U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13 (e) of the Securities Exchange Act of 1934
and Rule 13E-3 (Section 240.13E-3) thereunder)
CROWELL & CO., INC.
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(Name of the Issuer)
CROWELL & CO., INC. AND OTIS L. CROWELL
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(Name of Persons Filing Statement)
Common Stock No Par Value NA
- ------------------------------ -------------------------------------
(Title of Class of Securities) (CUSIP Number of Class of Securities)
Mark L. Gilliam
Crowell & Co., Inc.
924 Stevens Creek Road
Augusta, GA 30907
(706)855-1099
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(Name, Address, and Telephone Number of Persons Authorized to Receive Notice
and Communications on Behalf of Persons Filing Statement)
This statement is filed in connection with (Check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13E-3 (c) under the
Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [X]
Calculation of Filing Fee
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Transaction valuation $ 86,325 Amount of filing fee $17
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* Calculated based on the maximum aggregate number of fractional shares of
common stock to be exchanged for a payment of $.134 per pre-reverse stock split
shares, at a valuation of $.134 per pre-reverse stock split shares, the price to
be paid for such pre-reverse stock split shares as described in the October 22,
1999 Proxy Statement which is incorporated by reference in its entirety to this
filing.
[X] Check box if any part of the fee is offset as provided by Rule 0-11 (a) (2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $124.99
Form or Registration No: 10-KSB
Filing Party: Crowell & Co., Inc.
Date Filed: From credit notice from SEC
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INTRODUCTION
This Rule 13E-3 Transaction Statement ("Statement") relates to a
solicitation of proxies by Crowell & Co., Inc. (the "Company" or "Crowell"), to
be used at a special meeting ("Special Meeting") of shareholders (the
"Shareholders") of the Company to consider and vote upon a proposal to amend the
Company's Articles of Incorporation ("Amendment") to effect a reverse split (the
"Reverse Stock Split") of the Company's issued and outstanding common stock,
without par value, (the "Common Stock") as of 4:30 p.m., E.S.T., on the date of
filing of the Amendment on the basis that each share of Common Stock then
outstanding will be converted into .000005 share, at $.134 per share
pre-reverse-split price, with fractional shareholders receiving cash in lieu of
their resulting fractional share (the "Transaction").
The Company has filed a Preliminary Proxy Statement ("Preliminary Proxy
Statement") and Schedule 14A, with exhibits with the Securities and Exchange
Commission ("SEC"). The Preliminary Proxy Statement describes and requires a
vote on the Transaction. The cross reference sheet herein is being supplied
pursuant to General Instruction F to Schedule 13E-3 required to be included in
response to the items of this Statement. The information in the Preliminary
Proxy Statement is hereby expressly incorporated herein by reference and the
responses to each item are qualified in their entirety by the contents thereof.
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CROSS REFERENCE SHEET
Pursuant to General Instruction F of Schedule 13E-3, the following
table sets forth the location in the Preliminary Proxy Statement of the
registrant dated October 22, 1999 (which has been filed in preliminary form with
the SEC and is attached hereto as Exhibit 1), of the information required by
Schedule 13E-3 which is incorporated herein from such Preliminary Proxy
Statement.
<TABLE>
<CAPTION>
SCHEDULE 13E-3 ITEM AND CAPTION LOCATION IN PRELIMINARY PROXY STATEMENT
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<S> <C> <C>
Item 1. Issuer and Class of Security
Subject to the Transaction (a) Outside cover page
(b) Voting/General
(c) - (d) Market Price of Company Common Stock,
Preferred Stock and Shares
(e) - (f) Not applicable
Item 2. Identity and Background This Preliminary Proxy Statement is being
filed by the issuer of the class of equity
securities which is the subject of this Rule
13E-3 transaction
(a) - (g) Not in Proxy Statement
Item 3. Past Contacts, Transactions
Or Negotiations
(a) - (b) Not applicable
Item 4. Terms of the Transaction General/Quorum and Vote Required/Proxies/
The Reverse Stock Split/Background and
Reason for the Reverse Stock Split/The
Effects of the Reverse Stock Split/Board
Recommendations/Dissenters' Rights/
Federal Income Tax Consequences/Sources
and Amount of Funds
(b) Not applicable
Item 5. Plans or Proposals of the Issuer
or Affiliate
(a) - (e) Not applicable
(f) - (g) Purpose/Background of and Reason
for the Reverse Stock Split
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Item 6. Source and Amount of Funds
Or Other Consideration
(a) - (c) Sources and Amount of Funds
(d) Not applicable
Item 7. Purpose (s), Alternatives, Reasons,
and Effects
(a) Purpose
(b) - (c) Background of and Reason for the Reverse
Stock Split
(d) Purpose/Background of and Reason for the
Reverse Stock Split/The Effects of the
Reverse Stock Split/Federal Income Tax
Consequences
Item 8. Fairness of the Transaction
(a) - (b) Background of and Reason for the Reverse
Stock Split/Board Recommendations
(c) Quorum and Vote Required
(d) - (f) Board Recommendations
Item 9. Reports, Opinions, Appraisals No report, opinion or appraisal and materially
Certain Negotiations related to this Rule 13E-3 Transaction has
been received by the Issuer
(a) - (c) Not Applicable
Item 10. Interest in Securities of the Issuer
(a) Principal Shareholders
(b) Not applicable
Item 11. Contracts, Arrangements or There are no contracts, arrangements, or
Understandings with Respect understandings with respect to the Issuer's
to the Issuer's Securities securities in connection with the Rule 13E-3
Transaction
Item 12. Present Intention and Recommen-
dation of Certain Persons with
Regard to the Transaction
(a) - (b) Quorum and Vote Required/ Background and
Reason for the Reverse Stock Split/Board
Recommendations
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Item 13. Other Provisions of the
Transaction
(a) Dissenter's Rights
(b) No such provision has been made
(c) Not applicable
Item 14. Financial Information
(a) 1998 Annual report/10-QSB for the six months
ended June 30, 1999
(b) Not applicable
Item 15. Persons and Assets Employed,
Retained or Utilized
(a) Mark L. Gilliam, Vice President, Secretary,
Chief Financial Officer, and Director has
prepared the Proxy, Schedule 13E-3, 1998 Annual
Report, and 10-QSB for the six months ended June
30, 1999 /Deborah E. Nelson, Executive Assistant, has
assisted Mr. Gilliam in the preparation of such
materials
(b) Not applicable
Item 16. Additional Information Not applicable
Item 17. Material to be Filed as Exhibits
(a) There is no written loan agreement between the
Company and Mr. Crowell regarding the Item 6 loan.
(b) - (c) Not applicable
(d) 1998 Annual Report/10-QSB for the six months ended
June 30, 1999
(e) Voting/Dissenters' Rights/Article 13 of the Georgia
Business Code/Sample of Notice of Intention to
Demand Payment
(f) Not applicable
</TABLE>
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Item 1. Issuer and Class of Security Subject to the Transaction.
(a) The name of the issuer of the class of security which is the subject
of the Rule 13E-3 transaction is Crowell & Co., Inc. The address of
its principal executive offices is 924 Stevens Creek Road, Augusta, GA
30907.
(b) The exact title of the securities outstanding of the class of security
which is the subject of the Rule 13E-3 transaction is Crowell common
stock without par value. There were approximately 2,520,835 shares
outstanding of Crowell common stock with approximately 750 holders of
record as of June 30, 1999.
(c) The Company's Common Stock is not currently traded on any stock
exchange or market. To the best of the Company's knowledge the Common
Stock has not been traded on any stock exchange or market in the past
five years. The Company is not aware that the Common Stock has ever
been traded on any exchange since the Company's incorporation.
Consequently, there have been no high and low bid quotations for each
quarterly period during the past two years.
(d) No dividends have been paid on the Company's Common Stock during the
past two years. There are no restrictions on the Company's present or
future ability to pay such dividends except as restricted by the
Company's financial position. The Company does not anticipate the
payment of dividends on Common Stock in the foreseeable future.
(e) The Company or Otis L. Crowell ("Mr. Crowell") filing this statement
have not made any underwritten public offering of such securities for
cash in the past three years which was registered under the Securities
Act of 1933 or exempt from registration thereunder pursuant to
Regulation A.
(f) No purchase of Company Common Stock has been made by the Company or
Mr. Crowell since the commencement of the Company's second full year
preceding the date of this schedule.
Item 2. Identity and Background.
This Statement is being filed by the issuer of the class of equity security
which is the subject of this Rule 13E-3 transaction.
(a) Mr. Crowell, majority shareholder, president and chairman of the
Company, is also a filer of this Statement.
(b) Mr. Crowell's business address is 924 Stevens Creek Road, Augusta, GA
30907.
(c) Mr. Crowell is employed in a full time position at the Company.
(d) Mr. Crowell has been President of Crowell for the past five years.
(e) Mr. Crowell has not been convicted in a criminal proceeding in the
past five years. No executive officer, director, control person, or
executive officer or director of any corporation ultimately in control
of the registrant during the past five years have been convicted
during the last five years in a criminal proceeding (excluding traffic
violations and similar misdemeanors).
(f) Mr. Crowell has not been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction during the last five
years. No executive officer, director, control person, or executive
officer or director of any corporation ultimately in control of the
registrant during the past five years have been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining further violations of, or
prohibiting activities subject to, federal or state securities laws or
a finding of any violation of such laws.
(g) Mr. Crowell is a United States citizen.
Item 3. Past Contacts, Transactions or Negotiations.
(a) There have been no contacts, negotiations or transactions which have
been entered into which have occurred since the commencement of the
Company's second full year preceding the date of this schedule between
any affiliate of the Company concerning a merger, consolidation, or
acquisition; a tender offer for or other acquisition of securities of
any class of the Company; an election of directors of the Company; or
a sale or other transfer of a material amount of assets of the Company
or any of its subsidiaries.
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(b) Not applicable.
Item 4. Terms of the Transaction.
(a) At the Special Meeting, Shareholders will be asked to consider and
vote upon the Amendment which, if adopted, will move the Company from
public company status subject to the reporting requirements of the
Securities Acts as administered by the SEC to private company status
not subject to the Securities Acts. Effective as of the approval of
the Amendment, the Articles of Incorporation of the Company will be
amended to reflect the Reverse Stock Split. Certificates for all
outstanding shares of Common Stock shall be exchanged for the
certificates for the new shares where applicable. No fractional shares
will be issued. Those shareholders holding fractional shares will
receive cash payment for their shares as detailed in this Schedule
13E-3.
The securities that can be voted at the Special Meeting consist
of Common Stock of the Company, without par value, with each share
entitling its owner to one vote on each matter submitted to the
Shareholders and Preferred Stock, stated value $1.00 per share, with
every four shares entitling its owner to one vote on each matter
submitted to the Shareholders. The record date for determining the
holders of Common Stock and Preferred Stock who are entitled to
receive notice of and to vote at the Special Meeting is October 5,
1999. On the record date, 2,520,835 shares of Common Stock and
1,011,899 shares of Preferred Stock were outstanding and eligible to
be voted at the Special Meeting.
The presence, in person or by proxy, of a majority of the
outstanding shares of Common and Preferred Stock of the Company is
necessary to constitute a quorum at the Special Meeting. In counting
the votes to determine whether a quorum exists at the Special Meeting,
the proposal receiving the greatest number of all votes "for",
"against", or "withheld" and abstentions (including instructions to
withhold authority to vote) will be used.
The Company believes that approximately 1,899,747 voting shares
owned or controlled on the record date by directors and executive
officers of the Company, constituting approximately 68.2% of the
outstanding Common and Preferred Stock (together the "Voting Stock"),
will be voted in favor of the proposal.
Adoption of the Amendment requires the affirmative vote of a
majority of the outstanding shares of Company Voting Stock entitled to
vote at the Special Meeting. Mr. Crowell is the beneficial owner of,
and has authority to vote 1,898,497 shares of Company Voting Stock, or
68.2 % of the shares of Company Voting Stock which were issued and
outstanding on the Record Date. Mr. Crowell plans to vote all shares
of Company Voting Stock over which he has voting authority to approve
the Amendment. If Mr. Crowell votes all of his shares of Company
Voting Stock over which he has voting authority to approve the
Amendment, the requisite vote for adoption of the Amendment will have
been obtained.
If the Amendment is adopted, the Articles of Incorporation of
Crowell & Co., Inc., will be amended to provide that all shares of
outstanding Common Stock be the subject of a reverse stock split, so
that each outstanding share shall, without further action of the
Corporation, be entitled to .000005 of a share of Common Stock upon
surrender of the old shares for certificates representing the new
shares.
No fractional new shares will be issued. Any common shareholders
who would otherwise be entitled to a fractional share will be paid for
such right at the rate of $.134 per old share.
(b) There is no term or arrangement concerning the Rule 13e3 transaction
relating to any security holder of the Company which is not identical
to that relating to other security holders of the same class of
securities of the Company.
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a) - (e) Neither Crowell nor Mr. Crowell have any plan or proposal
regarding activities or transactions which are to occur after the Rule
13E-3 transaction which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; a sale
or transfer of a material amount of assets of the issuer or any of its
subsidiaries; any change in the present board of directors or
management of the issuer including, but not limited to, any plan or
proposal to change the number or term of directors, to fill any
existing vacancy on the board or to change any material term of the
employment contract of any executive officer; any material change in
the present dividend rate or policy or indebtedness or capitalization
of the Company; any other material change in the Company's corporate
structure or business.
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(f) - (g) After the consummation of the Rule 13E-3 transaction, the
Company will become eligible for termination of registration under the
Securities Exchange Act because there will be only one remaining
common shareholder, Mr. Crowell. The Company plans to apply for
termination of registration immediately upon completion of the Rule
13E-3 transaction.
After the Rule 13E-3 transaction the Company will be unable to
raise capital through public markets. It should be noted that the
Company has been unable to raise capital in the public market for the
past ten years. Consequently, management of the Company does not
believe the Company is in substance gaining anything from its status
as a public company. All financing arranged has been private or bank
financing over the past ten years. The inability to raise equity
capital can have devastating effects on any company. The Company is no
exception. Without the ability to raise capital, shareholders may lose
all or part of their investment. The Company is completely dependent
on internally generated capital, that is, generated capital from
profits, and capital provided through private and bank loans. Mr.
Crowell presently guarantees all loans which have been obtained by the
Company. Mr. Crowell's personal guarantee has been a condition for the
Company obtaining a loan. Unfortunately, the Company is in the
position of having all of the liabilities of being a public company
and none of the benefits of being a public company. The liabilities of
being a public company are the periodic reporting requirements. The
Company estimates that approximately $50,000 per year is expended for
attorneys, accountants, postage, printing, wages, EDGAR filing fees,
and other expenses to comply with these periodic reporting
requirements. The benefits of being a public company include the
ability to raise capital through public markets and offering a
marketable stock to investors. These benefits have not been realized
by the Company in the past ten years.
The Company has not paid dividends on its outstanding preferred
stock in the past two years. The preferred stock dividends are
cumulative and must be paid providing the corporation has funds to pay
the dividends. The Company has $424,236 in unpaid preferred stock
dividends at June 30, 1999. The preferred stock and accumulated
dividends on the preferred stock have priority over payment of common
stock and dividends on common stock in the event of liquidation. No
dividends are unpaid on common stock as of June 30, 1999. The Company
has not paid dividends on Common Stock in the past five years.
Management of the Company does not anticipate paying dividends on
Company Common Stock in the foreseeable future.
After the consummation of the Rule 13E-3 transaction the
shareholders will be paid for their shares as determined by the
valuation of the Common Stock. The shareholders will recognize gain or
loss for federal income tax purposes as the difference between their
purchase price and the amount paid by Crowell for their pre-reverse
stock split shares of the Common Stock. Virtually all of the
unaffiliated shareholders purchased their common stock in the issuer
over twenty-five years ago. To the management of the Company's
knowledge, no dividends have ever been paid on the common stock of the
issuer. Many of the original purchasers of the stock have died since
their stock purchases in the late sixties and early seventies. This
stock has been transferred to their beneficiaries. Management of
Crowell believes that most shareholders have written off this
investment years ago. As a practical matter, management believes that
most shareholders may benefit much more from the capital loss which
they can claim on their income tax return than they will from holding
a stock which has no trading market. At June 30, 1999, the Company had
a book value per common share of ($.14), which is a deficit or
negative "value". Therefore, management of the Company believes it
would be fair to offer no payment for fractional shares after the Rule
13E-3 transaction. Nevertheless the Company will pay $.134 per share
for shares held before the reverse stock split.
The shareholders will receive $.134 per share for their pre
reverse stock split shares. The payment was determined by valuing the
Company at June 30, 1999. The shareholders of record on June 30, 1999
will receive payment by check for their shares after the reverse stock
split is consummated. The checks will be sent by US mail. The
shareholders will not be required to take any action in order to
receive payment for their shares.
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Item 6. Source and Amount of Funds or Other Consideration.
(a), (c) The source of the funds to be used in the Schedule 13E-3
transaction will be a loan from Mr. Crowell. The loan will be secured
by real estate. The loan will be at prime rate plus one percent. A
repayment plan has not been established.
(b) An itemized statement of all expenses incurred or estimated to be
incurred in connection with the Rule 13E-3 transaction is as follows:
Printing $ 3,000
Postage 3,000
Legal 4,000
Accounting 500
Filing fees 500
Fractional share purchase 86,325
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$ 97,325
(d) Not applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
At a special meeting of shareholders, shareholders of the Company will be
asked to consider and vote upon the Reverse Stock Split Proposal which, if
adopted, will move the Company from public company status subject to the
reporting requirements of the Securities Acts as administered by the Securities
and Exchange Commission to private company status not subject to the Securities
Acts. Effective as of the approval of the Reverse Stock Split Proposal, the
Articles of Incorporation of the Company will be amended to reflect the Reverse
Stock Split. The shareholders will receive $.134 per share for their pre reverse
stock split shares. The payment was determined by valuing the Company as of June
30, 1999. The shareholders of record on October 5,1999 will receive payment by
check for their shares after the reverse stock split is consummated. The checks
will be sent by U.S. mail. The shareholders will not be required to take any
action in order to receive their checks.
(a) - (d) In 1988 Janka, Inc. ("Janka"), a company whose majority
shareholder was Otis L. Crowell, merged with the Mid South Corporation
("Mid South"). Mid South was a public company with approximately 750
shareholders. To management of the company's knowledge, no dividends
had ever been paid on Mid South's common stock.
After the merger, Mr. Crowell became the majority shareholder of
Mid South. In 1989, Crowell & Co., Inc. ("Crowell"), a company wholly
owned by Mr. Crowell, was merged into Mid South. Subsequently, the
name of the combined companies was changed to Crowell & Co., Inc.
The purpose of these mergers was to make it possible for the
Company to raise capital for real estate operations through public
markets. Over the past 10 years, and after substantial effort, the
Company has been unable to develop a trading market for its common
stock, thus never realizing the possibility of raising capital through
public markets. Because of this, the only reason for merging Crowell,
Janka, and Mid South, the ability to raise capital in public markets,
has never been realized.
The Company has expended substantial dollars and efforts over the
past ten years meeting the reporting rules required by the SEC. Total
dollars spent are in excess of $500,000. Approximately $50,000 per
year is spent because the Company must be audited by Independent
Certified Public Accountants. Attorneys are paid to review filing
documents. Additional expenses are fees paid to various outside
electronic filers in order to comply with the SEC's EDGAR filing
requirements, postage for filings, and various other expenses related
to the Company's public company status.
Recently, major lenders to the Company have urged the Company to
cut corporate expenses, including the expense of maintaining public
company status because of the Company's general financial condition.
One major lender has informed the Company that it is unwilling to loan
the Company additional funds without the personal guarantee of Mr.
Crowell. Mr. Crowell has expressed hesitancy to continue to do this
when he does not own all Common Stock. Mr. Crowell is the only
shareholder with liability in excess of his investment. If Mr. Crowell
owned all Common Stock, he has indicated his willingness to continue
to personally guarantee all Company debt.
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Because of the aforementioned conditions, which are the Company's
inability to raise capital through public markets, the substantial
expenses incurred by the reporting requirements of the Company's
public company status, the recommendation of lenders to cut expenses
by terminating public company status, and the reluctance of Mr.
Crowell to continue to personally guarantee the Company`s debt, the
Company's President, Mr. Crowell, and Chief Financial Officer, Mark L.
Gilliam, began exploring ways to terminate public company status.
Several options were considered including a tender offer, various
types of mergers, corporate reorganization, and a reverse stock split.
The excess expense and uncertainty of success eliminated all options
except corporate reorganization and a reverse stock split.
The reverse stock split was chosen because its outcome was
certain, expenses incurred by the Company were moderate, and
shareholders would receive payment for their fractional shares as
opposed to corporate reorganization where shareholders would receive
no payment. If the Amendment is adopted, the Articles of Incorporation
of Crowell & Co., Inc., will be amended to provide that all shares of
outstanding Common Stock, without par value, be the subject of a
reverse stock split, so that each outstanding share shall, without
further action of the Corporation, be entitled to .000005 of a share
of Common Stock, without par value, upon surrender of the old shares
for certificates representing the new shares.
No fractional new shares will be issued. Any common shareholders
who would otherwise be entitled to a fractional share will be paid for
such right at the rate of $.134 per old share.
The result of the reverse stock split will be the attainment of
private company status for the Company and the payment for fractional
shares owned by shareholders which will be generated by the reverse
stock split. The valuation date of the Company has been set at June
30, 1999, for the payment of fractional shares. The Board of Directors
has determined a value of the Company's common stock as $338,109. This
translates to $.134 per share for every share owned prior to the
Reverse Stock Split.
The Company's Board of Directors believes that the reverse stock
split proposal is in the best interests of the shareholders of the
Company and recommends that the shareholders of the Company vote to
adopt the proposal.
In the event the proposal is approved, shareholders would have
certain rights to dissent and demand appraisal of their shares under
Section 14-2-1301 et. seq. of the Georgia Code. Dissenting
shareholders who comply with the requisite statutory procedures would
be entitled to receive a judicial determination and payment of "fair
value" of their Shares as of the close of business on the day prior to
the date of shareholders called to vote on such Proposal. The value so
determined could be more or less than the consideration offered
pursuant to the amount disclosed in this Proxy Statement.
The payment for fractional shares for the Company's Common Stock
pursuant to the Reverse Stock Split is expected to be a fully taxable
transaction. Accordingly, each exchanging shareholder will recognize
gain or loss for federal income tax purposes measured by the
difference between such shareholder's basis in the Shares exchanged
and the cash received by the Shareholder for the fractional shares.
Such gain or loss will be capital gain or loss if the Shares were held
as a capital asset. All shareholders are urged to consult with their
own tax advisors as to the tax consequences of the Reverse Stock
Split.
The benefits and detriments to the Company are either explicitly
or implicitly disclosed in the Proxy Statement. The benefit to the
Company is the termination of reporting requirements to the Securities
and Exchange Commission. The Company estimates that this will save
approximately $50,000 per year in expense. The detriment to the
Company is the inability to raise capital through a secondary offering
after termination of reporting status.
The benefit to the unaffiliated shareholders is that they will
receive payment in exchange for their shares, whereas they have not
received any payments of dividends over the past ten years. The
Company has no knowledge that a public trading market has ever existed
for its Common Stock. Additionally, some shareholders will be able to
recognize a federal income tax loss on the exchange which may result
in a lowering of their income taxes.
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Presently, Shareholders have Common Stock with no trading market.
The Company does not intend to pay dividends on Common Stock in the
foreseeable future. Therefore, the issuer sees no detriment to the
interests of unaffiliated shareholders because of the Transaction.
After the Transaction has been consummated, Mr. Crowell will own 100%
of the Common Stock of the Company.
Item 8. Fairness of the Transaction.
(a) - (b) The Board of Directors ("Board") of the Company and Mr. Crowell
believe the transaction to be fair to unaffiliated shareholders. The
Board and Mr. Crowell considered the following factors when reaching
this decision. There is no public market for the common stock so
market value is not readily determinable. The Board and Mr. Crowell
have no knowledge of anyone who is actively purchasing or selling the
common stock so no value could be derived from such transactions. The
Board and Mr. Crowell have no knowledge of any public market for the
common stock on which to base a common stock value over the past ten
years so no value could be derived from historical market prices. The
net book value of the common stock is a negative number (see Item 14).
Based on the negative book value, not paying anything per share
would be fair to the unaffiliated shareholders, inasmuch as the common
stock's book value would indicate that it is worthless. The going
concern value of the issuer is not readily determinable since the
Company has experienced net losses over three of the past four years.
Additionally, the continued existence of the Company relies on the
personal guarantee of payment of debt by Mr. Crowell. This personal
guarantee of Mr. Crowell is not a corporate asset and has not been
considered when determining the value of the Company. Therefore, the
Board and Mr. Crowell have relied on what it considers a fair value of
the Company based on the value of its assets in excess of liabilities
and preferred stock rights. This valuation yielded a value of
approximately $86,325 for unaffiliated shareholders. The Board and Mr.
Crowell believe that unaffiliated common stock value would be lower if
the Company actually attempted to liquidate, based on past land and
lot sales experience.
(c) The transaction is not structured so that approval of at least a
majority of unaffiliated security holders is required.
(d) - (e) All directors are employees of the Company.
(f) No firm offers have been made by any unaffiliated person during the
preceding 18 months for the merger or consolidation of the Company
into or with such person or of such person into or with the Company,
the sale or other transfer of all or any substantial part of the
assets of the Company, or securities of the Company which would enable
the holder thereof to exercise control of the Company.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
No report, opinion or appraisal and materially related to this Rule 13E-3
Transaction has been received by the Company.
(a) - (c) Not applicable.
Item 10. Interest in Securities of the Issuer.
(a) On October 5, 1999, Otis L. Crowell owned 1,876,622 shares or 74.4
percent of Common Stock. Mark L. Gilliam, Vice President, Secretary,
Chief Financial Officer and Director of the Company owned 1,250 shares
of Common Stock on October 5, 1999. Additional information in response
to this sub-item is incorporated herein by reference to "Principal
Shareholders" in the Preliminary Proxy Statement.
(b) No such transaction as described in Item 10 (b) has occurred within
the past 60 days.
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Item 11. Contracts, Arrangements or Understandings with Respect to the Issuer's
Securities.
There are no contracts, arrangements, or understandings with respect to the
Company's securities in connection with the Rule 13E-3 Transaction.
Item 12. Present Intention and Recommendation of Certain Persons with Regard to
The Transaction.
(a) - (b) The Company believes that approximately 1,899,747 voting shares
owned or controlled on the record date by directors and executive
officers of the Company, constituting approximately 68.5% of the
outstanding Common and Preferred Stock (together the "Voting Stock"),
will be voted in favor of the proposal.
Adoption of the Reverse Stock Split Proposal requires the
affirmative vote of a majority of the outstanding shares of Company
Voting Stock entitled to vote at the Special Meeting. Otis L. Crowell,
Chairman of the Board and President of the Company, is the beneficial
owner of, and has authority to vote 1,898,497 shares of Company Voting
Stock, or 68.4% of the shares of Company Voting Stock which were
issued and outstanding on the Record Date. Mr. Crowell plans to vote
all shares of Company Voting Stock over which he has voting authority
to approve the Amendment. If Mr. Crowell votes all of his shares of
Company Voting Stock over which he has voting authority to approve the
Reverse Stock Split Proposal, the requisite vote for adoption of the
Reverse Stock Split will have been obtained.
The Board and Mr. Crowell believe that the reverse stock split
proposal is in the best interests of the shareholders of the Company
and recommends that the shareholders of the Company vote to adopt the
proposal.
Item 13. Other Provisions of the Transaction.
(a) In the event the Amendment is approved, shareholders would have
certain rights to dissent and demand appraisal of their shares under
Section 14-2-1301 et. seq. of the Georgia Code. Dissenting
shareholders who comply with the requisite statutory procedures would
be entitled to receive a judicial determination and payment of "fair
value" of their Shares as of the close of business on the day prior to
the date of shareholders called to vote on such Amendment. The value
so determined could be more or less than the consideration offered
pursuant to the amount disclosed in Item 8.
(b) No provision has been made by the Company or Mr. Crowell in connection
with the Rule 13E-3 transaction to allow unaffiliated security holders
to obtain access to the corporate files of the Company or Mr. Crowell
or to obtain counsel or appraisal services at the expense of the
Company or Mr. Crowell.
(c) The Rule 13E-3 transaction does not involve the exchange of debt
securities of the Company or Mr. Crowell for the equity securities
held by security holders of the issuer who are not affiliates.
Item 14. Financial Information.
(a) Information in response to this sub-item is incorporated herein by
reference to the 1998 Annual Report, and 10 QSB for the six months
Ended June 30, 1999 as filed in the Preliminary Proxy Statement. The
book value per common share is as follows at:
June 30, 1999 December 31, 1998 December 31, 1997
$(.14) $(.21) $(.25)
The ratio of earnings to fixed charges is as follows for the
years ended:
December 31, 1998 December 31, 1997
1.73 .79
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The ratio of earnings to fixed charges is as follows for the
three months ended:
June 30, 1999 March 31, 1998
2.94 .81
(b) Management of the Company does not believe the Rule 13E-3 transaction
will have a material effect on the Company's financial statements
because the transaction amount is less than 2% of fiscal 1998
revenues.
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) Mark L. Gilliam, Vice President, Secretary, Chief Financial Officer,
and Director has prepared the Preliminary Proxy Statement, Schedule
13E-3, 1998 Annual Report, and 10-QSB for the six months ended June
30, 1999. Deborah E. Nelson, Executive Assistant, has assisted Mr.
Gilliam in the preparation of such materials.
(b) No person, persons, or classes of persons have been employed,
retained, or are to be compensated by the Company or Mr. Crowell to
make solicitations or recommendations in connection with the Rule
13E-3 transaction.
Item 16. Additional Information.
Neither the Company nor Mr. Crowell know of other additional information
that may be necessary to make the required statements in the light of the
circumstances under which they are made, not materially misleading.
Item 17. Material to be filed as Exhibits.
(a) - (c) There are no loan agreements referred to in Item 6 of this
schedule, any report, opinion, or appraisal referred to in Items 8(d)
or 9 of this schedule, any document setting forth the terms of any
contracts, arrangements or understandings or relationships referred to
in Item 11 of this schedule to be filed as exhibits.
(d) The 1998 Annual Report, and 10-QSB for the six months ended June 30,
1999 has been filed with the Preliminary Proxy Statement and is
incorporated by reference herein along with Article 13 of the Georgia
Business Code and a sample of the Dissenter's Notice Of Intention To
Demand Payment.
(e) In the event the Proposal is approved, shareholders would have certain
rights to dissent and demand appraisal of their shares under Section
14-2-1301 et. seq. of the Georgia Code. Dissenting shareholders who
comply with the requisite statutory procedures would be entitled to
receive a judicial determination and payment of "fair value" of their
Shares as of the close of business on the day prior to the date of
shareholders called to vote on such Proposal. The value so determined
could be more or less than the consideration offered pursuant to the
amount disclosed in Item 8.
(f) No oral solicitation will be made to security holders by any person,
affiliated or unaffiliated.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
October 7, 1999
--------------------------------------
(Date)
/s/ Mark L. Gilliam
--------------------------------------
(Signature)
Mark L. Gilliam, Vice President, Chief
Financial Officer, Secretary, and
Director
--------------------------------------
(Name and Title)
