SCHEDULE 14C
(RULE 14C-101)
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[X] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
APPONLINE.COM, INC.
(Name of Registrant As Specified In Its Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which the transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
[ ] check box if any part of the fee is offset as provided by 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.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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APPONLINE.COM, INC.
520 BROADHOLLOW ROAD
MELVILLE, NY 11747
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PRELIMINARY INFORMATION STATEMENT
PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
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WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
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INTRODUCTION
This information statement (the "Information Statement") was mailed on
or about May 9, 2000 to the stockholders (the "Stockholders") of record on April
27, 2000 of AppOnline.com, Inc., a Delaware corporation (the "Company") in
connection with certain actions taken by the Company pursuant to the written
consent by the majority Stockholder of the Company, dated December 31, 1999. The
actions taken pursuant to the written consent concerned the issuance of more
than twenty percent (20%) of the Company's outstanding shares of Common Stock at
less than fair market value on the date of grant and an increase in the number
of authorized shares of the Company's Common Stock from 45,000,000 to
95,000,000. The principal executive offices of the Company are located at 520
Broadhollow Road, Melville, NY 11747. The Company's telephone number is (631)
844-9805.
THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO
STOCKHOLDERS' MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
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APPONLINE.COM, INC.
520 BROADHOLLOW ROAD
MELVILLE, NY 11747
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PRELIMINARY INFORMATION STATEMENT
PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF 1934
AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the following actions were taken pursuant to a
Unanimous Written Consent of the majority Stockholder in lieu of a Special
Meeting of Stockholders of AppOnline.com, Inc.:
1. Approval of the issuance of more than twenty percent (20%) of the
Company's outstanding shares of Common Stock at less than fair market
value, as required by the American Stock Exchange, Inc. rules, Section
713(a);
2. The adoption of an amendment to the Certificate of Incorporation of
the Company to increase the number of authorized shares of Common
Stock of AppOnline.com, Inc. from 45,000,000 to 95,000,000 shares.
The Board of Directors has fixed the close of business on April 27, 2000,
as the Record Date for determining the Stockholders entitled to Notice of the
foregoing.
The Company expects to send its Stockholders a definitive Information
Statement on or about May 9, 2000.
The Company has asked brokers and other custodians, nominees and
fiduciaries to forward this Information Statement to the beneficial owners of
the Common Stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
This Information Statement will serve as written Notice to stockholders
pursuant to Section 228 of the Delaware Business Company Law.
THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING
WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
By order of the Board of Directors,
Edward Capuano
CEO and Chairman of the Board
May 5, 2000
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DISSENTERS' RIGHTS OF APPRAISAL
Under Delaware Business Corporation Law, the state in which the Company
is incorporated, neither the increase in the number of authorized shares nor the
issuance of more than twenty percent (20%) of the Company's outstanding shares
of Common Stock at less than fair market value on the date of grant requires the
Company to provide dissenting Stockholders with a right of appraisal and the
Company will not provide Stockholders with such right.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS ACTED UPON
The Company's President, Mr. Jeffrey Skulsky, has an interest in the
matter acted upon through his capacity as trustee of the Skulsky Trust. The
Skulsky Trust was owed $31,410,221 on December 31, 1999. On December 31, 1999,
in consideration for the cancellation of the debt owed the Skulsky Trust, the
Company issued 18,191,534 shares of its Common Stock and transferred its
ownership in certain assets to the Skulsky Trust.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the Record Date, the Company's authorized capitalization
consisted of 45,000,000 shares of Common Stock, par value $.001 per share and
5,000,000 shares of Preferred Stock, par value $.001 per share, which Preferred
Stock may be issued in one or more series at the discretion of the Board of
Directors. As of the Record Date and after the consummation of the transaction
noticed through this Information Statement, there were 44,823,107 shares of
Common Stock outstanding, all of which were fully paid, non-assessable and
entitled to vote. Holders of Common Stock of the Company have no preemptive
rights to acquire or subscribe to any of the additional shares of Common Stock.
Each share of Common Stock entitles its holder to one vote on each matter
submitted to the stockholders.
There are 5,000 issued and outstanding shares of Series C Convertible
Preferred Stock. These shares have no voting rights but are convertible into 200
shares of Common Stock each.
The following table sets forth, as of the Record Date, the number of
shares of Common Stock of the Company owned by (i) each person who is known by
the Company to own of record or beneficially five percent (5%) or more of the
Company's outstanding shares, (ii) each director of the Company, (iii) each of
the executive officers, and (iv) all directors and executive officers of the
Company as a group.
Unless otherwise indicated, each of the Stockholders has sole voting
and investment power with respect to the shares beneficially owned.
NUMBER OF SHARES OF PERCENTAGE OFTOTAL SHARES OF
NAME AND ADDRESS OF OUTSTANDING COMMON STOCK OUTSTANDING COMMON STOCK
BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) BENEFICIALLY OWNED
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Edward R. Capuano 9,063,057 20.2%
Jeffrey Skulsky(3) 19,253,386 43.0
The Skulsky Trust 19,251,233 42.9
Cindy L. Eisle 2,164 *
James Richmond 1,163 *
Pargie Raiola 0 0
James Britton 1,163 *
Patrick Reilly 0 0
Jerry Dugan 2,871 *
Robert Knickman 14,500 *
Stanley Hagendorf(4) 11,840 *
All Executive Officers and
Directors as a 28,350,144 63.2%
Group (10 persons)(3)(4)
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*less than one percent
(1) Unless otherwise indicated, the address of each person listed below is c/o
AppOnline.com, Inc., 520 Broadhollow Road, Melville, New York 11747.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities and includes shares of Common Stock issuable
upon conversion of outstanding preferred stock, or subject to options, or
warrants exercisable or convertible within 60 days.
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(3) 19,251,233 of which are owned by the Skulsky Trust, of which Jeffrey Skulsky
is the Trustee.
(4) All of which are owned by Mr. Hagendorf's wife.
The approval of a majority of the outstanding shares of Common Stock
entitled to vote is necessary to approve the Proposals noticed hereby. However,
as discussed above, the Company's Board of Directors has obtained the necessary
approval for these Proposals from Stockholders with voting authority for stock
constituting in excess of 50% of the total outstanding shares of the Company's
Common Stock entitled to vote. As such, the Board of Directors does not intend
to solicit any proxies or consents from any Stockholders in connection with
these actions.
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AUTHORIZATION OR ISSUANCE OF SECURITIES OTHERWISE THAN FOR EXCHANGE
Prior to December 31, 1999, the Company owed $31,410,221 to the Skulsky
Trust. Jeffrey Skulsky, the Company's President, is the trustee of the Skulsky
Trust. This indebtedness represented advances made by the Skulsky Trust to the
Company from 1997 through December 1999. The debt previously owed to the Skulsky
Trust was interest-free with no set repayment terms.
On December 31, 1999, in partial satisfaction of the debt owed to the
Skulsky Trust, the Company transferred ownership of certain assets.
After the transfer of the aforementioned assets, the outstanding debt
remaining to the Skulsky Trust was $21,704,319. This debt was completely
satisfied through the issuance of 18,191,534 shares of the Company's Common
Stock, which issuance occurred on December 31, 1999. The issuance represented
more than twenty percent (20%) of the Company's outstanding shares of Common
Stock on the date of issuance at less than fair market value. This issuance is
required to be approved by a majority of the Stockholders pursuant to the
American Stock Exchange, Inc. rules, Section 713(a).
In Management's opinion, the conversion of the debt owed to the Skulsky
Trust to equity was in the Company's and its shareholders best interests in that
its balance sheet is now less leveraged and its debt-to-equity has been
significantly reduced after the conversion of $21,704,319 of debt. Upon
completion of this transaction, stockholders equity increased by $21,704,319,
and liabilities decreased by a similar amount. This transaction was valued based
on the closing price per share of the Company's common stock on December 31,
1999, less a 17% discount. Since the Skulsky Trust agreed to accept restricted
securities, which cannot be immediately sold, a discount of 17% on the
transaction was given. Although each shareholders prorata ownership interest in
the Company has decreased, the Company's net book value per share has increased
as a result of this transaction by approximately $0.48.
As of the Record Date, the Company's authorized capitalization
consisted of 45,000,000 shares of Common Stock, par value $.001 per share and
5,000,000 shares of Preferred Stock, par value $.001 per share, which may be
issued in one or more series at the discretion of the board of directors, 5,000
of which are outstanding. As of the Record Date and after the consummation of
the transaction noticed through this Information Statement, there were
44,823,107 shares of Common Stock outstanding, all of which were fully paid,
non-assessable and entitled to vote. Holders of Common Stock of the Company have
no preemptive rights to acquire or subscribe to any of the additional shares of
Common Stock.
Each share of Common Stock entitles its holder to one vote on each
matter submitted to the Stockholders.
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AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY
BACKGROUND
On December 31, 1999, the Company's Board of Directors unanimously
approved an amendment to the Company's Certificate of Incorporation increasing
the number of authorized shares of Common Stock from 45 million to 95 million.
The amendment was approved by a majority of the Stockholders of the Company on
December 31, 1999.
The Board of Directors has determined that the adoption of the proposed
amendment will be in the best interests of the Company.
REASONS FOR THE AUTHORIZED ACTIONS
The Company's Board of Directors believes that it is in the best interests
of the Company to increase the number of authorized shares of Common Stock from
45 million to 95 million shares of Common Stock in order to enable the Company
to issue up to 2,088,000 shares of Common Stock upon the exercise of currently
outstanding warrants and to issue up to 1,000,000 shares of common stock upon
the conversion of Series C Convertible Preferred Stock. Upon the exercise of all
outstanding warrants and the conversion of the Series C Convertible Preferred
Stock, the Company will have approximately 47,000,000 shares of Common Stock
available for issuance in connection with raising additional capital and issuing
shares of its Common Stock in connection with acquisitions, as well as have a
sufficient number of shares of its Common Stock available for future
transactions requiring the issuance of Common Stock. As of the date of the
Record Date, the Company had 44,823,107 shares issued and outstanding. Absent
such increase in its authorized capital stock, the Company would be restricted
in its ability to effect future transactions. Other than the issuance of shares
of the Company's Common Stock in connection with currently outstanding warrants
and convertible preferred stock, there are currently no specific transactions
for which the Company intends to use the additional shares of Common Stock that
have been authorized.
Following the adoption of the Amendment, there will be at least
44,823,107 shares of common stock issued and outstanding. The balance of the
authorized but unissued shares of common stock will be issuable at any time and
from time to time by action of the Board of Directors without further
authorization from the Company's Stockholders, except as otherwise required by
applicable law or rules and regulations to which the Company may be subject, to
such persons and for such consideration (but not less than the par value
thereof) as the Board of Directors determines. Stockholders of Common Stock of
the Company have no preemptive rights to acquire or subscribe to any of the
additional shares of Common Stock.
Issuance of additional Common Stock, directly or upon the conversion of
preferred stock, exercise of warrants or options, if issued, has potentially
dilutive effects on each of the Stockholders to the extent that any of the
authorized but unissued shares are subsequently issued. The issuance of such
shares of Common Stock (or even the potential issuance) may have a depressive
effect on the market price of the Company's securities. Finally, the issuance of
any additional shares of Common Stock, or options to purchase shares at prices
below the current market price, would also have a dilutive effect on
Stockholders' equity in the Company.
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SECTION 16(A) REPORTING
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding ten percent or more of the
Company's Common Stock must report on their ownership of the Company's Common
Stock and any changes in that ownership to the Securities and Exchange
Commission and to the American Stock Exchange. Specific due dates for these
reports have been established. During the year ended December 31, 1999, the
Company does not believe that all reports required to be filed by Section 16(a)
were filed on a timely basis, if at all.
FINANCIAL AND OTHER INFORMATION
The information required by this item is hereby incorporated by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 as filed with the Securities and Exchange Commission on April
14, 2000.
STATEMENT OF ADDITIONAL INFORMATION
The Company's Annual Report on Form 10-K for the year ended December
31, 1999, as filed with the SEC on April 14, 2000, has been incorporated herein
by reference.
The Company will furnish, to any Stockholder making such request, a
copy of its Annual Report within one business day of receiving such request. The
Annual Report will be sent by first class mail at no charge to such Stockholder.
A copy of the Annual report can be requested by writing to the Company at 520
Broadhollow Road, Melville, NY 11747, or by calling the Company at (631)
844-9805, attention Secretary.
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