POLITICS.COM., INC.
2530 SOUTH RURAL ROAD
TEMPE, AZ 85282
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY ___, 2001
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December __, 2000
To the Stockholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Special Meeting") of Politics, Inc., a Delaware corporation (the "Company"),
will be held at the offices of the Company, located at 2530 South Rural Road,
Tempe, AZ 85282on January __, 2001, commencing at 10:00 A.M., local time, for
the following purposes:
1. To approve the Company's distribution of its ownership interest in
New Politics.com, Inc., a Nevada corporation ("New Politics"), to
the Company's shareholders.
2. To approve a reverse stock split of the Company's common stock on a
1 for 10 basis.
3. To approve the Agreement and Plan of Reorganization by and between
the Company and Computer Assisted Learning and Instruction, Inc., a
Utah corporation ("CALI"), a copy of which is attached hereto as
Exhibit A.
4. To transact such other business as may properly be brought before
the Special Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December ____,
2000, as the record date for the Special Meeting or any adjournments thereof.
Only stockholders of record on the stock transfer books of the Company at the
close of business on that date are entitled to notice of, and to vote at, the
Special
Meeting.
THE DIRECTORS AND OFFICERS OF THE COMPANY AND THEIR AFFILIATES CONTROL
MORE THAN A MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY'S COMMON
STOCK. ACCORDINGLY, THE APPROVAL OF THE PROPOSED TRANSACTIONS IS ASSURED.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, YOU ARE
URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE
THAT IS PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors
/s/ Kevin C. Baer
Kevin C. Baer
Secretary
Tempe, Arizona
December __, 2000
<PAGE>
POLITICS.COM, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Politics.com, Inc. (the "Company") for
use at a Special Meeting of Stockholders, to be held on January __, 2001, at
the time and place set forth in the notice of the meeting, and at any
adjournments thereof. The approximate date on which this Proxy Statement and
form of proxy are first being sent to stockholders is December __, 2000.
If the enclosed proxy is properly executed and returned, it will be voted
in the manner directed by the stockholder. If no instructions are specified
with respect to any particular matter to be acted upon, proxies will be voted
in favor thereof. Any person giving the enclosed form of proxy has the power
to revoke it by voting in person at the meeting, or by giving written notice
of revocation to the Secretary of the Company at any time before the proxy is
exercised.
The holders of a majority in interest of all common stock, par value
$.00001 per share ("Common Stock") issued, outstanding and entitled to vote
are required to be present in person or to be represented by proxy at the
meeting in order to constitute a quorum for transaction of business. Approval
of all proposals on the agenda for the Special Meeting of stockholders will be
decided by a majority vote of the Common Stock entitled to vote at the
meeting. Abstentions and "non-votes" are counted as present in determining
whether the quorum requirement is satisfied. Abstentions and "non-votes" have
the same effect as votes against proposals presented to stockholders. A
"non-vote" occurs when a nominee holding shares for a beneficial owner votes
on one proposal, but does not vote on another proposal because the nominee
does not have discretionary voting power and has not received instructions
from the beneficial owner.
The Company will bear the cost of the solicitation. It is expected that
the solicitation will be made primarily by mail, but regular employees or
representatives of the Company (none of whom will receive any extra
compensation for their activities) may also solicit proxies by telephone,
telegraph and in person and arrange for brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy materials to their
principals at the expense of the Company.
The Company's principal executive offices are located at 2530 South
Rural Road, Tempe, Arizona 85282 and its telephone number is (480) 858-0016.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on December __,
2000 are entitled to notice of and to vote at the meeting. On that date, the
Company had outstanding and entitled to vote __________ shares of Common
Stock. Each outstanding share of the Company's Common Stock entitles the
record holder to one vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth as of December __, 2000 certain information
with respect to beneficial ownership of the Company's Common Stock by: (i)
each person known by the Company to own beneficially more than 5% of the
Company's Common Stock; (ii) each of the Company's directors, (iii) each of
the executive officers of the Company; and (iv) all directors and executive
officers as a group. This information is based upon information received from
or on behalf of the named individual. Unless otherwise noted, each person
identified possesses sole voting and investment power over the shares listed.
Amount and
Nature of
Name of Beneficial Percent of
Beneficial Owner Ownership Class
________________ __________ _________
Howard R. Baer 4,919,000 44.5%
Kevin C. Baer 1,750,000 15.8%
Burt Alimansky 30,000 0.3%
All executive officers
and directors as a
group(3 persons) 6,699,000 60.6%
Proposal 1:
The Company's Board of Directors has unanimously approved, and for the
reasons described below recommends that the Company's stockholders approve,
the distribution of the Company's ownership interest in New Politics to the
Company's stockholders (the "Spin Off"). Pursuant thereto, each stockholder
of record as of December __, 2000 would receive one share of New Politics for
every share of the Company held by such stockholder. Each fractional share
will be rounded up to the next highest whole share of New Politics.
The Spin Off is a condition precedent to the Reorganization Agreement
described below under Proposal 3. The Spin Off will allow the Company's
current management to continue the Company's historical business as well as to
continue to seek a third party 3buyer of the Company's historical assets while
allowing the Company's new business described under Proposal 3 to operate and
grow independently.
Proposal 2:
The Company's Board of Directors has unanimously approved, and for the
reasons described below recommends that the Company's stockholders approve, a
one for ten reverse stock split of the Company's common stock (the "Reverse
Stock Split"). No fractional shares or script representing fractional shares
of the Company's common stock will be issued. In lieu of issuing fractional
shares, each fractional share will be rounded up to the next highest whole
share of the Company's common stock.
The principal reasons to effectuate the Reverse Stock Split are to reduce
the number of shares of the Company's common stock that are outstanding, and
to increase the price per share of the Company's common stock. In addition,
the Reverse Stock Split will provide for a sufficient number of shares of the
Company's common stock to effectuate the transactions set forth under Proposal
3.
Proposal 3:
The Company's Board of Directors has unanimously approved, and for the
reasons described below recommends that the stockholders approve, The
Agreement and Plan of Reorganization by and between the Company and Computer
Assisted Learning and Instruction, Inc., a Utah corporation ("CALI"), dated
December __, 2000 (the "Reorganization Agreement"). A copy of the
Reorganization Agreement is attached hereto as Exhibit A.
According to the terms of the Reorganization Agreement, the shareholders
of CALI shall exchange 100% of the outstanding common stock of CALI for shares
of the Company's common stock representing approximately 85.6% of the issued
and outstanding shares of the Company's common stock. CALI shall then be
merged with and into the Company and the Company shall change its name to
"English Language Learning and Instruction System, Inc."
CALI'S BUSINESS
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CALI is a software development and marketing company based in Provo,
Utah. It was founded in 1990 by Dr. Frank Otto, a specialist in applying
technology to the teaching and learning of languages. Based on his academic
and practical experience with languages and how they are best taught, Dr. Otto
conceived a set of software applications which would apply leading-edge
technologies to the task of teaching the most demanded language in the world
English. He formed CALI to develop the software that would allow CALI to
capitalize on the emerging network computer-based teaching market.
As of October 2000, CALI has grown to 34 employees. Initially financed
by Dr. Otto, CALI is now profitable, and expects to achieve net pre-tax
profits of approximately $1.2 million from worldwide gross sales of ELLISTM
products of approximately $7.2 million in 2000. Over the last four years have
grown by more than 100% per year.
Since its inception, CALI has been involved in two primary functions:
- the development of a core set of products designed to ease and improve
the teaching and learning of English for students speaking a variety
of other languages. This core set of products, now numbering more
than twenty, was named ELLIS (for "English Language Learning and
Instruction System") in 1992, and they have now become recognized as
the most effective products of their type in this market. The ELLIS
products have won several industry awards and many favorable reviews
from educators.
- the distribution of these products within the United States and
internationally to a growing range and diversity of organizations,
including businesses, schools and academic institutions, through a
network of agents and distributors. In addition, CALI has dealt
directly with government agencies and businesses in the U.S. and
several other countries, leading to the development and sale of
specialized versions of the core ELLIS products.
CALI'S MANAGEMENT
-----------------
Pursuant to the terms of the Reorganization Agreement, at the "Closing
Date" (as defined in the Reorganization Agreement), the Company's officers and
directors shall resign and the officers and directors of CALI shall become the
Company's new officers and directors. Set forth below is certain biographical
information concerning CALI's officers and directors.
Francis R. Otto, Ph.D.. Dr. Otto is Cali's Founder and Chairman of the
Board of Directors of Cali. He received a Bachelors of Arts in Spanish from
Baldwin-Wallace College, Berea, Ohio, in 1958. Dr. Otto received a Masters of
Arts in Spanish Language and Literature in 1960 and a Ph.D. in Educational
Administration and Curriculum Development in 1966, both from the University of
Wisconsin. Dr. Otto was a Professor of Linguistics at Ohio State University
from 1966 until 1973. From 1973 until 1976, he was a Professor of Linguistics
at the University of the Americas, Puebla, Mexico. He was a Professor of
Linguistics at Brigham Young University, Provo, Utah, from 1976 through 1990,
serving as the University's Director of Research, Language and Technology.
During his tenure at Brigham Young University, Dr. Otto secured some $27.8
million in research funding and grants. Dr. Otto has been an active advocate
of computer-assisted language instruction throughout his career. He is a
charter member of TESOL (Teaching English as a Second Language). In 1982, he
founded and served as Director of CALICO (Computer Assisted Learning and
Instruction Consortium), an international symposium research group devoted to
applying technology to language instruction. He founded the Company in 1990.
Dr. Otto is the father of five children and fluent in Spanish. He is the
spouse of Janet M. Otto and the father of Timothy D. Otto. He is 64 years of
age.
Timothy D. Otto. Mr. Otto is the Chief Executive Officer, President and
a Director of Cali. Mr. Otto has worked at Cali since its inception in 1990.
Prior to joining the Cali, Mr. Otto studied Business at Brigham Young
University in Provo, Utah. He was the Cali's Vice-President of Marketing from
1992 until 1994. From 1994 through 1996, he was Cali's Vice-President and
Chief Operations Officer, overseeing the development and marketing of Cali's
products. Mr. Otto became Cali's President in 1997, assuming responsibility
for Cali's daily operations at that time. Since 1997, Cali's average annual
sales have increased by an average of one hundred and twelve percent (112%).
He became Cali's Chief Executive Officer in 1998. Mr. Otto speaks Spanish
fluently and is the father of two children. He is the son of Francis R. Otto
and Janet M. Otto. He is 31 years of age.
Kimber B. Jensen. Mr. Jensen is the Vice-President and Chief Operations
Officer and a Director of Cali. Mr. Jensen joined Cali in early 1997 as
Director of Development. Prior to joining Cali, he worked for WordPerfect,
Novell, and was a senior consultant for Oracle. Mr. Jensen's duties at Oracle
included designing a large-scale Internet application for the Department of
Defense. During Mr. Jensen's first year as Director of Development, Cali
released twice as many products while shaving thirty-three percent (33%) from
development costs. In 1998, Mr. Jensen became Cali's Chief Operations
Officer, and he continues to oversee Cali's software development, accounting
staff, divisional managers and consultants. Mr. Jensen received a Bachelor of
Arts. in Economics from Brigham Young University in 1996. He is the father of
two children and speaks Portuguese fluently. He is 31 years of age.
Janet M. Otto. Ms. Otto is a Director of Cali. Ms. Otto has taught a
variety of subjects in public schools, including English as a Second Language.
Ms. Otto has served in several capacities with various charitable
organizations. She received a Bachelor of Science degree from Baldwin-Wallace
College. She is the mother of five children. She is the spouse of Francis R.
Otto and the mother of Timothy D. Otto. She is 66 years of age.
CHANGES IN CONTROL OF THE COMPANY
At the Closing Date, the Company will acquire all of the issued and
outstanding capital stock of CALI from the stockholders of CALI, including
Francis R. Otto, who is currently the controlling stockholder of CALI. In
connection with the Reorganization, the Company will issue an aggregate of
11,550,000 shares of its common stock to the stockholders of CALI.
In connection with the Reorganization, it is contemplated that the
stockholders of CALI shall surrender 11,550,000 shares of common stock, being
all the issued and outstanding capital stock of CALI, of which 9,471,000
shares were surrendered by Francis R. Otto, the former controlling stockholder
of CALI, who, in connection with the Reorganization, acquired control of the
Company. The basis of the controlling stockholder's control of the Company is
the percentage of the issued and outstanding voting securities of the Company
beneficially owned by such person. Immediately following the Reorganization,
the current stockholders of CALI will beneficially own in the aggregate
approximately 85.6% of the issued and outstanding voting securities of the
Company, including 9,471,000 shares owned beneficially and jointly by
Francis R. Otto and Janet M. Otto (now the controlling stockholders of Cali),
which will represent approximately 70.2% of the issued and outstanding voting
securities of the Company. Howard R. Baer is the current controlling
stockholder of the Company, which control will be relinquished in connection
with the Reorganization.
FEDERAL INCOME TAX CONSEQUENCES
The receipt of stock of New Politics in the Spin Off and the effectuation
of the Reorganization should not result in any taxable gain or loss to
stockholders for Federal income tax purposes. This information is set forth
for general information only. All stockholders are advised to consult with
their own tax advisors as to any Federal, state, local or foreign tax
consequences applicable to them which could result from the Spin Off or the
Reorganization.
ANNUAL AND QUARTERLY REPORT INFORMATION
INCORPORATED BY REFERENCE
The Company hereby incorporates by reference the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1999, which contains
certified financial statements of the Company and the Quarterly Reports on
Form 10-QSB for the periods ended March 31, 2000, June 30, 2000, and September
30, 2000.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters
other than those set forth herein which will be presented for consideration at
the Special Meeting. If any other matter or matters are properly brought
before the Special Meeting or any adjournment thereof, the persons named in
the accompanying Proxy will have discretionary authority to vote, or otherwise
act, with respect to such matters in accordance with their judgment.
By order of the Board of Directors
/s/ Kevin C. Baer
Kevin C. Baer, Secretary
Tempe, Arizona
December __, 2000
<PAGE>
EXHIBITS
Reorganization Agreement by and between the Company and CALI - Exhibit A
<PAGE>
PLEASE MARK AN X INDICATING WHETHER YOU ARE VOTING YES OR NO WITH RESPECT TO
EACH PROPOSAL
PROPOSAL 1:
SPIN OFF OF THE COMPANY'S OWNERSHIP INTEREST TO THE COMPANY'S SHAREHOLDERS
YES [ ] NO [ ]
PROPOSAL 2:
ONE FOR TEN REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK
YES [ ] NO [ ]
PROPOSAL 3:
REORGANIZATION AGREEMENT BETWEEN THE COMPANY AND CALI
YES [ ] NO [ ]
PROPOSAL 4:
AUTHORIZING THE COMPANY'S BOARD OF DIRECTORS TO VOTE IN THEIR DISCRETION UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
YES [ ] NO [ ]
PLEASE SIGN AND DATE THIS PROXY BELOW.
___________________________________
STOCKHOLDER NAME
___________________________________
STOCKHOLDER SIGNATURE
___________________________________
DATE
