SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SACIO, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SACIO, INC.
c/o Nancy Davis
8320 O'Connell Road
El Cajon, CA 92021
February 18, 2000
To: Stockholders of Sacio, Inc.
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders
of Sacio, Inc., a Delaware corporation ("Sacio"), to be held at the offices
of Sacio, at 8320 O'Connell Road, El Cajon, CA 92021 on Thursday, March 16,
at 1:30 p.m., Pacific Time.
At this Special Meeting, you will be asked to consider and vote upon
the approval of (1) the Merger Agreement and Plan of Reorganization dated
January 28, 2000 by and among Sacio, on the one hand, and
Freesoftwareclub.com, Inc., a Nevada corporation ("FSC"), and the
shareholders of FSC, on the other hand (the "Merger Agreement") and each of
the transactions contemplated thereby, whereby FSC will be merged with and
into Sacio (the "Merger") with Sacio as the surviving corporation (the
"Surviving Entity"); (2) the change in the name ("Name Change") of Sacio,
Inc. to Freesoftwareclub.com, Inc. ("Freesoftwarecub.com"); (3) the election
of Richard Miles, John Collins, and Rene Pardo as directors of the surviving
entity; and (4) an increase in the authorized capital stock of the surviving
entity to 100,000,000 shares of common stock, par value $0.001. The Merger
Agreement calls for the issuance of 13,158,000 shares of Sacio common stock,
par value $0.001 per share, in exchange for all the issued and outstanding
common stock, $0.001 par value, of FSC. The proposed Name Change for Sacio
will provide association of the post-merger company with the name of FSC's
business name and website address. The Merger Agreement and the transactions
contemplated thereby and the Name Change are planned to be concluded as soon
as possible after approval by the shareholders of Sacio.
FSC is a development-stage company that has developed an internet
business strategy to offer "name-brand" software for free and/or at large
discounts to its club members. The Merger Agreement, the Merger, the Name
Change, and the increase in the authorized capital of the corporation have
been previously approved by the Board of Directors of Sacio. A copy of the
Merger Agreement is attached hereto as Exhibit A.
Sacio is a publicly traded company, listed on the NASDAQ Over-the-
Counter Bulletin Board (the "OTC Bulletin Board"). It is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, is
required to file periodic reports with the Securities and Exchange
Commission. As of the close of the market on January 31, 2000, Sacio's
common stock traded on the OTC Bulletin Board at a high and low price of
$3.02 and $0.00, respectively.
The Board of Directors of Sacio has carefully reviewed and considered
the terms and conditions of the proposed Merger, Merger Agreement, the Name
Change, and the increase in the authorized capital of the corporation. The
Board of Directors of Sacio has unanimously approved the Merger, the Merger
Agreement, the proposed Name Change, and the increase in the authorized
capital, and recommends that the stockholders of Sacio vote FOR approval of
the Merger, the Merger Agreement, the Name Change, the proposed directors,
and the increase in the authorized capital.
While the Board of Directors of Sacio is confident that new management
can incorporate the business assets and operating plans of FSC into Sacio,
there can be no assurance that Sacio will in fact be able to do so.
Therefore, Sacio shareholders are urged to read the enclosed Proxy Statement
and the Merger Agreement, attached as Exhibit A, and to carefully consider
the description of the prospective business, including the information under
"Risks of Sacio's Prospective Business" in the Proxy Statement.
Enclosed are a Notice of Special Meeting, Consent and Waiver of Notice,
a Proxy Statement, and a proxy card for the Special Meeting. Please give
this information your careful attention. It provides a detailed description
of the proposed transactions. The affirmative vote of the holders of a
majority of the shares of Sacio Common Stock entitled to vote at the Special
Meeting is required for approval of the Merger, the Merger Agreement, the
Name Change, the election of the proposed directors, and the increase in the
authorized capital. A majority vote of the shareholders is required for
approval by the Consent and Waiver of Notice. Accordingly, your vote is
important, no matter how large or how small your holdings.
In view of the importance of the action to be taken, we urge you to
complete, sign, and date the enclosed proxy card and to return it promptly in
the enclosed envelope, whether or not you plan to attend the Special Meeting.
To expedite the transaction, we request that you sign and return the
enclosed "Consent and Waiver of Notice" at your earliest convenience. Sending
in your proxy now will not interfere with your right to attend the Special
Meeting or to vote your shares personally at the Special Meeting if you wish
to do so. However, the merger will be approved upon receipt by the Company of
the Consent and Waiver of Notice signed by shareholders representing a
majority of the issued and outstanding shares and, accordingly, no
shareholders meeting will be held.
Sincerely,
/s/Nancy Davis
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Nancy Davis, President
SACIO, INC.
c/o Nancy Davis
8320 O'Connell Road
El Cajon, CA 92021
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF
SACIO, INC.
TO BE HELD ON FEBRUARY 23, 2000
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February 18, 1999
To the Stockholders of Sacio, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Sacio,
Inc., a Delaware corporation ("Sacio") will be held at the offices of Sacio,
at 8320 O'Connell Road, El Cajon, CA 92021, on Thursday, March 16, 2000, at
1:30 p.m. Pacific Time, for the following purposes:
1. For stockholders of Sacio to consider and vote upon a proposal to
approve the Merger and Merger Agreement and Plan of Reorganization, dated
January 28, 2000 (the "Merger Agreement") by and among Sacio, on the one
hand, and Freesoftwareclub.com, Inc., a Nevada corporation ("FSC"), and the
shareholders of FSC, on the other hand (the "Merger Agreement"), whereby FSC
will be merged with and into Sacio (the "Merger") with Sacio as the surviving
corporation (the "Surviving Entity") on the terms and conditions set forth in
the Merger Agreement, a copy of which is attached to the Proxy Statement as
Exhibit A. The Merger Agreement calls for the issuance of 13,158,000 shares
of Sacio common stock, par value $0.001 per share, in exchange for all the
issued and outstanding common stock, $0.001 par value, of FSC;
2. For stockholders of Sacio to consider and vote upon a proposal to
approve the change in the name ("Name Change") of Sacio to
"Freesoftwareclub.com, Inc." The proposed name change for Sacio will provide
association of the post-merger company with FSC's business name and website
address;
3. For stockholders to consider and vote upon a proposal to elect
Richard Miles, John Collins, and Rene Pardo as the directors of the surviving
entity;
4. For stockholders to consider and vote to upon a proposal to
approve of the increase in the authorized capital stock of the corporation to
100,000,000 common shares, par value $0.001; and,
5. To transact such other business as may properly come before the
Special Meeting of Stockholders of Sacio, or any adjournment thereof.
Only stockholders of record at the close of business on January 28,
2000, are entitled to receive notice of and to vote at the Special Meeting or
any adjournments thereof. Approval of the Merger, the Merger Agreement and
the transactions contemplated thereby, the Name Change, the election of the
proposed directors, and the increase in the authorized capital stock requires
the affirmative vote of the holders of a majority of the shares of Sacio
Common Stock entitled to vote at the Special Meeting of Stockholders of
Sacio.
Approval of the transaction by way of the Consent and Waiver of Notice
requires approval by a majority of the shareholders.
Appraisal Rights for Plan of Exchange. Stockholders may be entitled to
assert Appraisal rights under Delaware Corporate Code section 262. Please
see Exhibit B, which sets forth the Delaware Corporate Code (section 262)
applicable to Appraisal Rights.
THE BOARD OF DIRECTORS OF SACIO RECOMMENDS THAT YOU VOTE FOR APPROVAL
OF THE MERGER, THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, THE NAME CHANGE, THE PROPOSED DIRECTORS, AND THE INCREASE IN THE
AUTHORIZED CAPITAL STOCK.
By Order of the Board of Directors of Sacio, Inc.,
/s/ Nancy Davis
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Nancy Davis
President of Sacio
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON. IF
YOU DO ATTEND THE SPECIAL MEETING, YOU MAY THEN WITHDRAW YOUR PROXY IF YOU
WISH. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE.
TO EXPEDITE THIS TRANSACTION, WE REQUEST THAT YOU SIGN AND RETURN THE
ENCLOSED "CONSENT AND WAIVER OF NOTICE" AT YOUR EARLIEST CONVENIENCE. THE
CONSENT AND WAIVER MAY NOT BE REVOKED. IF THE MERGE IS APPROVED BY WAY OF THE
"CONSENT AND WAIVER OF NOTICE" NO SHAREHOLDER MEETING WILL BE HELD.
PROXY
SACIO, INC.
THIS IS YOUR PROXY CARD
SACIO, INC.
c/o Nancy Davis
8320 O'Connell Road
El Cajon, CA 92021
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Nancy Davis and Stephen Huntley, or
either of them, as proxy, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on this proxy,
all the shares of common stock of Sacio, Inc. held by the undersigned at the
Special Meeting of Stockholders to be held on March 16, 2000 or any
adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made,
this proxy will be voted for approval of Proposals 1 through 5.
1. For stockholders of Sacio to consider and vote upon a proposal to
approve the Merger and Merger Agreement and Plan of Reorganization, dated
January 28, 2000 (the "Merger Agreement") by and among Sacio, on the one
hand, and Freesoftwareclub.com, Inc., a Nevada corporation ("FSC"), and the
shareholders of FSC, on the other hand (the "Merger Agreement") and each of
the transactions contemplated thereby, whereby FSC will be merged with and
into Sacio (the "Merger") with Sacio as the surviving corporation (the
"Surviving Entity") on the terms and conditions set forth in the Merger
Agreement, a copy of which is attached to the Proxy Statement as Exhibit A.
The Merger Agreement calls for the issuance of 13,158,000 shares of Sacio
common stock, par value $0.001 per share, in exchange for all the issued and
outstanding common stock, $0.001 par value, of FSC.
FOR WITHHOLD AUTHORITY
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2. For stockholders of Sacio to consider and vote upon a proposal to
approve the change in the name ("Name Change") of Sacio to
"Freesoftwareclub.com, Inc." The proposed name change for Sacio will provide
association of the post-merger company with FSC's business name and website
address.
FOR WITHHOLD AUTHORITY
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3. For stockholders to consider and vote upon a proposal to elect
Richard Miles, John Collins, and Rene Pardo as the directors of the surviving
entity.
FOR WITHHOLD AUTHORITY
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4. For Stockholders to consider and vote upon a proposal to increase
the authorized capital stock of the corporation to 100,000,000 common shares,
par value $0.001.
FOR WITHHOLD AUTHORITY
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5. Transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
FOR WITHHOLD AUTHORITY
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Dated:
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Signature
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Print Name(s)
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Signature if held jointly
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD TO THE COMPANY:
SACIO, INC.
c/o Nancy Davis
8320 O'Connell Road
El Cajon, CA 92021
AS SOON AS POSSIBLE. THANK YOU.
CONSENT AND WAIVER OF NOTICE
SACIO, INC.
THIS IS A CONSENT AND WAIVER OF YOUR NOTICE OF MEETING
SACIO, INC.
c/o Nancy Davis
8320 O'Connell Road
El Cajon, CA 92021
THIS CONSENT AND WAIVER OF NOTICE IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby Consents to the recommendation of the Board of
Sacio as outlined in Proxy dated February 18, 2000 and waives notice to the
Special Meeting of Stockholders to be held on March 16, 2000.
This Consent and Waiver of Notice, when properly executed, will approve
the five proposals recommended by the Sacio Board in the Proxy Statement
dated February 18 and allow the vote prior to the scheduled date of the
Special Meeting of Stockholders. If a majority of the stockholders sign and
return a Consent to the Waiver of Notice the merger will be approved at the
date upon which a majority of the Consent and Waiver is received. If a
majority of the stockholders do not provide their consent to the waiver of
notice, the vote will be taken at the regularly scheduled Special Meeting of
the Stockholders.
I hereby Consent and Waive my right to Notice of the Special Meeting of
Stockholders scheduled for March 16, 2000.
Dated:
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Signature
------------------------
Print Name(s)
-------------------------
Signature if held jointly
PLEASE SIGN, DATE AND RETURN YOUR CONSENT AND WAIVER OF NOTICE TO THE
COMPANY:
SACIO, INC.
c/o Nancy Davis
8320 O'Connell Road
El Cajon, CA 92021
AS SOON AS POSSIBLE. THANK YOU.
SACIO, INC.
c/o Nancy Davis
8320 O'Connell Road
El Cajon, CA 92021
PROXY STATEMENT
For Special Meeting of Stockholders of Sacio, Inc.
to be Held on March 16, 2000
This Proxy Statement is being furnished to the stockholders of Sacio,
Inc., a Delaware corporation ("Sacio"), in connection with the solicitation
of proxies by the Board of Directors of Sacio from holders of outstanding
shares of common stock of Sacio ("Sacio Common Stock") for use at the Special
Meeting of Sacio Stockholders.
The purpose of the Sacio Special Meeting is to consider and vote upon
the following:
1. For stockholders of Sacio to consider and vote upon a proposal to
approve the Merger and Merger Agreement and Plan of Reorganization, dated
January 28, 2000 (the "Merger Agreement") by and among Sacio, on the one
hand, and Freesoftwareclub.com, Inc., a Nevada corporation ("FSC"), and the
shareholders of FSC, on the other hand (the "Merger Agreement"), whereby FSC
will be merged with and into Sacio (the "Merger") with Sacio as the surviving
corporation (the "Surviving Entity") on the terms and conditions set forth in
the Merger Agreement, a copy of which is attached to the Proxy Statement as
Exhibit A. The Merger Agreement calls for the issuance of 13,158,000 shares
of Sacio common stock, par value $0.001 per share, in exchange for all the
issued and outstanding common stock, $0.001 par value, of FSC;
2. For stockholders of Sacio to consider and vote upon a proposal to
approve the change in the name ("Name Change") of Sacio to
"Freesoftwareclub.com, Inc." The proposed name change for Sacio will provide
association of the post-merger company with FSC's business name and website
address;
3. For stockholders to consider and vote upon a proposal to elect
Richard Miles, John Collins, and Rene Pardo as the directors of the surviving
entity;
4. For stockholders to consider and vote to upon a proposal to
approve of the increase in the authorized capital stock of the corporation to
100,000,000 common shares, par value $0.001; and,
5. To transact such other business as may properly come before the
Special Meeting of Stockholders of Sacio, or any adjournment thereof.
-1-
All information contained in this Proxy Statement pertaining to Sacio
has been supplied by Sacio. All information contained in this Proxy
Statement pertaining to Freesoftwareclub.com, Inc. ("FSC") has been supplied
by FSC. No person is authorized to give any information or to make any
representations other than those contained herein and, if given or made, such
information or representations must not be relied upon as having been
authorized. The delivery of this document shall under no circumstances
create an implication that there has been no change in the affairs of Sacio
or FSC since the date hereof or that the information herein is correct as of
any time subsequent to its date.
This Proxy Statement, the accompanying Notice of Meeting and the other
documents enclosed herewith are dated January 31, 2000 and are being first
mailed to the stockholders of Sacio on or about February 7, 2000.
THE ACQUISITION AGREEMENTS, THE PLAN OF EXCHANGE, AND THE SPECIAL MEETING
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement, and additional information concerning the
Special Meeting. It is not a complete description of all material
information regarding Sacio or FSC and the matters to be considered at the
Special Meeting and is qualified in all respects by the information appearing
elsewhere in this Proxy Statement and the Exhibits hereto. A copy of the
Merger Agreement is set forth as Exhibit A to this Proxy Statement and
reference is made thereto for a complete description of the terms of such
document.
The Special Meeting
The Special Meeting will be held at 1:30 p.m., local time, on
Thursday, March 16, 2000, at the office of Sacio, at 8320 O'Connell Road,
El Cajon, CA 92021. The purpose of the Special Meeting of Stockholders of
Sacio is to consider and vote upon approval of the Merger, the Merger
Agreement and the transactions contemplated thereby, the Name Change, the
proposed directors, and the increase in the authorized capital stock of the
corporation. The Board of Directors of Sacio has fixed the close of business
on January 28, 2000, as the record date for determining stockholders entitled
to vote at the Special Meeting (the "Record Date"). As of such date, there
were 3,289,500 shares of common stock, par value $0.001, of Sacio issued and
outstanding and therefore entitled to be voted at the Special Meeting, and
there were approximately 41 stockholders, of record or through registered
clearing agents.
The presence, in person or by proxy, of holders of a majority of the
issued and outstanding shares of Sacio Common Stock entitled to vote at the
Special Meeting is necessary to constitute a quorum at such Special Meeting.
-2-
The enclosed proxy is solicited on behalf of the Board of Directors of
Sacio for use in connection with the Special Meeting and any adjournment or
adjournments thereof. Holders of Sacio Common Stock are requested to
complete, date, and sign the accompanying proxy and return it promptly to
Sacio in the enclosed envelope. Failure to return a properly executed proxy
or to vote at the Special Meeting will have the same effect as a vote against
approval of the Merger, the Merger Agreement and the transactions
contemplated thereby, the Name Change, the nominees for directors, the
increase in the authorized capital stock, and any other proposal to be
considered at the Special Meeting.
A stockholder who has executed and delivered a proxy may revoke it at
any time before it is voted by giving a later written proxy or by giving
written revocation to Nancy Davis or Stephen Huntley, directors of Sacio,
provided such later proxy or revocation is actually received by the company
before the vote of the stockholders, or by voting in person at the Special
Meeting. Any stockholder attending the Special Meeting may vote in person
whether or not a proxy has been previously filed. The shares represented by
all properly executed proxies received in time for the Special Meeting,
unless revoked, will be voted in accordance with the instructions therein.
If instructions are not given, properly executed proxies received will be
voted FOR approval of the applicable agreements and any other proposal to be
considered at the applicable Special Meeting.
Sacio's management is not aware of any business to be acted upon at the
Special Meeting other than approval of the proposal to approve the Merger,
the Merger Agreement and the transactions contemplated thereby, the Name
Change, the election of the directors, and the increase in the authorized
capital stock. If other matters are properly brought before the Special
Meeting, or any adjournment thereof, the enclosed proxy, if properly signed,
dated and returned, will be voted in accordance with the recommendation of
the Board of Sacio, or, if there is no such recommendation, in the discretion
of the individuals named as proxies therein.
Background of and Reasons for the Merger and Name Change; Recommendation of
Board of Directors.
Sacio, Inc. was incorporated in Delaware on May 31, 1994. The Company
was formed in order to develop a chain of English Pub theme-based restaurants
and bars tentatively called "The Old Coach Inn", starting with an initial Pub
in the downtown redevelopment area of San Diego, California. Management used
the intervening years to study existing British restaurant and bar operations
in Southern California as the downtown redevelopment of the "Gas Lamp" area
of San Diego grew to the point where sufficient restaurant traffic existed to
support a proposed English Pub restaurant. During 1996 the Company raised
funds necessary to pay the Company's state fees and taxes by the sale of
stock to investors.
-3-
Beginning in 1998, Management determined the Company should complete
the development of its neighborhood English Pub restaurant and bar.
Management's decision was based primarily on the following factors; 1) the
success of downtown redevelopment including a new ballpark district, 2) the
popularity of theme-based restaurants and patron-involved music (such as
Karaoke), and 3) the resurgence of the San Diego economy. In January of 1999
the board of directors voted to seek capital and began development of the
Company's business plan.
While the Company had initiated preliminary discussions with restaurant
design and construction companies and restaurant suppliers, it had no firm
commitments or contracts for services and supplies and could not initiate
firm negotiations until such a time as the Company had sufficient funding.
Management's estimate for total construction build-out for a 5,000 square
feet of Pub space was approximately $500,000, food and beverage inventory was
estimated at approximately $25,000, and a full liquor license was estimated
to cost approximately $50,000 in the San Diego area. Management anticipated
initial implementation of its business plan to begin in the 4th quarter of
1999.
To date, management has been unsuccessful in raising the capital to
fund its first operating Pub. The restaurant and bar industry is highly
competitive with respect to price, service, quality and location, and as a
result, has a high failure rate. In addition, there are numerous well-
established competitors, including national, regional and local chains,
possessing substantially greater financial, marketing, personnel and other
resources than the Company. This risky and competitive environment, along
with the fact the Company does not have an operating history seem to be the
most dominant reasons the Company has been unable to raise the capital it
requires.
During January, Sacio was contacted by management of
Freesoftwareclub.com regarding a proposed merger. FSC had developed an
internet business strategy to offer "name-brand" software for free and/or at
large discounts to its club members and had obtained financing commitments
contingent of FSC merging with a publicly traded entity to provide a public
valuation for the company and increased exposure.
In the Sacio Board's view, the proposed merger with FSC would allow
Sacio to divest itself of the development of a national chain English style
pubs, which it has been unable to fund, and to acquire another operating
business that has acquired funding commitments for developing its business.
This planned Merger, if successful, is meant to provide Sacio's stockholders
with the potential for, although not the assurance of, an increase in the
value of their shares at some time in the future without additional
investment on their part.
-4-
The Merger. Sacio proposes to enter into a Merger Agreement with FSC.
The Merger Agreement provides that FSC will be merged with and into Sacio,
and as consideration therefore, all of the issued and outstanding shares of
the FSC capital stock will be converted into an aggregate of 13,158,000
shares of the capital stock, $0.001 par value, of Sacio. Sacio will be the
surviving corporation of the merger and will subsequently change its name to
Freesoftwareclub.com, Inc. Immediately prior to the Closing of the Merger,
Sacio will have 3,289,500 common shares issued and outstanding. Upon the
Closing of the Merger Agreement and concurrent with the authorization of the
13,158,000 shares of the common stock, $0.001 par value, of Sacio to be
issued to the shareholders of FSC, there shall be a total of 16,447,5000
shares of common issued and outstanding in the post-merger entity.
The following table shows the number of issued and outstanding shares
of common stock, $0.001 par value, of Sacio Pre- Proposed Merger and Post-
Proposed Merger.
Shareholder # Shares Held # Shares Held
Pre-Merger Post-Merger
- ----------- ---------- -----------
Current Sacio Shareholders(1) 3,289,500 3,289,500
Richard Miles(2) -0- 4,144,770
John Collins(2) -0- 2,763,180
Rene Pardo(2) -0- 4,934,250
EMJ DataSystems(3) -0- 1,315,800
TOTAL 3,289,500 16,447,500
(1) Current Shareholders of Sacio. The officers and directors of Sacio
cancelled all beneficially owned shares in December, 1999.
(2) Current Officers and/or Directors of FSC, Proposed Officers and/or
Directors of Sacio, Post-Merger.
(3) Current Shareholder of FSC.
Additional terms and conditions of the Merger are set forth below and
in the Merger Agreement, which is attached as Exhibit A. Shareholders of
Sacio are urged to review these items carefully.
There are certain conditions to the closing of the Merger before the
Merger will be consummated, including the completion of due diligence to each
party's satisfaction and the affirmative vote of the shareholders of FSC, and
the transaction is not free from risk. There can be no assurances that the
Merger will be approved, or, if it is approved, that the Merger will be
closed.
If the Merger and Name Change are approved, Sacio will amend its
articles of incorporation to change its name to Freesoftwareclub.com, Inc.,
and remain a Delaware corporation. If the Merger is not approved, or if the
Merger is not closed for whatever reason, Sacio may continue to look for
other operating businesses to acquire.
-5-
Vote Required. Approval of the Merger, the Merger Agreement and the
transactions contemplated thereby, the Name Change, the election of the
directors, and the increase in the capital stock will require the affirmative
vote of the holders of a majority of the outstanding shares of Sacio Common
Stock. The directors and officers of Sacio beneficially owned as of the
Record Date and are entitled to vote -0- of the total 3,289,500 issued and
outstanding shares of Sacio Common Stock at the Special Meeting. Thus
directors and officers shares represent 0% of the outstanding shares entitled
to be voted. A failure to return the enclosed proxy or a vote to abstain
will have the same effect as a vote against approval of the Plan of Exchange.
The consummation of the Merger also requires the approval of the Board
of Directors and a majority of the issued and outstanding shares of FSC. As
of the date of this Proxy Statement, the FSC Board and Shareholders have
approved the Merger, the Merger Agreement, and the transactions contemplated
thereby.
Appraisal Rights for Plan of Exchange. Under Delaware law (Corporate
Code, section 262), Sacio stockholders may have the right to dissent from the
Plan of Merger and receive cash in respect of the "fair value" of their
shares of Sacio Common Stock. Please see Exhibit B, which sets forth the
Delaware Corporate Code (section 262) applicable to Appraisal Rights.
Expenses and Fees. The Merger Agreement provides that Sacio will bear
and pay all costs and expenses incurred by the parties in connection with the
transactions contemplated by the Merger and the Merger Agreement, including
fees and expenses of their respective accountants and counsel, mailing fees,
and transfer agent and related fees. It is expected that the total of such
expenses and fees will be approximately $35,000.
The Proposed Directors. The backgrounds of the proposed directors are
as follows:
Richard Miles
Richard is President of Re:Launch, a computer channel integrated
marketing and advertising firm located in Berkeley, California. Under
Richard's direction and leadership, Re:Launch has become one of the
industry's top marketing and sales service agencies.
1990 - present: Founder and President of Re:Launch. Created sales and
marketing consulting firm specializing in technology products. Self-funded
company enjoys revenues of approx. $3,000,000 per year. Marketing and sales
manager behind more than 20 best-selling products. Creative genius behind
the industry's longest running profitable direct mail program. Consultant to
over 50 firms including IBM, Computer Associates, Hitachi, Memorex, Connectix
and many others. Well-respected within the industry as a speaker, columnist
and analyst. Primary author of "The Software Channel Sales Guidebook" used by
over 200 firms including Microsoft, Intuit, IBM, Memorex, and many others.
-6-
1986 - 1990 Vice President, Sales & Marketing, Polaroid Magnetics.
Responsible for Polaroid's floppy disk and computer retail channel business.
Responsible for helping to manage a commodity business from loss to profit.
while undergoing intense competition from low cost Far Eastern competitors.
1984 - 1986 Vice President, Sales & Strategic Planning, Schlage
Electronics. Responsible for helping keep this $50MM company in #1 industry
position, introducing new technologies into a VAR / installing dealer network
worldwide. Reported to Division Vice-President for Business Development,
assisting in evaluating new technologies and new acquisitions for this
division of worldwide Ingersoll-Rand.
1980 -1984 President, Adaptive Controls, Inc. Chosen by the Board of
Directors to take over operations for this developer of integrated
electronics controls systems for high-rise office building. Responsible for
increasing sales to premier accounts and nationwide developers, as well as
continuing operations with very tight cash flow. Turned around unprofitable
operations and delivered profits. Negotiated sale of the business to
Ingersoll-Rand, managed the merger of the business into Schlage Electronics
division.
Richard Miles will be the primary spokesperson for the company. He will
devote approximately 30% of his time during the development stage, and will
be overseeing the company on a salaried basis beginning in August of 1999.
John Collins
John Collins joined Re:Launch as a Senior partner in 1991. He was
General Manager for the Re:Launch Channel Sales division and was responsible
for business development, contract negotiation, and customer service with
software publishers and other vendors. He brings 15 years of sales and
marketing leadership to Re:Launch and spearheaded Re:Launch's successful
drive to establish itself as the premiere sales organization for consumer
products in the Computer Retail segment.
As a 10-year computer industry veteran specializing in selling and marketing
computer software, John directed the retail development efforts for over 30
different software developers and publishers as clients, including Computer
Associates, Memorex, Bungie, Micrologic, Software Publishing Corp and many
others. His expertise, relationships, and knowledge of the computer software
industry has resulted in significant sales growth and success for many
Re:Launch clients.
Prior to joining Re:Launch, John was Regional Sales Manager for Polaroid's
Computer Products division and Product Marketing Manager for Schlage
Electronics. At each position he quickly established profitability by
designing and executing effective marketing plans and by leveraging
distribution channels and solid relationships. John also contributed to the
Software Channel Sales Guidebook as the author of the Selling Skills section.
-7-
John has developed great relationships with software distributors including
Ingram Micro, Tech Data, Merisel, and Navarre, GT Interactive. He also has
many contacts with prominent software vendors throughout North America.
Rene Pardo
Rene is currently the Vice President for Business Development for
Online Direct, and is the CEO of NetProfitEtc., Inc. 1970 he was the founder
of Lanpar Technologies, and took it to $25 million revenue, going public on
Toronto Stock Exchange raising $13 million.
In 1994 Rene joined Aztech New Media, a software anthology publisher
which was just starting to sell shareware. He brought in financing and
shareholders, in different stages, and established international sales.
Revenues have grown to approx. $10 million Canadian, funded with little
capital.
In Sept. 1997, Rene established and raised financing for ComCentral
Inc. to continue the development of proprietary "Script Agent" software for
enabling the rapid customization and browsing of CD-ROMs (clients include
Compaq, Ziff Davis); and to build internet community tools (chat, homepages,
instant messaging, polling, forums, e-cards etc) to enhance electronic direct
marketing.
Management After the Plan of Merger. Immediately before and
immediately after the closing of the Merger Agreement, assuming the nominated
directors are approved and the Merger is closed, the management of Sacio will
be as follows:
Sacio Pre-Merger:
Name Age Position
---- --- --------
Nancy Davis 38 Director, President, Secretary
Stephen Huntley 45 Director, Treasurer
Sacio Post-Merger:
Name Age Position
---- --- --------
Richard Miles 45 Director, Secretary and
Treasurer
John Collins 38 Director, President
Rene Pardo 52 Director
It is anticipated that additional directors will be appointed by the
Board as the appropriate candidates are identified.
Sacio's Employees and Facilities. Sacio currently has 0 (zero)
employees. Immediately after the closing of the proposed transactions, the
surviving corporation will have 2 (two) employees.
-8-
Sacio currently leases no office space. Immediately after the closing
of the proposed transaction, the surviving entity expects to sublease
approximately 1,000 square feet of office space from Re:Launch, located at
600 Bancroft Way, Berkeley, CA 94710.
Management Compensation. Sacio currently has no management compensation
agreements in place. The Merger Agreement calls for compensation agreements
to be signed between the post-acquisition company on the one hand, and
Richard Miles and John Collins, on the other hand. The required terms of
such agreements as follows:
John Collins shall be offered an employment agreement with a minimum
monthly salary of $9,500 for a duration of 3 years that shall possess
mutually suitable non-competition and non-disclosure provisions.
Marilson Campos shall be offered an employment agreement with a minimum
monthly salary of $7,500 per month for a duration of 3 years that shall
possess mutually suitable non-competition and non-disclosure provisions.
Selected Financial Data:
The following tables present for selected historical financial data of
Sacio. This information is based on the financial statements of Sacio. The
financial statements of Sacio, included as Exhibit C hereto, should be read
in conjunction herewith.
Sacio Selected Historical Financial Data
Year ended December 31,
1999 1998
------ ------
Statement of Operations Data -
Net Revenues $ 0 $ 0
Total Costs and Expenses 424 0
Net Loss from Operations 0 0
Net Loss $ (424) $ 0
Balance Sheet Data -
Total Assets $ 15 $ 4,300
Total Liabilities 0 0
Total Stockholders' Equity (deficit) 15 4,300
Total Liabilities and Stockholders' Equity $ 15 $ 4,300
The following tables present for selected historical financial data of FSC.
This information is based on the financial statements of FSC. The financial
statements of FSC, included as Exhibit D hereto, should be read in
conjunction herewith.
-9-
FSC Selected Historical Financial Data
Year ended December 31,
1999
Statement of Operations Data - -------
Net Revenues $ 0
Total Costs and Expenses 200,373
Net Loss from Operations 0
Net Loss $ (200,373)
Balance Sheet Data -
Total Assets $ 24,358
Total Liabilities 99,973
Total Stockholders' Equity (deficit) (75,615)
Total Liabilities and Stockholders' Equity $ 24,358
STOCK OWNERSHIP OF SACIO AND FSC
Sacio's Current Ownership:
The following table sets forth information regarding the beneficial
ownership of Sacio at the date hereof.
Name Shares Percentage
- ----------- ------ ----------
Nancy Davis* -0- 0%
Stephen Huntley* -0- 0%
Other 3,289,500 100.0%
Total 3,289,500 100.0%
* Officers and Directors of Sacio.
FSC's Current Ownership:
FSC currently has 10,000,000 shares of common stock issued and
outstanding. Each share of FSC common stock will be exchanged for 1.3158
shares of Sacio common stock. The following table sets forth information on
the stock ownership of the Officers, Directors and Affiliates of FSC at the
date hereof and the corresponding number of shares of Sacio stock that will
be held at the Close of the Merger.
FSC SHAREHOLDER # FSC SHARES OWNED # OF SACIO SHARES
TO BE EXCHANGED
- --------------- ------------------ -----------------
Richard Miles(1) 3,150,000 4,144,770
John Collins(2) 2,100,000 2,763,180
Net Profits, Etc.(3) 3,750,000 4,934,250
EMJ DataSystems 1,000,000 1,315,800
TOTAL 10,000,000 13,158,000
-10-
(1) Mr. Miles is the President and a Director of FSC.
(2) Mr. Collins is the Vice President and a Director of FSC.
(3) Net Profits, Etc. is owned by Rene Pardo, who is a Director of FSC.
- -------------------
OTHER INFORMATION RELATING TO PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF SACIO
Compensation of Sacio Management
The following table sets forth the compensation of Sacio management
from Sacio's inception to date: No Compensation has been paid to Sacio
Officers or Directors.
OTHER INFORMATION RELATING TO PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF FSC
Management
The following are the current Directors and Executive Officers of FSC.
Richard Miles will become the Secretary and Treasurer and John Collins will
become the President of the surviving entity upon the closing of the Merger.
Name Age Position
- ------------- --- --------
Richard Miles 45 Director, President, Secretary, and
Treasurer
John Collins 38 Director, Vice President
Rene Pardo 52 Director
Compensation of FSC Management
Richard Miles and John Collins have received the following compensation
during 1999: $ 0.
DESCRIPTION OF FSC
The following information concerning FSC and its business has been
provided by FSC for inclusion in this Proxy Statement. This information is
confidential. The information contained herein does not purport to be all-
inclusive or to contain all the information that a prospective investor may
desire. This information contains statements that constitute "forward-
looking statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Any statements that express or involve
discussions with respect to predictions, business strategy, budgets,
developments opportunities or projects, the expected timing of transactions
or other expectations, beliefs, plans, objectives, assumptions or future
events or performance are not statements of historical fact and may be
"forward-looking statements". Forward-looking statements are based on
expectations, estimates and projections at the time the statements are made
that involve a number of known and unknown risks and uncertainties which
could cause actual results or events to differ materially from those
anticipated by the FSC.
-11-
Introduction
The Free Software Club is a membership club that offers current, best selling
fully licensed software titles to members. Members pay a fee of $9.95/ month
and are eligible for one free "A" level title per month, in addition to an
extensive catalog of high quality pre-licensed "shareware" that can be
selected at no cost. The software will either be shipped to the customer on
CD-ROM discs or if available, via digital download. Customers pay only a
small shipping and handling charge per title if the product is physically
shipped.
The Free Software Club exploits a unique opportunity that exists on Internet
that is borne out of the following three conditions:
1) Shopping online is simply a better way to acquire software. Consumers can
more thoroughly evaluate software, attain them faster, easier and often at
less cost, than they in a typical brick and mortar store. As such, industry
data shows increasing sales and traffic to software-oriented websites and a
clear deceleration of buying activity at traditional retail stores for
2) Anything featured "FREE" on the internet is experiencing explosive growth
in web site traffic.
3) Lifecycles for software at retail stores are now extremely short.
Publishers and retailers alike often remove perfectly salable products from
the shelf because of high marketing costs and declining sell-through rates
that in turn, mean low or negative ROI. As a result, a plethora of high
quality content can be acquired at relatively low cost.
The Free Software Club is leveraging all of the above, in conjunction with an
aggressive marketing program to quickly capture a large membership base.
The company is now well positioned to capitalize on the opportunity as it has
accomplished the following in a few short months:
- - Built a dynamic, database driven, e-commerce enabled website, that is
prepared to handle the accelerated growth in site traffic and a deep catalog
of titles.
- - Developed back end infrastructure in conjunction with the following
service providers:
Software Development Warehouse Fulfillment Creative Services
- - Secured over 70 titles for the website catalog from Aztech New Media
-12-
The Market
Millions of people visit download sites looking for free software, but are
often met with a confusing mix of free, trial, demo, and shareware products.
Last week alone over 1,000,000 people downloaded a single free product from
one site. Most software available on the Internet for free is either
shareware (which requires payment later in a "try-before-you-buy" scenario),
or limited versions of commercial products ("lite" versions with less
capability). The Free Software Club will have an inventory of over 1,000
completely free titles that are available as free downloads to anyone. The
Free Software Club will offer only truly free titles to attract the user who
wants free software but wants to avoid the hassle of sifting through a
confusing array of products. These visitors will also be able to see all of
the commercial titles we offer "free" to members, and will be solicited to
join.
Key Segments
Recent industry analysis of web purchasing trends show an increasingly high
percentage of shoppers online are women. Educational studies show that
children aged 4 - 10 years jump a learning level every 4 to 5 months, while
parents typically purchase software twice a year - at Christmas and
birthdays. One of the The Free Software Club "sweet spots" are parents with
children in the home, where membership allows them to provide software for
their children on a timely basis so that the software they own does not hold
their children back. With The Free Software Club membership, the software in
the home can keep up with the advances their children make in learning
Game software continues to be the top draw in the consumer software and will
also be prominently featured in The Free Software Club. Industry data has
shown the gamer demographic (Male, Age 18 - 34) overlaps a high percentage of
the on-line audience. And, as this segment is also made up of large body of
students, disposable income is a concern and the "FREE" will have high appeal
to this audience.
Revenue Model
The company earns revenues from the following:
1. Monthly Membership Fees
2. Shipping Charges
3. Special Member Offers
4. Affiliate Programs
5. Advertising on the website
-13-
Membership
Projected customer acquisition is forecasted at approximately 140,000 new
customers in the first 12 months from marketing programs at an acquisition
cost of approx. $17 per customer. Additional customers are forecasted from
affiliate / OEM arrangements with other vendors. These customers are acquired
at no cost to the company, but with a discount given and a recurring rebate
back for continuing members.
Members can sign-up for one of 3 fee plan options:
a) $9.95/ month
b) $49.95/ 6 months
c) $89.95/ year.
Projected customer acquisition is forecasted at approximately 140,000 new
customers in the first 12 months from marketing programs at an acquisition
cost of approx. $17 per customer. Additional customers are forecasted from
affiliate / OEM arrangements with other vendors. These customers are acquired
at no cost to the company, but with a discount given and a recurring rebate
back for continuing members.
Customers pay a $6.95 shipping and handling charge per title for tangible
product. (No fees are associated with electronic download.
Special Member offers are exclusive deals for highly popular software titles
solicited directly to the membership throughout the year via email. Titles
offered will be current "A" quality releases offered to members at discount
"exclusive" prices (e.g. Product normally sold for $50 via traditional
resellers, will be available for $29.95 to club members).
Affiliate programs, fees obtained from referral to Affiliate partners, and Ad
Banner fees will contribute a small portion of revenue beginning later in the
year.
Revenue Projections
The following results (in 1,000s) are forecast based on the company's fiscal
year ending December:
Fiscal Year 2000 2001
------ ------
Revenues $12,049 $56,133
Gross Margin $3,517 $25,491
Expenses $4,222 $12,597
Operating Profit -$705 $12,894
- - Valuation at the end of the first full year of operations should be in
excess of $100 million.
-14-
Conclusion
The Free Software Club is positioned itself with a breakthrough marketing
model that leverages market conditions in the consumer software at retail and
on-line the will drive its membership quickly and build an tremendous
recurring revenue vehicle for growth and profit. The company has significant
strategic partners and a dedicated executive staff of industry experts in
technology marketing, e-commerce, and business.
Business Plan
The Opportunity
FreeSoftwareClub.com (FSC) offers a compelling and unique opportunity to
quickly build a profitable Internet-based business by exploiting the most
pervasive perception of the Internet - the number one source of "free stuff"
and by providing one of the most heavily pursued products on the internet -
software.
Unique among recent Internet startups, the FreeSoftwareClub.com promises to
be a profitable venture within its second year of operation. Given the
valuation even unprofitable Internet companies are currently enjoying, the
FreeSoftwareClub.com should very rapidly enjoy a very high valuation.
A joint-venture company will be formed to construct, populate and operate an
Internet website called FreeSoftwareClub.com. It will offer members fully
licensed software (not shareware, demos or "light" version) titles for FREE
every month with their membership in the Club. In addition, members can
select additional new titles at dramatic discounts every month.
The FreeSoftwareClub is determined to be the "HBO" of Software
The FreeSoftwareClub.com essentially creates a powerful new distribution
mechanism for software. The FSC is designed to become the "HBO" of software.
We will be creating for software distribution the same model that
entertainment companies use when producing films. Film distribution starts
with theatrical release, then video release, then cable television, then
broadcast, then syndication.
Currently, software is only produced for retail (theatrical) release. A hot
title will enjoy success for a limited period of time, and as sales decline,
the publisher will either offer rebates, other incentives, or simply reduce
the price. If sales velocity cannot be maintained, the retailer will return
whatever inventory they have at no risk. As sales continue to decline, the
publisher will either continue to drop the price to keep sales velocity, or
simply allow it drop off the retail shelf. At that point, it may become
available for bundling with other titles or as a premium (bonus) offered with
other products.
What the FSC provides is a secondary source of sales (cable). By licensing
current bestsellers on an advance royalty basis, we offer publishers an
immediate guaranteed income, with no risk of return. This helps them offset
their marketing and promotion costs while the title enjoys its "theatrical"
(retail) life.
-15-
This is typical in the book and music business, and is the reason for the
Book-of-the-Month club, Columbia Record Club, etc. Today's John Grisham
Bestseller is available in bookstores everywhere in the "What's New" and
"Bestsellers" sections at the front of the store. It will be available as a
monthly selection to Book Club members in 2 or 3 months. The publisher has a
guaranteed income from the Book Club to offset his cost of marketing and
promotion, and a secondary life for the product.
FSC club members will be always be able to see today's bestselling software,
first available via the club at distribution cost (the lowest price currently
available via online resellers like buysoft.com), but also will be able to
see the title as a "Member's Only Special Selection - Coming Soon" available
in 30 or 60 days, at approx. half that price, and then it will go into the
"Monthly Free Picks" section. After the velocity declines from members
Monthly Free Picks, it can then go into our unlimited free pick area.
FSC will also be the premier destination for great completely FREE Software.
The FreeSoftwareClub.com will have a non-member public access area that will
have a terrific selection of Free software available for download. Only the
best "5 Star" quality products will be listed and the only the completely
"Free"titles with no licenses or fees to pay.
Currently, other prominent sites also have free software available, but it's
often lost among a raft of shareware titles at various license fees with
disabled features or time limitations. Viewers must hunt for titles that are
both highly rated and completely free.
Viewers who browse the FSC's public access catalog will quickly discover a
highly organized catalog of high quality content that is fully enabled, and
completely Free.
The effect of this "public" area will be that it will allow any viewer
without any obligation to immediately become a satisfied customer. It will
also give reason for non-members and members alike to continue to return to
the site to check out what's new.
10's of millions of users download software each week. For example,
Download.com in the week ending 1/11/00 had over 3,000,000 downloads for just
it's top 50 titles. Tucows.com, another popular site had comparable numbers.
We can validate the intense interest and traffic and demand for free stuff on
the net by just looking at the site traffic on sites with the FREE in the
title. PC-Data online shows among their top 1000 sites approximately 25%
have FREE in the title name. For the week ending 1/14/00 approx. 37 Million
users collectively visited these sites with 486 Million page views.
In short, the word FREE in site name builds site traffic and free
downloadable software is tremendously popular. FSC is going to leverage both
of these conditions by developing and promoting its "COMPLETELY FREE
SOFTWARE" section as the premier destination for this class of content.
In turn, this will drive traffic for FSC's membership and other revenue
centers on the site.
-16-
Risk Factors
FSC is a newly formed venture that will be dependent on new business
strategy. The company's success will depend in part on its ability to deal
with the problems, expenses, and delays frequently associated with
establishing a new business venture and developing new technology and
strategy. FSC has made no sales to date. Losses are likely before the FSC's
operations will become profitable. There can be no assurance that the FSC's
operations will ever prove profitable.
FSC is dependent on the overall acceptance of a software club membership
program and the continued acceptance of the internet as a distribution
channel for software.
There is no assurance that the current funding commitments will be fulfilled
and additional sources of funding may be required in the future. There can be
no assurance that such financing will be available to FSC on attractive terms
or at all.
Additional Risks of Investing in FSC's Business
Risks of Acquisition. A Merger Agreement has been signed between Sacio
and FSC. There are, however, conditions precedent to the Closing of the
Merger, including, but limited to, the completion of due diligence to each
party's satisfaction and approval by the shareholders of FSC, which may or
may not be fulfilled or completed. Accordingly, there can be no assurances
that the Merger will in fact be consummated.
Early Stage Business. If the FSC Merger Agreement is consummated,
Sacio will own the FSC business and assets. The FSC business is an early
stage business. FSC has only one product to date, known as "ConversIt," which
is in the beta testing stage. It is not yet ready for commercial sale.
There are no orders to purchase any products.
Need for Capital. Sacio will need to raise capital to finance the FSC
operating business. There can be no assurances that Sacio will be able to
obtain the necessary financing in the amounts and on the timetable needed for
development of the FSC business, or if financing is available, that it will
be available on terms and conditions that are satisfactory to Sacio.
Competition. FSC's business faces strong competition in the sale of
software over the internet. Competitors may include companies that are
significantly larger than the surviving corporation, companies that have been
in business for a longer period of time and have established relationships,
companies that have competitive or possibly better technology, companies with
strong management teams and access to research and development facilities,
and companies that are better funded. Accordingly, there can be no assurance
that the surviving corporation will be able to achieve and maintain a
competitive position in its new industry.
-17-
Dependence on Key Personnel. The surviving corporation will, after
closing the FSC acquisition and thereafter for the foreseeable future, be
dependent on the skills of Richard Miles, John Collins, and Rene Pardo, its
management team. The loss of key personnel or an inability to attract,
retain and motivate key personnel could adversely affect the surviving
corporation's business. The surviving corporation, at present, has no plans
to maintain key-person life insurance on any employees.
Lack of Active Public Market. Sacio Common Stock is currently listed
for trading on the OTC Bulletin Board, but there has been little trading
during the past two years. There is currently limited public trading market
for Sacio Common Stock, and there can be no assurance that the public market
will continue or develop. Holders of Sacio Common Stock may therefore have
difficulty selling their stock. The OTC Bulletin Board is generally
considered to be less efficient than securities markets such as NASDAQ or
other national exchanges. Any market price for Sacio Common Stock may not
necessarily bear any relationship to Sacio's book value, assets, past
operating results, financial condition or any other established criterion of
value, and may not be indicative of the market price in the future. The
market price may be volatile depending on business performance, industry
dynamics, news announcements, changes in general economic conditions and
other factors.
Control By Principal Stockholders. Assuming the transactions
contemplated by this Proxy Statement are completed, the surviving
corporation's new directors, officers, and affiliates will own in the
aggregate approximately 80.0% of the Company Common Stock outstanding
immediately after the transactions. As a result of such ownership, the post-
transaction the surviving corporation directors, officers, and affiliates
will be able to, and intend to, exercise substantially complete control of
the surviving corporation's affairs, including electing additional directors
of the surviving corporation. As a result of such control, a potential buyer
may be deterred from trying to acquire the Company without consent of the
surviving corporation officers and directors.
Merger; Potential Dilution. The purchase price of the Sacio stock in
the Merger was reached by negotiation between the parties. These prices or
values are not necessarily based on any market price, appraised value, book
value, or other objective measure of value. The current shareholders of
Sacio may suffer dilution of voting power and of economic percentage
ownership upon closing of the Merger and any other share issuance, including,
but not limited to management option plans, that may be instituted by
management.
Issuance of Additional Shares; Shares Eligible for Future Sale. It is
likely that future financing of the FSC business will be require, which will
in turn require additional share issuance. Future issuance of the surviving
corporation stock for financing or other purpose, could adversely affect any
prevailing market price of the surviving corporation stock. The issuance of
such securities will result in the dilution of the voting power and other
rights of existing stockholders. After the closing of the Merger,
approximately 3,289,500 shares of Sacio common stock will be unrestricted;
-18-
and the 13,158,000 shares to be issued in exchange for the FSC shares will be
restricted securities that will be available for resale later, subject to
Rule 144. As restricted securities become available for resale into the
public market, it may be anticipated that the surviving corporation common
stock will experience selling pressure, which may have the effect of
depressing or reducing, perhaps significantly, the Sacio common stock price
in the market.
Lack of Dividends. Sacio has not paid any dividends on its Common
Stock to date and there are no plans for paying dividends on the common stock
of the surviving corporation in the foreseeable future.
FINANCIAL STATEMENTS
The financial statements included in this Proxy Statement relating to
Sacio and relating to FSC have been prepared by Sacio and FSC. The financial
statements for Sacio, attached as Exhibit C, are un-audited, and have not
been reviewed or compiled by any outside accounting firm. They represent
Sacio's best understanding of the financial position of the company as at and
for the periods indicated.
The financial statements included in this Proxy Statement relating to
FSC, attached as Exhibit D, have been prepared by FSC. They are unaudited,
and have not been reviewed or compiled by any outside accounting firm. They
represent FSC's best understanding of the financial position of FSC as at and
for the periods indicated.
OTHER MATTERS
As of the date of this Proxy Statement, Sacio's Board of Directors
Board of Directors knows of any other matters that will be presented for
consideration at the Special Meeting other than as described in this Proxy
Statement. If any other matter shall come before the Special Meeting or any
adjournment or postponement thereof and shall be voted upon, it is intended
that the shares represented by proxy will be voted with respect thereto in
accordance with the judgment of the persons voting them.
By Order of the Board of Directors of Sacio,
/s/Nancy Davis
--------------
Nancy Davis
February 18, 2000
Please find the following Exhibits attached hereto:
Exhibit 2 - Acquisition Agreement dated January 31, 2000
Exhibit 4 - Appraisal Rights per Delaware State Code
Exhibit 99.1 - SACIO, Inc. Financial Statements
Exhibit 99.2 - Freesoftwareclub.com, Inc. Financial Statements
-19-