SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a)
of the Security 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
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Circuit Research Labs, Inc.
(Name of Registrant as Specified In Its Charter)
Dennis L. Drew
Name of Person Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box): N/A
[ ] $125 per Exchange Act rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a6(j) (2).
[ ] $500 per each party to the controversy pursuant toExchange Act
Rule 14a-6(i)(3).
[ ] 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:
N/A
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:
4) Proposed maximum aggregate value of transaction:
[ ] 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 Previous Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Mailed to Shareholders on
or about April 26, 1999
CIRCUIT RESEARCH LABS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 11, 1999
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of CIRCUIT RESEARCH LABS, INC., an Arizona
corporation, will be held on May 11, 1999 at 2:00 o'clock p.m.,
Mountain Standard Time, at the offices of Circuit Research Labs,
Inc., 2522 West Geneva Drive, Tempe, Arizona 85282 for the
following purposes:
1. To elect a board of three (3) directors to serve for
the coming year and until their successors are elected; and
2. To approve or disapprove the dissolution and
liquidation of the Company; and
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 31,
1999 are entitled to notice of and to vote at the meeting.
You are cordially invited to attend the meeting in person.
However, only those shares which are represented at the meeting
personally by the holder or by proxy may vote. To assure your
representation at the meeting, please mark, date, sign and return
the enclosed proxy card as promptly as possible in the envelope
provided. You may attend the meeting, revoke your proxy and vote
in person even if you have returned a proxy.
Sincerely,
Dennis L. Drew,
Secretary
Tempe, Arizona
April 26, 1999
CIRCUIT RESEARCH LABS, INC.
2522 WEST GENEVA DRIVE
TEMPE, ARIZONA 85282
PROXY STATEMENT
The enclosed Proxy is solicited on behalf of CIRCUIT RESEARCH
LABS, INC. (the Company) for use at its Annual Meeting of
Shareholders to be held on May 11, 1999, at 2:00 p.m., Mountain
Standard Time, or at any adjournment thereof. The purposes of
the meeting are set forth herein and in the accompanying Notice
of Annual Meeting of Shareholders. The Annual Meeting will be
held in the offices of Circuit Research Labs, Inc., 2522 West
Geneva Drive, Tempe, Arizona 85282. The Company will bear the
cost of this solicitation.
Shareholders may revoke any proxy given pursuant to this
solicitation by: (a) delivering a written notice of revocation
to Dennis L. Drew, Secretary, Circuit Research Labs, Inc., 2522
West Geneva Drive, Tempe, Arizona 85282; or (b) a duly executed
proxy bearing a later date; or (c) attending the meeting and
voting in person.
Outstanding Shares and Voting Rights
As of the close of business on March 31, 1999, the Company had
outstanding 410,182 shares of common stock with $.10 per share
par value, each of which is entitled to one vote at all meetings
of stockholders, other than the election of directors. (see
"Cumulative Voting Rights"). Only holders of record of Common
Stock at the close of business on March 31, 1999 will be entitled
to notice of, and to vote at, the Annual Meeting and any
adjournments thereof.
In determining whether a quorum exists at the meeting, all shares
represented in person or proxy will be counted. Presence of
holders of a majority of the outstanding stock shall constitute a
quorum. Votes will be tabulated by inspectors. Abstentions and
broker non-votes are each included in the determination of the
number of shares present and voting. Each is tabulated
separately. Abstentions are counted in tabulations of the votes
cast on proposals presented to shareholders, whereas broker non-
votes are not counted for purposes of determining whether a
proposal has been approved.
Cumulative Voting Rights
Each member present either in person or by proxy at the Annual
Meeting will have cumulative voting rights with respect to the
election of directors; that is the shareholder will have an
aggregate number of votes in the election of directors equal to
the number of directors to be elected multiplied by the number of
shares of Common Stock of the Company held by such shareholder on
the record date. The resulting aggregate number of votes may be
cast by the shareholder for the election of any single nominee,
or the shareholder may distribute such votes among any number of
all the nominees. The three nominees receiving the highest
number of votes will be elected to the Board of Directors. The
cumulative voting rights may be exercised in person or by proxy
and there are no conditions precedent to the exercise of such
rights.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
A board of three directors is to be elected at the meeting.
Unless otherwise instructed, proxy holders will vote the proxies
received by them for the Company's nominees named below, each of
whom is a current director of the Company. If any of the
Company's nominees is unable or declines to serve as a director
at the time of the Annual Meeting, proxies will be voted for any
nominee designated by the present board of directors to fill the
vacancy. It is not expected that any nominee will be unable or
will decline to serve as a director. If additional persons are
nominated for election as directors, the proxy holders intend to
vote all proxies received by them according to the cumulative
voting rules to assure the election of as many of the nominees
listed below as possible. In such event, the specific nominees
to be voted for will be determined by the proxy holders. The
term of office of each person elected as a director will continue
until the next Annual Meeting of Shareholders or until his
successor has been elected and qualified.
Names of the nominees of the Company, together with certain
information about them is set forth below.
Director
Name Age Since Position in the Company
Gary D. Clarkson 46 1978 Chief Executive Officer,
President and Chairman
Erle M. Constable 80 1983 Assistant Treasurer and
Director
Carl E. Matthusen 55 1988 Director
Gary D. Clarkson In January 1998, following the death of Mr.
Ronald R. Jones, Mr. Clarkson was elected to the positions of
Chief Executive Officer, President and Chairman. Mr. Clarkson had
been Secretary and a director of the Company since its
incorporation and was elected Treasurer in July 1992. Mr.
Clarkson founded Circuit Research Labs with Mr. Jones in 1974,
and has devoted substantially all of his business efforts to the
Company's business since that time. He has been a design
engineer for Circuit Research Labs from 1974 to present. He
holds an associate degree in electronics engineering technology
from DeVry Institute of Technology, Phoenix, Arizona. Mr.
Clarkson served as assistant and chief engineer at many radio
stations from 1971 until 1978. Mr. Clarkson is Treasurer and a
director of CRL International, Inc., the Company's wholly owned
foreign sales corporation.
Erle M. Constable has served as a director of the Company since
1983 and Treasurer from January 1987 to November 1988 when he
reduced his activity to Assistant Treasurer. In 1983, Mr.
Constable retired from Dynalectron Corporation (now DYNCORP),
then a publicly-held diversified technical services company where
he served as Vice President of Finance and Corporate Development.
He was employed by Dynalectron in 1973, and was in charge of an
acquisition program which merged 15 companies into Dynalectron.
Prior to joining Dynalectron, Mr. Constable worked for Fairchild
Industries, Lockheed Aircraft Corporation, Glenn L. Martin
Company and Trans World Airlines. He holds undergraduate and
masters degrees in business administration received in 1939 and
1940 from the University of Nebraska. Periodically, Mr.
Constable acts as a consultant to the Company and receives an
hourly consulting fee for his services. Mr. Constable is a
director of CRL International, Inc., the Company's wholly owned
foreign sales corporation.
Carl E. Matthusen became a member of the Board of Directors in
February 1988. Mr. Matthusen has been in the broadcast industry
since 1963 serving in various capacities at seven radio broadcast
stations in Arizona, Wisconsin, Minnesota and Virginia. Since
1978, he has been General Manager of KJZZ/Sun Sounds operated by
the Mesa Community College in Mesa, Arizona. In addition, he is
a guest lecturer at Mesa Community College, Phoenix College and
Arizona State University as well as a consultant to Arizona
Western Community College and the Arizona Commission on post-
secondary education. Mr. Matthusen also served as Chairman of
the Board of Directors of the National Public Radio Network, from
1992 to 1996, where he had been a director from 1990 to 1996.
OTHER EXECUTIVE OFFICERS
Name Age Position
Dennis L. Drew 53 Vice President
Operations,
Secretary/Treasurer
Dennis L. Drew was appointed Secretary/Treasurer in January 1998.
Mr. Drew joined the Company in 1993 as Controller. In 1994, he
was appointed to the positions of Vice President of Operations,
and Assistant Secretary/Treasurer. Before joining the Company,
Mr. Drew spent three years as a Project Manager for Computer
Cable Specialists. Prior to Computer Cable Specialists, Mr. Drew
held several senior financial management positions with companies
in the computer leasing industry. These positions covered a wide
range of responsibilities including implementing computerized
internal controls to negotiating contracts and loan agreements.
Mr. Drew has an MBA from Arizona State University.
PROPOSAL 2
APPROVAL OR DISAPPROVAL OF THE
DISSOLUTION OF
CIRCUIT RESEARCH LABS, INC.
Background.
The Board of Directors met on March 8, 1999 to consider and
adopt a proposal to dissolve the Company. The Board unanimously
approved a resolution to propose dissolution for submission to
the stockholders. The reasons for the Boards actions are
discussed below, along with discussion of the effects on the
Company and stockholders if the proposal to dissolve is approved
by the stockholders.
The proposal to dissolve is that the Company be dissolved
pursuant to applicable provisions of the Arizona General
Corporation Law, that after providing for discharge of its
liabilities it distribute its remaining assets (which shall
consist solely of cash) to its stockholders, and that it wind up
and liquidate its business and affairs; provided, that
dissolution may be revoked within the time permitted under
applicable law for revocation by the Board of Directors alone,
without stockholder action relating to such revocation.
In January 1999, the Company announced that it would seek
buyers for its business. The principal reason for this step was
the Companys need for significant additional capital to (1)
develop a new generation of products, including digital products
to replace its analog products, and (2) fund the high costs of
marketing and selling its products. These costs have been a
fundamental reason that the Company has had losses in six of its
last seven years.
After the announcement, the Company did not receive a bona
fide offer relating to any type of transaction. The Board of
Directors and the Companys officers have had general discussions
with several parties concerning potential transactions, but to
date no definitive credible offer has been received relating to a
potential transaction. Notwithstanding its proposal that the
Company dissolve, the Board intends to continue to consider and
evaluate any credible proposals that it may receive and will
consider transactions that, if consummated, would not involve the
dissolution of the Company. Under Arizona law, which governs
dissolution of the Company, dissolution may be revoked by the
Board of Directors at any time up to 120 days after its effective
date. Revocation may be effected without stockholder action if
the stockholders authorization permitted revocation by action of
the Board of Directors alone. The dissolution proposal before
you, if approved by the stockholders, permits the Board to revoke
dissolution without any further action by the stockholders.
The Board considered several alternatives to dissolution,
including (1) continuing operations while attempting to raise
sufficient capital to sustain efforts to develop new products and
to produce and market new products, and (2) ceasing active
operations and selling the Companys remaining inventories,
followed by a cash dividend to stockholders and maintaining the
corporation as a public company shell that someone may wish to
acquire. The Board rejected the first alternative primarily
because it determined that the likelihood was remote that the
Company could successfully attract significant amounts of new
capital. The Board rejected the second alternative because a
dividend payment may be ordinary income to stockholders, and the
costs associated with maintaining the Company as a shell
corporation would be too great.
What is Dissolution?
Dissolution is, in essence, the winding up and ending of a
corporations existence.
Under Arizona law, the Board of Directors must propose
dissolution for submission to the stockholders for approval. The
proposal to dissolve, to be adopted, must be approved by a
majority of the shares of the Companys common stock outstanding.
If dissolution is approved by the stockholders, the Company
may be dissolved by delivering articles of dissolution to the
Arizona Corporation Commission, together with the filing fee.
After filing, dissolution would be effective on the date the
Arizona Corporation Commission is notified by the Arizona
Department of Revenue that all corporate and other taxes have
been paid.
A dissolved corporation continues to exist but can not carry
on any business, except that it can collect and dispose of its
assets, discharge its liabilities, distribute its remaining
assets to its stockholders and do any other act necessary to wind
up and liquidate its business and affairs.
Potential Stockholder Liability After Dissolution.
Claims against a dissolved corporation may be enforced
against the corporation. Once assets have been distributed in
liquidation, claims can be enforced against stockholders to the
extent of each stockholders pro rata share of the assets
distributed to him in liquidation. A stockholders liability for
all claims cannot exceed the total amount of all assets
distributed to him. This means that if the Company is dissolved
and distributes its remaining cash to its stockholders, a
claimant against the corporation can seek to recover on the claim
by proceeding directly against one or more stockholders. If the
claimant were successful, the stockholders would have to pay to
the claimant up to as much as the stockholder received in the
corporations liquidating dissolution.
Potential Liquidation Value.
The amount that will be available for distribution to the
Companys stockholders will depend primarily upon amount of
expenses that the Company will incur prior the time of
dissolution, the amount the Company realizes in disposing of its
assets, and the amounts the Company spends settling any claims
that may be made against it before the effective date of
dissolution.. At this point, the Company can not predict the
amount that may be available for distribution, either on an
aggregate or per share basis. On the date of this proxy
statement, the Company knows of no holders of claims against the
Company, but employees, stockholders, customers, tax authorities
and others could make claims which, if successful, would decrease
the amount available for a liquidating distribution. The costs
of investigating and defending any claims, even if the claim was
determined to have no merit, would also decrease the amount
available for distribution. The Company owns its principal
offices in Tempe, and the amount available for distribution will
be materially affected by the sales price that the Company is
able to negotiate for that property. The Company has begun
marketing the property, but has not secured an independent
appraisal of the property.
Summary of Material Federal Income Tax Consequences.
The following is a general summary of the material federal
income tax consequences of the proposed dissolution to the
Company and its shareholders. The summary is based upon the
Internal Revenue Code of 1986, as amended, Treasury Department
regulations promulgated thereunder, interpretive rulings of the
Internal Revenue Service (the IRS), and pertinent judicial
authorities in effect as of the date hereof, all of which are
subject to change at any time, possibly with retroactive effect.
Any such change could affect the continuing validity of this
discussion. The summary is not intended to be a complete
analysis of all potential tax effects of the proposed dissolution
and does not address the income tax consequences that may be
relevant to stockholders who are subject to special tax treatment
such as dealers, banks, insurance companies, tax-exempt
organizations, and foreign individuals and entities. In addition
to the federal income tax consequences discussed below,
stockholders may be subject to state and local taxes and should
consult their tax advisors with respect to the state and local
tax consequences of the dissolution. In addition, foreign
corporations and persons who are not citizens or residents of the
United States should consult their tax advisors with respect to
the U.S. and non-U.S. tax consequences of the dissolution in
their particular circumstances.
The following summary assumes that the Company will be
dissolved substantially in accordance with the dissolution
proposal and that only cash will be distributed to the
stockholders. No ruling has been requested from the IRS with
respect to the anticipated tax treatment of the dissolution, and
the Company will not seek an opinion of counsel with respect to
the anticipated tax treatment summarized below.
Tax Consequences to the Company. The Company will continue
to be subject to tax on its taxable income following approval of
the dissolution proposal until the dissolution is completed. The
Company will realize gain or loss on the sale of all of its
assets that will occur prior to the dissolution. It is not
expected that there will be any material federal income tax
liability at the corporate level, however, because of the net
operating losses that the Company has sustained in prior years.
Tax Consequences to the Stockholders. The stockholders will
not recognize any gain or loss as a result of the Companys sale
of its assets. The amount of cash received by a shareholder upon
the dissolution of the Company will be treated as received in
full payment in exchange for the Company stock held by the
shareholder. As a result, the stockholder will realize gain or
loss equal to the difference between (1) the amount of cash
received, and (2) the stockholders adjusted tax basis in the
Company stock. A stockholders adjusted tax basis in the Company
stock will depend upon various factors, including the cost of the
stock to the stockholder and the amount and nature of any
distributions received with respect thereto. Any gain or loss
should be capital gain or loss provided that the stock is a
capital asset in the hands of the stockholder and will be long-
term capital gain or loss if the Company stock was held by the
stockholder for more than one year.
The Company will provide stockholders and the IRS with a
statement of the amount of cash distributed to the stockholders
at such time and in such manner as required by law.
THE FOREGOING SUMMARY OF MATERIAL FEDERAL INCOME TAX
CONSEQUENCES IS INCLUDED FOR GENERAL INFORMATION ONLY AND DOES
NOT CONSTITUTE LEGAL ADVICE TO ANY STOCKHOLDER. THE TAX
CONSEQUENCES OF THE PROPOSED DISSOLUTION MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF THE STOCKHOLDER. STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX
CONSEQUENCES OF THE DISSOLUTION UNDER THEIR PARTICULAR
CIRCUMSTANCES.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR PROPOSAL CONCERNING DISSOLUTION OF THE COMPANY
BOARD MEETING AND COMMITTEES
The Board of Directors of the Company held a total of three
meetings during the fiscal year ended December 31, 1998.
The Board of Directors has an Executive Committee currently
comprised of Messrs. Clarkson and Constable. The Executive
Committee is empowered to act on behalf of the full Board of
Directors when it is inconvenient for the full Board to meet.
The Executive Committee was formed in 1983 and held no meetings
in 1998.
The Board of Directors has an Audit Committee which was
comprised of Messrs. Constable and Matthusen during the year
ended December 31, 1998. The Audit Committee oversees the
financial reporting and disclosures prepared by Management. The
Audit Committee held one meeting during the fiscal year ended
December 31, 1998.
The Company has no nominating committee. The entire board
acts as the nominating committee.
The Company has no executive compensation committee. The
entire board acts in that capacity. Mr. Clarkson does not vote
on his salary and other compensation.
Each of the directors attended, either in person or by
telephone, each meeting scheduled during the time he has served
as a director.
EXECUTIVE COMPENSATION
The Company did not pay any individual cash compensation in
excess of $100,000 for services provided during the fiscal year.
The following table sets forth compensation paid or accrued to
the chief executive officer during each of the three fiscal years
ended December 31, 1998.
Summary Compensation Table
Name and Other
Principal Position Year Salary Bonus Compensation
Gary D. Clarkson
President and
Chairman of the Board 1998 $69,982 -0- $2,321(2)
Ronald R. Jones(1)
Former President and
Chairman of the Board 1998 $ 4,194 -0- $3,571(2)
1997 72,696 -0- -0-
1996 72,696 -0- 2,022(2)
(1) Mr. Jones died on January 1, 1998.
(2) Fee paid by Company for the personal guarantee of the SBA
loan.
The Company has no employment contracts currently in force.
The Company has agreements with all employees calling for
nondisclosure of trade secrets.
The Company has group life, disability, and medical
insurance plans, a 401(k) pension plan, an Employee Stock
Purchase Plan and an Incentive Stock Option Plan.
Compensation of Directors
During the year ended December 31, 1998, Directors received
no compensation for attending meetings.
Employee Pension Plan
The Company sponsors the CRL, INC. 401(K) PROFIT SHARING
PLAN (the "Plan") for the benefit of all employees meeting
certain eligibility requirements. Under the Plan, participants
are permitted to make pre-tax contributions to their plan
accounts. The Company will match 50% of a participant's
contributions up to a maximum Company matching contribution of 3%
of a participant's annual compensation. Total annual
contributions to a participant's account may not exceed 25% of
annual compensation. In addition, the Company, at its sole
discretion, may make an annual profit sharing contribution to the
Plan out of its current or accumulated profits. The annual
contribution, if any, is allocated to participants based upon
each participant's annual compensation. The Company has not made
an annual contribution and currently has no plans to do so.
Stock Purchase Plan
The Company has an employee stock purchase plan which is offered
to substantially all employees, including officers. Employees
may purchase the Company's common stock through payroll
deductions not exceeding $50 per week and shares are purchased at
the market price, by a nonaffiliated dealer on the open market.
During 1998, one employee participated in the Stock Purchase
Plan.
Stock Options
No options were granted to officers or directors for the Company
during 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
A. Security Ownership of Certain Beneficial Owners
As of February 26, 1999, the following persons were known by the
Company to be the beneficial owners of more than 5% of the
Company's Common Stock:
Amount and
Name and Address of Nature of Percent of
Title of Class Beneficial Owner Beneficial
Owner Class(1)
$.10 par value common Gary D. Clarkson 121,312 30%
of
Circuit Research Labs, Inc.
2522 West Geneva Drive
Tempe, Arizona 85282
(1) On the basis of 410,182 shares outstanding on February 26,
1999.
B. Security Ownership of Management
The stock ownership by directors and officers of the Company as
of February 26, 1999 is set forth below. Each person named
exercises sole voting power over all shares beneficially owned.
Amount and
Name and Nature of
Address of Beneficial Percent
Title of Class Beneficial Owner Owner of Class(4)
$.10 par value common Gary D. Clarkson 121,312 29.0%
$.10 par value common Erle M. Constable 2,500(1) * %
$.10 par value common Carl E. Matthusen 1,250(2) * %
$.10 par value common Dennis L. Drew 5,000(3) * %
All of
Circuit Research Labs, Inc.
2522 West Geneva Drive
Tempe, Arizona 85282
Officer and directors as a group (4 persons) 130,062 31.1%
(1) 938 shares owned; 1,562 shares under exercisable options.
Held as community property with Eugenia Constable.
(2) No shares owned; 1,250 shares under exercisable options.
(3) No shares owned; 5,000 shares under exercisable options.
(4) Percentage is calculated on the basis that all director and
officer shares under stock options presently exercisable are
deemed outstanding, a total of 417,994 shares.
* Less than 1%.
OTHER MATTERS
Management knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting,
it is the intention of the persons named on the enclosed proxy
card to vote the shares they represent as the Board of Directors
may recommend.
THE BOARD OF DIRECTORS
Dated: April 10, 1999
CIRCUIT RESEARCH LABS, INC.
2522 W. GENEVA DRIVE TEMPE, ARIZONA 85282
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of CIRCUIT RESEARCH LABS, INC. hereby
appoints each of Gary Clarkson and Dennis Drew as proxy, with
power of substitution and authorizes each of them to represent,
vote and act on behalf of such shareholder at the Annual Meeting
of Shareholders to be held May 11, 1999, or any adjournment
thereof.
1. Election of directors.
FOR ALL nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below.)
GARY D. CLARKSON ERLE M. CONSTABLE CARL E. MATTHUSEN
2. Proposal to dissolve Circuit Research Labs, Inc. pursuant to
applicable law, provided that the Board of Directors may revoke
dissolution without further shareholder action.
______ Approve ______ Disapprove ______ Abstain
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
