SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 Rule 14a-11(c) or Rule 14a-12
NCT GROUP, INC.
(formerly Noise Cancellation Technologies, Inc.)
(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
NCT GROUP, INC.
1025 West Nursery Road, Suite 120
Linthicum, Maryland 21090
_______________, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders of
NCT Group, Inc., a Delaware corporation ("NCT" or the "Company"), to be held at
2:00 p.m., local time, on ________________, at the Sheraton Stamford Hotel, 2701
Summer Street, Stamford, Connecticut 06905. All shareholders of record as of
_______________ are entitled to vote at the Special Meeting. I urge you to be
present in person or represented by proxy at the Special Meeting.
The attached Notice of Special Meeting and Proxy Statement fully describe
the formal business to be transacted at the Special Meeting, which includes the
approval of an amendment to the Company's Restated Certificate of Incorporation
to increase the number of shares of common stock authorized for the Company.
The Company's Board of Directors and officers are excited about the
continuing successful execution of the Company's DistributedMedia.com, Inc.
("DMC") strategy to target the $117 billion advertising market. Progress in
launching DMC has been most encouraging. As previously announced, DMC has (1)
secured $10.0 million of equipment financing and a $1.0 million equity
investment from Production Resource Group, (2) secured Compaq Computer
Corporation as a charter DMC advertiser and an official supplier of customized
components for the Sight & Sound(TM) system, (3) signed Trans World
Entertainment for the retail installation of 1,750 Sight & Sound(TM) systems,
(4) signed Wherehouse Entertainment, Inc. for the retail installation of 1,446
Sight & Sound(TM) systems, (5) signed The Wiz for the retail installation of
multiple Sight & Sound(TM) systems in 41 stores, (6) signed Barnes & Noble
College Bookstores for the retail installation of multiple Sight & Sound(TM)
systems in their entire network of 380 college bookstores, and (7) has signed
but not announced three other retailers for the installation of additional Sight
& Sound(TM) systems. In addition, DMC has recently announced the appointment of
Interep Nontraditional Media ("Interep") as DMC's advertising sales
representative. The appointment of Interep as DMC's advertising sales
representative is a crucial component to DMC's market penetration strategy. The
Company is excited about these developments, and the Company may require
additional capital to support and sustain the execution of the DMC strategy
until DMC revenues generate a positive cash flow. The Company is requesting that
the shareholders approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of shares of common stock authorized so
that on an if needed and as needed basis, the Company may raise such capital. We
believe that the ability to raise additional capital, if required, will help
accelerate the executin of DMC's strategy.
At the present time, the Company anticipates reserving and eventually
issuing additional shares of common stock for conversion of the Company's Series
F Convertible Preferred Stock ("Series F"). The Company has also designated and
is considering the issuance of up to $1.8 million of the Company's Series G
Convertible Preferred Stock ("Series G") which, if issued, would require the
Company to reserve its common stock for the eventual conversion of the preferred
shares. The proceeds of Series F and, if needed Series G, have or will be
primarily directed to the execution of the Company's DMC strategy. Please refer
to the Company's attached Proxy Statement for a complete discussion of the
Company's plans. The Company will make future offerings of Series F or Series G,
if any, only by means of a prospectus to potential investors.
NCT's Board of Directors believes that a favorable vote on this matter is
in the best interest of the Company and its shareholders and unanimously
recommends a vote "FOR" such matter. Accordingly, we urge you to review the
attached material carefully and to return the enclosed proxy promptly.
Directors and officers of NCT Group will be present to help host the
Special Meeting and to respond to any questions that our shareholders may have.
I hope that you will be able to attend. Even if you expect to attend the Special
Meeting, please complete, sign, date and return your proxy in the enclosed
envelope without delay. If you attend the Special Meeting, you may vote in
person even if you have previously mailed your proxy.
On behalf of your Board of Directors, thank you for your support.
Sincerely,
/s/ JAY M. HAFT
-----------
Jay M. Haft
Chairman of the Board of Directors
<PAGE>
NCT GROUP, INC.
1025 West Nursery Road Suite 120
Linthicum, Maryland 21090
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ___________, 2000
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NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of NCT Group, Inc. (formerly known as Noise Cancellation Technologies,
Inc.) will be held at the Sheraton Stamford Hotel, 2701 Summer Street, Stamford,
Connecticut 06905 on ___________, ______________, 2000 at 2:00 p.m. The purpose
of the Special Meeting is to vote on a proposal to amend the Company's Restated
Certificate of Incorporation to increase the number of authorized shares of
common stock from 325,000,000 shares to 390,000,000 shares and transact such
other business as may properly come before the Special Meeting.
The record date for the meeting is the close of business on _____________, 2000.
All holders of our common stock at that time are entitled to notice of, and to
vote at, the Special Meeting and at any adjournments or postponements of the
meeting.
The presence, in person or by proxy, of a majority of the shares of our common
stock entitled to vote will constitute a quorum for the Special Meeting, and the
affirmative vote of a majority of the outstanding shares of our common stock
present or represented by proxy at the Special Meeting is necessary for the
adoption of the proposal.
Your vote is very important. To ensure that your shares are represented, you
should complete, sign, date and return the enclosed proxy card in the prepaid
envelope enclosed, whether or not you expect to attend the Special Meeting. You
may revoke your proxy in the manner described in the accompanying Proxy
Statement at any time before it is voted.
By Order of the Board of Directors,
/s/ Irene Lebovics
Executive Vice President
and Secretary
Linthicum, Maryland
________________, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY SIGN THE ACCOMPANYING PROXY, WHICH
IS SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS, AND MAIL IT IN THE ENCLOSED
POSTAGE PAID ENVELOPE. ANY SHAREHOLDER MAY REVOKE HIS OR HER PROXY AT ANY TIME
BEFORE THE MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING A
SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE. SEE "WHERE YOU CAN
FIND MORE INFORMATION" FOR A LISTING OF DOCUMENTS INCORPORATED BY REFERENCE.
SUCH DOCUMENTS ARE AVAILABLE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, AT
NO CHARGE UPON REQUEST DIRECTED TO THE CORPORATE SECRETARY, 1025 WEST NURSERY
ROAD, SUITE 120, LINTHICUM, MARYLAND 21090. TO ENSURE TIMELY DELIVERY OF THESE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY _______________, 2000. THE EXHIBITS TO
THESE DOCUMENTS WILL GENERALLY NOT BE MADE AVAILABLE UNLESS THEY ARE
SPECIFICALLY INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT.
<PAGE>
NCT GROUP, INC.
1025 West Nursery Road Suite 120
Linthicum, Maryland 21090
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PROXY STATEMENT
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SOLICITATION OF PROXY, REVOCABILITY AND VOTING
Solicitation
This Proxy Statement and form of Proxy are being mailed on or about __________,
2000, to all shareholders of record at the close of business on _________, 2000,
in connection with the solicitation by the Board of Directors of Proxies for the
Special Meeting to be held at 2:00 p.m., local time, on _______________, at the
Sheraton Stamford Hotel, 2701 Summer Street, Stamford, Connecticut 06905.
Proxies will be solicited by mail, and all expenses of preparing and soliciting
such proxies will be paid by the Company. All proxies duly executed and received
by the persons designated as proxy thereon will be voted on matters presented at
the Special Meeting in accordance with the instructions given thereon by the
person executing such proxy or, in the absence of specific instructions, will be
voted in favor of the proposal indicated on such proxy. Management does not know
of any other matter that may be brought before the Special Meeting, but, in the
event that any other matter should properly come before the Special Meeting, the
persons named as proxy will have authority to vote all proxies not marked to the
contrary in their discretion as they deem advisable.
A list of shareholders entitled to vote at the Special Meeting will be available
for examination by any shareholder at the Company's offices, 1025 West Nursery
Road, Suite 120, Linthicum, Maryland 21090, for a period of ten (10) days prior
to the Special Meeting. Such list will also be available for examination at the
Special Meeting.
Revocability
Any shareholder may revoke his or her proxy at any time before the Special
Meeting by written notice to such effect received by the Company at the address
shown above, attention: Corporate Secretary. A shareholder also may revoke his
or her proxy at any time before the Special Meeting by delivery of a
subsequently dated proxy or by attending the Special Meeting and voting in
person.
Quorum and Voting
The total number of issued and outstanding shares of common stock of the Company
as of ___________, 2000, was _________________. The common stock is the only
class of securities of the Company entitled to vote, each share being entitled
to one noncumulative vote. Only shareholders of record as of the close of
business on ______________, 2000 will be entitled to vote. A majority of the
shares outstanding and entitled to vote, or ______________ shares, must be
present at the Special Meeting, in person or by proxy, in order to constitute a
quorum for the transaction of business. The affirmative vote of a majority of
all of the outstanding shares of common stock of the Company is required to
approve the proposed amendment of the Company's Restated Certificate of
Incorporation. Further, the affirmative vote of a majority of the shares of
common stock present and voting in person or by proxy at the Special Meeting is
required to transact such other business as may properly come before the Special
Meeting. With respect to a proxy marked "ABSTAIN," shares are considered present
at the Special Meeting for the purpose of determining the presence of a quorum,
but as they are not affirmative votes for the proposal, they will have the same
effect as a vote against the proposal. With respect to broker non-votes, shares
are not considered present at the Special Meeting for the proposal for which the
broker withheld authority and, accordingly, will not be counted in favor of or
against the proposal, but will be counted toward a quorum. Because the
affirmative vote of a majority of all of the outstanding shares of common stock
of the Company is required to approve the proposed amendment to the Company's
Restated Certificate of Incorporation, a broker non-vote with respect to that
proposal will have the effect of a vote against that proposal.
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of December 31, 1999, information concerning
the shares of common stock beneficially owned by each person who, to the
knowledge of the Company, is (1) the holder of 5% or more of the common stock of
the Company, (2) each person who has been a Director of the Company in the last
twelve months, (3) the five most highly compensated executive officers of the
Company (including the Company's Chief Executive Officer) in the last fiscal
year, and (4) all present and former executive officers and Directors of the
Company as a group. Except as otherwise noted, each beneficial owner has sole
investment and voting power with respect to the listed shares.
Amount and
Nature of Approximate
Beneficial Percentage
Name of Beneficial Owner Ownership (1) Of Class (1)
------------------------ -------------- ------------
Michael J. Parrella 7,045,888 (2) 2.6%
John J. McCloy 2,516,998 (3) *
Jay M. Haft 1,862,681 (4) *
Sam Oolie 909,813 (5) *
Stephan Carlquist 425,000 (6) *
John Horton 614,417 (7) *
Paul D. Siomkos 374,000 (8) *
Cy E. Hammond 518,718 (9) *
Irving M. Lebovics 950,517 (10) *
Irene Lebovics 1,623,067 (11) *
Morton Salkind 445,000 (12) *
All Executive Officers and 17,535,099 (13) 6.3%
Directors as a Group
(12 persons)
Carole Salkind 28,052,452 (14) 10.0%
* Less than one percent.
(1) Assumes the exercise of currently exercisable options or warrants to
purchase shares of common stock. The percent of class ownership is
calculated separately for each person based on the assumption that the
person listed on the table has exercised all options and warrants shown
for that person, but that no other holder of options or warrants has
exercised such options or warrants.
(2) Includes 862,500 shares issuable upon the exercise of currently
exercisable warrants, 6,174,500 shares issuable upon the exercise of
currently exercisable options and 8,888 shares held in custody for Mr.
Parrella's dependent children.
(3) Includes 862,500 shares issuable upon the exercise of currently
exercisable warrants, 5,000 shares from a stock award granted by the
Company, 1,070,000 shares issuable upon the exercise of currently
exercisable options and 300,000 shares held by the John J. McCloy II
Family Trust for which the named person's spouse serves as trustee, shares
as to which Mr. McCloy has no voting or investment power.
(4) Includes 218,500 shares issuable upon the exercise of currently
exercisable warrants, 10,000 shares from a stock award granted by the
Company and 1,533,500 shares issuable upon the exercise of currently
exercisable options.
(5) Includes 25,000 shares from a stock award granted by the Company, 570,000
shares issuable upon the exercise of currently exercisable options, 75,000
shares owned by the named person's spouse, as to which he has no voting or
investment power, 20,000 shares owned by Oolie Enterprises, and 44,313
shares held by the Oolie Family Support Foundation.
(6) Includes 420,000 shares issuable upon currently exercisable options and
5,000 shares from a stock award granted by the Company. Mr. Carlquist
resigned as Director of the Company on September 23, 1999.
(7) Includes 614,417 shares issuable upon currently exercisable options. Mr.
Horton resigned as Senior Vice President, General Counsel and Secretary on
February 19, 1999.
(8) Includes 100,000 shares from a stock award granted by the Company and
274,000 shares issuable upon the exercise of currently exercisable
options.
(9) Includes 25,000 shares issuable upon the exercise of currently exercisable
warrants and 493,718 shares issuable upon the exercise of currently
exercisable options.
<PAGE>
(10) Includes 360,000 shares issuable upon the exercise of currently
exercisable options and 590,517 shares owned jointly with his spouse.
Irving Lebovics is married to Irene Lebovics. Mr. Lebovics disclaims
beneficial ownership to the shares issuable to Ms. Lebovics upon the
exercise of currently exercisable warrants and options.
(11) Includes 201,250 shares issuable upon the exercise of currently
exercisable warrants, 831,300 shares issuable upon the exercise of
currently exercisable options and 590,517 shares owned jointly with her
spouse. Irene Lebovics is married to Irving Lebovics. Ms. Lebovics
disclaims beneficial ownership to the shares issuable to Mr. Lebovics upon
the exercise of currently exercisable options.
(12) Includes 440,000 shares issuable upon the exercise of currently
exercisable options and 5,000 shares from a stock award granted by the
Company. Mr. Salkind resigned as a Director of the Company on January 19,
1999. Mr. Salkind is married to Carole Salkind, a holder of 5% or more of
the common stock of the Company, shares as to which he has no voting or
investment power.
(13) Includes 2,169,750 shares issuable to 3 Directors and 2 executive officers
of the Company upon the exercise of currently exercisable warrants,
13,030,435 shares issuable to 12 current and former executive officers
upon the exercise of currently exercisable options, 145,000 shares from
stock awards issued by the Company to 4 current and former Directors and
an executive officer. Excludes options to acquire 11,433,000 shares from
the Company which are not presently exercisable but become exercisable
over time by 11 current and former executive officers and Directors of the
Company.
(14) Carole Salkind's address is 801 Harmon Cove Towers, Secaucus, New Jersey
07094. Includes 17,647,059 shares issuable upon the conversion of
convertible secured notes calculated at a conversion price of $0.17 per
share on the aggregate of three million dollars ($3,000,000) of
convertible secured notes outstanding. Such beneficial ownership indicated
herein is based on information contained in Form 13D/A filed by Ms.
Salkind with the Securities and Exchange Commission on December 22, 1999,
except that the conversion price used was $0.17 based on current market
conditions, rather than the conversion price of $0.121 when filed.
Excludes shares beneficially owned by Morton Salkind, Ms. Salkind's
husband and a former Director of the Company, as to which she has no
voting or investment power.
PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED CAPITALIZATION
The Company's Board of Directors has unanimously approved and declared advisable
an amendment to the Company's Restated Certificate of Incorporation to increase
the number of authorized shares of common stock, par value $.01 per share, from
325,000,000 to 390,000,000, an increase of 65,000,000 shares. The Board of
Directors is submitting this matter for adoption by the holders of the common
stock at the Special Meeting.
The terms of the additional shares of common stock will be identical to those of
the currently outstanding shares of common stock. However, because holders of
common stock have no preemptive rights to purchase or subscribe for any unissued
stock of the Company, the issuance of additional common shares will reduce the
percentage interest of current shareholders in the total outstanding shares of
common stock. Approval of this proposal will not affect the number of other
shares authorized. The relative rights and limitations of the shares of common
stock and other shares authorized would remain unchanged under this proposal.
As of January __, 2000, a total of ______________ of the Company's currently
authorized shares of common stock have been issued and are outstanding. In
addition, a number of the currently authorized shares of common stock are
required to be held in reserve for possible future issuance: (a) upon conversion
of convertible secured notes and interest thereon; (b) upon conversion of
certain series of the Company's convertible preferred stock and accretion of
dividends thereon; (c) upon exercise of stock options and warrants; (d) upon the
exchange of common stock of NCT Audio Products, Inc., a subsidiary of the
Company ("NCT Audio"); and (e) for certain contingent obligations pursuant to an
exchange agreement and a reset provision.
<PAGE>
For certain conversions and exchanges into shares of our common stock, the
number of shares required to be reserved may vary as a function of the price of
our common stock. At a closing bid price per share of $______, the Company would
not have available and in reserve all of the shares of common stock necessary to
fulfill its obligations for all of these future issuances. Specifically, the
Company would not have sufficient shares of common stock in reserve for issuance
upon conversion into common stock of the four million dollars ($4,000,000) of
secured convertible notes that have been subscribed ($3,000,000 of which notes
have been issued) plus interest thereon. To alleviate this problem, current
executive officers and Directors of the Company have agreed, if it should become
necessary, to release or set aside the reserve required for the exercise of
their warrants and options. If the proposal is adopted, the Company would have a
total of approximately ______________ unissued and unreserved shares of common
stock available for future issuance, at a closing bid price of $______.
Some of the additional shares will be earmarked for specific purposes,
including: (a) if necessary, restoring the required reserve for shares of common
stock issuable to current executive officers and Directors upon their exercise
of warrants and options; (b) establishing adequate reserves for the four million
dollars ($4,000,000) of secured convertible notes that have been subscribed and
interest thereon ($3,000,000 of such notes have been issued); (c) increasing the
maximum number of shares of common stock that may be issued to the holders of
the Company's Series F Convertible Preferred Stock (the "Series F Preferred
Stock"), as described below; and (d) if required, fulfilling certain contingent
obligations of the Company, as described below.
As noted, the proposed increase in the number of authorized shares of common
stock would ensure that the Company could fulfill certain obligations pursuant
to a letter agreement between the Company and holders of the Company's Series F
Preferred Stock. This letter agreement, dated December 1, 1999, provided that
the maximum conversion share amounts, as defined under the Series F Preferred
Stock Certificate of Designations, Preferences and Rights would be increased
from 35,000,000 shares of common stock of the Company to 77,000,000 in
consideration for the waiver of certain notice and redemption requirements that
may have been required of the Company if the parties had not agreed upon such
increase. This action was considered to be in the best interest of the Company
and its investor relations and was ratified by the Company's Board of Directors
in January 2000. On January 27, 2000, an amendment increasing the maximum
conversion share amounts to 77,000,000 under the Series F Preferred Stock
Certificate of Designation became effective when the Company filed such
amendment with the Office of the Secretary of State of Delaware.
In addition, the proposed increase in the number of authorized shares of common
stock would ensure that the Company could fulfill certain contingent obligations
under a securities exchange agreement, dated as of October 9, 1999 (the
"Exchange Agreement"), among the Company, Austost Anstalt Schaan ("Austost") and
Balmore Funds S.A. ("Balmore"). Pursuant to the Exchange Agreement, on October
26, 1999 the Company issued a total of 17,333,334 shares to Austost and Balmore
(the "Exchange Shares") in exchange for 532 shares of common stock of NCT Audio,
held by Austost and Balmore. The effective per share price of the Exchange
Shares received by Austost and Balmore was $0.06 per share (representing the
total purchase price originally paid by Austost and Balmore for the NCT Audio
shares of $1.0 million divided by 17,333,334). This effective per share price
was $0.115, or 65.7%, less than the closing bid price of the Company's common
stock as reported by the OTC Bulletin Board on October 25, 1999. This effective
per share price may be subject to increase upon the application of an exchange
ratio adjustment provision contained in the Exchange Agreement on February 15,
2000 (or an earlier date agreed to by all the parties) and may be subject to
decrease upon the application of a reset provision contained in the Exchange
Agreement as described below.
Under the exchange ratio adjustment provision, the Company has the right to
re-determine the price of the Exchange Shares issued to each of Austost and
Balmore on February 15, 2000 (or another date that is not later than February
15, 2000 and that is mutually agreed upon by the Company, Austost and Balmore).
If the aggregate value of the Exchange Shares issued to Austost and Balmore is
greater than $2,600,000 based upon the closing bid price of the Company's common
stock as reported on the OTC Bulletin Board on such date, Austost and Balmore
are required to return to the Company any such Exchange Shares representing the
excess amount. Under the reset provision contained in the Exchange Agreement, on
April 24, 2000, and again on July 24, 2000, the Company may be required to issue
additional shares to either Austost or Balmore or both if the sum of certain
items on those dates is less than $2,600,000. Those items are: (i) the aggregate
market value of the Exchange Shares held by Austost and Balmore (based on the
per share closing bid price on those dates); (ii) the market value of any
Exchange Shares transferred by Austost and Balmore as permitted under the
Exchange Agreement (based on the per share closing bid price on the date of
transfer); and (iii) any amounts realized by Austost and Balmore from sales of
any such shares prior to April 24, 2000 or July 24, 2000, as the case may be.
The number of additional shares of common stock that the Company would be
obligated to issue in such case would be a number of shares having an aggregate
market value (based on the per share closing bid price on such date) that, when
added to the sum of items (i), (ii) and (iii) set forth above, would equal
$2,600,000.
<PAGE>
Further, the proposed increase in the number of authorized shares of common
stock would enable the Company to fulfill certain contingent obligations under a
securities purchase agreement, dated as of December 27, 1999 (the "Purchase
Agreement"), among the Company, Austost, Balmore and Nesher, Inc. ("Nesher").
Based on an offer on November 9, 1999, the Company, Austost, Balmore and Nesher
entered into the Purchase Agreement whereby the Company, on December 28, 1999,
issued a total of 3,846,155 shares (the "SPA Shares") to Austost, Balmore and
Nesher for a total purchase price of $500,000. In addition, the Company issued
288,461 shares of its common stock to the placement agent for the transaction.
The price of the SPA Shares was $0.13 per share, which was $0.03, or 19%, less
than the closing bid price of the Company's common stock as reported by the OTC
Bulletin Board on November 8, 1999, and $0.015, or 10%, less than the closing
bid price of the Company's common stock as reported by the OTC Bulletin Board on
December 27, 1999. This per share price may be subject to decrease upon the
application of a reset provision contained in the Purchase Agreement as
described below.
Under the reset provision, on June 26, 2000, and again on September 25, 2000,
the Company may be required to issue additional shares to one or more of
Austost, Balmore or Nesher if the sum of certain items on those dates is less
than 120% of the total purchase price paid by Austost, Balmore and Nesher for
the SPA Shares. Those items are: (i) the aggregate market value of the SPA
Shares held by Austost, Balmore and Nesher (based on the per share closing bid
price on those dates); (ii) the market value of any SPA Shares transferred by
Austost, Balmore and Nesher as permitted under the Purchase Agreement (based on
the per share closing bid price on the date of transfer); and (iii) any amounts
realized by Austost, Balmore and Nesher from sales of any such shares prior to
June 26, 2000 or September 25, 2000, as the case may be. The number of
additional shares of common stock that the Company would be obligated to issue
in such case would be a number of shares having an aggregate market value (based
on the per share closing bid price on such date) that, when added to the sum of
items (i), (ii) and (iii) set forth above, would equal 120% of the total
purchase price paid for the SPA Shares.
Finally, the proposed increase in the number of authorized shares of common
stock would enable the Company, without undue delay, to issue such shares from
time to time as may be required for proper business purposes, such as raising
additional capital for ongoing operations, including the operation of
DistributedMedia.com, Inc., a subsidiary of the Company ("DMC"), and other
corporate purposes. If the Company's execution of its strategy for DMC does not
proceed according to plan, the Company will need to generate additional capital
which may be raised by the issuance of shares of its common stock. The Board
believes it to be in the best interest of the Company to make additional shares
of common stock available for possible issuance for acquisitions, public or
private financings involving common stock or preferred stock or other securities
convertible into common stock, stock splits and dividends, present and future
employee benefit programs and other corporate purposes.
Under the Restated Certificate of Incorporation, the Board of Directors is
empowered to issue all or any part of the shares of its unissued authorized
common stock without further action by shareholders. Except for the purposes
outlined above, the Company currently has no specific plans to issue any
additional unissued and unreserved shares of common stock.
Vote Required
The affirmative vote of a majority of the issued and outstanding shares of
common stock is required to approve the proposal to increase the Company's
authorized common stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF THE COMMON
STOCK VOTE FOR THE PROPOSAL TO INCREASE THE CORPORATION'S AUTHORIZED COMMON
STOCK.
OTHER MATTERS
As of the date of this Proxy Statement, we know of no other business to be
presented for action at the Special Meeting. As to any business which would
properly come before the Special Meeting, the proxies confer discretionary
authority in the persons named therein and those persons will vote or act in
accordance with their best judgment with respect thereto.
MISCELLAENOUS
All costs of solicitation of proxies will be borne by us. In addition to
solicitation by mail, our officers, employees or agents may solicit proxies by
telephone or personally, without additional compensation. We may also make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation materials to the beneficial
owners of shares of common stock held of record by such persons, and we may
reimburse them for their out-of-pocket expenses incurred in connection
therewith. The costs of solicitation of proxies are anticipated to be
approximately $87,000.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires the Company to file information with the
Securities and Exchange Commission ("SEC") concerning its business and
operations. Accordingly, the Company files annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any document filed by the Company at the SEC's public reference rooms
located at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. These SEC filings are also available to the public on the SEC's
web site at http://www.sec.gov.
SEC rules and regulations permit us to "incorporate by reference" the
information the Company files with the SEC. This means that we can disclose
important information to you by referring you to the other information the
Company has filed with the SEC. The information that we incorporate by reference
is considered to be part of this proxy statement. Information that the Company
files later with the SEC will automatically update and supersede this
information.
We incorporate by reference the documents listed below and any filings the
Company will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 following the date of this document, but prior
to the date of the shareholder meeting:
o Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and
amendments thereto;
o Quarterly Reports on Form 10-Q for the periods ended March 31, 1999, June
30, 1999 and September 30, 1999; and
o Periodic Report on Form 8-K filed January 12, 2000.
You may request a free copy of the above filings or any filings subsequently
incorporated by reference into this proxy statement by writing or calling:
NCT Group, Inc.
1025 West Nursery Road, Suite 120
Linthicum, Maryland 21090
Attn.: Corporate Secretary
Telephone requests may be directed to (410) 636-8700.
In order to ensure timely delivery of these documents, you should make such
request by ______________, 2000.
The Company has not authorized anyone to give any information or make any
representation about the Company that differs from or adds to the information in
this proxy statement or in the documents that the Company files publicly with
the SEC. Therefore, you should not rely upon any information that differs from
or is in addition to the information contained in this proxy statement or in the
documents that the Company files publicly with the SEC.
The information contained in this proxy statement speaks only as of the date on
the cover, unless the information specifically indicates that another date
applies.
<PAGE>
NCT GROUP, INC.
1025 West Nursery Road, Suite 120
Linthicum, Maryland 21090
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Jay M. Haft, Michael J. Parrella and Irene
Lebovics as Proxies, each with the power to appoint his or her substitute, and
hereby authorizes them, and each of them, to represent and vote, as designated
on the reverse side, all the shares of common stock of NCT Group, Inc. held of
record by the undersigned on ____________, at the Special Meeting of
Shareholders to be held on ______________, or any adjournment thereof.
To approve the amendment of the Company's Restated Certificate of
Incorporation to increase the number of shares of common stock
authorized thereunder from 325,000,000 shares to 390,000,000 shares.
FOR / / AGAINST / / ABSTAIN / /
This proxy, when properly executed, will be voted in the manner directed by the
undersigned shareholder. If no direction is made, this proxy will be voted FOR
the above proposal.
Dated: ________________, 2000
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Signature
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Signature
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give title. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
PLEASE USE DARK INK TO MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
