UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Pursuant to Section 14(c) of the Securities Exchange Act of 1934
(Amendment No. _____)
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[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission only
(as permitted by Rule 14c-5(d)(2)
[X] Definitive Information Statement
Nannaco, Inc.
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(Name of registrant as specified in its charter)
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_________________________________________________________________
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Nannaco, Inc.
7235 North Creek Loop
Gig Harbor, WA 98335
September 13, 2004
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
To the Stockholders of Nannaco, Inc.:
This Information Statement is furnished to the stockholders
of Nannaco, Inc., a Texas corporation (Nannaco), in connection
with the following corporate action:
--To authorize the Board of Directors to effect a
100-for-one reverse stock split of the common stock.
Stockholders of record at the close of business on the date of the first
delivery of this information statement to any stockholder of the company shall
be given a copy of this Information Statement. The date of first delivery of
this information statement to any stockholder is expected to be September 13,
2004.
By Order of the Board of Directors
/s/ Steve Careaga
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Steve Careaga, President
THIS INFORMATION STATEMENT IS BEING FURNISHED TO ALL HOLDERS OF THE
VOTING CAPITAL STOCK OF NANNACO IN CONNECTION WITH THE PROPOSED ACTION BY
WRITTEN CONSENT TO AUTHORIZE THE BOARD OF DIRECTORS TO CARRY OUT A REVERSE SPLIT
OF THE COMMON STOCK ON A 100-FOR-ONE(100:1) BASIS.
NANNACO, INC.
INFORMATION STATEMENT
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This information statement is being furnished to all holders of the
voting capital stock of Nannaco, Inc., a Texas company ("Nannaco"), in
connection with resolutions of the board of directors (the "Board") and the
written consent of the holders of in excess of 66% of the voting capital stock
of Nannaco providing for a reverse split of the common stock of Nannaco on the
basis of 100 shares for each one share of common stock held. The reverse split
would be conducted at a time to be determined by the Board.
The Board, and persons owning a majority of the outstanding voting
securities of Nannaco, have adopted, ratified and approved the proposed reverse
stock split. No additional votes are required or necessary. See the caption
"Vote Required for Approval" below. Any reverse split adopted by the board of
directors will become effective upon final approval by the board and the filing
of required notices.
The Form 10-QSB for the quarterly period ended June 30, 2004 and the
form 10-KSB for the year ended September 30, 2003, filed by Nannaco with the
Securities and Exchange Commission may be viewed on the Securities and Exchange
Commission's web site at www.sec.gov in the Edgar Archives. Nannaco is presently
current in filing all reports required to be filed by it. See the caption
"Additional Information" below.
GRANT AUTHORITY TO THE BOARD OF DIRECTORS TO CONDUCT UP TO A 100-for-ONE SHARE
REVERSE STOCK SPLIT
Nannaco's board has determined that it would be in the Company's best
interest in the near future to conduct a reverse split of its common stock on up
to a 100-for-one basis and has received the consent of holders of a two-thirds
majority of the voting capital stock to authorize the board to conduct such a
reverse split, in the Board's discretion.
A reverse split would provide for the reduction of the presently issued
and outstanding shares of common stock into a smaller number of shares of
identical common stock. This process that is known as a reverse split would
cause one hundred shares of the presently issued and outstanding common stock on
the effective date of the reverse split to convert into one share of the post-
reverse stock split common stock.
The board has indicated that fractional shares will not be issued.
Instead, Nannaco will issue one full share of the post-reverse stock split
common stock to any stockholder who would have been entitled to receive a
fractional share as a result of the process. Each stockholder will hold the same
percentage of the outstanding common stock immediately following the reverse
stock split as that stockholder did immediately prior to the stock split, except
for minor adjustment as a result of the additional shares that will be issued as
a result of the treatment of fractional shares.
Reasons for the reverse stock split
The primary purposes of the reverse stock split are to accomplish the following:
a) increase the per share price of the common stock to help maintain
the interest of the markets
b) reduce the number of outstanding shares of common stock to a level
more consistent with other public companies with a similar anticipated market
capitalization; and
c) provide the management of the Company with additional flexibility to
issue shares to facilitate future acquisitions and financing for the Company.
For the above reasons, the board believes that the reverse stock split
is in the best interest of the Company and its stockholders. There can be no
assurance, however, that the reverse stock split will have the desired benefits.
Effects of the reverse stock split.
The reverse stock split will be effected by notice to the appropriate
regulatory authorities and will become effective upon such filing and final
approval of the Board as may be required. The actual timing of any such filing
will be decided by the Board based upon its evaluation as to when the filing
will be most advantageous to the Company and its stockholders.
Nannaco is currently authorized to issue 500,000,000 shares of its
common stock of which 474,253,389 shares are currently issued and outstanding as
of August 23, 2004. Currently, stockholders holding 10,000,000 of the voting
capital stock having voting power of 1,000,000,000 shares of common stock have
consented in writing to the proposal, constituting approval of two-thirds of the
shares entitled to vote. A reverse split on a 100 for one basis would reduce the
number of issued and outstanding shares to approximately 4,742,534, but will not
reduce the number of authorized shares of common stock. The reverse split will
not have any effect on the stated par value of the common stock.
The effect of the reverse split upon existing stockholders of the
common stock will be that the total number of shares of Nannaco's common stock
held by each stockholder will be automatically converted into the number of
whole shares of common stock equal to the number of shares of common stock owned
immediately prior to the reverse stock split divided by 100, with an adjustment
for any fractional shares. Fractional shares will be rounded up into a whole
share.
If acted upon by the Company's Board, the consent by the two-thirds
majority of the voting capital stock as reported herein, would result in each
stockholder's percentage ownership interest in the company and proportional
voting power remaining unchanged, except for minor changes and adjustments that
will result from rounding fractional shares into whole shares. The rights and
privileges of the holders of shares of common stock will be substantially
unaffected by the reverse stock split. All issued and outstanding options,
warrants, and convertible securities would be appropriately adjusted for the
reverse stock split automatically on the effective date of the reverse stock
split. All shares, options, warrants or convertible securities that the Company
has agreed to issue (or agrees to issue prior to the effective date of the
reverse stock split) also will be appropriately adjusted for the reverse stock
split.
The reverse stock split may also result in some stockholders holding
"odd lots" of less than 100 shares of common stock. Brokerage commissions and
other costs of transactions in odd lots may be higher, particularly on a per-
share basis, than the cost of transactions in even multiples of 100 shares.
The net effect of the reverse split of the common stock while
maintaining total authorized common capital stock at 500,000,000 shares is to
increase the authorized but unissued shares of common stock available to the
Company to be issued in the future. Aside from current obligations to issue
common capital stock as described in this Information Statement and other
reports filed with the Securities and Exchange Commission, we have no present
intent to issue any additional shares of common stock.
If in the future the Company issues additional equity or quasi-equity
securities combined with this reverse stock split, there is a significant risk
of stockholder value represented by the common stock being diluted. The
availability of authorized but unissued shares of common stock creates a risk
that current stockholders of the common stock will see the value of those shares
diluted through the issuance of the additional authorized shares if such shares
are issued at less than the book value per share of common stock of Nannaco. If
all additional shares of authorized common stock were issued, without any
increase in the book value of the assets of the Company, the net book value per
share would decrease by a factor of approximately 96%, assuming the company had
a positive book value per share at the time of such issuance. If all authorized
shares of common stock were issued each share would drop from representing
1/4,742,534 to 1/500,000,000 of the shares of common stock issued and
outstanding.
After the reverse stock split is effected there is no requirement that
stockholders obtain new or replacement share certificates. Each holder of record
of shares of the Company's common stock that is outstanding on the effective
date of the reverse stock split may contact the Company's transfer agent to
exchange the certificates for new certificates representing the number of whole
shares of post-reverse stock split common shares into which the existing shares
have been converted as a result of the reverse stock split.
EXISTING CERTIFICATES SHOULD NOT BE SENT TO THE COMPANY OR THE TRANSFER AGENT
BEFORE THE EFFECTIVE DATE OF THE FILING OF THE PROPOSED AMENDMENTS TO THE
ARTICLES OF INCORPORATION.
Until the stockholder forwards a completed letter of transmittal,
together with certificates representing such stockholder's shares of pre-reverse
stock split common stock to the transfer agent and receives in return a new
certificate representing shares of post-reverse stock split common stock, such
stockholder's pre-reverse stock split common stock shall be deemed equal to the
number of whole shares of post-reverse stock split common shares to which such
stockholder is entitled as a result of the reverse stock split.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes certain material federal income tax
considerations relating to the proposed reverse stock split. This discussion is
based upon the Internal Revenue Code, existing and proposed regulations
thereunder, legislative history, judicial decisions, and current administrative
rulings and practices, all as amended and in effect on the date hereof. Any of
these authorities could be repealed, overruled, or modified at any time. Any
such change could be retroactive and, accordingly, could cause the tax
consequences to vary substantially from the consequences described herein. No
ruling from the Internal Revenue Service (the "IRS") with respect to the matters
discussed herein have been requested, and there is no assurance that the IRS
would agree with the conclusions set forth in this discussion.
This discussion may not address federal income tax consequences that
may be relevant to particular stockholders in light of their personal
circumstances or to stockholders who may be subject to special treatment under
the federal income tax laws. This discussion also does not address any tax
consequences under state, local or foreign laws.
STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCE OF THE REVERSE STOCK SPLIT FOR THEM, INCLUDING THE APPLICABILITY OF
ANY STATE, LOCAL OR FOREIGN TAX LAWS, CHANGES IN APPLICABLE TAX LAWS AND ANY
PENDING OR PROPOSED LEGISLATION.
The reverse stock split is intended to be a tax-free recapitalization
to the Company and its stockholders, except for those stockholders who receive a
whole share of common stock in lieu of a fractional shares. Stockholders will
not recognize any gain or loss for federal income tax purposes as a result of
the reverse stock split, except for those stockholders receiving a whole share
of common stock in lieu of a fractional share (as described below). The holding
period for shares of common stock after the reverse split will include the
holding period of shares of common stock before the reverse stock split,
provided, that such shares of common stock are held as a capital asset at the
effective date of the amendment. The adjusted basis of the shares of common
stock after the reverse stock split will be the
same as the adjusted basis of the shares of common stock before the reverse
stock split excluding the basis of fractional shares.
A stockholder who receives a whole share of common stock in lieu of a
fractional share generally may recognize gain in an amount not to exceed the
excess of the fair market value of such whole share over the fair market value
of the fractional shares to which the stockholder was otherwise entitled.
QUESTIONS AND ANSWERS REGARDING THE PROPOSED REVERSE STOCK SPLIT OF THE COMMON
STOCK.
Q. WHY IS APPROVAL SOUGHT FOR THE PROPOSED REVERSE STOCK SPLIT OF THE COMMON
STOCK ON A 100 FOR ONE BASIS?
A. The Board seeks approval of a reverse stock split of the common stock 100 for
one share of the currently issued common stock. It is the expectation of the
Board that such a reverse stock split would increase the market price of the
resulting common stock and thus maintain a higher level of market interest
in the shares, including shares issued pursuant to the Company's Employee
Benefit Plans, provide additional flexibility to management with regard to the
issuance of shares and maintaining the proper market capitalization of the
Company. The Board believes that the reverse stock split will enhance the
Company's flexibility with regard to the ability to issue common stock for
proper corporate purposes that may be identified from time to time, such as
financing, acquisitions, compensation of employees, the establishment of
strategic business relationships with other companies or the expansion of
Nannaco's business or product lines through the acquisition of other businesses
or products.
Q. HAS THE BOARD OF DIRECTORS APPROVED THE REVERSE STOCK SPLIT?
A. The sole member of the Board has approved the the reverse stock split of the
common stock in the best interest of Nannaco stockholders of Nannaco.
Q. WILL I RECEIVE ANY ADDITIONAL SHARES OR A DIFFERENT CLASS OF SHARES AS A
RESULT OF THESE PROPOSALS?
A. As a current stockholder of Nannaco your class of stock and the number of
shares that you hold will be affected only as a result of the adoption of the
proposal to authorize a reverse stock split. For example, a current holder of
10,000 shares of common stock will remain a holder of 100 shares of common stock
in the event that the Board approves a 100 for one reverse stock split.
Q. WILL THE REVERSE STOCK SPLIT RESULT IN ANY TAX LIABILITY TO ME?
A. The proposed changes are intended to be tax free for federal income tax
purposes, except in the case of the issuance of a whole share for a fractional
share, as noted above.
Q. WHAT VOTE OF THE STOCKHOLDERS WILL RESULT IN THE PROPOSALS BEING PASSED?
A. To approve the proposal, the affirmative vote of two-thirds of all capital
stock entitled to vote on the issue of a reverse stock split is required.
Consents in favor of the proposal have already been received from stockholders
holding a two-thirds majority of the voting securities of Nannaco.
Q. WHO IS PAYING FOR THIS INFORMATION STATEMENT?
A. The Company will pay for the delivery of this information statement.
Q. WHOM SHOULD I CONTACT IF I HAVE ADDITIONAL QUESTIONS?
A: Steve Careaga, President of Nannaco, Inc. 7235 North Creek Loop, Gig Harbor,
WA 98335, telephone: (253) 853-3632
VOTE REQUIRED FOR APPROVAL
Under Texas Law, the reverse split must be approved by a two-thirds
majority of all outstanding voting securities.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Board fixed the close of business on the first date that this
information statement is distributed to any stockholder as the date for the
determination of the common stockholders entitled to notice of the action by
written consent. The information relating to how the voting securities of the
Company are held is provided as of the date of the first filing of this
information statement which is September 3, 2004
At the record date, Nannaco had issued and outstanding 474,253,389
shares of $0.001 par value common stock and 10,000,000 shares Series A
Convertible Preferred Stock. Stockholders representing more than a two-thirds
majority of Nannaco's outstanding voting capital stock consented to the reverse
stock split.
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND FIVE PERCENT
STOCKHOLDERS
The following table sets forth information about the beneficial
ownership of Nannaco's Common Stock, as of September 3, 2004 by (i) each person
who is known by Nannaco to own beneficially more than five percent (5%) of the
outstanding shares of Common Stock; (ii) each of Nannaco's named Executive
Officers and Directors; and (iii) all Directors and Executive Officers as a
group:
Mr. Steve Careaga is the sole director and officer of Nannaco. In
connection with a service agreement, Nannaco will issue 5,000,000
shares of common stock (as determined prior to the reverse stock
split discussed herein) to Mr. Careaga. Nannaco is informed that no
filings on Schedule 13D or Schedule 13G have been made as of the
above date as would be required of any individual or entity owning
more than five percent of Nannaco's common stock. As of the date of
this Information Statement, 5% of Nannaco's issued and outstanding
common stock would be 23,712,670 shares. Nannaco is unaware of any
stockholder holding 5% or more of its common stock. Nannaco's
transfer agent ComputerShare Trust of Golden, Colorado suspended
services to Nannaco in June 2004. Until such time as the transfer
agent is paid it has declined to provide services to Nannaco
including assisting in the determination of 5% or greater
stockholders
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No director, executive officer, nominee for election as a director,
associate of any director, executive officer or nominee or any other person has
any substantial interest, direct or indirect, by security holdings or otherwise,
in the actions covered by the related resolutions adopted by the Board, which is
not shared by all other stockholders.
ADDITIONAL INFORMATION
Additional information concerning Nannaco, Inc. including its Form 10-
KSB annual report for the year ended September 30, 2004 and quarterly reports on
Form 10-QSB for the past quarters ended June 30, 2004 and March 31, 2004, which
have been filed with the Securities and Exchange Commission, may be accessed
through the EDGAR archives, at www.sec.gov.
Dated: September 13, 2004
By Order of the Board of Directors
/s/ Steve Careaga
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President and Director