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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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PERSONAL COMPUTER PRODUCTS, INC.
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(Name of Registrant as Specified In Its Charter)
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(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)(4) 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):
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(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:
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(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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PERSONAL COMPUTER PRODUCTS, INC.
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11031 Via Frontera - San Diego, California 92127
Phone: 619-485-8411 - Fax: 619-487-5809
December 31, 1996
Dear Stockholder:
The purpose of this letter is to emphasize the importance to you as a Personal
Computer Products, Inc., Stockholder of the successful passage of the measure
detailed in the attached information statement (the "Proposal").
As you know, in 1995, the Company was notified by Nasdaq that it was not in
compliance with the minimum bid requirement and that the Company's net equity
position was not sufficient to allow for an exemption to that bid price
requirement pursuant to Nasdaq's bylaws and accordingly, the Company's common
stock was delisted from The Nasdaq SmallCap Market.
As a result of the delisting, many investment funds and brokerage firms are
either unable to invest in the Company or to recommend to their clients PCPI as
an investment. In addition, not being listed on an exchange makes the task of
future fundraising activities, if any, to allow the Company to continue to grow
more difficult. Not being listed also makes it more difficult for shareholders
to execute trades of the Company's common stock.
At the present time, the Company is in compliance with all of the necessary
requirements to be considered for relisting on The Nasdaq SmallCap Market with
the exception of the minimum bid price. The Company believes that the best
alternative at the present time is to effect a 1-for-5 reverse stock split.
Timely Stockholder approval of this 1-for-5 reverse stock split offers the
Company's best short term possible solution to satisfy the aforementioned Nasdaq
listing requirements.
Your Board of Directors has evaluated several other alternatives and has
concluded the proposed course of action to be the in the best interests of the
Company and its Stockholders and recommends a VOTE FOR the Proposal.
To avoid the cost and inconvenience to all stockholders associated with a
special stockholders meeting and to attempt to resolve this matter prior to the
next annual meeting of stockholders, PCPI is seeking adoption of the proposal
through the written consent of the stockholders, in accordance with Delaware
corporate law. The Proposal is very important to the Company and its
Stockholders and the vote of a majority of the outstanding shares of Common
Stock by written consent is necessary to constitute a quorum for the Proposal.
Your vote is very important to the future of the Company. Failure of the
Proposal could result in delaying our ability to have the Company's common stock
relisted, being unable to complete possible future financings which could have a
material adverse effect on the Company and could result in the inability of the
Company to continue as a going concern.
Please review the enclosed information statement carefully, complete and sign
the enclosed card to indicate whether you approve or disapprove of the proposed
corporate action. YOUR RESPONSE SHOULD BE RECEIVED NO LATER THAN THE JANUARY 31,
1997 DEADLINE DESCRIBED IN THE INFORMATION STATEMENT IN ORDER FOR YOUR VOTE TO
BE CONSIDERED; MOREOVER, WE REQUEST THAT YOU RESPOND PROMPTLY SO THAT WE MAY
RESOLVE THIS MATTER AT THE EARLIEST POSSIBLE DATE.
If you have any questions, please contact Ralph Barry at 619-485-8411, extension
145.
Thank you for the confidence you have shown in us.
Sincerely yours,
/S/ Edward W. Savarese
Edward W. Savarese
President and Chief Executive Office
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PERSONAL COMPUTER PRODUCTS, INC.
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11031 Via Frontera - San Diego, California 92127
INFORMATION STATEMENT
INTRODUCTION
GENERAL INFORMATION FOR STOCKHOLDERS
This information statement is furnished in connection with the request by the
Board of Directors of Personal Computer Products, Inc., a Delaware corporation
("PCPI" or the "Company"), for approval by written consent of the holders of the
Company's Common Stock of a proposal to authorize a reverse stock split of the
Company's Common Stock. This information statement is being first sent to
stockholders on or about December 31, 1996.
Stockholders may state their approval or disapproval of this proposal by so
indicating on the accompanying consent form, and returning the consent form in
the enclosed self addressed, postage paid envelope so that the consent form is
received on or before January 31, 1997. Only the consent forms received on or
before January 31, 1997 will be used by PCPI to determine whether the proposed
actions have received sufficient stockholder approval for adoption. (However,
the Board of Directors has reserved the authority in its sole discretion to
extend the deadline for receipt of consent forms from January 31, 1997 to any
date as allowed under Delaware Law.
The cost of this request for approval by written consent will be borne by PCPI.
In addition to solicitation by mail, certain directors, officers and regular
employees of PCPI, without receiving any additional compensation, may solicit
written consent personally or by telephone or telegram. PCPI will reimburse
brokers and others holding stock in their names, or in the names of nominees,
for forwarding written consent material to their principals.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
THIS IS A REQUEST FOR STOCKHOLDER APPROVAL BY WRITTEN CONSENT. YOU ARE REQUESTED
TO INDICATE WHETHER YOU APPROVE OF THE PROPOSED CORPORATE ACTION ON THE CARD
ENCLOSED FOR THAT PURPOSE, AND TO RETURN THAT CARD TO US.
ITEM NO. 1
AUTHORIZE A REVERSE STOCK SPLIT
The proposal is to authorize the Company to effect a 1 for 5 reverse stock split
of the Company's Common Stock.
The Proposal would provide that upon the authorization of the action, that each
five (5) issued and outstanding shares of Common Stock will be automatically
converted into one (1) new share of Common Stock, par value $0.05 (the "New
Common Stock"). The number of authorized shares and the par value designation of
the Common Stock will be unaffected by this proposal. The rights and privileges
of the holders of Common Stock will be substantially unaffected by this
proposal, and each Stockholder's percentage ownership interest in the Company,
proportional voting power and other rights will remain unchanged by this
proposal.
The Company presently is authorized under the Articles of Incorporation to issue
100,000,000 shares of Common Stock, and, as of June 30, 1996, 33,824,955 shares
of Common Stock were issued and outstanding. The Reverse Split would reduce the
number of issued and outstanding shares of New Common Stock to approximately
6,764,991. The shares of Common Stock currently issued and outstanding, together
with shares reserved for issuance pursuant to options, warrants and convertible
securities, represent approximately 50% of the Company's authorized Common
stock. The Reverse Split will not affect the Company's retained deficit, and
Stockholders' equity will remain substantially unchanged.
The Company's Common Stock is presently being traded on the NASD Electronic
Bulletin Board and the Company would take the appropriate action to list the
post-reverse split New Common Stock of the Company on The Nasdaq SmallCap Market
System
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REASONS FOR THE REVERSE SPLIT. The Board of Directors believes that the Reverse
Split is advisable and in the best interests of the Company and its Stockholders
primarily for the reasons set forth below. The current estimated fair market
value of the Common Stock before giving effect to the Reverse Split is $1.00 per
share. The Reverse Split is intended to establish the market price of the new
Common Stock in a more traditional range for companies of equivalent size (an
estimated $5.00 per share on a post-Reverse Split basis). The Board of Directors
believe that a higher per share market price would make the New Common Stock
more attractive to a broader range of investors and may encourage greater
interest in the New Common Stock by securities analysts. In addition, a minimum
price of $3.00 per share is required for relisting on The Nasdaq SmallCap
Market, and many institutional investors have guidelines which disfavor stocks
that trade at relatively low prices. In addition, in recent months a few
completing companies have completed initial public offerings. The shares of New
Common Stock outstanding after the reverse split would be more in line with
these other companies.
THERE CAN BE NO ASSURANCE THAT THE ESTIMATED MARKET VALUE OF THE NEW COMMON
STOCK AFTER THE REVERSE SPLIT WILL BE 5.0 TIMES THE MARKET VALUE BEFORE THE
REVERSE SPLIT OR THAT ANY OF THE INTENDED CONSEQUENCES OF THE ACTION DESCRIBED
ABOVE WILL MATERIALIZE.
IMPACT ON WARRANTS, CONVERTIBLE SECURITIES AND STOCK OPTION PLANS. As of the
Record Date, the Company had a total of 21,571,551 shares of Common Stock
reserved for issuance under various warrant agreements, convertible securities
agreements and stock option plans. If the Proposal is adopted, the number of
shares and the exercise and/or conversion price will be adjusted appropriately
pursuant to the terms of such agreements and plans.
FRACTIONAL SHARES. No fractional shares will be issued by the Company. The
Company will therefore, round up to the nearest share any Shareholders who would
otherwise have been issued fractional shares of the Company's Common Stock as
the result of the reverse stock split, if applicable.
EXCHANGE OF CERTIFICATES. If the Proposal is adopted and approved, the Company
will cause each 5 shares of Common Stock to be converted into 1 share of New
Common Stock to take place as soon after the approval as is practicable. If the
Proposal is adopted, Stockholders will be required to exchange their stock
certificates for new certificates representing the shares of New Common Stock
and for payment in respect of fractional shares. Stockholders of record on the
effective date of the Reverse Split will be furnished the necessary materials
and instructions for the surrender and exchange of share certificates at the
appropriate time by the Company. Stockholders will not have to pay a transfer
fee or other fee in connection with the exchange of certificates. STOCKHOLDERS
SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
OTHER. The Reverse Split could result in some Stockholders owning "odd lots" of
fewer than 100 shares of New Common Stock. The costs, including brokerage
commissions, of transactions in odd lots, are generally higher than the cost of
transactions in "round lots" of even multiples of 100 shares.
The Company believes that no Stockholder's interest will be completely
eliminated by virtue of the Reverse Split. Except as discussed under the
Proposal, no officer, director, associate or affiliate of the Company would
derive any material benefit from the Reverse Split other than the benefits which
would be enjoyed by any other person holding the same number of shares.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has adopted and approved the Proposal, subject to
the requisite approval by the Company's Stockholders. The affirmative vote
of a majority of the outstanding shares of Common Stock is required to
adopt the Proposal. The Board of Directors of the Company has considered
the Proposal and recommends that the Company's Stockholders adopt the
Proposal as set forth in this information statement.
SHARES AND OWNERSHIP
VOTING SECURITIES
On December 26, 1996 (the "record date" for determination of stockholders
entitled to notice of and to vote on this Proposal), PCPI had outstanding
34,973,025 shares of Common Stock, which is the only class of stock entitled to
vote on this Proposal. Each share entitles the holder thereof to one vote on all
this Proposal.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
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The following table sets forth the number of shares of equity securities of
PCPI owned beneficially (as determined in accordance with the rules adopted by
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934) for all persons (including any "group") known to PCPI to be the
beneficial owner of more than five percent of any class of voting securities of
PCPI as of December 26, 1996, except as disclosed in the Security Ownership of
Management section below.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME SHARES BENEFICIALLY OWNED PERCENT OF CLASS
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<S> <C> <C> <C>
PCPI Common MCM Partners LP 3,658,833 10.5
</TABLE>
MCM Partners LP is a private investment group located at 1 Embarcadero Center,
Suite 2830, San Francisco, California 94111.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of equity securities of
PCPI owned beneficially (as determined in accordance with the rules adopted by
the SEC under the Securities Exchange Act of 1934) as of December 26, 1996 by
each director of PCPI and by each executive officer of PCPI who earned more than
$100,000 during fiscal year 1996, and by all directors and executive officers as
a group. In each case, such beneficial ownership includes both sole voting and
sole investment power. Dr. Saal, Dr. Savarese, Mr. Roth and MCM Partners LP
were, to the knowledge of PCPI, the only persons owning beneficially (as
determined in accordance with such rules) more than 5% of any class of voting
securities of PCPI as of such date. The business addresses of Dr. Saal, Dr.
Savarese and Mr. Bonar are the same as that of the Company. Mr. Roth's business
address is 322 West 57th Street, Apartment 45T, New York, New York 10019.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME SHARES BENEFICIALLY OWNED PERCENT OF CLASS
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<S> <C> <C> <C>
PCPI Common Harry J. Saal 10,835,000 (a) 25.7
PCPI Common Edward W. Savarese 2,067,040 (b) 5.6
PCPI Common Irwin Roth 1,804,400 (c) 5.0
PCPI Common Brian Bonar 540,030 (d) 1.5
PCPI Common All directors and executive 15,453,470 (e) 33.8
officers as a group (5 persons)
</TABLE>
(a) Includes options and/or warrants, now exercisable or exercisable within
60 days, to purchase 7,180,367 shares of PCPI Common Stock.
(b) Includes options and/or warrants, now exercisable or exercisable within
60 days, to purchase 1,675,000 shares of PCPI Common Stock. Also
includes 50,000 shares of PCPI Common Stock owned by Dr. Savarese's
children; Dr. Savarese disclaims beneficial ownership of those shares.
(c) Includes options and/or warrants, now exercisable or exercisable within
60 days, to purchase 1,048,335 shares of PCPI Common Stock.
(d) Includes options and/or warrants, now exercisable or exercisable within
60 days, to purchase 460,000 shares of PCPI Common Stock.
(e) Includes options and/or warrants, now exercisable or exercisable within
60 days, to purchase 10,700,702 shares of PCPI Common Stock. Also
includes 50,000 shares of PCPI Common Stock owned by Dr. Savarese's
children; Dr. Savarese disclaims beneficial ownership of those shares.
All percentages in this section were calculated on the basis of outstanding
securities plus securities deemed outstanding pursuant to Instruction 3 to
Item 403 of Regulation S-B, under the Securities Exchange Act of 1934.
OTHER MATTERS
APPRAISAL RIGHTS. The Company is aware of no appraisal rights in connection with
the Proposal provided to dissenting Stockholders under the Company's Articles or
the laws of the State of Delaware, the jurisdiction in which the Company is
incorporated.
INCORPORATION BY REFERENCE. Pursuant to Note D to Schedule 14A of Information
Required in Information Statement, the financial statements required by Item 13
are incorporated by reference from the Company's 10-KSB filed for the year ended
June 30, 1996 and the 10-QSB for the first quarter ended September 30, 1996.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1995, Dr. Savarese agreed to loan the Company a gross aggregate
amount of up to $100,000 with interest at the rate of 7% per year. As of June
30, 1996, borrowings under this Note aggregated $100,000.
In January 1996, the Company sold to its Chairman for $500,000 five-year
warrants to purchase 10,000,000 unregistered shares of its common stock at the
rate of $1.00 per share. The warrant contained certain anti-dilution provisions
should the Company issue equity instruments at less than 50% of the exercise
price. In connection with a private placement with various private investors of
approximately $2.5 million, the exercise price of this warrant was subsequently
reduced to $0.60 per share in accordance with this provision. In June 1996,
warrants to purchase 3,333,333 shares were exercised. In December 1996, warrants
to purchase 90,000 shares were exercised and gifted to various individuals.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ralph R. Barry
Ralph R. Barry,
Secretary
San Diego, California
December 31, 1996
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[LOGO]
PERSONAL COMPUTER PRODUCTS, INC.
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11031 Via Frontera - San Diego, CA 92127
Phone: 619-485-8411 - Fax: 619-487-5809
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