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
TECHNOLOGY CONNECTIONS, INC.
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(Name of Registrant As Specified In Its Charter)
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TECHNOLOGY CONNECTIONS, INC.
15720 John J. Delaney Drive, Ste 300
Charlotte, North Carolina 28277
INFORMATION STATEMENT
PURSUANT TO REGULATION 14C PROMULGATED UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
This information statement is being mailed on or about December 31, 2003 to
holders of record as of December 31, 2003 of shares of common stock, par value
$0.001 ("Common Stock"), of TECHNOLOGY CONNECTIONS, INC., a North Carolina
corporation (the "Company"). It is being furnished in connection with the
adoption of a one-for-twenty Reverse Stock Split by written consent of the
holders of a majority of the outstanding shares of Common Stock.
On April 1, 2003, the Company's Board of Directors approved a
one-for-twenty reverse stock split of the Company's Common Stock. On the same
date, the action was approved in a written consent executed by the holders of
more than a majority of the outstanding shares of Common Stock. Approval by the
Board of Directors and by the holders of a majority of the outstanding shares of
Common Stock is adequate under North Carolina law to effect the action. The
action will become effective following a waiting period of 20 calendar days from
the date this information statement is mailed to stockholders.
This information statement is being provided for your informational
purposes only.
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WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
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OUTSTANDING STOCK AND VOTING RIGHTS
As of the record date, there were 26,956,860 shares of Common Stock
outstanding. Each share of Common Stock entitles its holder to one vote.
REASONS FOR THE REVERSE STOCK SPLIT
The Board of Directors believes that the current per share price of the
Common Stock has had a negative effect on the marketability of existing shares
and on the amount and percentage of transaction costs paid by individual
stockholders seeking to buy or sell the Company's Common Stock. Many brokerage
firms and brokers are reluctant to recommend lower-priced stocks to their
clients. In addition, many institutional and individual investors are reluctant
to purchase lower-priced stocks. The structure of most brokerage commissions
tends to have an adverse affect on potential purchasers of lower-priced stocks
since the brokerage commission payable on buying and selling such stocks almost
always represents a higher percentage of the trade price than the commission on
a relatively higher-priced stock. These factors adversely affect not only the
liquidity of the Common Stock, but also the Company's ability to raise
additional capital through a sale of equity securities.
Although we have no immediate plans to issue stock by way of a merger, an
offering or the like, and we have no transaction pending or in process, we
continue to investigate opportunities to expand our business.
We believe that the Reverse Stock Split may improve the price level of our
Common Stock and that the higher share price could help generate interest in the
Company among investors and other business opportunities. However, the effect of
the reverse split upon the market price for our Common Stock cannot be
predicted, and the history of similar stock split combinations for companies in
like circumstances is varied. There can be no assurance that the market price
per share of our Common Stock after the reverse split will rise in proportion to
the reduction in the number of shares of Common Stock outstanding resulting from
the reverse split. The market price of our Common Stock may also be based on our
performance and other factors, some of which may be unrelated to the number of
shares outstanding.
1
In the reverse stock split, each twenty shares of Common Stock will
automatically be converted into one share, without any action on the part of the
stockholders. Fractional Shares shall be rounded up to the next whole share.
Consummation of the reverse stock split will not change the number of
shares of Common Stock authorized by the Company's Articles of Incorporation or
the par value of each share of Common Stock. However, the aggregate par value of
the issued Common Stock will be reduced. The reverse stock split will not effect
a stockholder's percentage ownership interest in the Company or proportional
voting power, except for minor differences resulting from fractional shares
having been rounded up to the next whole share.
As soon as practicable after the effective date, the Company's transfer
agent will mail an instruction letter to each holder of record of stock
certificates representing issued Common Stock outstanding on the effective date.
The instruction letter will contain instructions for stockholders to follow if
they wish to exchange their old certificates for new certificates representing
the number of whole shares of Common Stock into which the shares of Common Stock
represented by the old certificates have been converted by the reverse stock
split. It will not be necessary, however, for stockholders to exchange their old
certificates. Stockholders will not be required to pay a transfer or other fee
in connection with the exchange of certificates. Stockholders should not submit
any certificates to the Company's transfer agent until they have received the
instruction letter from the transfer agent.
Stockholders should note that the effect of the reverse stock split upon
the price of the Company's Common Stock cannot be accurately predicted. In
particular, there is no assurance that the price for shares of Common Stock
immediately after the reverse stock split will be twenty times the price of
shares of Common Stock immediately prior to the reverse stock split.
Furthermore, there can be no assurance that the reverse stock split will
not adversely impact the price of the Common Stock or, alternatively, that any
increase in price of the Common Stock immediately after the reverse stock split
will be sustained for a prolonged period of time. In addition, the reverse stock
split likely will have the effect of creating odd lots of stock for some
stockholders. These odd lots may be more difficult to sell or have higher
brokerage commissions associated with their sale. Fractional Shares shall be
rounded up to the next whole share.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock as
of December 31, 2003 by (i) each person known by the Company to beneficially own
5% or more of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each of the named executive officers, and (iv) all directors and
executive officers of the Company as a group. The table does not give effect to
the reverse stock split described above. The information set forth in the table
and accompanying footnotes has been furnished by the named beneficial owners. An
asterisk denotes beneficial ownership of less than 1%. Unless otherwise
indicated, the address of each person is c/o the Company at 15720 John J.
Delaney Drive, Ste 300, Charlotte, North Carolina 28277.
To the best of our knowledge, all persons named have sole voting and
investment power with respect to such shares, except as otherwise noted.
Security Ownership of Certain Beneficial Owners (foot1 Pursuant to Rule 13-d-3
under the Securities Exchange Act of 1934, as amended, beneficial ownership of a
security consists of sole or shared voting power (including the power to vote or
direct the voting) and/or sole or shared investment power (including the power
to dispose or direct the disposition) with respect to a security whether through
a contract, arrangement, understanding, relationship or otherwise. Unless
otherwise indicated, each person indicated above has sole power to vote, or
dispose or direct the disposition of all shares beneficially owned. We are
unaware of any shareholders whose voting rights would be affected by community
property laws. This table is based upon information obtained from our stock
records. Unless otherwise indicated in the footnotes to the tables and subject
to community property laws where applicable, we believe that each shareholder
named in the above table has sole or shared voting and investment power with
respect to the shares indicated as beneficially owned.
2).
Current
Title of Nature of %
Class Name and Address # of Shares Ownership Owned
- -------- ---------------- ----------- --------- ------
Common Kevin G. Kyzer 9,860,000 Direct 39.1 %
- -------- ---------------- ----------- --------- ------
Common Stacey A. Kyzer 9,840,000 Direct 39.0 %
- -------- ---------------- ----------- --------- ------
Security Ownership of Officers and Directors (2).
Current
Title of Nature of Current %
Class Name and Address # of Shares Ownership Owned
- -------- ---------------- ----------- --------- ---------
Common Kevin G. Kyzer 9,860,000 Direct 39.1 %
Common Stacey A. Kyzer 9,840,000 Direct 39.0 %
All Officers And
Directors
Common As a Group (2) 19,850,000 Direct 78.7 %
- -------- ---------------- ----------- --------- ---------
Changes in Control.
There are currently no arrangements, which would result in a change in our
control.
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(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to the shares shown. Except as indicated by
footnote and subject to community property laws where applicable, to the
Company's knowledge, the stockholders named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
3
Financial Statements
TECHNOLOGY CONNECTIONS, INC.
BALANCE SHEET (UNAUDITED)
AS OF MARCH 31, 2003
ASSETS
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CURRENT ASSETS
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Cash and cash equivalents $ 230
Inventory 3,911
Accounts receivable, net of allowance for doubtful 5,496
Accounts of $31,564
Prepaid expenses 123,750
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TOTAL CURRENT ASSETS $ 133,387
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PROPERTY AND EQUIPMENT
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Property and equipment 71,938
Accumulated depreciation (12,446)
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Net property and equipment 59,492
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TOTAL ASSETS $ 192,879
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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CURRENT LIABILITIES
- -------------------
Accounts payable and accrued expenses $ 249,833
Current portion of notes payable 30,262
Loans Payable to Stockholders 90,758
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TOTAL CURRENT LIABILITIES 370,853
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LONG-TERM DEBT
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Note Payable, less current portion $ 74,000
STOCKHOLDERS' DEFICIT
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Preferred Stock ($.001 par value, 5,000,000 authorized:
none issued and outstanding) -0-
Common Stock ($.001 par value, 100,000,000 shares authorized:
26,957,860 shares issued and outstanding) 26,958
Additional Paid-in-Capital 560,090
Retained Deficit (839,022)
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TOTAL STOCKHOLDERS' DEFICIT (251,974)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 192,879
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The accompanying notes are an integral part of the financial statements
F-2
TECHNOLOGY CONNECTIONS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
Three months ended March 31
2003 2002
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REVENUES AND COST OF SALES:
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Sales $ 18,956 $ 111,446
Cost of sales (12,128) (71,284)
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Gross profit 6,828 40,162
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OPERATING EXPENSES: (111,473) (550,822)
- ------------------- ---------- ----------
OPERATING INCOME (LOSS) (104,645) (510,660)
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OTHER EXPENSE:
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Interest expense (8,601) (5,928)
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NET LOSS (113,246) (516,588)
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Net income (loss) per common share -
basic & fully diluted (0.00) $ (0.02)
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Weighted average common
shares outstanding 26,257,860 24,502,383
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The accompanying notes are an integral part of the financial statements
F-3
TECHNOLOGY CONNECTIONS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss $ (113,246) $ (516,588)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 2,710 900
Stock issued for services 201,000 469,430
(Increase) decrease in operating assets:
Accounts receivable (1,699) (5,609)
Inventory 2,500 (5,485)
Prepaid Expenses (123,750)
Increase in operating liabilities:
Accounts payable and accrued
expenses 18,616 (2,352)
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NET CASH USED IN OPERATING
ACTIVITIES (13,869) (59,704)
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchases of property and equipment - (8,531)
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NET CASH USED IN INVESTING
ACTIVITIES - (8,531)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from sales of common stock - 61,000
Proceeds from stockholder loans 1,471 31,967
Borrowings on notes payable 10,200 -
Repayments on notes payable (2,029) (5,000)
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NET CASH PROVIDED BY FINANCING
ACTIVITIES 9,642 87,967
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NET INCREASE IN CASH AND
CASH EQUIVALENTS (4,227) 19,732
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CASH AND CASH EQUIVALENTS:
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Beginning of period 4,457 1,190
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End of period $ 230 $ 20,922
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SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH FINANCING:
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Cash paid during the period
for interest $ 6,070 $ 4,741
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The accompanying notes are an integral part of the financial statements
F-4
TECHNOLOGY CONNECTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
NOTE 1 - BASIS OF PRESENTATION
The accompanying interim consolidated financial statements are unaudited;
however, in the opinion of management, the interim statements include all
adjustments necessary for a fair presentation of the results for interim
periods. The preparation of financial statements in conformity with accounting
principles generally accepted in the United Sates of America re requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
The results of operations for the three months ended March 31, 2003 are not
necessarily indicative of the results to be expected for the year ended December
31, 2003.
The interim unaudited consolidated financial statements should be read in
conjunction with the Company's annual report on Form 10-KSB as filed with the
Securities and Exchange Commission.
NOTE 2 - GOING CONCERN AND LIQUIDITY
The Company's continued existence is dependent upon its ability to resolve its
liquidity problems, principally by obtaining equity, increasing sales and
achieving profitable operations. The Company has experienced a history of net
losses, has a stockholders' deficit of $241,774 and a net working capital
deficiency of $227,266. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Management's plans in regard to this matter are to implement cost reduction
policies and develop an aggressive sales strategy. The Company believes these
efforts in conjunction with raising equity, will improve liquidity and sustain
continuing operations. The eventual outcome, however, of management's plans
cannot be ascertained with any degree of certainty. The accompanying interim
financial statements do not include any adjustments that might result from the
outcome of these risks and uncertainties.
NOTE 3 - COMMON STOCK ISSUANCES
During the quarter ended March 31, 2003, the Company issued 1,800,000 shares of
common stock to subcontractors for services. The stock was valued at the closing
price on the date of issuance which resulted in an aggregate expense of
$201,000. The contracts provide for services over the next year which resulted
in a prepaid expense of $123,750 as of March 31, 2003 an a first quarter expense
of $77,250 that is included in the interim financial statements.