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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c- 5(d)(2))
[ ] Definitive Information Statement
UNITED LEISURE CORPORATION
(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 Rule 14c-5(g)
and O-11
1) Title of each class of securities to which transaction
applies:________
2) Aggregate number of securities to which transaction
applies:________
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): Not applicable.
4) Proposed maximum aggregate value of transaction: Not
applicable.
5) Total fee paid: None; no fee required.
[ ] 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:
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4) Date Filed:
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PRELIMINARY COPY
UNITED LEISURE CORPORATION
18081 MAGNOLIA
FOUNTAIN VALLEY, CALIFORNIA 92708
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INFORMATION STATEMENT
Pursuant to Regulation 14C Promulgated Under
The Securities Exchange Act of 1934, as amended
This Information Statement, which is being mailed on or about May
8, 1998 to holders of record on May 6, 1998 of shares of the common stock, par
value $.01 per share (the "Common Stock") of United Leisure Corporation, a
Delaware corporation (the "Company"), is being furnished in connection with the
proposed adoption of a Certificate of Amendment to the Company's Certificate of
Incorporation (the "Amendment") pursuant to the written consent of the holders
of a majority of the Company's outstanding shares of Common Stock.
On April 17, 1998, the Board of Directors of the Company approved
and recommended that the Company's Certificate of Incorporation be amended to
effect a 6 to 1 reverse stock split of the Company's Common Stock as provided in
the Amendment. The Amendment will be approved, not less than twenty days
following the mailing of this Information Statement to shareholders of record at
the close of business on May 6, 1998 (the "Record Date") by a Written Consent to
Corporate Action (the "Written Consent") executed by the holders of more than a
majority of the issued and outstanding shares of Common Stock, including Harry
Shuster, the Chairman of the Board and Chief Executive Officer of the Company.
Such approval by the Board of Directors and by the holders of a majority of the
issued and outstanding shares of Common Stock is adequate under Delaware law to
cause the Amendment to be effected. The Amendment will become effective upon the
filing with the Company of the Written Consent and the filing of the Amendment
with the Secretary of State of Delaware. The Company anticipates that the filing
of the Written Consent with the Company will occur on or about May 28, 1998, at
which time the Company will file the Amendment with the Secretary of State of
Delaware.
This Information Statement is being provided for informational
purposes only. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
OUTSTANDING STOCK AND VOTING RIGHTS
As of the Record Date, there were 14,002,849 shares of Common
Stock issued and outstanding. Each share of Common Stock entitles its holder to
one vote per share. There are no shares of the Company's authorized preferred
stock currently outstanding.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common
Stock as of the Record Date by: (i) each of the Company's executive officers and
directors, (ii) each person who is known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, and (iii) all of the
Company's officers and directors as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES PERCENTAGE
OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED OWNERSHIP
------------------ -----------
<S> <C> <C>
Harry Shuster 4,339,932(2) 29.9%
Alvin Cassel 185,100(3) 1.3%
Alvin Alexander 18,021(4) *
Brian Shuster 130,300(5) *
J. Brooke Johnston, Jr 55,000(6) *
Strata Equities Limited 1,800,000(7) 12.3%
c/o Euroba Management Limited
73 Front Street
Hamilton HM BX, Bermuda
Walton N.B. Imrie 654,430(8) 4.6%
c/o Kestral S.A
Pausilippe Ch
Des Trois-Portes 11
2006 Neuchatel, Switzerland
All Executive Officers and Directors
as a Group (5 persons) 4,728,353(2)(3)(4)(5)(6) 31.4%
</TABLE>
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* Less than 1%.
(1) Addresses are shown only for the beneficial owners of at least five percent
of the class of security shown. The address of all officers and directors
is c/o the Company at 18081 Magnolia, Fountain Valley, CA 92708.
(2) Includes 110,100 shares owned by Koorn N.V., a Netherlands Antilles
corporation, all of whose capital shares are owned by Harry Shuster. Mr.
Shuster has sole investment power over the shares owned by Koorn N.V., but
shares voting power of these shares. Alvin Cassel, a director of the
Company, acts as Managing Director of Koorn N.V. Also includes 125,000
shares owned by the Harry and Nita Shuster Charitable Foundation and 300
shares owned by Nita Shuster, the spouse of Harry Shuster. Does not include
10,000 shares owned by Bardene Shuster, 300 shares owned by Nita Shuster
and Bardene Anne Shuster, 300 Shares owned by Nita Shuster and Brian
Shuster, and 300 shares owned by Nita Shuster and Stanley Shuster, of which
shares Mr. Shuster disclaims beneficial ownership. Also includes options to
purchase 506,950 shares of common stock which are currently exercisable as
well as 3,597,582 shares of stock owned directly by Mr. Shuster. Also does
not include an aggregate of 240,000 shares owned by the trusts of which Mr.
Shuster's adult children are the beneficial owner.
(3) Includes 110,100 shares held by Koorn N.V., as to which Mr. Cassel has
shared voting power and options to purchase 75,000 shares of common stock
which are currently exercisable.
(4) Includes options to purchase 10,000 shares that are currently exercisable.
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(5) Includes 300 shares owned by Nita Shuster and Brian Shuster, 80,000 shares
owned by The Brian Shuster Trust and options to purchase 50,000 shares
which are currently exercisable.
(6) Includes options to purchase 50,000 shares which are currently exercisable.
(7) Includes warrants to purchase 600,000 shares which are currently
exercisble.
(8) These shares are owned by Plus One Finance, Ltd., a British Virgin Islands
corporation, which is wholly-owned by Walton N.B. Imrie, a resident of
Switzerland. Includes warrants to purchase 83,000 shares of common stock
which are currently exercisable.
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO EFFECT A 6 TO 1 REVERSE STOCK SPLIT
OF THE COMPANY'S COMMON STOCK
The Nasdaq Stock Market ("Nasdaq") has modified its requirements
with regard to standards for a company's shares being listed by the Nasdaq
SmallCap Market. Among other requirements, the minimum bid price for a security
trading on the Nasdaq SmallCap Market is now $1.00. On February 27, 1998 the
staff of Nasdaq advised the Company that its Common Stock is not in compliance
with the new Nasdaq SmallCap Market minimum bid price requirement and provided
the Company with a ninety calendar day period, which expires May 28, 1998, in
order to regain compliance with this standard for at least ten consecutive
trading days. The bid price per share of the Company's Common Stock has not been
at least $1.00 since July 26, 1996, at which time the closing bid price reported
on the Nasdaq Automated Quotation System was $1.25.
The Board of Directors has adopted a resolution approving a
proposal to amend the Company's Certificate of Incorporation to effect a reverse
stock split of the Company's Common Stock, pursuant to which each six shares of
Common Stock will be automatically converted into one share, without any action
on the part of the stockholders (the "Reverse Stock Split"). Pursuant to the
Written Consent, holders of a majority of the Company's outstanding shares of
Common Stock will be approving the Amendment. The complete text of the Amendment
is set forth in Exhibit A to this Information Statement.
Consummation of the Reverse Stock Split will not change the
number of shares of Common Stock authorized by the Company's Certificate of
Incorporation which will remain at 30,000,000 or the par value of the Common
Stock per share. The Reverse Stock Split will become effective as of 5:00 p.m.,
New York time (the "Effective Date"), on the date that the Certificate of
Amendment to the Company's Certificate of Incorporation is filed with the
Secretary of State of the State of Delaware.
In lieu of issuing less than one whole share resulting from the
Reverse Stock Split to holders of a fraction of one share (a "Fractional
Interest"), the Company will determine the fair market value of each outstanding
share of the Company's Common Stock held on the Effective Date of the Reverse
Stock Split (the "Fractional Share Purchase Price"). The Company currently
anticipates that the Fractional Share Purchase Price will be based on the
average daily closing bid price per share of the Common Stock as reported by the
Nasdaq Automated Quotation System for the Company's Common Stock for the ten
trading days immediately preceding the Effective Date. Stockholders who hold a
Fractional Interest on the Effective Date will be entitled to receive, in lieu
of the less than one whole share arising as a
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result of the Reverse Stock Split, cash in the amount of the Fractional Share
Purchase Price multiplied by the Fractional Interest.
As soon as practical after the Effective Date, the Company's
Transfer Agent (Oxford Transfer and Registrar) will mail a letter of transmittal
to each holder of record of a stock certificate or certificates which represent
issued Common Stock outstanding on the Effective Date. The letter of transmittal
will contain instructions for the surrender of such certificate or certificates
to the Company's Transfer Agent in exchange for certificates representing the
number of whole shares of Common Stock (plus the relevant portion of the
Fractional Share Purchase Price, if any) into which the shares of Common Stock
have been converted as a result of the Reverse Stock Split. No cash payment will
be made or New Certificate issued to a stockholder until he or she has
surrendered his or her outstanding certificates, together with the letter of
transmittal to the Company's Transfer Agent. Stockholders will not be required
to pay a transfer or other fee in connection with the exchange of certificates.
Stockholders should not submit any certificates to the Transfer Agent until
requested to do so.
The Company anticipates that the decrease in the number of
outstanding shares of the Company's Common Stock resulting from the Reverse
Stock Split will place the market price of the Common Stock in a range
satisfactory to satisfy the Nasdaq minimum bid price requirement. If the
requirement is not satisfied by May 28, 1998, Nasdaq will issue a delisting
letter which will identify the review procedures available to the Company. In
that event, the Company may request a review at that time, which generally stays
delisting. Although the anticipated Effective Date will not permit the Company
to satisfy the minimum bid requirement for ten consecutive trading days by May
28, 1998, the Company anticipates that delisting will not occur if the Reverse
Stock Split occurs prior to May 28, 1998 and the market price of the Common
Stock satisfies the requirement shortly thereafter. However, no assurance may be
given that delisting will not occur.
If the Company's securities are delisted from Nasdaq trading, the
Company's securities will likely be quoted in the "pink sheets" maintained by
the National Quotation Bureau, Inc. or the Nasdaq Electronic Bulletin Board and
the spread between the "bid" and the "asked" price of the shares of Common Stock
is likely to be greater than at present and the stockholders may experience a
greater degree of difficulty in engaging in trades of shares of the Company's
Common Stock.
The stockholders should note that the effect of the Reverse Stock
Split upon the market prices of the Company's Common Stock cannot be accurately
predicted. In particular, there is no assurance that the prices for shares of
the Common Stock after the Reverse Stock Split will be six times the price of
shares of the Company's Common Stock immediately prior to the Reverse Stock
Split. Furthermore, there can be no assurance that the Reverse Stock Split will
not adversely impact the market price of the Common Stock or, alternatively,
that any increase price per share of the Common Stock immediately after the
proposed Reverse Stock Split will be sustained for any prolonged period of time.
In addition, the Reverse Stock Split likely will have the effect of creating odd
lots of stock for some stockholders and such odd lots
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may be more difficult to sell or have higher brokerage commissions associated
with the sale of such odd lots.
As a result of the Reverse Stock Split, the number of whole
shares of Common Stock held by stockholders of record as of the close of
business on the Effective Date will automatically, without any action required
by the stockholders, be equal to the number of shares of Common Stock held
immediately prior to the close of business on the Effective Date divided by six,
plus cash in lieu of any fractional share. The Reverse Stock Split will not
effect a stockholder's percentage ownership interest in the Company or
proportional voting power, except for minor differences resulting from the
payment of cash in lieu of fractional shares. The rights and privileges of the
holders of shares of Common Stock will remain at $.01 per share following the
Effective Date of the Reverse Stock Split, and the number of shares of Common
Stock issued will be reduced. Consequently, the aggregate par value of the
issued Common Stock also will be reduced.
The Company is currently subject to certain obligations to issue
shares of Common Stock pursuant to the exercise of outstanding warrants and
outstanding options. Under the terms of various agreements relating to these
securities, the number of shares of Common Stock issuable pursuant to these
securities and the per share exercise prices, will automatically be adjusted in
accordance with the Reverse Stock Split. Thus, for every six shares of the
Common Stock pre-Reverse Stock Split previously issuable, the holders of these
securities will, upon exercise of the security now receive one share of Common
Stock, post-Reverse Stock Split for the same aggregate amount of consideration
paid. Under another agreement relating to outstanding warrants, no adjustment in
the number of shares of Common Stock issuable upon exercise or the per share
exercise price will occur. Strata Equities Limited, the holder of such warrants
will, upon exercise after the Reverse Stock Split, obtain a higher percentage
ownership interest in the Company and proportional voting power than it would
have obtained if the Reverse Stock Split did not occur.
As soon as practical after the Effective Date, the Company
intends to require stockholders to exchange their stock certificates and warrant
certificates (the "Old Certificates") for new certificates (the "New
Certificates") representing the number of whole shares of Common Stock into
which their shares of Common Stock have been converted as a result of the
Reverse Stock Split (as well as cash in lieu of the Fractional Interest
resulting from the Reverse Stock Split). Stockholders will be furnished with the
necessary materials and instructions for the surrender and exchange of stock
certificates at the appropriate time by the Company's Transfer Agent.
Stockholders will not be required to pay any transfer or other fee in connection
with the exchange of certificates. Stockholders should not submit any
certificates to the Transfer Agent until requested to do so.
The following description of the material federal income tax
consequences of the Reverse Stock Split is based on the Internal Revenue Code of
1986, as amended, the applicable treasury regulations promulgated thereunder,
judicial authority and current administrative rulings and practices all as in
effect on the date of this Information Statement. The Company has not sought and
will not seek an opinion of counsel or a ruling from the Internal Revenue
Service regarding the federal income tax consequences on the Reverse Stock
Split. This discussion is
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for general information purposes only and each stockholder is urged to consult
their own tax advisor to determine the particular consequences to them.
In general, the federal income tax consequence of the proposed
Reverse Stock Split will vary among stockholders depending upon whether they
receive cash for a Fractional Interest or solely new certificates in exchange
for old certificates. The Company believes that because the Reverse Stock Split
is not part of a plan to increase periodically a stockholder's proportionate
interest in the Company's assets or earnings and profits, the Reverse Stock
Split probably will have the following federal income tax effects:
1. A stockholder who receives solely new certificates will not
recognize gain or loss in the exchange. In the aggregate, the stockholder's
basis in the Common Stock represented by New Certificates will equal the
holder's basis in the Common Stock represented by Old Certificates.
2. A stockholder who receives cash for a Fractional Interest, as
a result of the Reverse Stock Split will generally be treated as having received
the payment as a distribution in redemption of the fractional share. Each
effected stockholder will be required to consult such stockholder's own tax
advisor for the tax effect of such redemption in light of such stockholder's
particular facts and circumstances.
Stockholders have no right under Delaware law or under the
Company's Certificate of Incorporation or Bylaws to dissent to the Reverse Stock
Split.
BY ORDER OF THE BOARD OF DIRECTORS
Harry Shuster, Chairman of the Board
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EXHIBIT A
CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION
OF
UNITED LEISURE CORPORATION
United Leisure Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That by a Unanimous Written Consent of the Board of Directors of the
Corporation, resolutions were duly adopted setting forth a proposed amendment of
the Certificate of Incorporation of said Corporation, declaring said amendment
to be advisable and providing that the written consent of the stockholders to
such amendment should be obtained. The resolution setting forth the proposed
amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this
Corporation be amended by adding the following paragraph to the end of
the Article thereof numbered "FOURTH":
"Each of the Corporation's issued and outstanding shares of
Common Stock, par value $.01 per share, as of the date of this
Certificate of Amendment shall be converted into one sixth
(.166667) of one (1) share of the Common Stock, par value $.01
per share; no change shall be made to the par value of the
Corporation's Common Stock; and in lieu of any fractional shares,
the Corporation shall pay to the holders thereof the fair value
of such shares in cash, based on the average daily closing bid
price per share of the Common Stock as reported on the Nasdaq
SmallCap Market for the Corporation's Common Stock for the ten
(10) trading days immediately preceding the effective date of
this Certificate of Amendment."
All other provisions of Article FOURTH and all other provisions of the
Corporation's Certificate of Incorporation shall remain unchanged and in
full force and effect.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, the
written consent of the stockholders of the Corporation was obtained in
accordance with Section 228 of the General Corporation Law, by which consent the
necessary number of shares as required by statute consented to the amendment,
and written notice of action taken by such stockholders' consent has been given
as provided in Section 228 of the General Corporation Law.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, said Corporation has caused this certificate to be signed by
Harry Shuster, an authorized officer, this ____ day of May, 1998.
By
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Harry Shuster, Chief Executive Officer
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