SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
PEN
PEN INTERCONNECT, INC
---------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[] No fee required
[] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11 1.
Title of each class of securities to which transaction
applies: Common shares
Aggregate number of securities to which transaction applies:
26,057,051
Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
Per unit price = $.20. Calculation - $.20 times 26,057,051,
times perFORMplace ownership (.825%).
Proposed maximum aggregate value of transaction: $4,299,413 5.
Total fee paid: $858.00
[X] Fee paid previously with preliminary materials.
[] Check box if any part of the fee is offset as provided b
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid:
Form, Schedule or Registration Statement No.:
Filing Party:
Date Filed:
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PEN INTERCONNECT, INC.
1601 Alton Parkway, Irvine, CA 92606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on Friday, December 15th, 2000
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders (the
"Meeting") of Pen Interconnect, Inc., a Utah Corporation (the "Company"), will
be held at the Newport Beach Tennis Club, 2601 Eastbluff Drive, Newport Beach,
CA 92660, on Friday, December 15th, 2000, at 10am, local time, to consider and
act upon the following:
1. The election of five persons named in the accompanying Proxy
Statement to serve as directors on the Company's board of
directors (the "Board") and until their successors are duly
elected and qualified;
2. To ratify the appointment of Berg & Company, LL as independent
auditors for the Company, for the fiscal year ending September
30, 2000, for the purpose of auditing the financial statements
and books of the Company, for, and during, the period ending
on that date;
3. To vote in favor of the merger with perFORMplac Inc., by an
exchange of shares;
4. To approve an amendment to the Company's certificate of
incorporation (the "Certificate of Incorporation") to increase
the number of shares of the Common Stock, authorized to be
issued, to 200,000,000 shares;
5. To approve an amendment to the Certificate of Incorporation in
order to effect a stock combination (reverse split) of the
Common Stock in an exchange ratio to be approved by the Board,
ranging from one newly issued share for each two outstanding
shares of Common Stock to one newly issued share for each ten
outstanding shares of Common Stock;
6. To approve moving the state of incorporation from Utah to
Delaware.
7. To approve changing the Company name from Pen Interconnect,
Inc., to perFORMplace, Inc., and;
8. To consider and transact such other business as may properly
come before the Meeting or any adjournment(s) thereof.
A Proxy Statement, form of Proxy and the Annual Report to Stockholders of the
Company for the fiscal year ended September 30, 1999 are enclosed herewith. Only
holders of record of Common Stock at the close of business on June 30, 2000 are
entitled to receive notice of and to attend the Meeting and any adjournment(s)
thereof. The stock transfer books of the Company will remain open between the
record date and the date of the Meeting. At least 10 days prior to the Meeting,
a complete list of the stockholders entitled to vote will be available for
inspection by any stockholder, for any purpose germane to the Meeting, during
ordinary business hours, at the executive offices of the Company. Should you
receive more than one Proxy because your shares are registered in different
names and addresses, each Proxy
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should be signed and returned to assure that all your shares will be voted. You
may revoke your Proxy at any time prior to the Meeting. If you attend the
Meeting and vote by ballot, your Proxy will be revoked automatically and only
your vote at the Meeting will be counted. If you do not expect to be present at
the Meeting, you are requested to fill in, date and sign the enclosed Proxy,
which is solicited by the Board of the Company, and to mail it promptly in the
enclosed envelope.
In the event there are not sufficient votes for a quorum or to approve or ratify
any of the foregoing proposals at the time of the Meeting, the Meeting may be
adjourned by a vote of the majority of the votes cast by the stockholders
entitled to vote thereon. Whether or not you expect to attend the Meeting, to
assure that a quorum is present at the Meeting or an adjournment thereof, and
there are sufficient votes to vote on all of the foregoing proposals, please
sign, date and return promptly your Proxy.
By Order of the Board of Directors
Stephen J. Fryer
Chairman of the Board, President, and Chief
Executive Officer
Dated: November 3, 2000
IMPORTANT
Shareholders are cordially invited to attend the Meeting Regardless of whether
you expect to attend the Meeting in person, we urge you to read the attached
Proxy Statement and sign and date the accompanying proxy card and return it in
the enclosed envelope. It is important that your shares be represented at the
Meeting. If you receive more than one proxy card because your shares are
registered in different names, or notices go to different addresses, each card
should be completed and returned to assure that all of your shares are voted.
Your proxy will not be used if you are present at the Meeting and desire to vote
your shares personally.
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PEN INTERCONNECT, INC
1601 Alton Parkway
Irvine, CA 92606
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
December 15th, 2000
-------------------
Solicitation of Proxies
This Proxy Statement is furnished to the shareholders of Pen Interconnect, Inc.,
a Utah corporation (the "Company"), in connection with the solicitation by the
Board of Directors of the Company of proxies from the Company's shareholders for
use at the 2000 Annual Meeting of Shareholders of the Company to be held on,
Friday, December 15th, 2000 at 10:00 a.m., Pacific time, at the Newport Beach
Tennis Club, 2601 Eastbluff Drive, Newport Beach, CA 92660, and any adjournment
or postponement thereof (the "Meeting"). At the Meeting, the Company's
shareholders will be asked to (i) elect five directors, (ii) approve independent
public accountants to audit the Company's financial statements for the fiscal
year ending September 30, 2000, (iii) to vote in favor of the merger with
perFORMplace, Inc., (iv) to approve an increase in the number of shares of
Common Stock, (v) to approve a reverse split of the Common Stock, (vi) to
approve moving the state of incorporation, (vii) to approve the change the name,
(viii) ratify and vote on such other matters as may properly come before the
Meeting or any adjournment or postponement of the Meeting.
Only shareholders of record at the close of business on June 30, 2000 are
entitled to notice of and to vote at the Meeting. The approximate date upon
which this Proxy Statement, the enclosed proxy and the attached Notice of Annual
Meeting of Shareholders are first being sent to shareholders is November 20,
2000.
The entire cost of soliciting proxies for use at the Meeting will be borne by
the Company. Proxies will be solicited by use of the mails. Directors, officers
and regular employees of the Company may also solicit proxies by telephone,
telecopier, electronic transmission or personal contact. The Company will not
pay any special compensation, to any person, in connection with the solicitation
of proxies. The cost of the solicitation of proxies will include the cost of
supplying necessary copies of the solicitation materials to the beneficial
owners of those common shares which are held of record by brokers, dealers,
banks, voting trustees and their nominees, including, upon request, the
reasonable expenses which are incurred by such record holders in mailing the
solicitation materials to beneficial owners.
Proxies in the enclosed form will be effective if they are properly executed,
returned to the Company prior to the Meeting, and not revoked. The common shares
represented by each effective proxy will be voted at the Meeting in accordance
with the instructions of the shareholder. If no instructions are indicated on a
proxy, all common shares represented by that proxy will be voted (i) in favor of
the election of the nominees for directors described in this proxy statement,
(ii) in favor of ratification of the appointment of Berg & Company, LLP as the
Company's independent auditors for the fiscal year ending September 30, 2000,
(iii) to vote in favor of the merger, (iv) approval of an increase in the number
of authorized shares; (v) approval of a reverse split of the Common Stock; (vi)
agreement on moving the state of incorporation from Utah to Delaware; approval
to change the Company's name; (vii) in the discretion of the persons named in
the accompanying Proxy, upon such other matters as may properly come before the
Meeting.
A shareholder giving a proxy pursuant to this solicitation may revoke it at any
time prior to its exercise by delivering to the Secretary of the Company a
written notice of revocation, or a duly executed proxy
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bearing a later date, or by attending the Meeting and voting in person. Any
written notice revoking a proxy should be sent to the principal executive
offices of the Company addressed as follows: Pen Interconnect, Inc., 1601 Alton
Parkway, Irvine, CA 92606.
Information on Outstanding Shares and Voting
On the record date, 26,059,051 of the Company's common shares, par value $.01
per share, were issued and outstanding and there were 1022 preferred shares
outstanding. Each shareholder is entitled to one vote on each matter to be voted
upon. No Vote for each share of convertible Preferred held by such stockholders
on June 30, 2000.
A majority of the votes entitled to be cast at the Meeting is required for a
quorum for the transaction of business at the Meeting. Abstentions and broker
non-votes (i.e., shares held by brokers or nominees as to which the broker or
nominee indicates on a proxy that it does not have discretionary authority to
vote) are each included in the determination of the number of shares present and
voting for purposes of determining the presence of a quorum. Each is tabulated
separately. Under Utah law, once a quorum is established, shareholder approval
with respect to a particular proposal is generally obtained when the votes cast
in favor of the proposal exceed the votes cast against the proposal. In the
election of directors, the five nominees receiving the highest number of votes
will be elected. Abstentions and broker non-votes will not be considered as
votes cast for or against any matter considered at the Meeting and will not
affect the outcome of any matter considered at the Meeting.
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PROPOSAL # 1 - ELECTION OF DIRECTORS
Nominees and Information
At the Meeting, five (5) directors are to be elected to serve one-year terms
expiring at the annual meeting of shareholders to be held in 2000. All directors
will serve until their successors are duly elected and qualified, subject,
however, to prior death, resignation, retirement, disqualification or removal
from office.
The persons named as proxy holders in the enclosed proxy card, Stephen J. Fryer
and Christine Risner have advised the Company that, unless a contrary direction
is indicated on the proxy card, they intend to vote for the five nominees named
below. They have also advised the Company that in the event of any of the five
nominees are not available for election for any reason, they will vote for the
election of such substitute nominee or nominees, if any, as the Board of
Directors may propose. The Board of Directors has no reason to believe that any
nominee will be unavailable to serve on the Board. The five nominees receiving
the highest number of votes at the Meeting will be elected.
The Company's nominees for the Board of Directors and their respective business
biographies are as follows:
Director
Name Age Principal Occupation Since
Stephen J. Fryer 62 CEO & President 1995
T.A. Mercurio 57 CEO perFORMplace, Inc., 2000
Brian Bonner 52 CEO - Imaging Technologies 1999
Milton Haber 76 CFO Airline Management Corp 1998
Robert Dietrich 55 CFO Knowledge Foundations
STEPHEN J. FRYER has served as a director of the Company since 1995 and as
President and CEO since September 15, 1998. From 1989 to 1996 Mr. Fryer was a
principal in Ventana International, Ltd., an Irvine, California based venture
capital and private investment banking firm. Mr. Fryer graduated from the
University of Southern California in 1960 with a Bachelors Degree in Mechanical
Engineering and has spent in excess of 28 years in the computer business in the
United States as well as Asia and Europe.
T.A. MERCURIO has served as director of the Company since 2000. Mr. Mercurio is
President and CEO of perFORMplace, Inc., and was former CEO of Theatrical
Investors International. Mr. Mercurio was the lead investor in World ComNet in
partnership with Tandem Computer Corp. Mr. Mercurio is Exit Point's Managing
Partner and has over twenty-five years or corporate finance, venture capital,
and business management experience. Mr. Mercurio has a Bachelors Degree and a
Masters Degree from California State University, Long Beach.
BRIAN BONNER has served as Director of Imaging Technologies Corporation (Itec)
since 1995 and became Chairman of the Board in 1999. Mr. Bonar has been with
Itec since 1994. Previous to that Mr. Bonar has been Vice President of worldwide
sales and marketing for Bezier Systems, Inc., Adaptec, Inc. Mr. Bonar also was
with Rastek Corporation, and QMS, Inc. Prior to 1984, Mr. Bonar was employed by
IBM, U.K. Ltd for approximately 17 years.
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MILTON HABER has been the CFO of Airline Management Corporation since 1996 and
is a private investor. From 1994 through 1983 Mr. Haber was a business
consultant, small business owner and a private investor. He attended Brooklyn
College from 1946 through 1948 after serving in the United States Air Force
during Word War 11. Mr. Haber joined the Company's Board of directors in
February 1998.
ROBERT A. DIETRICH has been the CFO/Director of Knowledge Foundations, Inc.,
(KNFO:OB) a knowledge engineering software tool developer since April 2000.
Since January 1998, President/CEO of Cyberair Communications Inc., a privately
held telecommunications company, from 1996 to July 2000 he was President/CEO of
Semper Resources Corporation, a public natural resources holding company.
Previously, he was Managing Director and CFO of Ventana International, Ltd.,
Irvine, California, a venture capital and private investment-banking firm. Mr.
Dietrich is a CPA and an accounting graduate of Notre Dame and holds an MBA from
the University of Detroit.
Board of Directors Meeting and Committees
The Board of Directors held 4 meetings in fiscal year ending September 30, 1999.
Each director attended at least 75% of all of the meetings of the Board of
Directors.
The Board of Directors has a standing Audit Committee and Compensation
Committee. The Audit Committee met twice during fiscal year 1999, and the
Compensation Committee met twice during the fiscal year 1999.
The responsibilities of the Audit Committee include: (1) the recommendation of
the selection and retention of the Company's independent public accountants; (2)
the review of the independence of such accountants; (3) the review of the
Company's internal control system; and (4) the review of the Company's annual
financial report to shareholders. The Audit Committee was comprised of, Milton
Haber, James E. Harward, and Stephen J. Fryer. The Compensation Committee was
comprised of, James E. Harward, Milton Haber, and Stephen J. Fryer.
Compensation of Directors
Members of the Board of Directors employed by the Company do not receive any
separate compensation for their services as directors. Members of the Board of
Directors not employed by the Company receive $250.00 per telephonic meetings,
and $1,000.00 for an on hand meeting. Directors are reimbursed for their actual
expenses incurred in connection with their attendance at meetings of the Board
of Directors.
Directors, Executive Officers and Key Employees
The following table lists the names, ages and positions held by all directors,
executive officers and key employees of the Company as of the date hereof.
Directors generally serve until the next annual meeting of shareholders and
until their successors have been duly elected or appointed. Executive officers
serve at the discretion of the Board of Directors.
Name Age Position Year Elected or
Appointed
Stephen J. Fryer 62 CEO & President 1998
T.A. Mercurio 57 Director 2000
Brian Bonar 52 Director 1999
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Jim Harward 47 Director 1997 (Resigned)
Milton Haber 76 Director 1998
Business Biographies
The business biographies of the Company's directors and director nominees are in
the section of this Proxy Statement entitled "Election of Directors".
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 and the rules there under
require the Company's executive officers and directors, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission, and to furnish the Company with copies.
Based on its review of the copies of such forms received by the Company, or
written representations from certain reporting persons, the Company believes
that during fiscal year 1999, except as otherwise noted below, each reporting
person has timely filed all requisite reports with the Securities and Exchange
Commission.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's common
shares beneficially owned as of June 1, 2000, (i) by each person who is known by
the Company to own beneficially more than 5% of the Company's common shares,
(ii) by each director and director nominee, (iii) by each of the Company's named
executive officers, and (iv) by all directors, director nominees and executive
officers, as a group, as reported by each such person. Unless otherwise
indicated, each stockholder's address is c/o Pen Interconnect, Inc., 1601 Alton
Parkway, Irvine, California, 92606.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Owner Class (1)
---------------- ---------------- --------
Directors and Executive Officers
Stephen J. Fryer 792,500 3.02%
James E. Harward 115,000 .04%
Milton Haber 140,000 .05%
Brian Bonar 150,000 .06%
Christine Risner 20,000 .006%
T.A. Mercurio 100,000 .03%
----
All Executive Officer and Directors 3.206%
as a Group
1. Based on 26,059,051 outstanding shares of commo shares (and
assumes the exercise by each individual of options exercisable
within sixty days after June 30, 2000). The inclusion herein
of any shares as beneficially owned does not constitute an
admission of beneficial ownership of those shares. Unless
otherwise indicated, each person listed has sole investment
and voting powers with respect to the shares listed. In
accordance with the rules of the Securities and Exchange
Commission, each person is deemed to beneficially own any
shares issuable upon exercise of stock options or warrants
held by such person that are currently exercisable or that
become exercisable within 60 days after June 30, 2000.
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Except as set forth above, the Company knows of no beneficial owner preferreds,
or more of the Company's common shares, and does not know of any arrangement,
which may, at a subsequent date, result in a change of control of the Company,
except for post-merger ownership.
Compensation of Executive Officers as of 1999
The following table shows the compensation paid by the Company to its CEO,
Stephen J. Fryer, and the Company's three other most highly paid executives.
None of the Company's other executive officer's total annual salary and bonus
exceeded $100,000 for the years presented.
Annual Compensation
<TABLE>
<CAPTION>
Long Term
Name and Fiscal Compensation
Principal Position Year Salary Bonus ($) Awards (Options)
------------------ ---- ------ --------- ----------------
<S> <C> <C> <C> <C>
Stephen J. Fryer 1999 139,000 17,304 250,000
1998 96,000 12,000 100,000
1997 67,053 45,117 12,500
(1)Jim Pendleton 1999 139,666 0 ======
1998 129,000 0 ======
1997 144,236 6,000 ======
(2)Mehrdad Mobasseri 1999 96,000 89,282 60,000
1998 83,999
1997 N/A
(3)Alan Weaver 1999 100,000 30,881
1998 120,000 32,432
1997 116,486 15,450 25,000
</TABLE>
OPTION GRANTS IN FISCAL YEAR 1999
Number of
Securities Percent of Total
Underlying Options Granted Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year 1999 Per Share Date
---- ------- ---------------- ----- ----
Stephen J. Fryer 250,000 65% .30 2004
Mehrdad Mobasseri 60,000 35% .30 2004
(1) Resigned - 10/27/99 or last date of employment.
(2) Resigned - 02/24/00 or last date of employment.
(3) Resigned - 07/29/99 or last date of employment.
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AGGREGATED OPTION EXERCISES IN FISCAL YEAR
1999 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-the-
Unexercised Money Options at
Options Fiscal Year End
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercised Unexercised
---- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Stephen J. Fryer -0- None 492,500 113,275/113,275
Mehrdad Mobasseri -0- None 105,000 24,150/ 24,150
</TABLE>
*The tables above do not include certain insurance, the use of a car, and other
personal benefits, the total value of which does not exceed $50,000 or 10% of
any listed person's salary and bonus.
Employment Agreements
The Company has an employment agreement with Stephen J. Fryer dated October 15,
1996 and is effective through October 2002.
The agreement includes all the terms of employment including, the employee's
duties, the duration of the contract, compensation (which includes salary,
bonus, commissions and vacation), car allowances, insurance coverage, and
deferred compensation and stock options. Each agreement also contains a non-
competition clause, provisions for early termination, and confidentiality
provisions.
Certain Relationships and Related Transactions
The following information summarizes certain transactions, either engaged in
within the last two (2) years, or, proposed to be engaged in, by the Company and
the individuals described above. Mr. Stephen J. Fryer has ownership in
perFORMplace, Inc. He owns 4.9% of the shares of perFORMplace, Inc.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR ALL OF THE FIVE DIRECTOR NOMINEES
PROPOSAL # 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTING
At the Meeting, shareholders will be asked to elect, ratify, and approve the
Company's independent accountants for the fiscal year ending September 30, 2000.
Currently, Berg & Company, LLP ("Berg") acts as the Company's principal
accountant, and has acted in that capacity since February 2000.
The Company does not anticipate that any representative of Berg will be present
at the Meeting. If a representative is present, he or she will have the
opportunity to make a statement, and will be expected to be available to respond
to appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE TO RATIFY
THE SELECTION OF BERG & COMPANY, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2000.
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PROPOSAL # 3 - VOTE IN FAVOR OF THE MERGER WITH perFORMplace, Inc.
Pen Interconnect, Inc has entered into a definitive agreement to merge with
perFORMplace, Inc., a Nevada based, private company in the entertainment
services business. Pen's board of directors has approved this merger and
recommends a YES vote of approval by their shareholders.
Pen Interconnect, Inc., has become a public shell and non-operating company,
without assets since the pre- packaged foreclosure of its' assets by its' bank,
Finova Capital in March 2000. The proposed merger with perFORMplace is a new
direction in which the Board has agreed to move, which will give Pen
Interconnect a business base. Upon approval of the merger, the name of Pen
Interconnect, Inc., will change to perFORMplace, Inc. The management of
perFORMplace, Inc., will take over the day-to-day operating management of the
merged company. For the time being, Pen will retain it's' OTC:BB: symbol PENC.OB
for the foreseeable future.
The definitive agreement is extensive and therefore complete copies are not
attached to this proxy statement, the definitive agreement contemplates a merger
as described below: If any shareholder wishes to request a copy of the
definitive agreement, they will be available from the Company for a small
reproduction and mailing fee of $10.00. Please send a request and a check for
$10.00 to Pen at its' corporate address.
PerFORMplace - Agreement and Company Summary
Specific Information
1. Summary term sheet: This will be a reverse merger whereby
perFORMplace will own 82.5% of Pen's stock through the
issuance of unregistered Pen Interconnect common shares, thus,
causing major dilution to the present Pen shareholders.
Perform will take over the management of Pen which at present,
is a shell public company.
2. Contact information: perFORM is a Nevada based start-up
company with headquarters at the Cinneville Bldg, 225 Santa
Monica Blvd., 7th Floor, Santa Monica, CA 90401. Telephone
310-319-9800, facsimile 310-260-0075 - CEO - T.A. Mercurio.
3. Business conducted: Please refer to Summary Information in
this section. 4. Terms of the transaction: As mentioned
earlier this will be a reverse merger with Pen giving up
control of the company to perFORMplace. There is no cash
involved in the transaction, except Pen has to provide initial
financing during the merger discussions of at least $100,000
and at least $1 Million of available credit at the closing,
which has been accomplished.
a. It is anticipated that the merger will be a tax free
exchange of shares, with Pen exchanging 123,856,410
restricted common shares for all the perFORMplace,
Inc., shares.
b. The Exchange ratio is 49.54 shares of Pen for each
share of perFORMplace, Inc., of which there are 2.5
Million shares issued, based on a ratio of 17.5% to
83.5%/ Pen to perFORMplace).
c. Pen's trade and leasing debt must be at a minimum
level, not to exceed $1,063,000 at the closing of the
merger with perFORMplace, Inc.
d. Pen's bank, Finova must agree to limit its' lie only
to the extent of foreclosed assets.
e. Pen will be responsible for maintaining its'
Corporate records in a proper manner; including
on-time SEC reporting so as to maintain a current
filing position with the SEC.
f. Because of signing the definitive agreement, an the
Board's approval of the merger, pending shareholder
approval, the companies are working as one, except
that all monies provided to perFORMplace, Inc., by
Pen Interconnect, Inc., are on a loan basis, Pen's
loans to perFORMplace will be forgiven at the
closing, and will then become a balance sheet item.
11
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5. Regulatory approvals: There are no known regulatory approvals
needed from either State of Federal Agencies, with the
exception of the notice to the SEC on the expansion of Pen's
shares.
6. Reports, opinions, appraisals: There have been no reports,
opinions, or appraisals from any outside sources of this
transaction. The major guiding principal is the public market
place itself where typical reverse mergers with shell
companies range in the 95% to 80% give-up of ownership, based
on the conditions of the shell company, i.e., liabilities,
fully reporting on SEC documents, market conditions, etc.
7. Past contacts, transactions or negotiations: Discussions on a
potential merger started in March of 2000, shortly after Pen
was foreclosed on by its' bank, Finova. The Chairman of Pen
was acquainted with perFORM's founder through previous
business activities, and in fact, purchased 4.9% of the
founders' stock in perFORMplace prior to any serious merger
discussions between Pen and perFORM. The companies entered
into a letter of intent in April of 2000 and signed the merger
agreement in August of 2000.
8. Financial Background: In that perFORMplace is effectively a
start-up company, there is limited financial data. Although it
was incorporated in the State of Nevada as Flying Rhino in
1998, it was dormant except for yearly updates to the Nevada
Corporation Commission. In April of this year, the name was
changed from Flying Rhino to perFORMplace, Inc., and work was
begun on the software products through an outsource contract.
9. Selected Financial Information: The summary information set
forth below is derived from the un-audited financial
statements of (i) Pen Interconnect for the period April 1,
2000 through June 30, 2000 and (ii) perFORMplace, Inc., the
pro forma selected financial data presented for the period
from inception to the period ending June 30, 2000, are
unaudited and were prepared by management of the Company on
the same basis as the un-audited financial statements of the
Company included elsewhere herein and, in the opinion of the
Company include all adjustments (consisting of normal
recurring adjustments) necessary to present fairly the
information set forth therein.
10. Incorporation of Certain Documents by Reference The SEC allows
us to "incorporate by reference" the information we file with
them, which means that we can disclose important information
to you by referring you to those documents. We incorporate by
reference in connection with this pro forma, the documents
listed below and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities and
Exchange Act of 1934.
a. Our Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1999;
b. Our Quarterly Reports on Form 10-QSB for the fiscal
quarters ended June 30, 2000, March 31, 2000,
December 31, 1999.
12
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PEN INTERCONNECT, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Pen Interconnect perFORMplace
Historical Unaudited
Pro forma from
As of June 30, 2000 Inception as of Pro forma Pen Interconnect
June 30, 2000 Adjustments Unaudited Adjusted
ASSETS
Current Assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 23,449 $ 8,951 $ 32,400
Prepaid expenses and other cash assets 12,857 543 13,400
Other assets 118,506 724 $ (115,000) 4,230
----------- ---------- ----------
Total current assets $ 154,812 $ 10,218 $ 50,030
Property and equipment, net $ 899 $ 351 $ 1,250
Total assets $ 155,711 $ 10,569 $ (115,000) $ 51,280
----------- ---------- ----------- ----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable $ 3,218,595 $ 12,747 $3,231,342
Related party notes payable -0- 136,742 $ (115,000) 21,747
Accrued liabilities 496,655 -0- 496,655
Current maturity of long
time leases 55,545 -0- 55,545
----------- ---------- ----------- ----------
$ 3,770,795 $ 149,494 $ (115,000) $3,805,289
Stockholder's equity
Convertible Preferred Stock 10 10
Common Stock $.01 par value 260,591 2,500 1,236,074 1,499,165
Additional paid in capital 18,764,183 61,360,074 17,528,109
Accumulated (deficit) (22,639,867) (141,425) (22,781,293)
Total stockholder's equity (deficit) ( 3,615,083) (138,925) (3,754,008)
----------- ---------- -----------
Total liabilities and stockholder's
Equity $ 155,712 $ 10,569 $ 51,280
----------- ---------- -----------
</TABLE>
(1) Adjusted to reflect the condensed consolidated balance sheet as of the
Effective Date of the Merger
13
<PAGE>
PEN INTERCONNECT, INC.
PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Pen Interconnect perFORMplace
Historical un-audited Unaudited from Pro forma
For the 3 months Inception as of Pro forma Pen Interconnect
Ended June 30, 2000 June 30, 2000 Adjustments Unaudited Adjusted
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ -0- $ -0- $ -0- $ -0-
Cost of sales -0- -0- -0- -0-
--------------- -------------- --------- ------------
Gross profit -0- -0- -0- -0-
Selling general and
Administrative Expenses 735,473 139,806 -0- 875,279
Operating loss (735,473) (139,806) -0- (875,279)
Loss in repossession of
Assets (78,019) -0- -0- (78,019)
Other income (expense)
Interest income -0- -0- -0- -0-
Interest expense (39,970) (1,619) -0- (41,589)
--------------- ------------ -------- ------------
Net loss (853,462) (141,425) -0- (994,887)
--------------- ------------ -------- ------------
Basic and diluted (loss)
Per common stock $ (0.04) $ (0.057) $ (0.065)
</TABLE>
14
<PAGE>
SUMMARY:
perFORMplace, Inc., is a Web based resource center, providing information and
technical support for the entertainment arts encompassing the Motion Picture,
Television, Multimedia, Recording, Commercial and Live perFORMance Industries.
perFORM's initial activity is to provide a service that heretofore has not
existed, which is a Web based technology providing for the on-line calculation,
completion and processing of entertainment industry performance forms for the
unions and studios, replacing the manual, time consuming process that exists
today, the using of typewriters and the U.S. mail. This service will be provided
first for the US and Canada, where it is estimated that there are over 800,000
forms filed yearly.
Beyond the electronic filing of performance forms, perFORM will be providing an
array of services to actors, musicians, directors, composers, commercial
producers, television studios, record producers, including:
; On-line licensing of music and special effects
; Electronic music copyright filing
; Payment status tracking for actors, musicians and other
performers
; On-line production and marketing for film and music
; Video magazine
; Performance history database
; Creative resource databases
The software is in development with the first Alpha test successfully completed,
and customer demonstrations about to begin. Initial revenues are expected in the
4Q, 2000.
PRODUCT/SERVICE DESCRIPTION:
perFORMplace, Inc's e-commerce site will be developed over three phases rolling
out the services in the following chronology:
Phase One:
Electronic Form Filing:
Each year hundreds of thousands of Entertainment Industry performance forms are
filed manually with motion picture companies, television companies, record
companies and performance labor unions. perFORMplace, Inc., will be an on-line
resource company to facilitate the electronic processing of union contracts in
the areas of motion picture, television radio, recording, commercial production
and live performances. This first of a kind process will replace the existing
manual processing and filing procedure whereby contracts are prepared by
typewriter and delivered by standard mail service.
perFORMplace, Inc., will enable users to file, store and retrieve all types of
performance forms on-line including those for broadcasting, television and radio
announcers. The forms are then instantly available to record companies and local
union offices (password protected).
Subscription users can reserve their own space on secure servers. Performance
forms are then saved with specific projects, films and television shows and can
subsequently be accessed at a later date. A valuable use of this feature will be
to find original performance forms that provide for a new payment to be made to
a performer when that work is used in a different medium (e.g. a musician
records a song for a CD; later that song is included in a film).
15
<PAGE>
Users may also maintain a talent and contact database on-line. When filling out
forms, users simply click the name of a performer, announcer or actor and
required information such as address, social security number, PIN (performer ID
number), marital status is entered automatically into the forms. Session wages,
pension and/or health and welfare amounts are calculated automatically.
Once completed the unions and record/film/TV companies are notified, via email
that pending forms are posted on the perFORMplace, Inc., site available for
their review.
Payment Status Tracking:
This feature is designed to bring increased "hits" to perFORMplace, Inc., by
providing a much- needed service to the entertainment industry. Musicians,
actors and singers are continually frustrated because they never know when they
are getting paid. perFORMplace, Inc., offers a payment status function. Users
login, type in a form identifying number and instantly receive information as to
when the form was received and a payment status report.
Phase Two:
Electronic Forms Filing Worldwide:
After establishing a U.S. market presence, perFORMplace, Inc., will provide a
similar electronic filing service internationally. Thus far the targeted
countries include Japan, Australia, England, France, Italy, Germany, Belgium,
Sweden, The Netherlands and Greece.
In a very short time (during the first year of operation), perFORMplace, Inc.,
will begin to amass database information regarding performances, recording
session dates, performer information television release dates and motion picture
performance information which can be made available for future research
projects.
Phase Three:
Music Copyright Filing:
More than 600,000 copyrights are issued each year in the United States. It is
estimated that more than one third of these are music copyrights. perFORMplace,
Inc., will not only provide the convenience of filing music copyrights on-line,
but also provide the ability to submit music on- line using one of the following
techniques.
; Upload recorded or sampled music directly to perFORMplace,
Inc.,
; Type musical notes directly into on-line manuscript usin
"keyboard to music" technology
; Scan in the music manuscript
On-line licensing of music and special effects:
A library of digitally sampled (and recorded) musical sounds and effects is
available to perFORMplace, Inc. This could prove to be a resource via the
licensing and downloading of these sounds and effects by independent filmmakers,
motion picture studios and video game makers. This service will be of particular
value to small companies with budgetary considerations that may not be able to
afford the luxury of original music and well as major film studios looking for
quick passages to be used before deciding on the final musical backing.
16
<PAGE>
Video Magazine:
This component to the site is an "interactive" interview section. Customers will
have the option of seeing (and listening to) video taped interviews with
respected members of the arts (directors, composers, producers, artists). These
interviews will be based on questions previously submitted by subscribers and
other users. Once "aired" on perFORMplace, Inc., these interviews can be viewed
in their entirety or users may just click on the questions they wish answered.
We expect this feature to bring traffic to the site.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE YES IN
FAVOR OF THE MERGER WITH perFORMplace, Inc.
PROPOSAL # 4 - APPROVE AN AMENDMENT OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF COMMON STOCK
General
On June 25, 2000, the Board unanimously adopted a resolution proposing,
declaring advisable and recommending a proposal to amend the Certificate of
Incorporation to increase the number of shares of Common Stock, which the
Company is authorized to issue from 50,000,000 to 200,000,000 shares. The Board
determined that such amendment is advisable and directed that the proposed
amendment be considered at the Meeting. The additional 150,000,000 shares of
Common Stock, if and when issued, will have the same rights and privileges as
the shares of Common Stock presently issued and outstanding. Each holder of
Common Stock is entitled to one vote per share on all matters submitted to a
vote of stockholders. The Common Stock does not have cumulative voting rights
except for those as may be required under California law. The holders of Common
Stock share ratably on a per share basis in any dividends when, as and if
declared by the Board out of funds legally available therefore and in all assets
remaining after the payment of liabilities in the event of the liquidation,
dissolution or winding up of the Company. There are no preemptive or other
subscription rights, conversion rights or redemption or sinking fund provisions
with respect to the Common Stock.
Reference is made to the proposed amendment to Article Four of the Certificate
of Incorporation, which is attached hereto as Exhibit C to this Proxy Statement.
The Certificate of Incorporation, as amended to date, authorizes the Company to
issue 150,000,000 shares of Common Stock, $.005 par value per share, of which
26,059,051 shares were issued and outstanding as of June 30, 2000, and 1022
shares of the Company's preferred stock, par value $1,000.00 per share (the
"Preferred Stock"). In addition to the 26,059,051 shares of Common Stock
outstanding as of June 30, 2000, shares of Common Stock are reserved for
possible future issuances as follows:
; Options to purchase 2,777,000 shares at exercise prices
between $.30 and $8.45 per share;
; Warrants to purchase 3,865,453 shares at exercise prices
between $1.00 and $7.50 per share; and
The Company is contractually, by its' merger plan with perFORMplace, Inc.,
obligated to issue 123,856,410 shares of Common Stock in exchange for all of
2,500,000 shares of perFORMplace stock. This is 100,128,987 shares more than the
50,000,000 shares of Common Stock the Company is currently authorized to issue,
because 26,059,051 are already issued. Accordingly, the Company is in violation
of certain of its contractual violations as it would be unable to issue any
shares of Common Stock pursuant to (a) the exercise of options or warrants or
(b) the conversion of preferred Convertible Stock, as such issuance, together
with the merger would cause the Company to issue more than 50,000,000 shares of
Common Stock. Should the shareholders approve the 150,000,000 additional shares,
then after the merger and issuance of all options and warrants, there would
remain 43,442,086 available shares.
17
<PAGE>
A vote for the increase in shares is independent of the outcome of Proposal # 3,
(the "Merger"). If proposal # 3 is not approved, the company still proposes to
increase its' number of shares.
Purposes and Certain Possible Effects of Increasing the Number of Authorized
Shares of Common Stock
The Company has historically either publicly offered or privately placed its
capital stock to raise funds to finance its operations, including research and
development and product development activities, and has issued securities to
management, non-management employees and consultants. The Company expects to
continue to make substantial expenditures for research and product development
and in the development and marketing of products. The Company continues to
actively explore and negotiate additional financing that it requires. The
Company may also seek acquisitions of other companies, products and assets.
These activities are likely to require the Company to sell shares of Common
Stock or securities convertible into or exchangeable for Common Stock. The
Company has, at times in the past, sold shares or securities instruments
exercisable or convertible into shares at below the market price of its Common
Stock at the date of issuance and may be required to do so in the future in
order to raise financing.
The Board acknowledges that the increase in the number of authorized shares of
Common Stock at this time will provide the Company with the ability to issue the
shares of Common Stock it is currently obligated to issue pursuant to the
exercise and conversion of outstanding convertible securities and thereby avoid
certain contractual liabilities described above, and also provide it with the
flexibility of having an adequate number of authorized but un-issued shares of
Common Stock available for future financing requirements, including for funding
research and product development, acquisitions and other corporate purposes
without the expense or delay attendant in seeking stockholder approval at any
special or other annual meeting. The proposed amendment would provide additional
authorized shares of Common Stock that could be used from time to time, without
further action or authorization by the stockholders (except as may be required
by law or by any stock exchange or over-the-counter market on which the
Company's securities may then be listed).
Although it is not the purpose of the proposed amendment and the Board is not
aware of any pending or proposed effort to acquire control of the Company, the
authorized but un-issued shares of Common Stock also could be used by the Board
to discourage, delay or make more difficult a change in control of the Company.
This proposed amendment will not affect the rights of existing holders of Common
Stock except to the extent that further issuances of Common Stock will reduce
each existing stockholder's proportionate ownership. In the event that
stockholder approval of this proposed amendment of the Certificate of
Incorporation to increase the authorized Common Stock is not obtained, the
Company will be unable to satisfy its exercise and conversion obligations under
the terms of certain of its outstanding convertible securities and holders of
such convertible securities may commence legal proceedings against us.
Use of Additional Shares
At the present time, the Company has no plans for use of the additional shares
except as noted in Proposal # 3 (the "Merger" with perFORMplace which will use
123,856,410 shares.
18
<PAGE>
STOCKHOLDER APPROVAL
In accordance with the Utah Corporation Law and the Certificate of
Incorporation, the affirmative vote of a majority of the outstanding shares of
Common Stock entitled to vote thereon is required to adopt this proposed
amendment.
THE BOARD HIGHLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL # 5 - APPROVE AN AMENDMENT TO COMPANY'S CERTIFICATE OF
INCORPORATION TO EFFECT A REVERSE SPLIT OF THE COMMON STOCK
General
The Board has unanimously adopted resolutions proposing, declaring advisable and
recommending that stockholders authorize an amendment to the Certificate of
Incorporation to: (i) effect a stock combination (reverse split) of the
Company's Common Stock in an exchange ratio to be approved by the Board, ranging
from one (1) newly issued share for each two (2) outstanding shares of Common
Stock to one (1) newly issued share for each ten (10`) outstanding shares of
Common Stock (the "Reverse Split"); and (ii) provide that no fractional shares
or scrip representing fractions of a share shall be issued, but in lieu thereof,
each fraction of a share that any stockholder would otherwise be entitled to
receive shall be rounded up to the nearest whole share. There will be no change
in the number of the Company's authorized shares of Common Stock and no change
in the par value of a share of Common Stock.
If the Reverse Split is approved, the Board will have authority, without further
stockholder approval, to effect the Reverse Split pursuant to which the
Company's outstanding shares (the "Old Shares") of Common Stock would be
exchanged for new shares (the "New Shares") of Common Stock, in an exchange
ratio to be approved by the Board, ranging from one (1) New Share for each two
(2) Old Shares to one (1) New Share for each ten (10) Old Shares. The number of
Old Shares for which each New Share is to be exchanged is referred to as the
"Exchange Number". The Exchange Number may, within such range, be a whole number
or a whole number and fraction of a whole number. This Proposal # 5 is
independent upon the approval of Proposal # 3 (the "Merger") or proposal # 4
(the "Increase of Authorized Shares").
In addition, the Board will have the authority to determine the exact timing of
the effective date and time of the Reverse Split, which may be any time prior to
December 31, 2001, without further stockholder approval. Such timing and
Exchange Number will be determined in the judgment of the Board, with the
intention of maximizing the Company's ability to comply with the listing
requirements of The NASDAQ Stock Market, Inc. ("NASDAQ"), to raise financing, to
issue shares of Common Stock pursuant to outstanding contractual obligations,
and for other intended benefits as the Company finds appropriate. See "--
Purposes of the Reverse Split," below. The text of this proposed amendment
(subject to inserting the effective time of the Reverse Split and the Exchange
Number) is set forth in Exhibit D to this Proxy Statement.
The Board also reserves the right, notwithstanding stockholder approval and
without further action by stockholders, to not proceed with the Reverse Split
if, at any time prior to filing this amendment with the Secretary of State of
the State of Delaware, the Board, in its sole discretion, determines that the
Reverse Split is no longer in the best interests of the Company and its
stockholders. The Board may consider a variety of factors in determining whether
or not to implement the Reverse Split and in determining the Exchange Number
including, but not limited to, the approval by the stockholders of Proposal 4
which would increase the number of the authorized Common Stock, overall trends
in the stock market, recent changes and anticipated trends in the per share
market price of the Common Stock, business and transactional developments and
the Company's actual and projected financial performance.
19
<PAGE>
Purposes of the Reverse Split
The Common Stock is quoted on the OTDC-BB but had been, prior to being de-listed
on March 27, 1999, quoted on The NASDAQ National Market. In order for the Common
Stock to be re-listed on The NASDAQ SmallCap Market, the Company and its Common
Stock are required to comply with various listing standards established by
NASDAQ. Among other things, as such requirements pertain to the Company, the
Company is required to have a market capitalization of at least $50,000,000 and
its Common Stock must (a) have an aggregate market value of shares held by
persons other than officers and directors of at least $5,000,000, (b) be held by
at least 300 persons who own at least 100 shares and (c) have a minimum bid
price of at least $4.00 per share.
Under NASDAQ listing requirements, to be listed or re-listed, the Company must
demonstrate the ability to maintain a minimum bid price of at least $4.00 per
share. Although there are no strict guidelines in regard to how such an ability
to maintain stock price is to be demonstrated, at least a month of consistent
closing prices of more than $4.00 per share may be necessary for NASDAQ
consideration. Furthermore, if re-listed, under NASDAQ's listing maintenance
standards, if the closing bid price of the Common Stock falls under $1.00 per
share for 30 consecutive business days and does not thereafter regain compliance
for a minimum of 10 consecutive business days during the 90 calendar days
following notification by NASDAQ of failure to comply with listing maintenance
requirements, NASDAQ may again de-list the Common Stock from trading on The
NASDAQ SmallCap Market. The principal purpose of the Reverse Split is to
increase the market price of the Common Stock in order that the market price of
the Common Stock is well above the NASDAQ minimum bid requirement for re-listing
and if re-listed could better maintain the $1.00 maintenance requirement (which
does not adjust for the Reverse Split). The OTC-BB on which the Common Stock is
now traded is generally considered to be a less efficient market.
The purpose of the Reverse Split also would be to increase the market price of
the Common Stock in order to make the Common Stock more attractive to raise
financing (and, therefore, both raise cash to support the Company's operations
and increase the Company's net tangible assets to facilitate compliance with
NASDAQ requirements), and as a possible currency for acquisitions and other
transactions. The Common Stock traded on The NASDAQ National Market at market
prices ranging from approximately $.80 to approximately $2.10 from November 18,
1998 through March 29, 1999 and on the OTC-BB from approximately $.20 to
approximately $1.18 from March 29, 1999 through June 30, 2000. This has reduced
the attractiveness of using the Common Stock or instruments convertible or
exercisable into Common Stock in order to raise financing to support the
Company's operations and to increase the Company's net worth and as
consideration for potential acquisitions (which, when coupled with the Company's
need to deploy its available cash for operations, has rendered acquisitions
difficult to negotiate). Furthermore, the Company believes that re-listing the
Company's Common Stock on The NASDAQ SmallCap Market may provide the Company
with a broader market for its Common Stock and, therefore, facilitate the use of
the Common Stock in acquisitions and financing transactions in which the Company
may engage.
THERE CAN BE NO ASSURANCE, HOWEVER, THAT, EVEN AFTER CONSUMMATING THE REVERSE
SPLIT, THE COMPANY WILL MEET THE MINIMUM BID PRICE FOR RE-LISTING AND OTHERWISE
MEET THE REQUIREMENTS OF NASDAQ FOR INCLUSION FOR TRADING ON THE NASDAQ SMALLCAP
MARKET, OR THAT IT WILL BE ABLE TO UTILIZE ITS COMMON STOCK IN ORDER TO
EFFECTUATE FINANCING OR ACQUISITION TRANSACTIONS.
Furthermore, the Company is contractually obligated to issue 100,128,987 shares
of Common Stock more than the 50,000,000 shares of Common Stock the Company is
currently authorized to issue. Accordingly, the Company is in violation of
certain of its contractual violations as it would be unable to issue any shares
of Common Stock pursuant to the merger with perFORMplace, Inc., as such issuance
would cause the Company to issue more than 50,000,000 shares of Common Stock. A
Reverse Split would allow the Company to issue shares pursuant to its
contractual obligations, as it would reduce the number of shares of Common Stock
outstanding and make available shares of authorized Common Stock to issue as
required.
20
<PAGE>
Giving the Board authority to implement the Reverse Split will help avoid the
necessity of calling a special meeting of stockholders under time constraints to
authorize a reverse split should it become necessary in order to seek to
effectuate a financing or acquisition transaction or to meet NASDAQ's listing
maintenance criteria at a future time.
The Reverse Split will not change the proportionate equity interests of the
Company's stockholders, nor will the respective voting rights and other rights
of stockholders be altered, except for possible immaterial changes due to
rounding up to eliminate fractional shares. The Common Stock issued pursuant to
the Reverse Split will remain fully paid and non-assessable. The Company will
continue to be subject to the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended.
Certain Effects of the Reverse Split
The following table illustrates the principal effects of the Reverse Split to
the 26,059,051 shares of Common Stock outstanding as of June 30, 2000:
<TABLE>
<CAPTION>
After1-for After 1-for
Prior to 2 10
Reverse Reverse Reverse
Stock Stock Stock
Number of Shares Split Split Split
---------------- ----------- ----- -----
<S> <C> <C> <C>
Common Stock:
Authorized .................................. 50,000,000 50,000,000 50,000,000
Outstanding (2).............................. 26,059,051 13,029,525 2,605,905
---------- ----------- ----------
Available for Future
Issuance..................................... 23,940,949 36,970,475 47,394,095
Common Stock
Authorized (1)............................. 200,000,000 200,000,000 200,000,000
Outstanding................................ 26,059,051 13,029,525 2,605,905
---------- ---------- ---------
Available for Future
Issuance................................... 173,940,949 186,970,475 197,394,095
</TABLE>
(1) If Proposal # 4 is approved by the stockholders, there would
be 200,000,000 shares of Common Stock authorized.
(2) Gives effect to the Reverse Split, excluding New Shares to be
issued in lieu of fractional shares, and to conversions of
convertible preferred stock through June 30, 2000 and to
exercise of warrants through March 15, 2000. Excludes, on a
pre-Reverse Split basis: 1022 shares of Preferred Stock
subject to potential issuance upon conversion of the
outstanding shares of Preferred Convertible Stock;
approximately 6,642,453 shares of Common Stock which were
subject to outstanding options and warrants; and additional
shares of Common Stock which would be needed for the merger
with perFORMplace, Inc. The number of shares of Common Stock
issuable upon conversion of the Preferred Convertible Stock
may be dependent upon the market price of Common Stock.
Accordingly, the actual number of shares of Common Stock
issued upon conversion of the Preferred Convertible Stock may
not be determined at this time. Upon effectiveness of the
Reverse Split, each option and warrant would entitle the
holder to acquire a number of shares equal to the number of
shares which the holder was entitled to acquire prior to the
Reverse Split divided by the Exchange Number at the exercise
price in effect immediately prior to the Reverse Split
multiplied by the Exchange Number.
21
<PAGE>
Stockholders should recognize that, if the Reverse Split is effectuated, they
will own a fewer number of shares than they presently own (a number equal to the
number of shares owned immediately prior to the filing of the amendment
regarding the Reverse Split divided by the Exchange Number, as adjusted to
include New Shares to be issued in lieu of fractional shares). While the Company
expects that the Reverse Split will result in an increase in the market price of
the Common Stock, there can be no assurance that the Reverse Split will increase
the market price of the Common Stock by a multiple equal to the Exchange Number
or result in a permanent increase in the market price (which is dependent upon
many factors, including the Company's performance and prospects). Also, should
the market price of the Company's Common Stock decline after the Reverse Split,
the percentage decline may be greater than would pertain in the absence of the
Reverse Split. Furthermore, the possibility exists that liquidity in the market
price of the Common Stock could be adversely affected by the reduced number of
shares that would be outstanding after the Reverse Split. In addition, the
Reverse Split will increase the number of stockholders of the Company who own
odd-lots (less than 100 shares). Stockholders who hold odd-lots typically will
experience an increase in the cost of selling their shares, as well as greater
difficulty in effecting such sales. In addition, an increase in the number of
odd-lot holders will reduce the number of holders of round lots (100 or more
shares), which could adversely affect the NASDAQ listing requirement that the
Company have at least 300 round lot holders. Consequently, there can be no
assurance that the Reverse Split will achieve the desired results that have been
outlined above.
Stockholders should also recognize that, as indicated in the foregoing table,
there would be an increase in the number of shares, which the Company will be
able to issue from authorized but un-issued shares of Common Stock. As a result
of any issuance of shares, the equity and voting rights of holders of
outstanding shares may be diluted.
Procedure for Effecting Reverse Split and Exchange of Stock Certificates
If this amendment is approved by the Company's stockholders, and if the Board
still believes that the Reverse Split is in the best interests of the Company
and its stockholders, the Company will file the amendment with the Secretary of
State of the State of Delaware at such time as the Board has determined the
appropriate Exchange Number and the appropriate effective time for such split.
The Board may delay effecting the Reverse Split until as late as December 31,
2001 without re-soliciting stockholder approval. The Reverse Split will become
effective on the date of filing the amendment at the time specified in the
amendment (the "Effective Time"). Beginning at the Effective Time, each
certificate representing Old Shares will be deemed for all corporate purposes to
evidence ownership of New Shares.
As soon as practicable after the Effective Time, stockholders will be notified
that the Reverse Split has been effected and of the exact Exchange Number. The
Company expects that its transfer agent will act as exchange agent (the
"Exchange Agent") for purposes of implementing the exchange of stock
certificates. Holders of Old Shares will be asked to surrender to the Exchange
Agent certificates representing Old Shares in exchange for certificates
representing New Shares in accordance with the procedures to be set forth in a
letter of transmittal to be sent by the Exchange Agent. No new certificates will
be issued to a stockholder until such stockholder has surrendered such
stockholder's outstanding certificate(s) together with the properly completed
and executed letter of transmittal to the Exchange Agent. Any Old Shares
submitted for transfer, whether pursuant to a sale or other disposition, or
otherwise, will automatically be exchanged for New Shares at the exchange ratio.
Stockholders should not destroy any stock certificate and should not submit any
certificate until requested to do so by the Company or the Exchange Agent.
22
<PAGE>
Fractional Shares
No scrip or fractional certificates will be issued in connection with the
Reverse Split. Any fraction of a share that any stockholders of record otherwise
would be entitled to receive shall be rounded up to the nearest whole share.
No Dissenter's Rights
Under Delaware law, stockholders are not entitled to dissenter's rights with
respect to the proposed amendment.
Federal Income Tax Consequences of the Reverse Split
The following is a summary of certain material U.S. federal income tax
consequences of the Reverse Split and does not purport to be complete. It does
not discuss any state, local, foreign or minimum income or other U.S. federal
tax consequences. Also, it does not address the tax consequences to holders that
are subject to special tax rules, such as banks, insurance companies, regulated
investment companies, personal holding companies, foreign entities, nonresident
alien individuals, broker-dealers and tax-exempt entities. The discussion is
based on the provisions of the U.S. federal income tax law as of the date
hereof, which is subject to change retroactively as well as prospectively. This
summary also assumes that the Old Shares were, and the New Shares will be, held
as a "capital asset," as defined in the Code (generally, property held for
investment). The tax treatment of a stockholder may vary depending upon the
particular facts and circumstances of such stockholder. Each stockholder should
consult with such stockholder's own tax advisor with respect to the consequences
of the Reverse Split.
The Reverse Split is an isolated transaction and is not part of a plan to
periodically increase any stockholder's proportionate interest in the assets or
earnings and profits of the Company. As a result, no gain or loss should be
recognized by a stockholder of the Company upon such stockholder's exchange of
Old Shares for New Shares pursuant to the Reverse Split. The aggregate tax basis
of the New Shares received in the Reverse Split will be the same as the
stockholder's aggregate tax basis in the Old Shares exchanged therefore. The
stockholder's holding period for the New Shares will include the period during
which the stockholder held the Old Shares surrendered in the Reverse Split.
Stockholder Approval
In accordance with the Utah Corporation Law and the Certificate of
Incorporation, the affirmative vote of a majority of the outstanding shares of
Common Stock entitled to vote thereon is required to adopt this proposed
amendment.
Use of Additional Shares
At the present time, the Company has no plans for use of the additional shares
except as noted in Proposal # 3 (the "Merger" with perFORMplace which will use
123,856,410 shares.
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Anti-Takeover Effects
The Company does not have any anti-takeover provisions in its' by-laws,
articles, or in any other corporate or employment agreements, and there are no
plans to incorporate such provisions. However, management might use the
additional shares to resist or frustrate a third-party transaction, providing an
above-market premium that is favored by a majority of independent shareholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THIS PROPOSAL.
PROPOSAL # 6 - TO APPROVE MOVING THE STATE OF INCORPORATION FROM UTAH TO
DELAWARE.
The Board is asking the shareholders to ratify, and approve the move of the
state of Incorporation of Pen Interconnect, Inc., from Utah and to
re-incorporate in Delaware. The reason for changing the state of incorporation
is based on the following:
1. There is no longer any reason to be incorporate in Utah as Pen
has totally moved out of Utah.
2. It is a continual problem and cost when the Company needs
legal opinions and we have to obtain Utah counsel for inputs.
3. Our merger partner has asked for the change.
4. Directors and Officers liabilities are reduced through
Delaware Corporate Law.
5. Shareholder votes differ between Utah and Delaware in that
Utah law allows for a majority vote to be 51% of the votes
cast, whereas Delaware law states a majority to be 51% of
issued shares.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL # 7 - TO APPROVE THE NAME CHANGE OF PEN INTERCONNECT, INC., TO
perFORMplace, Inc.
Should Proposal # 3 (the "Merger") be approved, the Board is asking the
shareholders to approve the change of Pen's name to perFORMplace, Inc. This
would be so as to reflect the new direction of the Company.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS PROPOSAL.
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<PAGE>
PROPOSAL # 8 - TO CONSIDER AND TRANSACT SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(s) THEREOF
The Company knows of no other matters that will be presented for consideration
at the Meeting. If any other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed form of Proxy to vote the shares
they represent as the Board may recommend. Discretionary authority with respect
to such other matters is granted by the execution of the enclosed Proxy.
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<PAGE>
Exhibit C
Proposed Form of Amendment to Certificate of Incorporation
Increasing the Number of Authorized Shares of Common Stock
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PEN INTERCONNECT, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
Pen Interconnect, Inc.
2. The Certificate of Incorporation of the Corporation (hereinafter called
the "Certificate of Incorporation") is hereby further amended by
deleting the current first paragraph of the Fourth Article and
replacing it with the following:
"FOURTH: The aggregate number of shares of stock which the Corporation
shall have authority to issue is 200,000,000 shares divided into two
classes; 200,000,000 shares of which shall be designated as Common
Stock, $.005 par value per share, and 100,000 shares of which shall be
designated as Preferred Stock, with $1,000.00 par value per share.
There shall be no preemptive rights with respect to any shares of
capital stock of the Corporation."
3. The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Sections 228 and
242 of the General Corporation Law of the State of Delaware.
Dated: ___________, 2000
By:_________________________
Stephen J. Fryer
Chairman, President and CEO
ATTEST:
By:__________________________
Christine Risner, Secretary
26
<PAGE>
Exhibit D
Proposed Form of Amendment to Certificate of Incorporation
Effecting a Reverse Split
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PEN INTERCONNECT, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
Pen Interconnect, Inc.
2. The Certificate of Incorporation of the Corporation (hereinafter called
the "Certificate of Incorporation") is hereby further amended by
deleting the current first paragraph of the Fourth Article and
replacing it with the following:
"FOURTH: The aggregate number of shares of stock which the Corporation
shall have authority to issue is _________ shares divided into two
classes; _________ shares of which shall be designated as Common Stock,
$.005 par value per share, and _________ shares of which shall be
designated as Preferred Stock, with $1,000.00 par value per share.
There shall be no preemptive rights with respect to any shares of
capital stock of the Corporation.
Effective 12:01 a.m. on __________, 2001 (the "Effective Time"), each
__ shares of Common Stock then issued shall be automatically combined
into one share of Common Stock of the Corporation. No fractional shares
or scrip representing fractions of a share shall be issued, but in lieu
thereof, each fraction of a share that any stockholder would otherwise
be entitled to receive shall be rounded up to the nearest whole share."
3. The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Sections 228 and
242 of the General Corporation Law of the State of Delaware.
Dated: ___________, 2000
By:_________________________
Stephen J. Fryer
Chairman, President and CEO
ATTEST:
By:__________________________
Christine Risner, Secretary
27
<PAGE>
THE BOARD OF DIRECTORS OF
PEN INTERCONNECT, INC.
Dated: November 3, 2000
PEN INTERCONNECT INCORPORATED - PROXY OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen J. Fryer and Christine Risner jointly
and severally, as proxies, with full power of substitution and re-substitution,
to vote all shares of stock which the undersigned is entitled to vote at the
Annual Meeting of Stockholders (the "Annual Meeting") of Pen Interconnect, Inc.,
(the "Company") to be held at the Newport Beach Tennis Club, on Friday, December
15, 2000 at 10:AM local time, or at any postponements or adjournments thereof,
as specified below, and to vote in his or her discretion on such other business
as may properly come before the Annual Meeting and any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4, 5 AND 6 and
7.
1. ELECTION OF DIRECTORS:
Nominees: Stephen J. Fryer, T.A. Mercurio, Brian Bonar, Milton Haber,
Robert Dietrich
[] VOTE FOR ALL NOMINEES ABOVE [] VOTE WITHHELD FROM ALL NOMINEE
(Except as withheld in the space below)
Instruction: To withhold authority to vote for any individual nominee, check the
box "Vote FOR" and write the nominee's name on the line below.
2. RATIFICATION OF ACCOUNTANTS:
Ratification and approval of the selection of Berg & Company, LLP as
independent auditors for the fiscal year ending September 30, 2000.
[] VOTE FOR [] VOTE AGAINST [] ABSTAIN
3. VOTE FOR THE MERGER WITH perFORMplace, Inc:
Vote in favor of the merger with perFORMplace, Inc., by an exchange of
shares.
[] VOTE FOR [] VOTE AGAINST [] ABSTAIN
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<PAGE>
4. APPROVAL OF INCREASE IN NUMBER OF COMMON STOCK:
Approval of an amendment to the Company's certificate of incorporation
to increase the number of the Common Stock authorized to be issued to
200,000,000 shares.
[] VOTE FOR [] VOTE AGAINST [] ABSTAIN
5. APPROVAL OF REVERSE SPLIT:
To approve an amendment to the Certificate of Incorporation in order to
effect a stock combination (reverse split) of the Common Stock in an
exchange ratio ranging from one newly issued share for each two
outstanding shares of Common Stock, to one newly issued share for each
ten outstanding shares of Common Stock.
[] VOTE FOR [] VOTE AGAINST [] ABSTAIN
6. APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION FROM UTAH TO DELAWARE:
To approve moving the state of incorporation from Utah to Delaware.
[] VOTE FOR [] VOTE AGAINST [] ABSTAIN
7. APPROVAL OF CHANGING THE COMPANY NAME:
To Approve changing Pen's name to perFORMplace, Inc.
[] VOTE FOR [] VOTE AGAINST [] ABSTAIN
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<PAGE>
UNLESS OTHERWISE SPECIFIED BY THE UNDERSIGNED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2, 3, 4, 5,6 and 7, AND WILL BE VOTED BY THE PROXY HOLDERS AT THEIR
DISCRETION AS TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE ANNUAL MEETING OR
ANY ADJOURNMENT(s) THEREOF TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS JUST SIGN BELOW, NO BOXES NEED BE CHECKED.
DATED: ____________________, 2000
SIGNATURE OF STOCKHOLDER
PRINTED NAME OF STOCKHOLDER
TITLE (IF APPROPRIATE)
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. IF SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH, AND, IF
SIGNING FOR A CORPORATION, GIVE YOUR TITLE. WHEN SHARES ARE IN THE NAMES OF MORE
THAN ONE PERSON, EACH SHOULD SIGN.
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING. []
PEN
PEN INTERCONNECT, INC
1601 Alton Parkway, Irvine, CA 92606
(949) 798-5800-phone (949) 261-3113-fax
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<PAGE>
Shareholder Proposals
To be considered for inclusion in the Proxy Statement and for the consideration
at the Meeting, shareholder proposals must be submitted on a timely basis. The
Company must receive proposals for the 2000 Annual Meeting of Shareholders not
later than a reasonable time before the Meeting begins in order that they are
included in the proxy statement and for the proxy relating to that meeting. The
Company recommends that shareholders who wish to submit proposals contact the
Company substantially earlier than such date. Any such proposals, as well as any
questions related thereto, should be directed to the Secretary of the Company.
Additional Information
The Company will provide, without charge to any person from whom a Proxy is
solicited by the Board of Directors, upon written request of such person, a copy
of the Company's Annual Report on Form 10- KSB/A, including the financial
statements and schedules thereto (as well as exhibits thereto, if specifically
requested), required to be filed with the Securities and Exchange Commission.
Written requests for such information should be directed to: Investor Relations
Department, Pen Interconnect, Inc., 1601 Alton Parkway, Irvine, CA 92606.
Incorporation by Reference
This Proxy Statement incorporates by reference the Company's Financial
Statements and the information contained under the heading "Management's
Discussion and Analysis or Plan of Operations", from the Company's Form 10-KSB/A
for the fiscal year 1999, and the 10QSB for the fiscal quarters ended, June 30,
2000, March 31, 2000, December 31, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Stephen J. Fryer
--------------------------------------
Stephen J. Fryer
Chairman, President and CEO
November 3, 2000
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