<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PERFECTDATA CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PERFECTDATA CORPORATION
110 WEST EASY STREET
SIMI VALLEY, CALIFORNIA 93065
(805) 581-4000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 29, 1999
To the Shareholders of PERFECTDATA CORPORATION:
You are cordially invited to attend the Annual Meeting of the Shareholders
of PerfectData Corporation, a California corporation (the "Company"), which will
be held at the offices of Flamemaster Corporation, at 11120 Sherman Way, Sun
Valley, CA 91352, at 10:00 a.m. Pacific Standard Time, on January 29, 1999, to
consider and act upon the following matters, all as more fully described in the
accompanying Proxy Statement which is incorporated herein by this reference:
1. To elect a board of three (3) directors to serve until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualify;
2. To approve a proposal to amend the Company's Articles of Incorporation to
increase the authorized number of shares of common stock from 10 million to
50 million;
3. To approve a proposal to issue 3,750,000 shares of PerfectData's common
stock to The Hartcourt Companies, Inc. for 100% of the outstanding shares
of Pego Systems, Inc.;
4. To ratify the selection of Beckman, Kirkland & Whitney as independent
accountants for the Company for the fiscal year ending March 31, 1999; and,
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Shareholders of record of the Company's common stock at the close of
business on December 29, 1998, the record date fixed by the Board, are entitled
to notice of, and to vote at, the meeting.
THOSE WHO CANNOT ATTEND ARE URGED TO SIGN, DATE, AND OTHERWISE COMPLETE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. ANY SHAREHOLDER
GIVING A PROXY HAS THE RIGHT TO REVOKE IT ANY TIME BEFORE IT IS VOTED.
BY ORDER OF THE BOARD OF DIRECTORS
Joseph Mazin
President
Simi Valley, California
December 16, 1998
<PAGE>
PERFECTDATA CORPORATION
110 WEST EASY STREET
SIMI VALLEY, CALIFORNIA 93065
PROXY STATEMENT
---------------
Approximate date proxy material first sent to shareholders:
January 8, 1999
The following information is provided in connection with the solicitation
of proxies for the Annual Meeting of Shareholders of PerfectData Corporation
(the "Company") to be held on January 29, 1999, and adjournments thereof (the
"Meeting"), for the purposes stated in the Notice of Annual Meeting of
Shareholders preceding this Proxy Statement.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is being furnished by the Company to each shareholder, and,
in each case, is solicited on behalf of the Board of the Company for use at the
Meeting. The entire cost of soliciting these proxies will be borne by the
Company. The Company may pay persons holding shares in their names or the names
of their nominees for the benefit of others, such as brokerage firms, banks,
depositaries and other fiduciaries, for costs incurred in forwarding soliciting
material to their principals. Members of the management of the Company may
solicit some shareholders in person, or by telephone or by telegraph, following
solicitations of this Proxy Statement, but will not be separately compensated
for such services.
Proxies duly executed and returned by shareholders and received by the
Company before the Meeting will be voted (a) FOR the election of all three (3)
of the nominee-directors specified herein; (b) FOR the proposal to amend the
Company's Articles of Incorporation to increase the authorized number of shares
of common stock from 10 million shares to 50 million shares; (c) FOR the
proposal to issue 3,750,000 shares of the Company's common stock to The
Hartcourt Companies, Inc. for 100% of the outstanding shares of Pego Systems,
Inc.; and (d) FOR the ratification of the selection of Beckman, Kirkland &
Whitney as the Company's independent accountants for fiscal year 1999, unless a
contrary choice is specified. Where a specification is indicated as provided in
the proxy, the shares represented by the proxy will be voted and cast in
accordance with the specification made. As to other matters, if any, to be voted
upon, the person designated as proxy will take such actions as he, in his
discretion, may deem advisable. The person named as proxy was selected by the
Board of the Company and is an officer of the Company.
Your execution of the enclosed proxy will not affect your rights as a
shareholder to attend the Meeting and to vote in person. Any shareholder giving
a proxy has a right to revoke it at any time by either (a) a later-dated proxy,
(b) a written revocation sent to and received by the Secretary of the Company
prior to the Meeting, or (c) attendance at the Meeting and voting in person.
2
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company has outstanding only common stock, of which 3,155,506 shares
were outstanding as of the close of business on December 29, 1998 (the "Record
Date"). Only shareholders of record on the books of the Company at the close of
business on the Record Date will be entitled to vote at the Meeting. Each
shareholder of common stock is entitled to one vote for each share of stock held
by him, except that in the election of directors, each shareholder has
cumulative voting rights. Voting on all matters, other than the election of
directors, submitted for approval by the shareholders at this Meeting will be on
a noncumulative basis.
Representation at the Meeting by the holders of more than 33-1/3% of the
outstanding shares of common stock of the Company, either by personal attendance
or by proxy, will constitute a quorum.
The following table sets forth, as of November 30, 1998, information
concerning (a) beneficial ownership of voting securities (only common stock) of
the Company by the persons who are known by the Company to own beneficially more
than 5% of the Company's common stock, and (b) beneficial ownership of the
Company's common stock by all directors and officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
TITLE OF NAME AND ADDRESS BENEFICIAL OF
CLASS OF BENEFICIAL OWNER OWNERSHIP (1) CLASS(2)
- ----- ------------------- ------------- --------
<S> <C> <C> <C>
(a) More than
5% Share-
holdings
Common
Stock Joseph Mazin 910,197(3)(4)(5) 28.0
110 West Easy Street (6)(7)
Simi Valley, CA 93065
Flamemaster Corporation 613,497 19.4
11120 Sherman Way
Sun Valley, CA 91252
Leland P. Polak and 316,000 10.0
Mark E. Polak
11494 Burbank Blvd.
North Hollywood, CA 91601
William R. Woodward 213,349 6.8
Successor &
Special Trustee
Richard M. Drysdale Trust
116 26th Street
Santa Monica, CA 90402
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
TITLE OF NAME AND ADDRESS BENEFICIAL OF
CLASS OF BENEFICIAL OWNER OWNERSHIP (1) CLASS(2)
- ----- ------------------- ------------- --------
<S> <C> <C> <C>
(b) Directors and Officers
Common
Stock All directors and 938,797(3)(4)(5) 28.8
officers as a group (6)(7)(8)
(4 in number)
</TABLE>
- ----------------------
(1) All shares are owned directly by the owner named in the table, except as
otherwise indicated in a footnote below.
(2) Percentages are based on the number of shares of common stock outstanding
on November 30, 1998. There were 3,155,506 shares of common stock
outstanding on November 30, 1998.
(3) Includes 613,497 shares owned by Flamemaster Corporation for which Mr.
Mazin has voting power as President, Chairman and CEO of Flamemaster
Corporation.
(4) Includes 37,700 shares owned by the Flamemaster Employees' Profit Sharing
Plan for which Mr. Mazin is the fiduciary.
(5) Includes 23,000 shares owned by Altius Investment Corporation for which Mr.
Mazin has voting power as Chairman of the Board of Altius Investment
Corporation.
(6) Includes 25,000 shares which are covered by a stock option which was
granted June 28, 1993, and which is exercisable at any time on or before
June 28, 2003. Percentage of interest includes these shares.
(7) Includes 65,000 shares which are covered by a stock option which was
granted November 24, 1993, and which is exercisable at any time on or
before November 24, 2003. Percentage of interest includes these shares.
(8) Includes 10,000 shares which are covered by a stock option which was
granted July 20, 1995, and which is exercisable at any time on or before
July 20, 2005. Percentage of interest includes these shares.
The Company anticipates that a change of control will occur subsequent to
the completion of the acquisition of Pego Systems, Inc. and the issuance of
3,750,000 shares of common stock to The Hartcourt Companies, Inc. A more
detailed statement will be issued to shareholders and a Form 8K will be filed,
as required, identifying the transaction along with biographical information on
any change of individuals to the Board.
4
<PAGE>
NOMINATION AND ELECTION OF DIRECTORS
The Company's last annual meeting of shareholders was held on January 11,
1996, at which time Joseph Mazin, Bruce D. Stuart, Tracie Savage and Gerald W.
Chamales were duly elected to serve as directors of the Company until the next
annual meeting of shareholders and until their successors are elected and
qualify. Mr. Stuart resigned as a director July 1, 1997. On July 24, 1997,
Ronald M. Chodorow was elected to the Board to fill Mr. Stuart's position. On
September 30, 1997, the Board received the resignation of Gerald W. Chamales.
His position has not been filled.
The Company's By-laws provide that the authorized number of directors be
not less than three and not more than five, with the exact number to be
determined by the Board of Directors. At the Board meeting held on December 1,
1998, the Board adopted a resolution setting the number of directors as three.
The Company's directors are to be elected at each annual meeting of
shareholders. At this Meeting, three directors, making up the entire membership
of the Board of the Company as now authorized, are to be elected to serve until
the next annual meeting of shareholders and until their successors are elected
and qualify. The nominees for election as directors at this Meeting are set
forth in the table below and are all recommended by management of the Company.
Each of the nominees has consented to serve as a director if elected.
In the event that any of the nominees for director should become unable to
serve if elected, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominee(s) as may be
recommended by the Company's existing Board.
The three nominee-directors receiving the highest number of votes cast at
the Meeting will be elected as the Company's directors to serve until the next
annual meeting of shareholders and until their successors are elected and
qualify. Subject to certain exceptions specified below, shareholders of record
on the Record Date are entitled to cumulate their votes in the election of the
Company's directors (i.e., they are entitled to the number of votes as
determined by multiplying the number of shares held by them times the number of
directors to be elected) and may cast all of their votes so determined for one
person, or spread their votes among two or more persons as they see fit. No
shareholder shall be entitled to cumulate votes for a given candidate for
director unless such candidate's name has been placed in nomination prior to the
vote and the shareholder has given notice at the Meeting, prior to the voting,
of the shareholder's intention to cumulate his/her votes. If any one shareholder
has given such notice, all shareholders may cumulate their votes for candidates
in nomination. Discretionary authority to cumulate votes is hereby solicited by
the Board.
The following table lists the nominees for election as directors and shows
certain information concerning each nominee, including the number of shares of
common stock of the Company beneficially owned, directly or indirectly, by such
nominee as of November 30, 1998:
5
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL DIRECTOR NO. OF PERCENT
NOMINEE (1) OCCUPATION AGE SINCE SHARES (2) OF CLASS
- ----------- ---------- --- ----- ---------- --------
<S> <C> <C> <C> <C> <C>
Joseph Mazin President, 52 1993 910,197(3)(4)(5) 28.0
Chief Execu- (6)(7)
tive Officer
and Chairman
of the Board
PerfectData
Corporation;
President,
Chief Execu-
tive Officer
and Chairman
of the Board
Flamemaster
Corporation.
Tracie Co-anchor 36 1995 10,100(8) (9)
Savage and General
Assignment
Reporter
NBC
Los Angeles
Ronald M. President 58 1997 17,500 (9)
Chodorow Ronald M.
Chodorow &
Associates, Inc.
Accountants
And Tax
Consultants
</TABLE>
- -----------------
(1) The Company does not have a Nominating Committee of the Board. Management's
nominees for election as directors at the meeting were selected by the
Board of the Company and are all present directors of the Company.
(2) All shares are owned directly by the director named in the table except as
otherwise indicated in a footnote below.
(3) Includes 613,497 shares owned by Flamemaster Corporation for which Mr.
Mazin has voting power as President, Chairman and CEO of Flamemaster
Corporation.
(4) Includes 37,700 shares owned by the Flamemaster Employees' Profit Sharing
Plan for which Mr. Mazin is the fiduciary.
6
<PAGE>
(5) Includes 23,000 shares owned by Altius Investment Corporaation for which
Mr. Mazin has voting power as Chairman of the Board of Altius Investment
Corporation.
(6) Includes 25,000 shares which are covered by stock options which were
granted June 28, 1993, and which are exercisable at any time on or before
June 28, 2003. Percentage of interest includes these shares.
(7) Includes 65,000 shares which are covered by a stock option which was
granted November 24, 1993, and which is exercisable at any time on or
before November 24, 2003. Percentage of interest includes these shares.
(8) Includes 10,000 shares which are covered by a stock option which was
granted July 20, 1995, and which is exercisable at any time on or before
July 20, 2005. Percentage of interest includes these shares.
(9) Represents less than 1%.
Mr. Joseph Mazin was appointed in June 1993 to be a Director of the Company
by the unanimous consent of the Board. Mr. Mazin was appointed Chairman,
President and Chief Executive Officer of the Company in October 1993. He is the
Chairman of the Board, President and Chief Executive Officer of Flamemaster
Corporation, a publicly traded specialty chemicals manufacturer. Mr. Mazin has
held this position for more than five years. He previously served as Chairman of
the Board of Altius Corporation, a former manufacturer of industrial steel
products.
Ms. Tracie Savage was appointed in July 1995 to be a Director of the
Company by the unanimous consent of the Board. She joined NBC-TV Los Angeles, a
Television Subsidiary of National Broadcasting Company, Inc. in March of 1994.
Ms. Savage is the co-anchor of NBC 4's "Today in LA: Weekend" and also serves as
a general assignment reporter for the "Channel 4 News". From 1991 to 1994 she
was a general assignment reporter for the independent Los Angeles station, KCAL.
Ms. Savage has been in broadcast journalism for ten years and has been the
recipient of numerous awards and honors in her field.
Mr. Ronald M. Chodorow was appointed in July 1997 to be a Director of the
Company by unanimous consent of the Board. Mr. Chodorow is an accountant and has
been in Public Accounting since 1966. In 1978 he opened his own practice and is
the president of Ronald M. Chodorow & Associates, Inc., Accountants and Tax
Consultants. Mr. Chodorow has sat on the Board of Directors of many small
corporations (non-publicly listed companies).
There were five meetings of the Board held during the last fiscal year of
the Company. The Company's Audit and Compensation Committees were established on
April 3, 1985 and no meetings were held during the Company's last fiscal year.
The Board does consider nominees for election as director recommended by
shareholders although no names have ever been submitted. Shareholders may make
such recommendations by submitting them in writing to the Board of Directors of
the Company.
7
<PAGE>
Directors of the Company are elected annually. The present term of office
of each director will expire at the next annual meeting of shareholders of the
Company or at such time as his successor is duly elected and qualified.
TRANSACTIONS WITH MANAGEMENT
Mr. Mazin, President and Chief Executive Officer of the Registrant, is also
President and Chief Executive Officer of Flamemaster Corporation, a publicly
traded specialty chemicals manufacturer. Flamemaster Corporation has acted, in
the normal course of its business, as a manufacturer of certain products for the
Company. For the fiscal year ended March 31, 1998, sales of products to the
Company approximated $9,912.
REMUNERATION OF OFFICERS AND DIRECTORS AND OTHER INFORMATION
The following table provides certain summary information concerning the
compensation earned for services rendered in all capacities to the Company
during each of the last three fiscal years by the Company's Chief Executive
Officer. No other executive officer of the Company earned in excess of $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation
Name and
Principal Position Year Salary($) (1)
- ------------------ ---- -------------
<S> <C> <C>
Joseph Mazin 1998 $61,317
President, Chief 1997 63,365
Executive Officer and 1996 65,135
Chairman of the Board
</TABLE>
(1) There are no employment agreements or contracts between the Company and
Joseph Mazin.
EMPLOYEE STOCK OPTION PLAN
In 1979 the Company adopted its Employee Stock Option Plan and amended it
in 1981 (the "1979 Plan"). The 1979 Plan, which expired December 31, 1988,
provided for the grant of
8
<PAGE>
incentive stock options to officers and other key employees of the Company.
The 1979 Plan covers an aggregate of 290,660 shares of Common Stock. During
the year ended March 31, 1996, options to purchase 1,000 shares of Common
Stock expired. There was no activity under the Plan during the year ended
March 31, 1998. A total of 99,166 shares of Common Stock have been issued
upon the exercise of options granted under the 1979 Plan. No options remain
outstanding.
1985 EMPLOYEE STOCK OPTION PLAN
In January 1985, the Board of Directors of the Company established the
Company's 1985 Employee Stock Option Plan (the "1985 Plan"). In November 1985,
the shareholders of the Company approved the Plan. The Board of Directors voted
to extend the term of the plan by twelve months thereby making the new
expiration date December 31, 1996. The 1985 Plan, provided for the grant of both
non-qualified stock options and incentive stock options to officers and other
key employees of the Company and for the grant of non-qualified stock options to
non-employee Directors of the Company. The 1985 Plan covers an aggregate of
500,000 shares of Common Stock. During the fiscal year ended March 31, 1998,
70,000 options were exercised. At March 31, 1998, options covering a total of
118,000 shares of Common Stock were outstanding at an average exercise price of
$1.069 per share. Options covering a total of 275,250 shares of the Company's
Common Stock have been cancelled through March 31, 1998. A total of 286,250
shares of Common Stock have been issued upon the exercise of options granted
under the 1985 Plan. The 1985 Plan is administered by the Board of Directors of
the Company. The exercise price of options granted must not be less than 100% of
the fair market price of the Common Stock of the Company on the date of grant.
The rate at which options granted under the 1985 Plan will be exercisable shall
be determined by the Board of Directors at the time of the grant of the option,
provided that the option may become exercisable in full no faster than annually
over a two-year period and no slower than annually over a five-year period.
Options which have been granted under the 1985 Plan are exercisable annually
with respect to 25% of the total number of shares covered by the option. Options
may not be exercised after the expiration of ten years from the date of grant,
are non-transferable, other than by will or inheritance, and may be exercised
only while an optionee is employed by the Company, except that an option may
provide that it will be wholly or partially exercisable (a) within three months
after an optionee's termination of employment for any reason other than cause,
(b) within one year after an optionee's termination of employment, if such
employment is terminated by reason of the optionee's death or permanent
disability or if the optionee dies or becomes permanently disabled within three
months after the termination of the optionee's employment, and (c) within thirty
days after the termination of an optionee's employment for cause. The
termination of a non-employee Director's employment is deemed to occur on the
termination of his status as a Director of the Company.
1983 STOCK BONUS AND PURCHASE PLAN
In May 1983, the Company adopted an Employee Stock Bonus and Purchase Plan
(the "Bonus Plan") and amended it in 1987 and 1989. The Bonus Plan, which
expired May 17, 1993, provided for the issuance of a maximum of 745,330 shares
of Common Stock of the Company to certain officers or other key employees of the
Company. The Bonus Plan is administered by the Board of Directors of the Company
which determines to whom shares shall be issued, the number of shares which may
be issued to any participant, whether shares
9
<PAGE>
shall be issued as a stock bonus without consideration (other than services),
or alternatively, the price for which shares shall be purchased by the
participant and the manner and time of payment of such price, the length of
time during which shares may be issued to the participant (which may not be
more than five years from the date the agreement providing for the issuance
is executed), whether the participant must continue to serve as an officer or
key employee for a specified period of time following execution of such
agreement to avoid forfeiture of some or all of such shares to the Company or
a right in the Company to repurchase such shares, and such other terms and
conditions as the Board of Directors may specify which are not inconsistent
with the provisions of the Bonus Plan.
The Company had entered into stock bonus agreements to issue through 1992
under the Bonus Plan up to an aggregate of 126,269 shares of Common Stock (net
of shares covered by agreements cancelled through March 31, 1993) as stock
bonuses to certain key employees. At March 31, 1993, all 126,269 shares had been
issued.
The Company had also entered into stock purchase agreements to issue under
the Bonus Plan up to an aggregate of 101,000 shares of Common Stock (net of
shares covered by agreements cancelled or expired through March 31, 1995), at an
average price of $.5687 per share. At March 31, 1995, all 101,000 shares had
been issued.
OPTION GRANTS, EXERCISES AND HOLDINGS
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
No stock options or stock appreciation rights (Scars) were granted to the
Company's Chief Executive Officer named in the Summary Compensation Table during
the fiscal year ended March 31, 1998.
The following table provides certain summary information concerning the
exercise of options during the 1998 fiscal year and unexercisable options held
as of the end of the 1998 fiscal year by the Chief Executive Officer named in
the Summary Compensation Table:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE
NUMBER OF UN-
OF UN- EXERCISED
EXERCISED IN-THE-
SHARES OPTIONS MONEY
ACQUIRED HELD OPTIONS
ON VALUE AT FISCAL AT
NAME EXERCISE REALIZED YEAR END FY-END(2)
(#) ($) (#)
<S> <C> <C> <C> <C>
Joseph Mazin - - 90,000(1) $45,000
</TABLE>
10
<PAGE>
(1) As of March 31, 1998, all 90,000 options were exercisable.
(2) Such value is based upon the market value of the Company's Common Stock as
of March 31, 1998, less the exercise price payable per share under such
options.
DIRECTOR COMPENSATION
No director receives cash compensation from the Company for services
provided as a director. Non-employee directors may be granted non-qualified
stock options as provided for under the Company's 1985 Employee Stock Option
Plan ("1985 Plan"). During the fiscal year ended March 31, 1998, no new options
were granted to non-employee directors of the Company.
PROPOSED AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED
NUMBER OF SHARES OF COMMON STOCK FROM
10 MILLION TO 50 MILLION
PerfectData's Board of Directors is seeking shareholder approval to
increase the authorized number of common shares from the current 10 million to
50 million. The authorized shares are not OUTSTANDING and will not affect
earnings per share or affect individual percentage ownership of the Company. The
purpose of the increase is to allow flexibility in making acquisitions in order
to pursue a growth strategy. It will also make it easier to declare stock
dividends and approve issuance of stock options in the future to hire
specialized talent or key executives.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES.
PROXIES RETURNED TO THE COMPANY WILL BE VOTED FOR THE AMENDMENT UNLESS OTHERWISE
INSTRUCTED.
PROPOSAL TO ISSUE 3,750,000 SHARES OF PERFECTDATA'S
COMMON STOCK TO THE HARTCOURT COMPANIES, INC. FOR 100%
OF THE OUTSTANDING SHARES OF PEGO SYSTEMS, INC.
The Board is also seeking shareholder approval for the issuance of
3,750,000 shares to The Hartcourt Companies, Inc. for 100% ownership (all
outstanding shares) of Pego Systems, Inc. Pego Systems is a Long Beach,
California, based engineering and manufacturing company and distributor of
industrial process equipment for a wide range of industries, especially
environmentally controlled systems for large industrial concerns. Pego's design
engineers use computer programs to assure precise sizing and a CAD system to
prepare preliminary drawings of each customized layout. Pego Systems has
completed a variety of package designs. Key configurations include:
- Blower packages
- Air sparging systems
- Trailer-mounted vacuum recovery systems
- Vapor-extraction systems
- Ammonia injection and vaporization systems
- Skid-mounted compressors
- Gas recovery and gas boosters
11
<PAGE>
Pego also provides start-up support for every system installed and, if
needed, on-stream follow-up. Importantly, all Pego-designed packages are fully
warranted.
Pego's technicians repair and rebuild all rotary-positive displacement
blowers, sliding-vane compressors and single-stage steam turbines. Blowers by
Gardner-Denver, Sutorbilt, Duroflow, Roots, and MD Pneumatics; Tuthill
Coppus/Murray Steam Turbines; and Fuller Compressors are among companies whose
products are serviced by Pego.
Pego in-shop repair and rebuilding services are factory authorized and
performed by factory approved professionals.
Included in Pego's service roster are these maintenance and repair
specialties:
BLOWERS
- Rotary positive pressure lobe blowers
- Rotary screw blowers
- Multi-stage centrifugal blowers
- Centrifugal fans
COMPRESSORS
- Rotary sliding vane
- Rotary screw machines
- High-pressure diaphragm compressor
- Recip gas compressors
STEAM TURBINES
The 3,750,000 shares of the PerfectData common stock to be issued to The
Hartcourt Companies, Inc. represents 53.5% of the fully diluted outstanding
shares of PerfectData. The 53.5% ownership of PerfectData's outstanding shares
will constitute control status. Pursuant to the terms of the acquisition of Pego
Systems, Inc., PerfectData shareholders of record (record date has not yet been
determined), will receive, as a property dividend, shares of the The Flamemaster
Corporation which are currently owned by PerfectData. In addition, PerfectData's
shareholders are to receive certificates of beneficial interest for
PerfectData's ownership in El Guapo Spices, Inc., and a distribution of one
share of The Hartcourt Companies, Inc. common stock for every 10 shares of
PerfectData held on the record date (record date has not yet been determined).
The shares of PerfectData being issued to The Hartcourt Companies, Inc. will not
be eligible to participate in these special distributions to shareholders of
PerfectData.
Following are the unaudited Nine Month Ended 9/30/98 Consolidated Balance
Sheets and Statements of Operations for Pego Systems, Inc. and Subsidiary. Pego
Systems, Inc. acquired its subsidiary, Pacific Pneumatics, Inc. during August
1998.
12
<PAGE>
PEGO SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998
<TABLE>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 479,716
Marketable Securities 1,000,000
Accounts receivable 751,596
Inventory 615,073
----------
TOTAL CURRENT ASSETS 2,846,385
PROPERTY AND EQUIPMENT, NET 1,306,935
OTHER ASSETS 40,225
INTANGIBLES, NET 1,805,583
----------
TOTAL ASSETS $5,999,128
----------
----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 573,752
Line of credit 1,613,197
Accrued Expenses 46,006
Notes payable real estate-current portion 17,002
----------
TOTAL CURRENT LIABILITIES 2,249,957
NOTES PAYABLE, REAL ESTATE, NET OF CURRENT PORTION 1,180,260
----------
TOTAL LIABILITIES 3,430,217
SHAREHOLDERS' EQUITY
Common stock, $0.04 par value, 75,000 shares authorized
33,000 shares issued and outstanding 1,320
Additional paid-in capital 2,270,411
Retained Earnings 297,180
----------
TOTAL SHAREHOLDERS' EQUITY 2,568,911
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,999,128
----------
----------
</TABLE>
13
<PAGE>
PEGO SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
NET SALES $4,755,054
COST OF SALES 3,174,994
----------
Gross Profit 1,580,060
GENERAL AND ADMINISTRATIVE EXPENSES 1,342,031
DEPRECIATION AND AMORTIZATION 92,149
----------
Income from operations 145,880
OTHER EXPENSES
Interest expense 81,387
----------
TOTAL OTHER EXPENSES 81,387
----------
INCOME BEFORE INCOME TAXES 64,493
INCOME TAXES 800
----------
NET INCOME $ 63,693
----------
----------
</TABLE>
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSAL TO ISSUE
3,750,000 SHARES OF PERFECTDATA'S COMMON STOCK TO THE HARTCOURT COMPANIES, INC.
PROXIES RETURNED WILL BE VOTED FOR THE PROPOSAL UNLESS OTHERWISE INSTRUCTED.
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
By the selection of the Company's Board, the accounting firm of Beckman,
Kirkland & Whitney, certified public accountants, has served, and continues to
serve the Company as its auditors since its most recent Annual Meeting of
Shareholders. The Board has again selected Beckman, Kirkland & Whitney to serve
as the Company's independent accountants for the fiscal year ending March 31,
1999. The matter is not required to be submitted for shareholder approval, but
the Board has elected to seek ratification of its selection of the independent
accountants by the affirmative vote of a majority of the shares of common stock
represented and voted at the Meeting.
If the selection of Beckman, Kirkland & Whitney is not ratified by the
shareholders, the Board will select other independent accountants for the fiscal
year ending March 31, 1999, and will not seek shareholder ratification of its
choice.
14
<PAGE>
A representative of Beckman, Kirkland & Whitney is expected to be present
at the Meeting and will have an opportunity to make a statement if he desires
and will be available to respond to appropriate questions from the shareholders.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF
BECKMAN, KIRKLAND & WHITNEY AS THE INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR
THE FISCAL YEAR ENDING MARCH 31, 1999. PROXIES RETURNED TO THE COMPANY WILL BE
VOTED FOR THE RATIFICATION OF THE SELECTION OF BECKMAN, KIRKLAND & WHITNEY
UNLESS OTHERWISE INSTRUCTED.
SHAREHOLDER PROPOSALS
Shareholders who wish to present proposals for action at the 1999 Annual
Meeting should submit their proposals in writing to the Secretary of the Company
at the address of the Company set forth on the first page of this Proxy
Statement. Proposals of shareholders intended to be present at the 1999 Annual
Meeting (a) must be received by the Secretary no later than April 30, 1999 for
inclusion in next year's proxy statement and proxy card, and (b) must satisfy
the applicable conditions established by the Securities and Exchange Commission
for shareholder proposals.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders of the Company for the fiscal year ended
March 31, 1998, including audited financial statements, has been mailed to the
shareholders concurrently herewith, but such report is not incorporated in this
Proxy Statement and is not deemed to be a part of the proxy solicitation
material.
OTHER MATTERS
The Management of the Company does not know of any other matters which are
to be presented for action at the Meeting. Should any other matter come before
the Meeting or any adjournment thereof, the person named in the enclosed proxy
will have the discretionary authority to vote all proxies received with respect
to such matter in accordance with his judgment.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (EXCLUSIVE OF EXHIBITS), WILL BE FURNISHED
WITHOUT CHARGE TO ANY PERSON FROM WHOM THE ACCOMPANYING PROXY IS SOLICITED UPON
WRITTEN REQUEST TO THE COMPANY'S SECRETARY AT PERFECTDATA CORPORATION, 110 WEST
EASY STREET, SIMI VALLEY, CALIFORNIA 93065. IF EXHIBIT COPIES ARE REQUESTED, A
COPYING CHARGE OF $.35 PER PAGE WILL BE MADE.
BY ORDER OF THE BOARD OF DIRECTORS
Joseph Mazin
President
Simi Valley, California
December 16, 1998
15
<PAGE>
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN, AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
The Proxy Statement herein may contain or identify a forward-looking statement.
These statements are based on a number of assumptions and estimates which are
inherently subject to uncertainty and contingencies, many of which are beyond
the control of the Company and reflect future business decisions which are
subject to change.
16
<PAGE>
PROXY
PERFECTDATA CORPORATION
110 West Easy Street
Simi Valley, California 93065
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph Mazin as Proxy, with the powers the
undersigned would possess if personally present, and with full power of
substitution, to vote as designated on the reverse side, all the shares of
common Stock of PerfectData Corporation (the "Company") held of record by the
undersigned on December 29, 1998 at the Annual Meeting of Shareholders to be
held on January 29, 1999 and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 2, 3 & 4 AND FOR THE ELECTION OF THE NOMINEES FOR
DIRECTORS LISTED IN PROPOSAL 1.
1. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
NOMINEES: Joseph Mazin, Tracie Savage and Ronald M. Chodorow
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
------------------------------------------------------------
2. Approval to amend Company's Articles of Incorporation to increase
authorized number of shares of common stock.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. Approve issuance of 3,750,000 shares of common stock to The Hartcourt
Companies, Inc.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
4. Ratification of selection of Beckman, Kirkland & Whitney as the Independent
Accountants for the Company.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
5. In his discretion, the Proxy is authorized to vote upon such other business
as may properly come before the meeting.
<PAGE>
Please sign exactly as name appears to the
left. When shares are held by joint tenants,
both should sign. When signing as attorney,
executor, administrator, trustee, or guardian,
please give full title as such. If a corporation,
please sign in full corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
Dated:
----------------------------------
-----------------------------------------
Signature
-----------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
