UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
| | 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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pursuant to Exchange Act Rule 0-11 (set forth the amount of which
the filing fee is calculated and state how it was determined):
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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
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number, or the Form or Schedule and the date of its filing.
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Nannaco, Inc.
4916 Point Fosdick Dr., Suite 102
Gig Harbor, WA 98335
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
To the Shareholders of Nannaco, Inc.:
This Information Statement is furnished to the shareholders of Nannaco,
Inc., a Texas corporation ("Nannaco"), in connection with the following
corporate action:
-- To authorize the board of directors to effect a one for 400 (1:400)
reverse split of the common stock of Nannaco.
The first shareholder consent in favor of authorizing the action reported
on herein was received on or about June 13, 2005 which date has been determined
by the Board of Directors of Nannaco as the record date to determine the
shareholders entitled to be given a copy of the Information Statement provided
under cover of this letter.
By Order of the Board of Directors
/s/ Steve Careaga
----------------------------------------
Steve Careaga, President
THE INFORMATION STATEMENT IS BEING FURNISHED TO ALL HOLDERS OF THE VOTING
CAPITAL STOCK OF NANNACO IN CONNECTION WITH THE ACTION BY WRITTEN CONSENT TO
AUTHORIZE THE BOARD OF DIRECTORS TO CARRY OUT A REVERSE SPLIT OF NANNACO COMMON
STOCK ON A ONE-FOR-FOUR HUNDRED (1:400) BASIS.
INFORMATION STATEMENT
---------------------
This information statement is furnished to all holders of the voting
capital stock of Nannaco, Inc., a Texas company ("Nannaco" or the "Company"), in
connection with resolutions of the Board of Directors (the "Board") and the
written consent of the holders of in excess of two-thirds (2/3) of the voting
capital stock of Nannaco providing for a reverse split of the issued and
outstanding common stock of Nannaco on the basis of one share for each 400
shares of common stock held (the "reverse split"). The reverse split will be
conducted at a time to be determined by the Board but in no case before the
expiration of twenty (20) days after the date this Information Statement is
filed with the Securities and Exchange Commission in definitive form.
The Board of Directors, and persons owning greater than two-thirds (2/3)
of the outstanding voting securities of Nannaco, have adopted, ratified and
approved the proposed reverse split. No additional votes are required to adopt
the resolution authorizing the reverse split. See the caption "Vote Required for
Approval" below. The reverse split authorized by the shareholders of Nannaco
will become effective upon final action by the Board of Directors of Nannaco and
the filing of the required notice with the National Association of Securities
Dealers, Inc.
The resolution put before the shareholders by the Board was "Should the
shareholders:
GRANT AUTHORITY TO THE BOARD TO CONDUCT UP TO A ONE FOR 400 HUNDRED (1:400)
REVERSE SPLIT OF NANNACO'S ISSUED AND OUTSTANDING COMMON STOCK"
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 1-for-400 basis and has received the consent of holders in excess 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 reduce the amount of presently issued and
outstanding shares of common stock into a smaller number of shares of identical
common stock. This process would take up to four hundred shares of the presently
issued and outstanding common stock on the effective date of the reverse split
and convert those shares into one share of the post-reverse split common stock,
as a matter of law.
The Board has indicated that fractional shares will not be issued.
Instead, Nannaco will issue one full share of the post-reverse split common
stock to any shareholder who would have been entitled to receive a
fractional share as a result of the reverse split. Each shareholder will hold
the same percentage of the outstanding common stock immediately following the
reverse stock split as that shareholder held immediately prior to the stock
split, except for minor adjustment as a result of the additional shares that
will need to be issued as a result of the issuance of one share for a fractional
share.
Reasons for the reverse split.
The primary purpose of the reverse split is to:
a) reduce the number of outstanding shares of common stock to a level
consistent with other public companies with a similar business and anticipated
capital structure and market capitalization; and
b) increase the per share price of the common stock as a result of the
reverse split to help maintain the interest of market participants.
For the above reasons, the Board has determined that the reverse split is
in the best interest of the Company and its shareholders. There can be no
assurance, however, that the reverse split will have the desired effects or
benefits.
Effects of the reverse split.
The reverse split will be effected by notice to the appropriate regulatory
authorities and will become effective upon such filing and final
action by the Board. The actual timing of any such filing will be made by the
Board based upon its evaluation as to when the filing will be most advantageous
to the Company and its shareholders but in no case before the expiration of
twenty (20) days after the date this Information Statement is filed with the
Securities and Exchange Commission in definitive form.
Nannaco is currently authorized to issue 500,000,000 shares of common
Stock and 100,000,000 million shares of preferred capital stock. Of the
preferred capital stock, 10,000,000 shares had previously been designated the
Series A Convertible Preferred Stock (the "Series A Preferred") with
super-majority voting rights, but have subsequently been returned to the Company
and cancelled.
At August 29, 2005 there were approximately 499,999,995 shares of common
stock issued and outstanding. Upon the record date and at the time of receipt of
the requisite shareholders' consent to the reverse split, shareholders holding
least 251,001,050 of the then-outstanding 358,233,561 shares of common stock
having voting power in excess of two-thirds (2/3) of all voting power of capital
stock issued and outstanding on the record date consented in writing to the
proposal. A reverse split on a one for 400 basis would reduce the number of
issued and outstanding shares of common stock to approximately 1,250,000 shares
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 shareholders of the common
stock will be that the total number of shares of Nannaco's common stock held by
each shareholder 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 split divided by 400, with an adjustment for any fractional
shares. Fractional shares will be rounded up and issued as a whole share.
If acted upon by the Board, the consent by the shareholders reported
herein, would result in each shareholder'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 split. All issued and outstanding
options, warrants, and convertible securities will be appropriately adjusted for
the reverse split automatically on the effective date of the reverse 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
split) also will be appropriately adjusted for the reverse split.
The reverse split may also result in some shareholders 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 multiples of 100 shares.
If, in the future, the Company issues additional equity securities, or
securities convertible into equity securities, there is a significant risk of
decline of a shareholder's book value per share and relative voting power
represented by shares of the Company's common stock held by him. The
availability of authorized but unissued shares of common stock creates a risk
that current shareholders 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.
Current shareholders will also have a relatively smaller percentage ownership of
the Company than they held prior to any such authorized additional issuances of
the Company's common stock.
After the reverse split is effected there is no requirement that
shareholders obtain new or replacement share certificates. Each holder of record
of shares of the Company's common stock on or after the effective date of the
reverse split may, however, contact the Company's transfer agent to exchange the
certificates for new certificates representing the number of whole shares of
post-reverse split common shares into which the existing shares have been
converted.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes certain material federal income tax
considerations relating to the proposed reverse 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 of this
Information Statement. Any of these sources of law 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 has 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 shareholders in light of their personal circumstances
or to shareholders 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.
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCE OF THE REVERSE 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 split is intended to be a tax-free recapitalization to the
Company and its shareholders, except for those shareholders who receive a whole
share of common stock in lieu of a fractional share. Shareholders will
not recognize any gain or loss for federal income tax purposes as a result of
the reverse split, except for those shareholders 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 split, provided,
that such shares of common stock are held as a capital asset at the effective
date of the reverse split. The adjusted basis of the shares of common stock
after the reverse split will be the same as the adjusted basis of the shares of
common stock before the reverse split excluding the basis of any fractional
share.
A shareholder 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 share to which the shareholder was otherwise entitled.
QUESTIONS AND ANSWERS REGARDING THE PROPOSED REVERSE SPLIT OF THE COMMON
STOCK
Q. WHY WAS APPROVAL SOUGHT FOR THE PROPOSED REVERSE SPLIT?
A. The Board requires approval under Texas law to effect a reverse split of the
common stock. It is the expectation of the Board that such a reverse split would
increase the market price of the common stock and thus support and maintain a
higher level of market interest in the shares, including shares issued pursuant
to the Company's Employee Benefit Plans and registered on Form S-8, and 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 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, 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 APPROVED THE REVERSE SPLIT?
A. The sole member of the Board of Directors has approved the reverse split of
the common stock in the best interest of Nannaco and its shareholders.
Q. WILL I RECEIVE ANY ADDITIONAL SHARES OR A DIFFERENT CLASS OF SHARES AS A
RESULT OF THESE PROPOSALS?
A. As a current shareholder of Nannaco the class of stock you hold will not
change but the number of shares that you hold will be affected. For example, a
current holder of 10,000 shares of common stock will remain a holder of 25
shares of common stock.
Q. WILL THE REVERSE 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 SHAREHOLDERS WILL RESULT IN THE PROPOSAL 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 split is required under Texas
law. Consents in favor of the proposal have already been received from
shareholders 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. 4916 Point Fosdick Dr., Suite 102,
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, which approval has been obtained.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- -----------------------------------------------
The Board of Directors fixed the close of business on June x, 2005 as the
record date for the determination of the shareholders entitled to notice of the
action taken by written consent.
At the record date, Nannaco had issued and outstanding 358,233,561 shares
of $0.001 par value common stock. Shareholders holding a controlling interest
of more than two-thirds of the total voting power of Nannaco's outstanding
voting capital stock consented to the reverse split. In all, 251,001,050 shares
of voting stock (approximately 70%) of all shares entitled to vote on the matter
voted by written consent in favor of the proposed reverse split.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
- -------------------------------------------------------
No director, officer, nominee for election as a director, and no
associate of any director, officer or director nominee has any substantial
interest, direct or indirect, by security holdings or otherwise, in the actions
covered by the related resolutions adopted by the Board of Directors, that is
not shared by all other shareholders.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age, position and date of appointment of our directors and executive
officers as of August 29, 2005 are as follows:
Name Age Position Years of Service
- ---- --- -------- ----------------
Steve Careaga 40 Sole Officer 1
Sole Director
STEVE CAREAGA is the sole officer and director of the Company and has served in
that capacity since February 2004. Mr. Careaga oversees the professional
services being rendered to the Company by outside providers and participates in
the development of policies and objectives of the Company. Mr. Careaga is
formerly the Executive Director of Firefighters National Trust, a not for profit
corporation providing aid and assistance to families of fallen firefighters,
including victims of the September 11 attack against the World Trade Towers in
New York City. In that capacity, he presided over an organization with a budget
at one time exceeding $9,000,000. Mr. Careaga served in that position from 2001
to 2005. Mr. Careaga is also a director of Reality Wireless Networks, Inc., an
over-the-counter bulletin board company trading under the symbol RWNW.OB.
Audit Committee
The Company does not have an audit committee because the Company does not have
sufficient directors to people such a committee. The Company does not have
sufficient directors because the business affairs of the Company do not require
a larger participation.
Code of Ethics
The Company has not adopted a code of ethics because the Company has only one
officer and director and because the business affairs and status of the Company
do not require supervision or regulation over the conduct of more than one
decision-maker. The Company is presently reviewing a form of a Code of Conduct
and Ethics and expects that when, if at all, the Company's business and
therefore the number of participants in the Company expands, a Code of Conduct
and Ethics will be adopted.
SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers, directors and
persons who beneficially own more than 10% of the Company's common stock to file
reports of ownership and changes in ownership with the SEC. It is the
responsibility of the reporting persons and not necessarily that of the
registrant to provide reports required to be filed under this section of the
Exchange Act. These reporting persons also are required to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on the Company's
review of these reports or written representations from certain reporting
persons, we believe that during the fiscal year ended September 30, 2004 and
during the current fiscal year, all filing requirements applicable to the
Company's officers, directors, greater-than-ten-percent beneficial owners and
other persons subject to Section 16(a) of the Exchange Act were met.
EXECUTIVE COMPENSATION
The following table shows for the fiscal years ending September 30, 2004, 2003
and 2002 the compensation awarded or paid by the Company to its directors and
officers:
SUMMARY COMPENSATION TABLE
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Annual Compensation Long Term Compensation
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Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------------
Name and Year Salary Bonus Other annual Retricted Securities LTIP All other
principal compensation Stock Awards Underlying payouts compensation
position ($) ($) ($) ($) Options/SAR's
(#) ($) ($)(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Steve Careaga, 2004 0 0 0 0 0 0 92,000
CEO
- -----------------------------------------------------------------------------------------------------------------------------------
Andrew De Vries, 2004 50,000 0 0 0 0 0 1,766,304
III 2003 66,759 0 0 0 0 0 2,086,057
CEO 2002 24,000 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Mr. DeVries served the Company as CEO in 2003 and 2002, and for three months
of 2004.
(2) Each amount in this column is the result of multiplying the number of shares
of common stock distributed to the named executive times the market price at the
date of issuance. Shares of common stock were issued and registered pursuant to
Form S-8 registration statements. The dollar value of the shares of common stock
stock issued in this manner on the date of issuance may be more than, less than
or the same as the price received in a sale of the shares.
Options
In April 2000, the Company adopted the Nannaco 2000 Stock Option Plan (the
"2000 Plan"). The purpose of the 2000 Plan is to advance the business and
development of the Company and its shareholders by aligning the interests of
employees, directors and officers of the Company with those of the shareholders
through the grant of Options to such persons. The 2000 Plan reserved 5,000,000
shares for grant or issuance upon the exercise of options granted under the
plan. Stock Options under the Plan may be granted by the Board of Directors or a
Compensation Committee of the Board of Directors. The exercise prices for
Options granted will be at the fair market value of the common stock at the time
of the grant if a public market develops for the common stock or not less than
the most recent price at which the Company had sold its common stock.
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
- ------------------------- ----------------------- ----------------------- ----------------------- -----------------------
Name Number of securities Percent of total Exercise or base price Expiration Date
underlying options/SARs granted
options/SARs Granted to employees in
fiscal year
- ------------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ------------------------- ----------------------- ----------------------- ----------------------- -----------------------
No Stock Options were granted in 2004
Long-Term Incentive Plans-Awards in Last Fiscal Year
The Company has no long term incentive plans pursuant to which any awards were
made to any person in the last fiscal year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The following table sets forth information as of the most recently completed
fiscal year for each category of equity compensation plan (including individual
compensation plans) under which equity securities of the issuer are authorized
for issuance.
Equity Compensation Plan Information
- ------------------------------------------------------------------------------------------------------------------
Plan Category Number of securities to be Weighted average exercise Number of securities
issued upon exercise of price of outstanding remaining available for
outstanding options options warrants and rights future issuance under
warrants and rights equity compensation plans
(excluding securities
reflected in column (a)
- ------------------------------------------------------------------------------------------------------------------
Equity compensation plans (a)....... (b)....... (c)........
approved by shareholders
Equity compensation plans
not approved by security
holders (a)
Total
- ------------------------------------------------------------------------------------------------------------------
Information about 5% or greater shareholders
Based upon information received from the persons concerned, each person known to
us to be the beneficial owner of more than five percent of the outstanding
shares at June 16, 2005 of any class of our voting securities are as follows:
- ------------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Amount and Nature of Percent of Class
beneficial Owner beneficial ownership(1)
- ------------------------------------------------------------------------------------------------------------------
COMMON Terry Byrne 23,333,334 6.5
C/O Bartholomew
New York,NY
- ------------------------------------------------------------------------------------------------------------------
COMMON The Otto Law Group PLLC 70,000,000 19.5
301 Union Street
Suite 4500
Seattle, WA 98101
- ------------------------------------------------------------------------------------------------------------------
COMMON Seth Elliott 23,333,333 6.5
C/O Bartholomew
New York, NY
- ------------------------------------------------------------------------------------------------------------------
COMMON Bradford van Siclen 6.5
C/O Bartholomew 23,333,333
New York,NY
- ------------------------------------------------------------------------------------------------------------------
COMMON Bruce Arthur Hall 25,000,000 7.0
[address]
Texas
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(1) Unless otherwise indicated, all shares are held directly with sole voting
and investment power.
Information about the shareholdings of officers and directors of the Company
Each director, each of our executive officers and all of our directors and
executive officers as a group, owned beneficially as of June x, 2005 the number
and percentage of outstanding shares of each class of equity securities of
registrant, its parent or subsidiaries as follows:
- ------------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Amount and Nature of Percent of class
beneficial owner beneficial ownership(1)
- ------------------------------------------------------------------------------------------------------------------
COMMON Steve Careaga(2) 21
4916 Pt. Fosdick Road 76,001,050
Suite 102
Gig Harbor, WA 98335
- ------------------------------------------------------------------------------------------------------------------
(1) Unless otherwise indicated, all shares are held directly with sole voting
and investment power.
(2) Mr. Careaga is the sole officer and director of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Transactions in which certain persons had a direct or indirect material interest
are as follows:
- ------------------------------------------------------------------------------------------------------------------
Name of person Relationship to Description of Nature of interest in Amount of such
company transaction transaction interest
- ------------------------------------------------------------------------------------------------------------------
Steve Careaga President and Director Issuance of stock in Direct and sole 100%
exchange for services control of common
stock
- ------------------------------------------------------------------------------------------------------------------
Andrew DeVries III Former President and Issuance of stock in Direct and sole
Director exchange for services control of common 100%
stock
- ------------------------------------------------------------------------------------------------------------------
INCORPORATION BY REFERENCE
--------------------------
Certain financial and other information is incorporated herein by this
reference to Nannaco's Form 10-KSB annual report for the year ended September
30, 2004 and the reports including the report on Form 10-QSB for the quarter
ending June 30, 2005, which reports have been filed with the Securities and
Exchange Commission. These reports as well as additional information concerning
Nannaco, Inc. may be accessed through the SEC EDGAR archives on the Internet at
www.sec.gov.
Dated: August 29, 2005
By Order of the Board of Directors
/s/ Steve Careaga
----------------------------------------
President and Director