INFORMATION SCHEDULE 14C INFORMATION
Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ X ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Information Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Ethika Corporaton (formerly known as Dixie National Corporation)
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(Name of Registrant as Specified in Its Charter)
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ETHIKA CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 9, 1999
May 17, 1999
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Ethika
Corporation (the Corporation) will be held at The Doubletree Hotel, 8773 Yates
Drive, Westminster, Colorado, 80021 on Wednesday, June 9, 1999 at 9:00 a.m.
(Mountain) for the following purposes:
PROPOSAL I: NUMBER AND ELECTION OF DIRECTORS.
To fix the number of and to elect the Board of Directors for the ensuing year or
until their successors are duly elected.
PROPOSAL II: REORGANIZATION MEASURES.
To approve authorizing the Board of Directors to take the following actions (The
Reorganization Measures) when and as deemed necessary to effectuate a
reorganization of the Corporation:
A. Amend the Articles of Incorporation changing the par value of common stock
to no par common stock;
B. Amend the Article of Incorporation to change the name of the Corporation;
C. Authorize a reverse split of the outstanding shares of common Stock on the
basis of one new share for up to every fifty shares outstanding shares as
of the effective date with fractional shares rounded up to the next whole
share. Odd lots of less than one hundred shares of common stock may be
tendered to Corporation for the average closing price for the common stock
for the ten trading days preceding the effective day multiplied by the
reverse split ratio;
D. Seek out, negotiate and conclude an agreement on the best terms available
to the Corporation and its shareholders for the reorganization of the
Corporation with as yet unknown parties whereby there will be a change in
control of the Corporation and a change in business direction so as to
increase the present and future value of the Corporation.
The Reorganization Measures are being submitted to the Shareholders to be voted
upon as a single proposal.
The Shareholders may also transact such other business as may properly come
before the meeting or any adjournment thereof.
The close of business on May 14, 1999 is the Record Date for the determination
of Shareholders entitled to vote at the Annual Meeting and to receive Notice
thereof. The stock transfer books of the Corporation will not be closed. WE ARE
NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Dennis Brovarone
Dennis Brovarone, President
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ETHIKA CORPORATION INFORMATION STATEMENT
For the Annual Meeting of Shareholders
To be Held Wednesday, June 9, 1999
"We are not asking you for a Proxy and you are requested not to send us a Proxy"
The enclosed information is being furnished by the Board of Directors of Ethika
Corporation ("Corporation") for use at the Annual Meeting of Shareholders of the
Corporation to be held at The Doubletree Hotel, 8773 Yates Drive, Westminster,
Colorado, 80021 on Wednesday, June 9, 1999 at 9 a.m. (Mountain) and any
adjournment or postponement thereof. Shareholders may vote their shares by
attendance at the meeting and voting their shares in person. We are not asking
you for a proxy and you are requested not to send us a proxy. The term
"Corporation," as used herein, includes the Corporation and the Corporation's
subsidiaries as the context indicates. This Information Statement is being
mailed to shareholders on or about May 17, 1999.
Shareholders attending the meeting will be asked to vote FOR:
PROPOSAL I: NUMBER AND ELECTION OF DIRECTORS.
To set the Board of Directors to initially consist of three members and up to
seven members upon completion of a reorganization of the Corporation as
described herein and the election of the three nominees of the Board of
Directors to serve as Directors of the Corporation; and
PROPOSAL II: REORGANIZATION MEASURES.
Authorizing the Board of Directors to take the following actions (the
Reorganization Measures) when and as deemed necessary to effectuate a
reorganization of the Corporation:
A. Amend the Articles of Incorporation changing the par value of common stock
to no par common stock;
B. Amend the Article of Incorporation to change the name of the Corporation;
C. Authorize a reverse split of the outstanding shares of common Stock on the
basis of one new share for up to every fifty shares outstanding shares as
of the effective date with fractional shares rounded up to the next whole
share. Odd lots of less than one hundred shares of common stock may be
tendered to Corporation for the average closing price for the common stock
for the ten trading days preceding the effective day multiplied by the
reverse split ratio;
D. Seek out, negotiate and conclude an agreement on the best terms available
to the Corporation and its shareholders for the reorganization of the
Corporation with as yet unknown parties whereby there will be a change in
control of the Corporation and a change in business direction so as to
increase the present and future value of the Corporation.
The Reorganization measures are being submitted to the Shareholders to be voted
upon as a single proposal.
VOTING SECURITIES
Shareholders of record at the close of business on May 14, 1999 will be entitled
to Notice of and to vote at the Meeting. On May 14, 1999 there were 23,360,346
shares of common stock of the Corporation outstanding and entitled to vote. Each
outstanding share of common stock is entitled to one vote per share on each
matter submitted to a vote at the Annual Meeting except with respect to the
election of Directors, in which Shareholders have cumulative voting rights.
Cumulative voting means that each Shareholder will be entitled to cast as many
votes as he or she has shares of common stock multiplied by the number of
Directors to be elected, and all such votes may be cast for a single nominee or
may be distributed among the Directors to be voted for as he/she sees fit.
The presence in person of a majority of the outstanding shares shall constitute
a quorum for the transaction of business at the Annual Meeting. Abstentions will
be counted for purposes of determining the presence or absence of a quorum.
Abstentions are considered as a vote against any matter other than the election
of Directors as to which a Shareholder may vote for a nominee or withhold
authority to vote.
Shareholders who have their shares held in "street name" by a bank or
broker-dealer and wish to attend the meeting and vote their shares must obtain a
"legal proxy" from the holding bank or broker-dealer in order to vote their
shares at the meeting. The Chairman of the Board of the Corporation will appoint
an inspector who will take charge of, and will count the votes and ballots cast
at the Annual Meeting and will make a written report on their determination.
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OWNERSHIP OF VOTING SECURITIES BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth pertinent information as to the beneficial
ownership of the Corporation's common stock as of May 14, 1999 of persons known
by the Corporation to be holders of 5% or more of the outstanding common stock.
Information as to the number of shares beneficially owned has been furnished by
the persons named in the table as the holders of 5% or more of such common
stock.
Name and Address Shares Of Beneficial Owner
Beneficially Owned Percent of Class
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Alfred Peeper 9,930,328 (1) 42.5%
Calle Hamburg 22
Benidorm, Spain ALC 03500
Argere Holdings, S.A. 420,000 (2) 1.8%
18 Boulevard Royal
L-2449 Luxembourg
Eur-Am B.V. 610,100 (3) 2.6%
Calle Hamburg 22
Benidorm, Spain ALC 03500
La Roche Holdings, S.A. 902,500 (4) 3.9%
18 Boulevard Royal
L-2449 Luxembourg
La Salle Investment, Ltd. 7,997,828(5) 34.2%
35 Rue De Bains
Geneva, Switzerland 1205
(1) Alfred Peeper is an investment manager headquartered and operating in
Benidorm, Spain. Mr. Peeper holds a power of attorney for each Reporting
Person which gives him authority to purchase, sell, and exercise all voting
rights relating to each "Group Member." This Reporting Person represents
42.5% of the total outstanding shares of Ethika common stock.
(2) Argere Holdings, S.A. is a corporation organized under the laws of
Luxembourg. Jacques Benzeno, Andre LaBranche and Marie-Paule Mockel are the
directors with the power to revoke Mr. Peeper's power of attorney.
(3) Eur-Am, B.V., is a corporation organized under the laws of the Netherlands.
Mr. Peeper and Mr. Evert Eggink are the directors of Eur-Am, B.V.
(4) La Roche Holdings, S.A. is a corporation organized under the laws of
Luxembourg. Jacques Benzeno, Andre LaBranche and Marie-Paule Mockel are the
directors with the power to revoke Mr. Peeper's power of attorney.
(5) La Salle Investment, Ltd., is a corporation organized under the laws of
Ireland. Jean Claude Roder and Claude Oberson are the directors with the
power to revoke Mr. Peeper's power of attorney.
Security Ownership Of Management
The following table sets forth information as to the beneficial ownership of the
Corporation's common stock as of May 14, 1999, by each Director, nominee;
Executive Officer and by all Directors and Executive Officers as a group.
Name of Shares Percent
Beneficial Owner Beneficially Owned of Class
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Dennis Brovarone 1,000,000 4.2%
Russell C. Burk 1,000,000 4.2%
Dennis P. Nielsen 1,000,000 4.2%
Directors, nominees, and
Executive Officers as a group 3,000,000 12.6%
(3 persons)
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
Executive Officers and Directors and persons who own more than 10% of its common
stock to file reports of ownership and changes in ownership with the SEC. Such
persons are required by SEC regulations to furnish the Corporation with copies
of all Section 16(a) forms filed by such person. Based upon a review of the
initial and annual statements of beneficial ownership, the Corporation's
Executive Officer and Directors have timely filed their reports of ownership.
During fiscal year 1998, the Board of Directors of the Corporation held two
meetings and acted by unanimous written consent five times. Each member of the
previous Board of Directors attended at least 85% of the meetings of the Board.
The Corporation has not had any Committees during the fiscal year ended December
31, 1998.
DIRECTORS' COMPENSATION
Directors who are not employees of the Corporation do not receive any cash
compensation. The Corporation was the subject of an investigation by the
Securities and Exchange Commission ("SEC") which was resolved by means of a
settlement. Pursuant to the settlement on March 9, 1994, the United States
District Court for the District of Columbia entered final judgment of permanent
injunction against the Corporation. The judgment was entered on the basis of a
complaint filed by the SEC. The Corporation consented to the entry of final
judgment of permanent injunction without admitting or denying the allegations
contained in the SEC's complaint. The final judgment to which the Corporation
consented enjoin it from violating or aiding and abetting future violations of
sections of the Securities Act of 1933 and the Securities and Exchange Act of
1934 and certain rules thereunder.
EXECUTIVE OFFICERS
The Corporation's officer serves at the pleasure of the Board of Directors. The
executive officer of the Corporation is:
Executive Officer
Name Age Since
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Dennis Brovarone 43 1997
President, CEO
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary Compensation Table:
The following sets forth information concerning the total compensation paid or
awarded to the Corporation's Chief Executive Officer for services rendered in
all capacities to the Corporation and its subsidiaries.
Number of
Annual Securities
Name and Compensation Underlying
Principal Position Year Salary Bonus Options
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Dennis Brovarone 1998 $60,000 $0 500,000
President and Chairman
Option Grants in 1998:
The following sets forth information concerning options to purchase shares of
common stock which were granted during 1998 to the individuals named in the
Summary Compensation table.
Date Number of Shares Exercise Date
Name Granted Underlying Option(1) Price(1) Exerciseable
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Dennis Brovarone 12/30/98 500,000 $0.02 (2)
Russell Burk 12/30/98 500,000 $0.02 (2)
Dennis Nielsen 12/30/98 500,000 $0.02 (2)
Not subject to adjustment as a result of any reverse split of the outstanding
common stock Exercisable ninety days from the date of closing of any
reorganization or merger agreement which results in a change in control of the
Corporation and expiring if unexercised by December 31, 2004.
Fiscal Year End Option Value Table: Omitted as the Options granted have not
vested and are not exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation did not enter into any reportable relationships or transactions
with its officers, directors or control persons during the fiscal year ended
December 31, 1998, except for the granting of shares and options to the
directors as set forth above.
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PROPOSAL I. NUMBER AND ELECTION OF DIRECTORS
In addition to establishing the minimum and maximum number of Directors, Article
III, Section 6 of the Bylaws of the Corporation also provides that the number of
Directors shall be fixed annually by the Shareholders at each Annual or Special
Meeting.
The Board of Directors recommends that the Board of Directors of the Corporation
for the ensuing year consist of three Directors until such time that the
corporation enters into a reorganization after which the number of Directors
could be set by Board resolution as up to seven individuals. The Board
recommends the election of the three nominees listed below. Each Director is to
hold office until the next Annual or Special Meeting of Shareholders or until
his successor shall be duly elected and qualified. Shareholders may also
nominate candidates for Director at any Meeting of Shareholders at which
Directors are to be elected. Votes will not be recognized for more than eight
nominees.
The three nominees are members of the present Board and were elected thereto by
the Board of Directors at Special Board of Directors' Meetings held on December
12, 1997 and January 27, 1998 to serve out the un-expired terms of resigning
Directors. Management has no reason to believe that any substitute nominee or
nominees will be required.
The following table indicates the age and the year first elected a Director
followed by the principal occupation or employment for the past five years of
each nominee.
Director
Name Age Since
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Russell C. Burk 41 1997
Dennis Brovarone 43 1997
Dennis P. Nielsen 56 1997
BUSINESS EXPERIENCE
The principal occupations and business experience for the last five years or
more of the nominees for directors are as follows:
Dennis Brovarone - Mr. Brovarone, 43, has been practicing corporate and
securities law since 1986 and as a sole practitioner since 1990. He was elected
to the Board in December 1997 and is Chairman of the Corporation's Board of
Directors. Mr. Brovarone also serves as President. Prior to 1990, Mr. Brovarone
served as in-house counsel to R.B. Marich, Inc.; a Denver, Colorado based
brokerage firm. Mr. Brovarone served as President (Chairman) of the Board of
Directors of The Community Involved Charter School, from January 1995 to March
1998, a four-year old K-12 independently chartered public school located in
Lakewood, Colorado. He also serves as a Director of Innovative Medical Services,
a publicly held corporation located in San Diego, California.
Russell C. Burk - Mr. Burk, 41, has been practicing corporate securities law
since 1990 and as a sole practitioner since 1997. He was elected to the Board in
December 1997. From 1993 to 1997, Mr. Burk was Vice President, General Counsel
for RAF Financial Corporation, Denver, Co.
Dennis Nielsen - Mr. Nielsen, 56, has been a director since March 1993, he has
been self employed as a business consultant offering assistance to business on
restructuring, financing or assisting with possible mergers or
acquisitions.Previously he was owner of P&N, Inc. and Hufburn Sales, Inc., both
automobile dealerships.
Vote Required for Approval
The vote required for Election Fixing the number of Directors initially at three
and up to seven upon the reorganization of the Corporation is the favorable vote
of a majority of those shares voting in person provided a quorum is present. The
three nominees receiving the highest number of votes shall be elected to the
Board.
The Board recommends that you vote FOR a Board initially consisting of three
Directors and up to seven upon the reorganization and FOR the election of each
of the three nominees to be Directors of the Corporation. The Board believes
that three directors are a sufficient number for management of the Corporation's
affairs at the present time and that by authorizing up to seven directors, the
Corporation will be more attractive to a prospective reorganization candidate
can choice the number of directors which it desires.
<PAGE>
PROPOSAL II. REORGANIZATION MEASURES: AUTHORIZATION FOR THE BOARD OF DIRECTORS
TO TAKE CERTAIN MEASURES WHEN AND AS DEEMED NECESSARY TO EFFECTUATE A
REORGANIZATION OF THE CORPORATION
The Board of Directors recommends that the Shareholders vote for authorizing the
Board of Directors to take the following actions (the Reorganization Measures)
when and as deemed necessary to effectuate a reorganization of the Corporation:
A. Amend the Articles of Incorporation changing the par value of common stock
to no par common stock;
B. Amend the Article of Incorporation to change the name of the Corporation;
c. Authorize a reverse split of the outstanding shares of common Stock on the
basis of one new share for up to every fifty shares outstanding shares as
of the effective date with fractional shares rounded up to the next whole
share. Odd lots of less than one hundred shares of common stock may be
tendered to Corporation for the average closing price for the common stock
for the ten trading days preceding the effective day multiplied by the
reverse split ratio;
D. Seek out, negotiate and conclude an agreement on the best terms available
to the Corporation and its shareholders for the reorganization of the
Corporation with as yet unknown parties whereby there will be a change in
control of the Corporation and a change in business direction so as to
increase the present and future value of the Corporation.
The Reorganization Measures are being submitted to the Shareholders to be voted
upon as a single proposal.
On April 23, 1999, the Board of Directors approved submitting the Reorganization
Measures to the shareholders. The Board recommends approval of the
Reorganization Measures as an effective means of making the Corporation an
attractive option for a privately held business seeking to become publicly held
by reorganizing and effecting a change in control of a publicly held corporation
with little or no current operations. Management believes that the
Reorganization Measures will improve the Corporation's utility to a privately
held business by allowing the Corporation's Board of Directors to quickly
conclude a reorganization agreement, which can be tailored to the private
businesses requirements.
The Board's recommendation to approve the Reorganization Measures as applied to
each of the specific components is as follows:
The Board believes that eliminating the $1.00 per share par value on the common
stock is necessary. The Board believes that par value is an antiquated
accounting principle, which does not accurately reflect any indication of per
share value. The Corporation is not restricted from issuing common stock for
less than the par value and must record a discount to shareholders equity for
the difference between the value of common stock issued as determined by the
Corporation's auditors and the par value. The Board believes that eliminating
the par value will eliminate the need to record such a discount and avoid any
misunderstanding as to the value of the Corporation's shareholder equity.
The Board believes that giving the Board the authority to change the name of the
Corporation by Board resolution will facilitate a change in control and change
in business direction, by allowing the Board of Directors of the reorganized
Corporation to select and quickly implement the Corporation's new name
reflective of the change in business direction.
The Board believes that a reverse split of the outstanding shares of common
stock will be a necessary component of a reorganization of the Corporation with
a privately held company. Typically in order for a reorganization to qualify as
a tax-free exchange, the shareholders of the privately held company must receive
not less than eighty percent of the outstanding shares of the surviving
corporation. With the present 23,360,346 outstanding shares and only 50,000,000
shares of common stock authorized, the Corporation would not be able to issue a
number of shares which would equal at least eighty percent of the then
outstanding number of shares. In addition, the Board of Directors believe that a
reverse split will be necessary to achieve an optimal capitalization of the
reorganized company without causing substantial dilution to the shareholders of
a privately held company. Assuming the current market price of $0.02 per share
and that the Corporation's present shareholders would own twenty percent of the
reorganized Corporation, the approximate market capitalization of the
reorganized Corporation would be approximately $2.3 million dollars at the
maximum reverse split at 50 to 1 (2,360,346 shares/ 50 = 467,207 shares X [$0.02
x 50 = $1.00] / 20% = $2,336,035). The Board believes that a market
capitalization of the reorganized Corporation between $1 million and $3 million
dollars is a realistic estimate.
The effective date of the reverse split would be ten trading days after the
Corporation provides notice of its adoption of the reverse split to the NASD OTC
Electronic Bulletin Board Market.
Effect of Reverse Split on Holders of Odd Lots of Shares
If authorized by the Shareholders and subsequently declared by the Board, a
reverse split is likely to result in shareholders having an "odd lot" of less
than 100 shares if their resulting number of shares is not a multiple of 100. A
securities transaction of 100 shares or more is a "round lot" transaction for
securities trading purposes and a transaction of less than 100 shares is an "odd
lot" transaction. Round lot transactions are the standard size requirement for
securities transactions and odd lot transactions may result in higher
transaction costs to the odd lot holder.
In addition, the aggregate value of odd lot holdings may be insufficient for a
shareholder to even cover the transactional cost of selling the odd lots. The
Corporation will purchase odd lots from shareholders upon request for the for
the average closing price for the common stock for the ten trading days
preceding the effective day multiplied by the reverse split ratio.
Vote Required for Approval
A favorable vote of a majority of the shares entitled to vote
(11,680,174 shares of 23,360,346 shares outstanding, voting in person is
required to approve the Reorganization Measures Proposal.
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SHAREHOLDER PROPOSALS
Any Shareholder desiring to have a proposal considered for inclusion in the
Proxy Statement to be distributed in connection with the Corporation's 1999
Annual Meeting, is requested to submit such proposal in writing to the
Corporation, Attention: Dennis Brovarone, no later than December 31, 1999.
OTHER MATTERS
The Management of the Corporation knows of no other matters, which may come
before the Meeting except for the approval of the Minutes of the last Annual
Meeting of Shareholders.
Copies of the Corporation's Form 10KSB for the year ended December 31, 1998
containing audited financial statements have been included in this mailing.
May 14, 1999
Dennis Brovarone, President
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