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
PERMA-TUNE ELECTRONICS, INC.
----------------------------
(Name of Registrant As Specified In Its Charter)
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/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11
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/ / Check box if any part of the fee is offset as provided by Exchange Act
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PERMA-TUNE ELECTRONICS, INC.
200 Trade Zone Drive
Ronkonkoma, New York 11779
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on November 21, 2003
To the stockholders of Perma-Tune Electronics, Inc.:
Notice is hereby given that an annual meeting of stockholders of Perma-Tune
Electronics, Inc. (the "Company") will be held on November 21, 2003 at 10:00
a.m. at 200 Trade Zone Drive, Ronkonkoma, New York 11779 for the following
purposes:
1. Election of up to two Directors. The election of Peter Mergenthaler and
Paul Cervino.
2. Approval of plan of merger and name change. The Board of Directors
recommends approval of a Plan of Merger (the "Plan") whereby the Company
will change its domicile from Texas to Nevada by merging into Trans Max
Technologies, Inc. ("Trans Max"), a Nevada corporation and wholly-owned,
direct subsidiary of the Company. As a result of the transactions
contemplated by the Plan, shareholders of the common stock of the Company
will automatically receive two (2) shares of newly issued common stock of
Trans Max in place of one (1) share of common stock of the Company. As a
result of the Plan of Merger, the Company will also change its name to
Trans Max Technologies, Inc. Immediately following the effective date of
the Plan of Merger, the Company's shareholders will own the identical
percentage of the issued and outstanding shares of Trans Max as it owned in
the Company.
3. Ratification of the Appointment of Ham, Langston & Brezina, LLP of Houston,
Texas as the corporation's independent auditors for fiscal year 2003.
4. To transact such other business as may properly come before the annual
meeting.
Common stockholders of record on the close of business on October 14, 2003 are
entitled to notice of the meeting. All stockholders are cordially invited to
attend the meeting in person.
By Order of the Board of Directors,
/s/ Peter Mergenthaler
------------------------
Peter Mergenthaler
Chief Executive Officer and Director
October 27, 2003
PERMA-TUNE ELECTRONICS, INC.
200 Trade Zone Drive
Ronkonkoma, New York 11779
INFORMATION STATEMENT
October 27, 2003
This Information Statement is furnished by the Board of Directors of
Perma-Tune Electronics, Inc. (the "Company" or "Perma-Tune") to provide notice
of an annual meeting of stockholders of Perma-Tune which will be held on
November 21, 2003.
The record date for determining stockholders entitled to receive this
Information Statement has been established as the close of business on October
14, 2003 (the "Record Date"). This Information Statement will be first mailed
on or about October 27, 2003 to stockholders of record at the close of business
on the Record Date. As of the Record Date, there were outstanding 17,667,705
shares of the Company's Common Stock. The holders of all outstanding shares of
Common Stock are entitled to one vote per share of Common Stock registered in
their names on the books of the Company at the close of business on the Record
Date.
The presence at the annual meeting of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the annual meeting is
necessary to constitute a quorum. The Board of Directors is not aware of any
matters that are expected to come before the annual meeting other than those
referred to in this Information Statement.
Directors are required to be elected by a plurality of the votes cast at the
annual meeting. Each of the other matters scheduled to come before the annual
meeting requires the approval of a majority of the votes cast at the annual
meeting. Messrs. Colonel Robert Fyn, Murray H. Stark, Garth S. Bailey and Peter
Mergenthaler (the "Majority Shareholders") own an aggregate 15,177,300 shares,
or 85.9% of our Common Stock, and will be able to approve the matters presented
in this Information Statement. The Company is not soliciting your vote as the
Majority Shareholders already have the vote in hand.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
PROPOSAL 1
THE ELECTION OF UP TO 2 DIRECTORS
Two directors are to be elected to serve until the next annual meeting of
the shareholders and until their successors are elected and shall have
qualified. The Board of Directors has nominated Peter Mergenthaler and Paul
Cervino to serve as directors (the "Nominees," or individually the "Nominee").
Mr. Mergenthaler is currently serving as Director and the Chief Executive
Officer ("CEO") of the Company. Mr. Cervino is currently serving as the Chief
Financial Officer ("CFO") of the Company. The Board of Directors has no reason
to believe that any Nominee will be unable to serve or decline to serve as a
director. Any vacancy occurring between shareholders' meetings, including
vacancies resulting from an increase in the number of directors may be filled by
the Board of Directors. A director elected to fill a vacancy shall hold office
until the next annual shareholders' meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
The following biographical information is furnished with respect to each of
the Nominees. The information includes the individual's present position with
the Company, period served as a director, and other business experience during
the past five years.
DIRECTORS
Peter Mergenthaler, age 63, has served as Chief Executive Officer,
Secretary and Director of the Company since July 21, 2003. Prior to serving the
Company, Mr. Mergenthaler served as a consultant for HMS Financial, a private
financing company. Mr. Mergenthaler has served as a consultant to various
companies throughout his career. Mr. Mergenthaler served as a partner and
general principal of Gallant Securities, Inc. for approximately seven years. Mr.
Mergenthaler filed a petition in bankruptcy under Chapter 13 of the Bankruptcy
Code on separate occasions, April 26, 1999, March 8, 2000 and June 19, 2002
(collectively referred to as the "Petitions"). The Petitions were subsequently
dismissed on May 27, 1999, March 28, 2000, and November 15, 2002, respectively.
The Pennsylvania Securities Commission issued an Order to Cease and Desist
against Mr. Mergenthaler, to halt the offer and sale of unregistered securities
in Pennsylvania.
Paul M. Cervino, age 49, has served as Chief Financial Officer and Director
of the Company since August 1, 2003. From January 1996 to July 2003, Mr. Cervino
was employed by Allied Devices Corporation where he served in the Various
capacities of President, Chief Operating Officer and Chief Financial Officer.
Prior to 1996, he was employed by Sotheby's Holdings, Inc., an international art
auction house. From 1992 to 1995, he was a member of the European Board of
Directors and Chief Financial Officer of Sotheby's Europe and Asia, operating in
London. From 1985 to 1992, he was a Director and Chief Financial and
Administrative Officer of Sotheby's North America. From 1976 to 1985, he worked
for Sotheby's in various other financial capacities. Mr. Cervino received a B.S.
in Accounting from St. John's University and an M.B.A. in Finance from Pace
University.
All directors of the Company will hold office until the next annual meeting
of the shareholders, and until their successors have been elected and qualified.
Officers of the Company are elected by the Board of Directors and hold office at
the pleasure of the Board.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than 10%
of a class of the Company's equity securities which are registered under the
Exchange Act to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes of ownership of such registered
securities. Such executive officers, directors and greater than 10% beneficial
owners are required by Commission regulation to furnish the Company with copies
of all Section 16(a) forms filed by such reporting persons.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and on representations that no other
reports were required, no person required to file such a report failed to
file on a timely basis during fiscal 2002. Based on stockholder filings with the
SEC, Colonel Robert E. Fyn, Marray H. Stark, and Garth S. Bailey along with
Messrs. Mergenthaler and Cervino are subject to Section 16(a) filing
requirements.
ATTENDANCE OF THE BOARD OF DIRECTORS
During the year ended December 31, 2002, the Board of Directors did not
hold a meeting in person. All of the Directors of the Board of Directors
executed three (3) Consent to Action Without Meeting of Board of Directors. We
have no standing audit, nominating, compensation committee, or any other
committees of the Board of Directors and therefore there were no committee
meetings.
EXECUTIVE COMPENSATION
Compensation paid to Officers and Directors is set forth in the Summary
Compensation Table below. The Company may reimburse its Officers and Directors
for any and all out-of-pocket expenses incurred relating to the business of the
Company.
SUMMARY COMPENSATION TABLE
Name and Position Fiscal Year Salary (1)
- ------------------------ --------------- -----------
Peter Mergenthaler, 2003 $ 42,000
Chief Executive Officer and
Director
Paul M. Cervino, 2003 $ 52,083
Chief Financial Officer
Lonnie Lenarduzzi, former President, 2003 $ 45,000
Chief Executive Officer and 2002 $ 45,500
Director 2001 $ 45,800
2000 $ 51,048
<FN>
(1) The Company anticipates that the amount listed for fiscal year 2003 for each officer and
director or former officer and director will be their compensation for the fiscal year ending
December 31, 2003.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
The following table sets forth information as of October 14, 2003, with
respect to the beneficial ownership of the common stock by (i) each director and
officer of the Company, (ii) all directors and officers as a group and (iii)
each person known by the Company to own beneficially 5% or more of the common
stock:
Name and Address of Shares Owned % of Class
Beneficial Owner Beneficially(1) Owned
- ------------------- --------------- -----------
Robert E. Fyn 5,312,055 30.0%
115 6th Street NW
Lynden, Alberta, Canada
T0M 1J0
Murray H. Stark 5,312,055 30.0%
115 6th Street NW
Lynden, Alberta, Canada
T0M 1J0
Garth S. Bailey 2,276,595 12.9%
23960 Madison Street
Torrance, California 90505
Peter Mergenthaler 2,276,595 12.9%
200 Trade Zone Drive
Ronkonkoma, New York 11779
Paul M. Cervino 20,834 *
200 Trade Zone Drive
Ronkonkoma, New York 11779
Lonnie Lenarduzzi 1,597,848(2) 9.0%
3 Grace Court
Center Moriches, New York 11934
Linda Decker 1,597,848(2) 9.0%
3 Grace Court
Center Moriches, New York 11934
All Officers and Directors
as a Group (currently 2 persons) 2,297,429 13.0%
------------
*Less than 1%
<FN>
(1) The number of shares of common stock owned are those "beneficially owned" as determined under the rules of the
Securities and Exchange Commission, including any shares of common stock as to which a person has sole or shared voting or
investment power and any shares of common stock which the person has the right to acquire within 60 days through the exercise of
any option, warrant or right. As of October 14, 2003, there were 17,667,705 shares of common stock outstanding. As of such date
there were 137,100 outstanding warrants to purchase shares of common stock, exercisable until December 31, 2003 at $2.00 per
share.
(2) Lonnie Lenarduzzi and Linda Decker hold 1,566,600 of these shares as tenants in common. They are husband and wife and
are both former Directors of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lonnie Lenarduzzi entered into a Licensing Agreement to license to the
Company all technology developed by him for $1,000 per year. The Licensing
Agreement was entered into on November 30, 1996 and has a term of 25 years,
extending to November 30, 2021.
PROPOSAL 2
APPROVAL OF PLAN OF MERGER
The Board of Directors recommends approval of the Plan of Merger between
the Company and Trans Max Technologies, Inc., a Nevada corporation ("Trans
Max"), (hereinafter the "Plan" ), whereby the Company will change its domicile
from Texas to Nevada by merging into Trans Max; thus, redomiciling from Texas to
Nevada. The Plan qualifies under Article 5.04 of the Texas Business Corporation
Act and Section 92A.110 of the Nevada Revised Statutes and constitutes a
so-called "Type A" reorganization within the meaning of section 368(a)(1)(A) of
the Internal Revenue Code. The Plan of Merger will be substantially in the form
attached hereto as Appendix A.
As a result of the transactions contemplated by the Plan, the Company will
in effect undergo a 2:1 forward stock split whereby the shareholders of the
common stock of the Company will automatically receive two (2) shares of newly
issued common stock of Trans Max in place of one (1) share of common stock of
the Company. In addition, the Company will change its name to Trans Max
Technologies, Inc. Trans Max is authorized to issue shares of its preferred
stock, as discussed below, whereas the Company is not authorized to issue shares
of preferred stock. Immediately following the effective date of the Plan, the
Company's shareholders will own the identical percentage of the issued and
outstanding shares of Trans Max as they owned in the Company and the Company
will cease to exist. Despite certain differences in the corporate legal system
in Texas and Nevada, your rights as a shareholder in Trans Max will be
substantially the same as your rights as holders in the Company.
QUESTIONS AND ANSWERS ABOUT THE PLAN OF MERGER
WHAT ARE THE MAJORITY SHAREHOLDERS BEING ASKED TO VOTE ON?
The Majority Shareholders are being asked to vote in favor of a Plan of
Merger by which the Company will merge into Trans Max Technologies, Inc. , a
Nevada corporation. You will automatically receive twice the number of shares of
Trans Max common stock in place of your shares of the Company's common stock.
WHAT ARE THE BENEFITS TO THE COMPANY OF COMPLETING THE MERGER AND RELATED
TRANSACTIONS?
We believe that the Plan of Merger and related transactions (both of which
are hereinafter collectively referred to as the "Plan of Merger" or the "Plan")
will enable us to realize a variety of potential business, financial and
strategic benefits, including, but not limited to, some or all of the following:
- - more effective management and control of operations;
- - reduction of our effective state and local income tax rate; and
- - enhanced flexibility in the event the Board of Directors determines that
it is necessary or appropriate to raise additional capital through the
sale of securities, to acquire other companies or their businesses or
assets or to establish strategic relationships with corporate
partners.
WILL THE PLAN OF MERGER AND RELATED TRANSACTIONS DILUTE MY OWNERSHIP INTEREST?
No. The Plan of Merger will not dilute your ownership interest in common
stock. Immediately after the Plan of Merger is completed, you will own the same
percentage of Trans Max common stock as you own of Company common stock
immediately prior to the completion of the Plan.
Trans Max, however, is authorized to issue shares of its preferred stock,
as discussed in more detail below, that may be issued with voting power or other
special rights which take preference over similar rights of the shares of common
stock held by you. At this time, we cannot predict with reasonable certainty
whether any shares of preferred stock of Trans Max will be issued or, if issued,
what the rights with respect thereto may be.
WILL THE COMPANY'S SHAREHOLDERS BE TAXED AS A RESULT OF THE PLAN OF MERGER?
For U.S. federal income tax purposes, shareholders who are U.S. persons
will not recognize gain or loss as a result of the merger between the Company
and Trans Max. Furthermore, the Company will not incur U.S. federal income tax
as a result of the Plan of Merger. We are not requesting any ruling from the
Internal Revenue Service regarding the U.S. federal income tax consequences to
you or the Company as a result of the Plan of Merger.
WE URGE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING YOUR PARTICULAR TAX
CONSEQUENCES.
WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
We hope to complete the Plan of Merger shortly after the annual meeting of
the Company's shareholders, assuming that it is approved by the shareholders at
that meeting.
WILL THE PROPOSAL AFFECT CURRENT OPERATIONS? WHAT ABOUT THE FUTURE?
The Plan of Merger should have no material impact on how we conduct
day-to-day operations. The location of future operations will depend, as it
does now, on the needs of the business, independent of our legal domicile.
WHAT VOTE IS REQUIRED TO APPROVE THE PLAN OF MERGER?
In order to have a quorum, the holders of record of the shares entitled to
cast a majority of the Company votes must be represented in person or by proxy
at the annual meeting. The affirmative vote of at least a majority of the votes
cast by holders of shares present in person or represented by proxy at the
annual meeting and entitled to vote as of the record date on the Plan of Merger
is required to approve the Plan.
The Majority Shareholders own an aggregate of 15,177,300 shares, or 85.9%
of our Common Stock, and will be able to approve the Plan of Merger. The
Company is not soliciting your vote as the Majority Shareholders already have
the vote in hand.
RELATED TRANSACTIONS
CHANGE OF NAME TO TRANS MAX TECHNOLOGIES, INC. AND CONTINUATION OF BUSINESS
As a result of the Plan of Merger, the Company will change its name to
Trans Max Technologies, Inc. with respect to all of its property and
obligations. Immediately after the Plan of Merger becomes effective, Trans Max
will be subject to all rights, title, and interest to all property owned by the
Company subject to any existing liens or other encumbrances on the property.
Trans Max will also be subject to all debts and obligations of the Company as
the primary obligor, and only Trans Max will be liable for the debt or
obligation. The Company will cease to exist. The Articles of Incorporation and
the Bylaws of Trans Max will continue in full force until further altered,
amended, or repealed as provided by law or in the Bylaws, respectively. Trans
Max will continue to conduct business with the assets of both parties to the
Plan of Merger as these corporations conducted business immediately prior to the
merger.
CAPITALIZATION
The Company has an authorized capitalization of 50,000,000 shares,
consisting on October 14, 2003, of 50,000,000 shares of common stock, no par
value per share, of which 17,667,705 shares are validly issued, outstanding, and
fully paid, and no shares of preferred stock.
Trans Max has an authorized capitalization of 210,000,000 shares,
consisting on October 14, 2003, of 200,000,000 shares of common stock, $.001 par
value per share, of which one (1) share is validly issued, outstanding, and
fully paid, and 10,000,000 shares of preferred stock, $.001 par value per share,
of which no shares have been issued.
After the effective date of the Plan, Trans Max will have a total of
210,000,000 shares of authorized stock, which are divided into 200,000,000
shares of common stock, $.001 par value per share and 10,000,000 shares of
preferred stock, $.001 par value per share. After the effective date, the
Company will have 35,335,410 shares of common stock issued and outstanding,
which amount takes into account cancellation of one (1) share of common stock of
Trans Max owned by the Company, and no shares of preferred stock.
EFFECTIVE INCREASE IN AUTHORIZED SHARES
As a result of the Plan of Merger, the Company will in effect undergo an
increase in the number of authorized shares of common stock and authorization of
preferred stock. Trans Max will have a total of 210,000,000 shares of authorized
stock, consisting of 200,000,000 shares of common stock, $.001 par value per
share, and 10,000,000 shares of preferred stock, $.001 par value per share,
whereas the Company only has 50,000,000 shares of authorized stock, consisting
of 50,000,000 shares of common stock, no par value per share and no shares of
preferred stock. The principal purpose for the additional shares of common and
the authorization of preferred stock is to enhance flexibility in the event the
Board of Directors determines that it is necessary or appropriate to raise
additional capital through the sale of securities, to acquire other companies or
their businesses or assets or to establish strategic relationships with
corporate partners.
The increase in authorized common stock will not have any immediate effect
on your rights. The Board of Directors has no present agreement or arrangement
to issue any of the shares of common stock for which approval is sought. If the
Plan of Merger is approved, however, the Board will have the authority to issue
the newly authorized common stock without requiring future stockholder approval
of such issuances, except as may be required by applicable law. As such, the
Board of Directors does not intend to solicit further stockholder approval prior
to the issuance of any additional shares of common stock or securities
convertible into common stock, except as may be required by applicable law.
The authorization of preferred stock may have an immediate effect on your
rights. The Board of Directors anticipates that it will authorize the issuance
of shares of preferred stock of Trans Max in a specific class or series. The
Board of Directors of the Company may issue shares of preferred stock of Trans
Max from time to time in one or more series, each of which shall have such
distinctive designation or title as shall be determined by resolution of the
Board of Directors prior to the issuance of any shares thereof. The preferred
stock may have such voting powers, full or limited, or no voting powers, and
such preferences and relative, participating, optional or other special rights
and such qualifications, limitations or restrictions thereof, as shall be stated
in such resolution or resolutions providing for the issue of such class or
series of preferred stock as may be adopted from time to time by the Board of
Directors prior to the issuance of any shares thereof. The shares of preferred
stock may have voting power or other special rights, including the right to
receive dividends, which take preference over similar rights of the shares of
common stock held by the existing stockholders. Although the Board of Directors
anticipates that it may issue shares of preferred stock of Trans Max in
connection with the Plan of Merger, it cannot estimate with reasonable certainty
the number of shares, if any, that may be issued or the rights with respect
thereto.
CURRENT BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY
The current Board of Directors of the Company will serve as the Board of
Directors of Trans Max until the next annual meeting or until their successors
have been elected and qualified. The present executive and administrative
officers of the Company will become the officers of Trans Max until the Board of
Directors of Trans Max determines otherwise.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of all outstanding shares of common
stock of the Company is required for approval of this proposal. The Majority
Shareholders own an aggregate 15,177,300 shares, or 85.9% of our Common Stock,
and will be able to approve this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE PLAN OF MERGER.
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF HAM, LANGSTON & BREZINA, LLP
AS THE COMPANY'S INDEPENDENT AUDITORS
The Board of Directors has selected Ham, Langston & Brezina, LLP of
Houston, Texas ("Ham, Langston & Brezina"), as independent auditors for the
Company for fiscal year 2003 and recommends that the shareholders vote for
ratification of such appointment. Ham, Langston & Brezina has served as the
Company's independent auditors since May 6, 2003.
The Company does not anticipate a representative from Ham, Langston &
Brezina to be present at the annual shareholders meeting. In the event that a
representative of Ham, Langston & Brezina is present at the annual meeting, the
representative will have the opportunity to make a statement if he/she desires
to do so and the Company will allow such representative to be available to
respond to appropriate questions.
For the fiscal year ended December 31, 2002 and 2001, the firm of Malone &
Bailey, PLLC ("Malone & Bailey") served as the Company's auditors. Effective
May 6, 2003, the Board of Directors of the Company approved a change of
accountants. On May 6, 2003, management of the Company dismissed Malone &
Bailey and engaged Ham, Langston & Brezina as its independent public accountants
to review its financial statements for the fiscal year ended December 31, 2003.
At no time had the Company previously consulted Ham, Langston & Brezina
regarding any accounting matters. This change is being made to contain the
Company's costs associated with accounting services and in an effort to get more
responsive service.
During the period of engagement of Malone & Bailey, there were no
disagreements between the Company and Malone & Bailey on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements (if not resolved to the satisfaction of
Malone & Bailey) would have caused Malone & Bailey to make reference in
connection with their report to the subject matter of the disagreements. The
accountants' report on the financial statements of the Company for the fiscal
years ended December 31, 2001, and 2002 did not contain any adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty or
audit scope or accounting principles, except to express doubt as to the
Company's ability to continue as a going concern.
The Company requested Malone & Bailey to furnish the Company with a letter
addressed to the Securities and Exchange Commission stating whether Malone &
Bailey agrees with the above statements, which letter was attached to the
filing filed on Form 8-K on May 8, 2003.
AUDIT FEES
The aggregate fees billed by Ham, Langston & Brezina, LLP for professional
services rendered for the review of the Company's financial statements for the
first, second and third quarters of 2003, of which the Company included the
first quarter financial statements in its Quarterly Financial Report on Form
10-QSB for March 31, 2003, were $6,000. The aggregate fees billed by Malone &
Bailey for audit services for fiscal years ended December 31, 2002 and 2001,
were $20,400. The aggregate fees billed by Malone & Bailey for professional
services related to reviews of Forms 10QSB for the fiscal year ended December
2002 were $6,600.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ham, Langston & Brezina and Malone & Bailey did not render any professional
services to the Company for financial information systems design and
implementation, as described in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation
S-X, during the year ended December 31, 2002. Neither Ham, Langston & Brezina
nor Malone Bailey has rendered any such services as of June 30, 2003.
ALL OTHER FEES
There were no fees billed by Ham, Langston & Brezina, LLP or Malone &
Bailey, PLLC other than those fees discussed in Audit Fees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF HAM, LANGSTON & BREZINA, LLP AS INDEPENDENT ACCOUNTANTS OF
THE COMPANY.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Annual Meeting and has not been informed that any other matters are to be
presented by others.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Peter Mergenthaler
------------------------
Peter Mergenthaler, Chief Executive Officer
and Director
October 27, 2003
APPENDIX A
PLAN OF MERGER FOR
TRANS MAX TECHNOLOGIES, INC. AND
PERMA-TUNE ELECTRONICS, INC.
THIS PLAN OF MERGER ("Plan'') is entered into on November __, 2003 by
Perma-Tune Electronics, Inc. ("Acquired Corporation"), a corporation
incorporated under the laws of Texas and Trans Max Technologies, Inc.
("Surviving Corporation"), a corporation incorporated under the laws of Nevada.
ARTICLE 1
PLAN OF MERGER
ADOPTION OF PLAN
1.01. A plan of merger of Acquired Corporation and Surviving Corporation
under the provisions of Article 5.04 of the Texas Business Corporation Act,
Nevada Revised Statutes Section NRS 92A.110 and Section 368(a)(1)(A) of the
Internal Revenue Code is adopted as follows:
(a) On the effective date of the merger as set forth in Article 1.02 of the
Plan of Merger, Acquired Corporation will be merged into Surviving Corporation,
to do business and be governed by the laws of Nevada.
(b) Surviving Corporation's name will be: Trans Max Technologies, Inc.
(c) When this Plan becomes effective, the existence of Acquired Corporation as
a distinct entity will cease. At that time, Surviving Corporation will succeed
to all the rights, title, and interests to all property owned by Acquired
Corporation, without reversion or impairment, without any further act, and
without any transfer or assignment having occurred, but subject to any existing
liens or other encumbrances on the property. Surviving Corporation also will be
subject to all the debts and obligations of Acquired Corporation as the primary
obligor, except as otherwise provided by law or contract, and only Surviving
Corporation will be liable for the debt or obligation.
(d) Surviving Corporation will carry on business with the assets of the parties
to the merger, as these corporations existed immediately prior to the merger.
(e) The shareholders of Acquired Corporation will surrender all of their shares
or other securities in the manner set forth in this Plan.
(f) In exchange for the shares of Acquired Corporation surrendered by its
shareholders, Surviving Corporation will issue and transfer to those
shareholders, on the basis set forth in this Plan, shares of its common stock or
other securities.
(g) Prior to the Plan, Surviving Corporation is a wholly owned subsidiary of
Acquired Corporation.
EFFECTIVE DATE
1.02. The effective date of the merger ("Effective Date"), will be the
date when a certificate of merger is issued by the Secretary of State of the
State of Nevada.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
ACQUIRED CORPORATION
2.01. As a material inducement to Surviving Corporation to execute this
Plan and perform its obligations under this Plan, Acquired Corporation
represents and warrants to Surviving Corporation as follows:
(a) Acquired Corporation is a corporation duly organized, validly existing, and
in good standing under the laws of Texas, with corporate power and authority to
own, lease, and operate property and carry on its business as it is now being
conducted. A copy of the certificate of incorporation and the bylaws of
Acquired Corporation, including all amendments, effective as of the date of this
Plan, have been delivered to Surviving Corporation, and are complete and
correct.
(b) Acquired Corporation has an authorized capitalization of 50,000,000 shares,
consisting on the date immediately prior to the effective date of this Plan of
50,000,000 shares of common stock, $.001 par value per share, of which
17,667,705 shares are validly issued, outstanding, and fully paid, and no shares
of preferred stock.
(c) Acquired Corporation has furnished Surviving Corporation with Acquired
Corporation's audited balance sheet as of September 30, 2002 (the "Balance Sheet
Date") and the related audited statement of income for the year ended September
30, 2002 as well as the unaudited financial statements for the three and six
months ending June 30, 2003. The financial statements referred to in this
subparagraph (c):
(i) Are in accordance with the books and records of Acquired Corporation;
(ii) Fairly represent the financial condition of the Acquired Corporation as of
the described dates and the results of its operations as of and for the periods
specified; and
(iii) Contain and reflect, (A) reserves for all liabilities, and costs in
excess of expected receipts and (B) all discounts and refunds in respect of
service and products already rendered or sold that are reasonably anticipated
and based on events or circumstances in existence or likely to occur in the
future with respect to any of Acquired Corporation's contracts or commitments.
(iv) Specifically, but not by way of limitation, the Balance Sheet all of the
debts, liabilities, and obligations of any nature, whether absolute, accrued, or
contingent, of Acquired Corporation at the Balance Sheet Date, including
appropriate reserves for all taxes due at such date but not yet payable.
(d) All required federal, state, and local tax returns of Acquired
Corporation have been accurately prepared and timely filed, and Acquired
Corporation has paid all federal, state, and local taxes required to be paid
with respect to the periods covered by such returns. Acquired Corporation has
not been delinquent in the payment of any tax, assessment, or governmental
charge. Acquired Corporation has never had any tax deficiency proposed or
assessed against it. Neither the federal income tax returns nor state franchise
tax returns of the Acquired Corporation have ever been audited by governmental
authorities.
(e) Acquired Corporation has the following securities outstanding:
17,667,705 shares of common stock; $_______________ in notes, and no shares of
preferred or convertible preferred stock.
(f) Since the Balance Sheet Date, there has not been any material adverse
change in the financial condition, business, and assets or other properties of
the Acquired Corporation that alters or impairs its ability to conduct its
business, including labor difficulties, market conditions, or any other event of
any character.
(g) To its knowledge, no actions, suits, or other legal proceedings are
pending or threatened against Acquired Corporation before or by any federal,
state, or municipal court, department, board, bureau, or agency.
SURVIVING CORPORATION
2.02. As a material inducement to Acquired Corporation to execute and
perform its obligations under this plan, Surviving Corporation represents and
warrants to Acquired Corporation as follows:
(a) Surviving Corporation is a corporation duly organized, validly existing,
and in good standing under the laws of Nevada, with corporate power and
authority to own property and carry on its business as it is now being
conducted.
(b) Surviving Corporation has an authorized capitalization on the date of this
Plan of 210,000,000 shares, consisting on the date of this Plan of 200,000,000
shares of common stock, $.001 par value per share, of which one (1) share is
validly issued, outstanding, and fully paid, and 10,000,000 shares of preferred
stock, $.001 par value per share, of which no shares have been issued.
As of the date of this Plan, one (1) share of the common stock is validly issued
and outstanding, fully paid, and nonassessable.
SECURITIES LAW
2.03. The parties to the merger warrant to arrange mutually for and manage
all necessary procedures under the requirements of federal, Nevada and Texas
securities laws and the related supervisory commissions to ensure that this Plan
is properly processed to comply with all federal and state registration
requirements, or to take full advantage of any lawful and applicable exemptions
from registration.
ARTICLE 3
TERMS, CONDITIONS, AND PROCEDURES PRIOR TO EFFECTIVE DATE
NO SUBMISSION TO SHAREHOLDERS AND FILING
3.01. This Plan will not be submitted for approval separately to the
shareholders of the merging parties as shareholder approval is not required.
CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED CORPORATION
3.02. Except as expressly waived in writing by Acquired Corporation, all
of the obligations of Acquired Corporation are subject to Surviving
Corporation's satisfaction of each of the following conditions on or before the
Effective Date:
(a) The representations and warranties made by Surviving Corporation to
Acquired Corporation in Article 2 of this Plan will be deemed to have been
repeated on the Effective Date and will on that date be true and correct in all
material respects. If Surviving Corporation discovers any material error,
misstatement, or omission in those representations and warranties on or before
the Effective Date, it must report that discovery immediately to Acquired
Corporation and must either correct the error, misstatement, or omission or
obtain a written waiver from Acquired Corporation.
(b) Surviving Corporation must have performed and complied with all applicable
covenants, agreements and conditions required by this Plan on or before the
Effective Date.
(c) No action or proceeding by any governmental body or agency must have been
threatened, asserted, or instituted to restrain or prohibit the carrying out of
the transactions contemplated by this Plan.
(d) All corporate and other proceedings and actions taken in connection with
the transactions contemplated and all certificates, opinions, agreements,
instruments, and documents must be satisfactory in form and substance to counsel
for the Acquired Corporation.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SURVIVING CORPORATION
3.03. Except as waived in writing by Surviving Corporation, all of the
obligations of Surviving Corporation under this Plan are subject to fulfillment
of each of the following conditions on or before the Effective Date,:
(a) The representations and warranties of Acquired Corporation in this Plan and
in any document delivered under this Plan are deemed to have been repeated in
full on the Effective Date and must on that date be true and correct in all
material respects. If Acquired Corporation discovers any material error,
misstatement, or omission in those representations and warranties on or before
the Effective Date, it must report that discovery immediately to Surviving
Corporation and must either correct the error, misstatement, or omission or
obtain a written waiver from Surviving Corporation.
(b) Acquired Corporation must have performed and complied with all applicable
covenants, agreements and conditions in this Plan on or before the Effective
Date.
(c) No action or proceeding by any governmental body or agency will have been
threatened, asserted, or instituted to restrain or prohibit the completion of
the transactions contemplated by this Plan.
(d) All corporate and other proceedings and actions taken in connection with
the transactions contemplated and all certificates, opinions, agreements,
instruments, and documents must be satisfactory in form and substance to counsel
for the Surviving Corporation.
INTERIM CONDUCT OF BUSINESS; LIMITATIONS
3.04. (a) Except as limited by this paragraph 3.04, pending consummation
of the merger, each of the parties to the merger will carry on its business in
substantially the same manner as prior to the date of this Plan and will use its
best efforts to maintain its business organization intact, to retain its present
employees, and to maintain its good will in relationships with suppliers and
others transacting business with the entity.
(b) Except with the prior consent in writing of Surviving Corporation,
pending consummation of the merger, Acquired Corporation will not enter into any
transaction other than those involved in carrying on its ordinary course of
business.
EXPENSES
3.05. (a) If the merger set forth in this Plan is consummated, Surviving
Corporation will pay all costs and expenses of the merger.
(b) If the merger set forth in this Plan is not consummated, each party to
this Plan will pay its own costs and expenses incident to the contemplated
merger.
ARTICLE 4
MANNER AND BASIS OF CONVERTING SHARES
MANNER OF CONVERTING SHARES
4.01. The holders of shares of Acquired Corporation will surrender their
securities to David M. Loev, Attorney at Law promptly after the Effective Date,
in exchange for securities of Surviving Corporation to which they are entitled
under this Article 4.
BASIS OF CONVERTING SHARES
4.02. (a) The shareholders of Acquired Corporation will be entitled to
receive two (2) shares of common stock of Surviving Corporation, each of $.001
par value, to be distributed on the basis of two (2) shares for each one (1)
share of common stock of Acquired Corporation, and preferred shareholders, if
any, shall receive two (2) shares of preferred stock of Surviving Corporation,
each of $.001 par value to be distributed on the basis of two (2) shares of
preferred stock for each one (1) share of preferred stock of Acquired
Corporation.
CAPITAL STRUCTURE OF SURVIVING CORPORATION
4.03. (a) There is currently one (1) outstanding share of common stock of
Surviving Corporation.
(b) After the Effective Date, Surviving Corporation will have a
total of 210,000,000 shares of authorized stock, which are divided into
200,000,000 shares of common stock which are of a par value of $.001 per share
and 10,000,000 shares of preferred stock which are of a par value of $.001 per
share. After the Effective Date, Surviving Corporation will have 35,335,410
shares of common stock issued and outstanding and no shares of preferred stock
issued and outstanding.
ARTICLE 5
DIRECTORS AND OFFICERS
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
5.01. The present board of directors of Acquired Corporation will serve as
the board of directors of Surviving Corporation until the next annual meeting or
until their successors have been elected and qualified.
5.02. All persons who on the Effective Date are executive or administrative
officers of Acquired Corporation will become officers of Surviving Corporation
until its board of directors determines otherwise. Surviving Corporation's board
of directors may elect or appoint additional officers as it deems necessary.
ARTICLE 6
ARTICLES OF INCORPORATION AND BYLAWS
ARTICLES OF INCORPORATION OF SURVIVING CORPORATION
6.01. The Articles of Incorporation of Trans Max Technologies, Inc. shall
be the Articles of Incorporation of Surviving Corporation at the Effective Date.
Such Articles of Incorporation, as existing on the Effective Date, will continue
in full force until altered, amended, or repealed as provided in such Articles
of Incorporation, the Bylaws or as provided by law. The Articles of
Incorporation of Perma-Tune Electronics, Inc. will cease to exist.
SURVIVING CORPORATION'S BYLAWS
6.02. The Bylaws of Trans Max Technologies, Inc. shall be the Bylaws of
Surviving Corporation at the Effective Date. Such Bylaws, as existing on the
Effective Date, will continue in full force until altered, amended, or repealed
as provided in such Bylaws, the Articles of Incorporation or as provided by law.
The Bylaws of Perma-Tune Electronics, Inc. will cease to exist.
ARTICLE 7
SURVIVAL OF WARRANTIES AND INDEMNIFICATION
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
7.01. All statements contained in any memorandum, certificate, letter,
document, or other instrument delivered by or on behalf of Acquired Corporation,
Surviving Corporation, or the shareholders of any party to the Plan of Merger
will be deemed representations and warranties made by such parties,
respectively, to each other under this Plan. The representations and warranties
of the parties and the shareholders will survive for a period of three (3) years
following the Effective Date and will survive despite any inspections,
examinations, or audits made on behalf of the parties and the shareholders.
INDEMNIFICATION
7.02. On or before the Effective Date, Acquired Corporation will obtain
from its shareholders an agreement to indemnify and hold harmless Surviving
Corporation against all damages, as defined in this paragraph 7.02. The term
"Damages," as used in this paragraph, includes any claim, action, demand, loss,
cost, expense, liability, penalty, and other damage, including but not limited
to, counsel fees and other costs and expenses incurred in attempting to avoid
damages or in enforcing this indemnity agreement, resulting to Surviving
Corporation from:
(a) Any inaccurate representation made by or on behalf of the Acquired
Corporation or its shareholders in or under this Plan;
(b) Breach of any of the warranties in or under this Plan made by or on behalf
of Acquired Corporation or its shareholders;
(c) Breach or default in the performance by Acquired Corporation of any
applicable obligations specified in this Plan; or
(d) Breach or default in the performance by Acquired Corporation's shareholders
of any of the applicable obligations specified in the agreement delivered by
them to Surviving Corporation under this Plan.
The shareholders will reimburse Surviving Corporation on a pro rata basis
according to the number of shares owned by each for any payment made or loss
suffered by Surviving Corporation at any time after the Effective Date, based on
the judgment of any court of competent jurisdiction or under a bona fide
compromise or settlement of claims, demands, or actions, regarding any damages
described in this paragraph. Shareholders must discharge their obligations to
Surviving Corporation by the payment of cash on demand. The shareholders will
have the opportunity to defend any claim, action, or demand asserted against
Surviving Corporation for which Surviving Corporation claims indemnity against
the shareholders, provided that: (i) the defense is conducted by counsel
reasonably approved by Surviving Corporation; (ii) the defense is expressly
assumed in writing within ten (10) days after written notice of the claim,
action, or demand is given to the shareholders; and (iii) Surviving
Corporation's counsel may participate at all times and in all proceedings,
formal and informal, relating to the defense, compromise, and settlement of the
claim, action, or demand, at the expense of Surviving Corporation.
ARTICLE 8
ABANDONMENT
CIRCUMSTANCES ALLOWING TERMINATION AND ABANDONMENT
8.01. This Plan may be terminated and the merger may be abandoned at any
time before the Effective Date, even after the Articles of Merger have been
filed with the Nevada Secretary of State.
(a) The board of directors of any party to the merger may abandon this Plan
before the Articles of Merger are filed with the Nevada Secretary of State.
(b) To abandon this Plan after the Articles of Merger have been filed with the
Nevada Secretary of State, an officer or authorized representative must file a
statement with the Secretary of State executed on behalf of each party to the
merger declaring that the Plan has been abandoned in accordance with the terms
of this Plan and Section 92A.175 of the Nevada Revised Statutes. The statement
must be filed before the Effective Date of the merger.
(c) Regardless of whether the Articles of Merger have been filed with the
Nevada Secretary of State, this Plan may be abandoned under the following
conditions:
(i) The number of shareholders dissenting from the merger is so large that
the merger is deemed inadvisable or undesirable in the opinion of the board of
directors of either party to the merger.
(ii) Any material litigation or proceeding has been instituted or threatened
against another party to the merger or any of its assets, that renders the
merger inadvisable or undesirable in the opinion of the board of directors of
either party to the merger.
(iii) Any legislation has been enacted that, in the opinion of the board of
directors of either party to the merger, renders the merger inadvisable or
undesirable.
(iv) After the date of execution of this Plan there has been, in the opinion of
the board of directors of either party to the merger, any materially adverse
change in the business or condition, financial or otherwise, of another party to
the merger.
(d) At the election of Surviving Corporation's board of directors if,
without the prior consent in writing of Surviving Corporation, Acquired
Corporation has entered into any transaction other than those involved in the
ordinary course of business.
NOTICE OF AND LIABILITY ON TERMINATION OF PLAN
8.02. If an election is made to abandon this Plan under paragraph 8.01:
(a) An officer or authorized representative of the party whose board of
directors has made the election must give immediate written notice of the
election to the other party to the merger.
(b) When notice has been properly effected as provided in subparagraph (a), and
when an appropriate statement has been filed with the Secretary of State
pursuant to this section 8.01(b), this Plan will terminate and the proposed
merger will be abandoned. Except for payment of its own costs and expenses
incident to this Plan, there will be no liability on the part of either party to
the merger as a result of the abandonment.
ARTICLE 9
ENFORCEMENT AND INTERPRETATION
FURTHER ASSURANCES AND ASSIGNMENTS
9.01. Acquired Corporation agrees that when requested by Surviving
Corporation or by its successors or assigns, Acquired Corporation will execute
and deliver or cause to be executed and delivered all deeds and other
instruments necessary to consummate the transaction that is the subject of this
Plan. Acquired Corporation also agrees to take or cause to be taken any further
actions, assignments, or assurances that are necessary to vest, perfect, and
conform title of Surviving Corporation to all the property, rights, privileges,
powers, and franchises referred to in Article 1 of this Plan, and otherwise
necessary to carry out the intent and purposes of this Plan.
NOTICES
9.02. Any notice or other communication required or permitted by this
Plan, with the exception of the filing of a statement of abandonment under
paragraph 8.01(b), will be deemed to be given when deposited in the United
States mails for transmittal by certified or registered mail, postage prepaid,
or when deposited with a public telegraph company for transmittal, charges
prepaid, addressed:
(a) In the case of Acquired Corporation, to: 200 Trade Zone Drive, Ronkonkoma,
New York 11779, or to any other person or address that Acquired Corporation may
designate in writing on proper notice to Surviving Corporation.
(b) In the case of Surviving Corporation, to: 200 Trade Zone Drive, Ronkonkoma,
New York 11779, or to any other person or address that Surviving Corporation may
designate in writing on proper notice to Acquired Corporation.
ENTIRE AGREEMENT AND COUNTERPARTS
9.03. This instrument and any exhibits attached to and incorporated into
the instrument contain the entire agreement between the parties with respect to
the transaction contemplated by this Plan. It may be executed in any number of
counterparts; however, all counterparts taken together will constitute one
original.
CONTROLLING LAW
9.04. The validity, interpretation, and performance of this Plan is
controlled by and construed under the laws of Nevada, the state in which this
Plan is being executed.
IN WITNESS WHEREOF, (i) the Surviving Corporation has caused this Plan to
be signed by the President of the Surviving Corporation and attested by the
Secretary of the Surviving Corporation pursuant to authorization contained in a
resolution adopted by the Directors of the Surviving Corporation approving this
Plan and (ii) the Acquired Corporation has caused this Plan to be signed by the
President of the Acquired Corporation and attested by the Secretary of the
Acquired Corporation pursuant to authorization contained in a resolution adopted
by the Directors of the Acquired Corporation approving this Plan.
PERMA-TUNE ELECTRONICS, INC.,
a Texas corporation
ATTEST:
By
--------------------------
, President
-------------
--------------------------
, Secretary
-------------
TRANS MAX TECHNOLOGIES, INC.,
a Nevada corporation
ATTEST:
By
--------------------------
, President
-------------
--------------------------
, Secretary
-------------
The undersigned, ______, as Secretary of Trans Max Technologies, Inc., a
Nevada corporation, hereby certifies that the foregoing Merger was duly approved
by the affirmative vote of the Directors and Sole Shareholder.
WITNESS my hand this the _______ day of November 2003.
--------------------------------
, Secretary
--------------------
The undersigned, _________, as Secretary of Perma-Tune Electronics, Inc., a
Texas corporation, hereby certifies that the foregoing Merger was duly adopted
by the unanimous consent of the directors of Perma-Tune Electronics, Inc.
WITNESS my hand this the _________ day of November 2003
--------------------------------
, Secretary
--------------------