NATIONAL INDUSTRIAL SECURITY CORPORATION
225 E. Kirkham
St. Louis, MO 63119
COMMISSION FILE NUMBER 000-13858
INFORMATION STATEMENT
PURSUANT TO
SECTION 14(f) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND
RULE 14f-1 THEREUNDER
Introduction
This Information Statement is being mailed on or about October 26, 1998, to
holders of record on July 29, 1998, of the shares of Common Stock, par value
$.16 2/3 per share (the "Common Stock") of National Industrial Security
Corporation, a Delaware corporation (the "Company"). It is being furnished in
connection with the change of the Company's Directors to be effected at a Board
meeting to be held at the closing of the transaction discussed below, to be held
on or about November 6, 1998.
Background of Transaction and Change in Control
Pursuant to the terms of an agreement (the "Agreement") between the Company
and Naidger Power Systems, Inc., a privately held Delaware corporation
("Naidger"), the Company has agreed to acquire all of the interests of Naidger
in exchange for previously unissued "restricted" Common Stock of the Company.
Naidger owns all of the issued and outstanding securities of Polcorp
Industries, Inc. ("Polcorp"), a Delaware corporation, which it acquired on June
26, 1998. Polcorp has two wholly owned subsidiary companies, Metrix Metal and
Metrix Tools, which are engaged in the business of manufacturing metal parts and
subassemblies and the design and production of tools, injection molds, dies and
assembly jigs, each of which has their principal place of business located in
Tzcew, Poland. Naidger and its subsidiaries currently employ approximately 170
persons. During its fiscal year ended December 31, 1997, which did not include
a full year of operations, Naidger, its subsidiaries and its predecessors
generated approximately $1.4 million in revenues. In the six month period ended
June 30, 1998, Naidger and its subsidiaries generated approximately $1.4 million
in revenues.
The terms of the Agreement provide that the Company will undertake a
reverse split of its issued and outstanding common stock, whereby one (1) share
of common stock shall be issued in exchange for each three (3) shares of common
stock then issued and outstanding, in order to establish the number of issued
and outstanding common shares at closing to be 2,331,367 shares. The
Company and Naidger have enter into a share exchange agreement wherein the
Company has agreed to issue an aggregate of 8,000,000 "restricted" shares of the
Company's Common Stock to Naidger in exchange for all of the issued and
outstanding shares of Naidger (the "Transaction"). Accordingly, if all of the
issued and outstanding shares of Naidger are exchanged for the Company's Common
Stock, the holders of Naidger's previously issued and outstanding common stock
1
<PAGE>
will own approximately 78.5% of the Company's shares of Common Stock which would
then be issued and outstanding.
Upon consummation of the Transaction, the Company's current Officers and
Directors will resign and will be replaced by Directors and Officers selected by
Naidger's management. See "Directors and Executive Officers and Related
Transactions" below.
Consummation of the Transaction will result in a change of control. If the
Transaction is not consummated, the Company's current Officers and Directors
will not resign and there will not be a change in control. The Company
anticipates, but cannot assure, that the Effective Date of the Transaction will
be on or about November 6, 1998.
Reason for Information Statement
Because a majority of its Directors is being changed otherwise than at a
meeting of stockholders, the Company is required pursuant to Rule 14f-1
promulgated under the Securities Exchange Act of 1934, as amended, to provide
its stockholders and the Securities and Exchange Commission (the "Commission")
with certain information not less than ten days prior to the date on which the
change will take place, or such other time period as may be established by the
Commission. This Information Statement is being filed with the Commission and
sent to stockholders in compliance with that Rule. The Company's stockholders
are urged to read this Information Statement carefully but are not required to
take any action.
Information Relating to the Company's Securities
As of the date of this Information Statement, there are outstanding
6,994,100 shares of the Company's Common Stock. Each outstanding share
of Common Stock entitles the record holder thereof to one vote on all matters
which are to be presented to stockholders for their consideration. The Common
Stock is the only issued and outstanding stock of the Company.
Principal Stockholders
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the date of this Information
Statement by each person known to the Company to be the beneficial owner of more
than 5% of the Common Stock, each of the Company's Directors and named Executive
Officers and all Executive Officers as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned
------------------------------------
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership(2) Class
- -------------- --------------- ----------------------- ----------
<S> <C> <C> <C>
Common Max T. Jackson(1) 3,500,723 50.4%
225 E. Kirkham Road
St. Louis, MO 63119
Common Yale Farar 613,500 8.8%
15919 Ventura Blvd.
Suite 302
Encino, CA 91426
2
<PAGE>
<CAPTION>
Shares Beneficially Owned
------------------------------------
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership(2) Class
- -------------- --------------- ----------------------- ----------
<S> <C> <C> <C>
Common Sam Schwartz 409,000 5.8%
21031 Ventura Blvd.
Suite 1100
Woodland Hills, CA 91364
All Executive Officers and 3,500,723 50.4%
Directors as a Group
(3 persons)
_______________________
<F1>
(1) Officer and/or Director of the Company.
<F2>
(2) The information relating to beneficial ownership of the Company's Common
Stock is based on information furnished by them using the definition of
"beneficial ownership" set forth in rules promulgated by the Securities and
Exchange Commission under Section 13(d) of the Securities Exchange Act of
1934. Except where there may be special relationships with other persons,
including share voting or investment power, the Directors and nominees
possess sole voting and investment power with respect to the shares set
forth beside their names.
</TABLE>
The following table sets forth as of the date hereof, certain information
with respect to all those known by the Company who, retroactively assuming
consummation of the Transaction, would be the record or beneficial owners of
more than 5% of its outstanding Common Stock, each newly-appointed Director and
Executive Officer of the Company and all newly-appointed Directors as a group.
Except as indicated in the footnotes to the table, the listed stockholders hold
sole voting and investment power over their respective shares.
<TABLE>
<CAPTION>
Shares of Common Stock to
be owned upon consummation
Name and Address Offices to be Held of the Transaction Percent of Class
- ------------------- --------------------- -------------------------- ----------------
<S> <C> <C> <C>
Michael Wexler Chairman of the Board 4,863,095(1) 47.2%
23 Wilton Crescent and President
Ottawa, Ontario
Canada K1S 4P2
Max T. Jackson(2) Director 1,166,908 11.3%
225 E. Kirkham Road
St. Louis, MO 63119
Harold Paumgarten(3) - 825,670 8%
3700 Lexington Ave.
Suite 405
New York, NY 10174
Dr. Mark Scibor-Rylski Vice President and 344,029 3.3%
12 Barklay Road Director
Fulham, London
England SW6 1EH
3
<PAGE>
All Proposed Directors - 6,374,032 61.8%
and Executive Officers
as a Group (3 persons)
_____________________
<F1>
(1) The common shares indicated are to be held by Suncrest Management Services,
S.A., a holding company controlled by the family of Michael Wexler. The
information relating to beneficial ownership of the Company's common stock
is based on information furnished by them using the definition of
"beneficial ownership" set forth in rules promulgated by the Securities
and Exchange Commission under Section 13(d) of the Securities Exchange Act
of 1934. Except where there may be special relationships with other
persons, including share voting or investment power, the directors and
nominees possess sole voting and investment power with respect to the shares
set forth beside their names.
<F2>
(2) Mr. Jackson is currently an officer and director of the Company. It is
anticipated that he will remain involved with the Company as a director if
the Transaction is successfully consummated.
<F3>
(3) Mr. Paumgarten is currently a director of Polcorp Industries, Inc., a wholly
owned subsidiary of Naidger. However, it is not anticipated that Mr.
Paumgarten will be appointed as a director of the Company upon closing of
the proposed Transaction. As such, the shares of common stock to be held by
Mr. Paumgarten are not included in the aggregate amount of common shares to
be held by all officers and directors as a group.
</TABLE>
Directors and Executive Officers and Related Transactions
Directors and Executive Officers
The present Officers and Directors of the Company are as follows:
Name Age Position
--------------------- --- -------------------
Max T. Jackson(1) 65 President, Director
David R. Jackson(1) 41 Director
Stephen C. Jackson(1) 41 Director
______________________
(1) David R. Jackson and Stephen C. Jackson are the sons of Max T. Jackson.
Resumes:
Max T. Jackson has held the offices of President and Director of the
Company since its inception in 1974. For thirteen years prior to that, he was a
stockbroker, partner and officer of a large national investment banking and
brokerage firm. Mr. Jackson graduated from the University of Missouri in 1955
with a B.S. degree in Business Administration. Since 1979, he has held the
status of a Certified Protection Professional (C.P.P.) as awarded by the
American Society for Industrial Security. Mr. Jackson presently devotes
substantially all of his time to the business of the Company. Upon closing of
the proposed Transaction, it is anticipated that Mr. Jackson will retain his
position as a director of the Company and is expected to devote approximately
25% of his time to the business of the Company.
4
<PAGE>
Stephen C. Jackson has served as a Director of the Company for the past
eight years, and since May 1988 has been an associate professor of mathematics
at the University of North Texas, Denton, Texas. He received a Bachelor of
Science degree in Mathematics from the California Institute of Technology
(Cal-Tech) in 1981, and a Ph.D. in Mathematics from the University of California
at Los Angeles (U.C.L.A.) in 1983.
David R. Jackson has served as a Director of the Company since June 1998.
Since 1985, he has been an associate professor of electrical engineering at the
University of Houston, Houston, Texas. He received a B.S. degree in Electrical
Engineering from the University of Missouri in 1981, and a Ph.D. in Electrical
Engineering (microwave communications) from the University of California at Los
Angeles (U.C.L.A.) in 1985.
If and when the Transaction is consummated, Mr. Max T. Jackson is expected
to remain with the Company as a director, but the other two directors of the
Company will resign and will be replaced, without stockholder action, by the
following Officers and Directors:
Name Age Position
--------------------- --- -------------------
Michael Wexler 52 Chairman, President and
Chief Executive Officer
Dr. Mark Scibor-Rylski 51 Vice President and
Director
Max T. Jackson(1) 65 Director
_________________________
(1) Mr. Jackson is currently an officer and director of the Company. If the
Transaction is successfully consummated, it is anticipated that Mr. Jackson
will remain with the Company as a director.
Resumes:
Michael Wexler is expected to assume the positions of Chairman of the
Board, President and CEO upon closing of the proposed Transaction. Prior, since
January 1997, he has served as President and Chief Executive Officer and a
director of Naidger, as well as its wholly owned subsidiary company, Polcorp
Industries, Inc. In addition, since 1993 Mr. Wexler as been President and a
director of VMS Rehab Systems, Inc., (f/k/a Viv Medical Sciences, Inc.) a
privately held corporation which supplies durable medical products. Further,
since 1991 he has been President and a director of Suncrest Management Services,
Inc., a family owned holding company which provides a range of corporate finance
activities and engages in direct investments in strategic and/or synergistic
situations. Upon closing of the proposed Transaction it is anticipated that Mr.
Wexler will devote approximately 50% of his time to the business of the Company.
Mark Scibor-Rylski is expected to assume the positions of Vice President
and a director of the Company upon closing of the proposed Transaction. In
addition to his proposed positions with the Company, from September 1995 through
January 1998, Mr. Scibor-Rylski has been a director of Hevelius Management
Spzoo, the fund management subsidiary of UNP Holdings, which manages a net asset
value in excess of $200 million. Prior, from September 1992 through March 1998,
Mr. Scibor-Rylski was senior vice president and CFO of International UNP
Holdings Ltd., a Canadian industrial holding company based in London and Warsaw
which invested $45 million in emerging markets and which is listed on the
Toronto Stock Exchange. Further, in 1989, Mr. Scibor-Rylski founded and since
that date has been a director of Due Diligence Services, Ltd., a London based
private company which provides investment investigation services to professional
investors and corporate clients. In 1969 Mr. Scibor-Rylski received a Bachelor
of Science degree from Imperial College of Science and Technology. Thereafter,
in 1973, he received a PhD from City University, London and in 1985,
5
<PAGE>
he received a masters degree from the London Business School. Upon closing of
the proposed Transaction it is anticipated that Mr. Scibor-Rylski will devote
approximately 40% of his time to the business of the Company.
Max T. Jackson's resume is included hereinabove and incorporated herein as
if set forth.
Related Party Transactions
There were no related party transactions which occurred during the past two
years and which are required to be disclosed pursuant to the requirements
included under Item 404 of Regulation SB.
Relevant to Naidger, in the event the proposed Transaction successfully
closes (of which there can be no assurance), it is anticipated that Suncrest
Management Services, S.A. continue its existing relationship with Naidger,
wherein Suncrest provides management services pursuant to a written agreement
applicable thereto. See "Compensation of Directors and Officers" hereinbelow
for the terms of this agreement.
Standing Audit, Nominating and Compensation Committees
The Board of Directors of the Company has no standing audit, nominating or
compensation committees.
Information Relating to Board of Directors Meetings
The Company presently has three Directors. During the fiscal year ended
December 31, 1997, the Directors held one meeting. During the current fiscal
year which ends December 31, 1998, three meetings of the Board have been held.
Compensation of Directors and Executive Officers
Remuneration
The following table reflects all forms of compensation for services to the
Company for the fiscal years ended December 31, 1997 and 1996 of the Chief
Executive Officer of the Company.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
------------------------------ ---------------------- ---------
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary($) Bonus($) sation($) Award(s)($) SAR's(#) Payouts($) sation($)
- ---------- ---- --------- -------- --------- ----------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Max T. 1997 $ 24,726 - - - - - -
Jackson,
President &
Director 1996 $ 60,192 - - - - - -
</TABLE>
The Company has no bonus or incentive plans in effect, nor are there any
understandings in place concerning additional compensation to the Company's
Officers or Directors.
6
<PAGE>
In the event the proposed Transaction described hereinabove closes, it is
anticipated that Suncrest Management Services, S.A. will continue its existing
contract with Naidger, wherein Suncrest has agreed to provide management
services. Mr. Michael Wexler provides his management activities pursuant to
this agreement. The agreement presently provides for annual payments by Naidger
to Suncrest of $112,200. The agreement expires in 2002. No other person is
expected to receive annual compensation in excess of $100,000 per annum.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Officers and Directors, and persons who beneficially own more than
10% of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers, Directors and
greater than 10% stockholders are required by Commission regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during the 1998 fiscal
year all filing requirements applicable to Officers, Directors and greater than
10% beneficial owners were complied with.
Dated: October 23, 1998.
National Industrial Security Corporation
s/Max T. Jackson
Max T. Jackson, President
