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
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(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 December 15,
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 December 15, 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>
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
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Regard to the Transaction
(a) - (b) Quorum and Vote Required/ Background and
Reason for the Reverse Stock Split/Board
Recommendations
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, 10QSB for the nine months
ended September 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, and 10-QSB for the nine months
ended September 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, 1999/10-QSB for the nine months ended
September 30, 1999
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(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 October 5, 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;
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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.
(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.
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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.
(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
$424,236 in unpaid preferred stock dividends at June 30, 1999.
The preferred stock and accumulated dividends on the preferred
stock have priority over payment of common stock and dividends on
common stock in the event of liquidation. No dividends are unpaid
on common stock as of September 30, 1999. The Company has not
paid dividends on Common Stock in the past five years. Management
of the Company does not anticipate paying dividends on Company
Common Stock in the foreseeable future.
After the consummation of the Rule 13E-3 transaction the
shareholders will be paid for their shares as determined by the
valuation of the Common Stock. The shareholders will recognize
gain or loss for federal income tax purposes as the difference
between their purchase price and the amount paid by Crowell for
their pre-reverse stock split shares of the Common Stock.
Virtually all of the unaffiliated shareholders purchased their
common stock in the issuer over twenty-five years ago. To the
management of the Company's knowledge, no dividends have ever
been paid on the common stock of the issuer. Many of the original
purchasers of the stock have died since their stock purchases in
the late sixties and early seventies. This stock has been
transferred to their beneficiaries. Management of Crowell
believes that most shareholders have written off this investment
years ago. As a practical matter, management believes that most
shareholders may benefit much more from the capital loss which
they can claim on their income tax return than they will from
holding a stock which has no trading market. At June 30, 1999,
the Company had a book value per common share of ($.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.
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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
October 5, 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.
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
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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.
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 14-2-130 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
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$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.
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.
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(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.
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.
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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 nine
months ended September 30, 1999 as filed in the Preliminary Proxy
Statement. The book value per common share is as follows at:
September 30, 1999 December 31, 1998 December 31, 1997
$(.06) $(.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
The ratio of earnings to fixed charges is as follows for the
three months ended:
September 30, 1999 September 30, 1998
3.45 .94
(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 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, 10-QSB for the six
months ended June 30, 1999, and 10-QSB for the nine months ended
September 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, 10-QSB for the six months ended June 30,
1999 and 10-QSB for the nine months ended September 30, 1999 have
been filed with the Preliminary Proxy Statement and are
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.
14
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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.
December 8, 1999
----------------------------------------
(Date)
/s/ Mark L. Gilliam
----------------------------------------
(Signature)
Mark L. Gilliam, Vice President, Chief
Financial Officer, Secretary, and
Director
----------------------------------------
(Name and Title)
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