SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 16, 2000
SURGE COMPONENTS, INC.
(Exact name of registrant as specified in its charter)
New York 0-14188 11-2602030
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
1016 Grand Boulevard
Deer Park, New York 11729
(Address of principal executive offices) (Zip Code)
(631) 595-1818
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets.
Effective November 16, 2000, we, Surge Components, Inc.,
acquired MailEncrypt.com, Inc., a Los Angeles, California based infrastructure
application service provider offering web-based, encrypted e-mail solutions. The
acquisition was in the form of a merger of MailEncrypt.com into Mail Acquisition
Corp., one of our wholly-owned subsidiaries which we formed for this
transaction. Mail Acquisition is a Delaware corporation which changed its name
to MailEncrypt, Inc. upon consummation of the merger.
The acquisition and merger was consummated pursuant to an
Agreement and Plan of Merger, dated as of November 13, 2000, between us,
Mail Acquisition, MailEncrypt.com and MailEncrypt.com's shareholders. Pursuant
to the merger agreement, we issued to the MailEncrypt.com shareholders a total
of 182,139.79 shares of our Voting Redeemable Convertible Series B Preferred
Stock.
Our board of directors authorized the Series B preferred stock
specifically in order to consummate this merger transaction. Holders of Series B
preferred stock are entitled to vote together with the holders of our common
stock. In any such vote, a holder of Series B preferred stock is entitled to 5.4
votes per share of Series B preferred stock. Holders of our common stock are
entitled to one vote per share of common stock. Further, shares of Series B
preferred stock will automatically convert into common stock upon either (a)
confirmation by The Nasdaq Stock Market, Inc. that the conversion does not
require further shareholder approval under the Nasdaq Marketplace Rules or (b)
shareholder approval of the conversion. The conversion will be at the rate of
ten shares of common stock for every one share of Series B preferred stock. We
intend to seek shareholder approval of the conversion as soon as possible. In
the event that we do not obtain shareholder approval of the conversion by March
15, 2001, the former shareholders of MailEncrypt.com have the right to purchase
MailEncrypt from us for the sole consideration of their Series B preferred stock
issued to them pursuant to the merger agreement. This Form 8-K should not be
read as a solicitation of proxies for such shareholder approval. Solicitation of
proxies for such shareholder approval can and will be made under a separate
proxy statement of our board of directors.
We have agreed to register for resale the 1,821,397 shares of
our common stock issuable upon conversion of the Series B preferred stock.
However, these 1,821,397 shares are subject to lock-up provisions which allow
for no sales prior to January 16, 2001 and limited sales during the following
four months, as specifically set forth in the merger agreement.
Item 5. Other Matters.
Investment Banking Agreement with Equilink Capital Partners, LLC
Effective November 24, 2000, we entered into an Investment
Banking Agreement with Equilink Capital Partners, LLC. Under the investment
banking agreement, we acknowledged past and continuing services provided to us
by Equilink and Equilink agreed to
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perform additional services on our behalf in the future. Pursuant to the
investment banking agreement, we issued to Equilink (a) 900,000 shares of our
common stock, (b) 70,000 shares of our Non-Voting Redeemable Convertible Series
C Preferred Stock and (c) warrants to purchase an additional 2 million shares of
our common stock.
Our board of directors authorized the Series C preferred stock
specifically in order to give consideration under the investment banking
agreement. Holders of Series C preferred stock do not have any voting rights,
except regarding (a) the issuance of securities senior to the Series C preferred
stock as to the payment of dividends, (b) any amendment to our certificate of
incorporation which would adversely affect the rights of holders of Series C
preferred stock or (c) as otherwise specifically provided under New York law.
Holders of Series C preferred stock are entitled to dividends at the annual rate
of $.50 per share, cumulative from April 15, 2001 and payable semi-annually
commencing on June 30, 2001. Holders of Series C preferred stock also are
entitled to a liquidation preference of $5.00 per share in the event of our
liquidation or dissolution. Payment of such dividends and liquidation rights on
the Series C preferred stock are senior to the payment of dividends and
liquidation rights on our common stock. However, shares of Series C preferred
stock will automatically convert into our common stock upon either (i)
confirmation by The Nasdaq Stock Market, Inc. that the conversion does not
require shareholder approval under the Nasdaq Marketplace Rules or (ii)
shareholder approval of the conversion. The conversion will be at the rate of
ten shares of our common stock for every one share of Series C preferred stock.
We intend to seek shareholder approval of the conversion as soon as possible. If
we obtain shareholder approval of the conversion by April 15, 2001, the
automatic conversion into shares of our common stock will occur and no payment
of dividends on the Series C preferred stock will be required to be made.
The warrants issued to Equilink are exercisable only upon
approval by our shareholders of the issuance of the shares underlying the
Equilink warrants. The Equilink warrants will be exercisable for a five year
period expiring on November 24, 2005, at an exercise price of $3.00 per share.
We have agreed to register for resale (a) the 900,000 shares
of our common stock we have issued to Equilink under the investment banking
agreement, (b) the 700,000 shares of our common stock issuable upon conversion
of the Series C preferred stock and (c) the 2,000,000 shares of our common stock
issuable upon exercise of the Equilink warrants.
This Form 8-K should not be read as a solicitation of proxies
for shareholder approval of the conversion into shares of our common stock of
the shares of Series C preferred stock nor the issuance of shares of our common
stock upon exercise of the Equilink warrants. Solicitation of proxies for such
shareholder approval can and will be made under a separate proxy statement of
our board of directors.
Merger Agreement to Reorganize in Delaware
We have entered into an Agreement and Plan of Merger, dated as
of November 29, 2000, with one of our wholly-owned Delaware subsidiaries,
Superus Holdings, Inc., pursuant
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to which we intend to merge into Superus and thereby become a Delaware
corporation. This merger agreement supersedes and terminates our earlier
agreement with Superus and simplifies the previously announced reorganization
transaction. Under this new reorganization agreement, we will merge with and
into Superus with each of our outstanding securities being exchanged for a
similar form of Superus security, on a one-for-one basis.
This Form 8-K should not be read as a solicitation of proxies
for shareholder approval of the reorganization transaction. Solicitation of
proxies for such shareholder approval can and will be made under a separate
proxy statement of our board of directors.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
The required financial statements will be filed by amendment
not later than January 30, 2001.
(b) Pro forma financial information.
The required pro forma financial information will be filed by
amendment not later than January 30, 2001.
(c) Exhibits.
Listed below are all exhibits to this Current Report on Form
8-K.
Exhibit
Number Description
- ------ -----------
10.1 Merger Agreement and Plan of Reorganization, dated as of November
13, 2000, among Surge Components, Inc., Mail Acquisition Corp.,
MailEncrypt.com, Inc. and the shareholders of MailEncrypt.com,
Inc.
10.2 Certificate of Amendment of Certificate of Incorporation of Surge
Components, Inc., with respect to the authorization of the Voting
Redeemable Convertible Series B Preferred Stock.
10.3 Investment Banking Agreement, dated as of November 24, 2000,
between Surge Components, Inc. and Equilink Capital Partners, Inc.
10.4 Certificate of Amendment of Certificate of Incorporation of Surge
Components, Inc., with respect to the authorization of the
Non-Voting Redeemable Convertible Series C Preferred Stock.
10.5 Warrant certificate, evidencing warrants to purchase 2 million
shares of the common stock of Surge Components Inc., registered in
the name of Equilink Capital Partners, Inc.
10.6 Agreement and Plan of Merger, dated as of November 29, 2000,
between Surge Components, Inc. and Superus Holdings, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: December 1, 2000
Surge Components, Inc.
By: /s/ Ira Levy
---------------------------
Ira Levy, President
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
10.1 Merger Agreement and Plan of Reorganization, dated as of November
13, 2000, among Surge Components, Inc., Mail Acquisition Corp.,
MailEncrypt.com, Inc. and the shareholders of MailEncrypt.com,
Inc.
10.2 Certificate of Amendment of Certificate of Incorporation of Surge
Components, Inc., with respect to the authorization of the Voting
Redeemable Convertible Series B Preferred Stock.
10.3 Investment Banking Agreement, dated as of November 24, 2000,
between Surge Components, Inc. and Equilink Capital Partners, Inc.
10.4 Certificate of Amendment of Certificate of Incorporation of Surge
Components, Inc., with respect to the authorization of the
Non-Voting Redeemable Convertible Series C Preferred Stock.
10.5 Warrant certificate, evidencing warrants to purchase 2 million
shares of the common stock of Surge Components Inc., registered in
the name of Equilink Capital Partners, Inc.
10.6 Agreement and Plan of Merger, dated as of November 29, 2000,
between Surge Components, Inc. and Superus Holdings, Inc.
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