes of
computing "beneficial ownership" and the percentage of outstanding common stock
held by each person or group of persons named above as of March 27, 2002, any
security which such person or group of persons has the right to acquire within
60 days after such date is deemed to be outstanding for the purpose of computing
beneficial ownership and the percentage ownership of such person or persons, but
is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
3) Includes 1,500,000 shares of Common Stock issuable upon the exercise of
warrants that are currently exercisable or exercisable within the next 60 days.
4) Consists of 75,000 shares of common stock issuable upon the exercise of
options that are currently exercisable or exercisable at any time within the
next 60 days. at any time until September 8, 2008. Does not include 225,000
shares of common stock with respect to options exercisable at dates in excess of
60 days from the date hereof.
5) Includes 80,144 shares of common stock issuable upon the exercise of warrants
that are currently exercisable or exercisable within the next 60 days. Does not
include 300,000 shares of common stock with respect to options exercisable at
dates in excess of 60 days from the date hereof.
6) Includes: (a) 272,830 shares of common stock owned by Aquila Airways, Inc., a
corporation in which Mr. Escobio is an officer and stockholder; (b) 95 shares of
common stock owned by Capital Investment Services, Inc. (the Placement Agent), a
corporation in which Mr. Escobio is a principal; (c) 31,711 shares of common
stock issuable upon the exercise of warrants owned by Mr. Escobio, which are
currently exercisable or exercisable within the next 60 days; (d) 100,000 shares
of Common Stock issuable upon the exercise of warrants owned by Mr. Escobio,
which are currently exercisable or exercisable within the next 60 days; (e)
20,550 shares of common stock issuable upon the exercise of warrants owned by
Aquila Airways, Inc., which are currently exercisable or exercisable within the
next 60 days; and (f) 8 shares of common stock issuable upon the exercise of
warrants owned by Capital Investment Services, Inc., which are currently
exercisable or exercisable within the next 60 days. Does not include 150,000
shares of common stock with respect to options exercisable at dates in excess of
60 days from the date hereof.
7) Includes 9,000 shares of common stock issuable upon the exercise of options
that are currently exercisable or exercisable within the next 60 days. Does not
include 51,000 shares of common stock with respect to options exercisable at
dates in excess of 60 days from the date hereof.
8) Does not include 60,000 shares of common stock with respect to options
exercisable at dates in excess of 60 days from the date hereof.
9) Includes: (a) 2,909,435 shares of common stock owned by Cyndel & Co., Inc.
(Cyndel), a corporation in which Mr. Bayern is a stockholder and officer; (b)
16,156 shares of common stock owned by Win Capital Corp. ("Win"), a corporation
in which Mr. Bayern is a principal; (c) 8,462 shares of common stock issuable
upon the exercise of warrants owned by Mr. Bayern, which are currently
exercisable or exercisable within the next 60 days; (d) 218,340 shares of common
stock issuable upon the exercise of warrants owned by Cyndel, which are
currently exercisable or exercisable within the next 60 days; and (e) 1,102
shares of Common Stock issuable upon the exercise of warrants owned by Win,
which are currently exercisable or exercisable within the next 60 days.
10) Includes: (a) 2,909,435 shares of Common Stock owned by Cyndel, a
corporation in which Mr. Kolenick is a stockholder and officer; (b) 16,156
shares of Common Stock owned by Win, a corporation in which Mr. Kolenick is a
principal; (c) 8,462 shares of Common Stock issuable upon the exercise of
warrants owned by Mr. Kolenick, which are currently exercisable or exercisable
within the next 60 days; (d) 218,340 shares of common stock issuable upon the
exercise of warrants owned by Cyndel, which are currently exercisable or
exercisable within the next 60 days; and (e) 1,102 shares of common stock
issuable upon the exercise of warrants owned by Win, which are currently
exercisable or exercisable within the next 60 days.
11) Includes 162,343 shares of Common Stock issuable upon the exercise of
warrants currently exercisable or exercisable within the next 60 days.
12) Includes 163,370 shares of Common Stock issuable upon the exercise of
warrants currently exercisable or exercisable within the next 60 days.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Silvano DiGenova
____________________________________
Silvano DiGenova
Director, Chairman
May 16, 2002
Newport Beach, California
APPENDIX - A
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
TANGIBLE ASSET GALLERIES, INC.
(After Issuance of Stock)
I, the undersigned President and Secretary, respectively, of Tangible Asset
Galleries, Inc., a Nevada corporation, do hereby certify:
1. That the Board of Directors of said corporation, as of March 27, 2002,
unanimously adopted a resolution to amend the articles as follows:
Article Fourth of the Articles of Incorporation of this corporation,
originally filed on August 30, 1995, is hereby amended to read as follows:
____
"4. A. The corporation is authorized to issue two classes of shares of
$0.001 par value capital stock, which classes shall be designated "Common Stock"
and "Preferred Stock," respectively. The corporation shall have the authority
to issue a total of 250,000,000 shares of Common Stock and 15,000,000 shares of
Preferred Stock.
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors of this Corporation is expressly authorized to
provide for the issue of all or any of the shares of Preferred Stock in one or
more series, and to fix the designation and number of shares and to determine or
alter for each such series such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating, optional
or other rights and such qualifications, limitations or restrictions thereof as
shall be stated and expressed in the resolution or resolutions adopted by the
Board of Directors providing for the issue of such shares and as may be
permitted by the Nevada Revised Statues. The Board of Directors is also
expressly authorized to increase or decrease (but not below the number of shares
of such series then outstanding) the number of shares of any series subsequent
to the issue of shares of that series. If the number of shares of any such
series shall be so decreased, the shares constituting such decrease shall resume
the status they had prior to the adoption of the resolutions originally fixing
the number of shares of such series."
____
2. The number of shares of the corporation outstanding and entitled to vote
on an amendment to the Articles of Incorporation is 41,211,463; that the said
changes and amendment have been consented to and approved by a majority all of
the stockholders of each class of stock outstanding and entitled to vote
thereon.
________________________________ _____________________________
Michael R. Haynes Silvano DiGenova
President Secretary
APPENDIX - B
CERTIFICATE OF AMENDMENT TO
BYLAWS
OF
TANGIBLE ASSET GALLERIES, INC.
I, the undersigned President and Secretary, respectively, of Tangible Asset
Galleries, Inc., a Nevada corporation, do hereby certify:
1. That the Board of Directors of said corporation, as of March 27,
2002, unanimously adopted a resolution to amend Article II Section 2 of the
Corporation's Bylaws shall be amended to read as follows:
"Section 2. Number of Directors. The authorized number of Directors of
the Corporation shall be five (5) until changed by a duly adopted amendment to
the Articles of Incorporation or by an amendment to this Section 2 of Article II
of these Bylaws, adopted by the vote or written consent of Stockholders entitled
to exercise majority voting power as provided in the Act."
___________
2. The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Bylaws is 41,211,463; that the said changes and
amendment have been consented to and approved by a majority all of the
stockholders of each class of stock outstanding and entitled to vote thereon.
________________________________ _____________________________
Michael R. Haynes Silvano DiGenova
President Secretary