SCHEDULE 14A-1 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 Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule
14a-6(e)(2))
[ ] Definitive Additional materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
nSTOR TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
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:
_____________________________________________
(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>
1998 ANNUAL MEETING OF STOCKHOLDERS
OF
nSTOR TECHNOLOGIES, INC.
----------------------
Supplement No. 1
----------------------
to Proxy Statement and
Notice of Annual Meeting
each dated May 13, 1998
nStor Technologies, Inc.
This Supplement No. 1 to Proxy Statement ("Supplement") is
furnished inconnection with the solicitation by the Board of
Directors of nStor Technologies, Inc., a Delaware corporation
(the "Company"), of proxies from the holders of the Company's
Common Stock, par value $.05 per share (the "Common Stock"), for
use at the 1998 Annual Meeting of Stockholders of the Company to
be held at 10:00 a.m., local time, on Monday, June 8, 1998, at
the Embassy Suites, 225 East Altamonte Drive, Altamonte Springs,
Florida 32701, or at any adjournment(s) or postponement(s)
thereof (the "Annual Meeting").
This Supplement provides information not included in the
Proxy Statement and Notice of Annual Meeting dated May 13, 1998
(the "Proxy Statement"). The approximate date that this
Supplement and the enclosed proxy are first being sent to
stockholders is May 27, 1998.
The Supplement contains a REVISED proxy card. The proxy is
solicited on behalf of the Company's Board of Directors. Please
note the following with respect to the enclosed REVISED proxy
card:
If you have not completed and returned the ORIGINAL
proxy card that was included with the Proxy Statement,
please do not use the ORIGINAL proxy card. Use the enclosed
REVISED proxy card instead;
If you have already completed and returned the ORIGINAL proxy card
that was included with the Proxy Statement and DO NOT wish to
change your vote, you may do nothing; you do not need to vote again
using the REVISED proxy card; and
If you have already completed and returned the ORIGINAL proxy card
DO WISH to change your vote, you may vote again using the REVISED
proxy card; the REVISED proxy card will serve to revoke the proxy
that you previously submitted on the ORIGINAL proxy card, and your
vote on the REVISED proxy card will be counted instead.
Stockholders have an unconditional right to revoke their
proxy at any time prior to the exercise thereof, either in person
at the Annual Meeting or by filing with the Company's Secretary
at the Company's headquarters a written revocation or duly
executed proxy bearing a later date; however, no such
revocation will be effective until written notice of the
revocation is received by the Company at or prior to the Annual
Meeting. The cost of preparing, assembling and mailing this
Supplement and the enclosed REVISED proxy is to be borne by the
Company.
Stockholders who would like an additional copy of the Proxy
Statement may contact the Company to receive a free copy. The
Company's executive offices are located at 100 Century Boulevard,
West Palm Beach, Florida 33417, and its telephone number is (561)
640-3103.
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<PAGE>
Additional Information Related to Proposal 3
As described in the Proxy Statement, in a private placement
of equity securities completed on April 16, 1998 (the "1998
Private Placement"), the Company sold to three institutional
investors and to H. Irwin Levy, a director of the Company, a
total of 3,500 shares of the Series A Preferred Stock and
issued warrants to purchase a total of 280,000 shares of Common
Stock (the "Warrants"). The Company received gross proceeds of
$3,500,000 and net proceeds of approximately $3,305,000
(including $1,000,000 placed in escrow (see the Proxy Statement
section entitled "Consequences if Stockholder Approval Not
Obtained")) after the payment of brokerage fees and transaction
expenses. The 1998 Private Placement was necessary to enable the
Company to meet its currently existing financial obligations as
they come due and to function as a going concern.
Change to Terms of 1998 Private Placement
The investors in the 1998 Private Placement have agreed to
exchange the shares of Series A Preferred Stock purchased by them
for Series B Preferred Stock of the Company. Series B Preferred
Stock is identical in all respects to the Series A Preferred
Stock described in the Proxy Statement (including the right to
convert shares of Series A Preferred Stock into Common Stock)
except that the Series B Preferred Stock provides the Company the
right to redeem the Series B Preferred Stock under certain
circumstances. Specifically, if the conversion price of the
Series B Preferred Stock is $0.77 or less when the holder of the
Series B Preferred Stock seeks to convert all or any part of the
Preferred Stock into Common Stock, then the Company will have the
right to redeem all or any part of the Series B Preferred Stock
instead of converting it. If the Company redeems the Series B
Preferred Stock, the redemption price will be equal to 130% of
the purchase price of the Series B Preferred Stock, payable in
cash. If the conversion price is higher than $0.77 at the time
the investor gives the Company a notice of conversion, then the
Company will have no right of redemption.
Recommendation of the Company's Board of Directors
The Company's Board of Directors believes that the exchange
of Series B Preferred Stock for Series A Preferred Stock is in
the best interests of the Company. The Series A Preferred Stock
is theoretically convertible into an unlimited number of shares
of Common Stock, which could have a substantial dilutive effect
on the holders of Common Stock prior to such issuance. The lower
the conversion price, the greater the number of shares of Common
Stock that are issuable upon conversion. See "Effects of 1998
Private Placement on Holders of Common Stock" contained in the
Proxy Statement. Under the terms of the Series B Preferred
Stock, when the conversion price falls to $0.77 or lower, the
Company will have the right to redeem the shares rather than
issue additional shares of Common Stock.
Other Considerations
If the Company's right to redeem shares of Series B
Preferred Stock is exercised, the redemption price is payable in
cash in an amount equal to 130% of the price that the holder paid
for the Series B Preferred Stock. Such payment will reduce the
amount of cash available to the Company for other purposes. In
addition, if the Company has insufficient cash on hand, the
Company will be unable to exercise the right of redemption, even
if the Company would otherwise be able to do so.
FOR THE REASONS DESCRIBED ABOVE AND IN THE PROXY STATEMENT,
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE 1998 PRIVATE PLACEMENT PROPOSAL.
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<PAGE>
REVISED PROXY CARD
nSTOR TECHNOLOGIES, INC.
100 Century Blvd.
West Palm Beach, FL 33417
THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS
The undersigned holder of Common Stock of nStor Technologies,
Inc., a Delaware corporation (the "Company"), hereby appoints
Mark F. Levy and Orilla F. Floyd and each of them, as proxies for
the undersigned, each with full power of substitution, for and in
the name of the undersigned to act for the undersigned and to
vote, as designated below, all of the shares of Common Stock of
the Company that the undersigned is entitled to vote at the 1998
Annual Meeting of Stockholders of the Company, to be held at
10:00 a.m., local time, on Monday, June 8, 1998, at Embassy
Suites, 225 East Altamonte Drive, Altamonte Springs, Florida
32701, and at any adjournment(s) or postponement(s) thereof.
(1) Election of directors: Michael L. Wise, Bernard R. Green, H. Irwin
Levy, Mark F. Levy, Richard Reiss, Jr., R. Daniel Smith, and Joseph
D. Weingard.
[ ] VOTE FOR all nominees listed above, except vote withheld
from the following nominees (if any).
______________________________________________________
[ ] VOTE WITHHELD for all nominees.
Cumulative votes for one or more nominees as follows:
Michael L. Wise __________
Bernard R. Green __________
H. Irwin Levy __________
Mark F. Levy __________
Richard Reiss, Jr. __________
R. Daniel Smith __________
Joseph D. Weingard __________
The Board of Directors unanimously recommends a
vote For the election of all the nominees for
election as directors.
<PAGE>
(2) To amend the Company's Restated Certificate of Incorporation to
increase the authorized number of shares of Common Stock from
24,000,000 to 40,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors unanimously recommends a
vote For this proposal.
(3) To ratify the April 1998 approval by the Board of Directors of the
sale of 3,500 shares of the Company's Series B Preferred Stock and
the related issuance of warrants to acquire 280,000 shares of
Common Stock;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors unanimously recommends a
vote For this proposal.
(4) To ratify the reappointment of BDO Seidman, LLP, certified public
accountants, as the Company's independent auditors for fiscal 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors unanimously recommends a
vote For this proposal.
(5) Upon such other matters as may properly come before the Annual
Meeting and any adjournments thereof. In their discretion, the
proxies are authorized to vote upon such other business as may
properly come before the Annual Meeting, and any adjournments or
postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED CUMULATIVELY
"FOR" THE ELECTION OF ALL NOMINEES LISTED ABOVE. IF NO
DIRECTION IS MADE, THIS PROXY WILL ALSO BE VOTED IN FAVOR OF
AMENDING THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
24,000,000 TO 40,000,000, IN FAVOR OF RESERVING FOR ISSUANCE
SHARES OF THE COMPANY'S COMMON STOCK PURSUANT TO THE
COMPANY'S SERIES B PREFERRED STOCK AND THE WARRANTS THERETO,
AND IN FAVOR OF THE RATIFICATION OF THE APPOINTMENT OF BDO
SEIDMAN, LLP.
<PAGE>
PURSUANT TO THE RESTATED CERTIFICATE OF INCORPORATION, THE
ELECTION OF DIRECTORS IS BY CUMULATIVE VOTING. EACH HOLDER
OF COMMON STOCK SHALL BE ENTITLED TO AS MANY VOTES AS SHALL
EQUAL THE NUMBER OF VOTES WHICH HE/SHE WOULD BE ENTITLED TO
CAST FOR THE ELECTION OF DIRECTORS WITH RESPECT TO HIS/HER
SHARES OF COMMON STOCK MULTIPLIED BY THE NUMBER OF DIRECTORS
TO BE ELECTED (7), AND HE/SHE MAY CAST ALL OF SUCH VOTES FOR
A SINGLE DIRECTOR OR MAY DISTRIBUTE THEM AMONG THE NUMBER OF
DIRECTORS TO BE VOTED FOR AS HE/SHE MAY SEE FIT. PLEASE
INDICATE YOUR VOTE FOR EACH DIRECTOR BY INSERTING THE
APPROPRIATE NUMBER OF VOTES IN THE SPACE NEXT TO EACH
DIRECTOR'S NAME. BY GIVING YOUR PROXY, YOU ARE AUTHORIZING
THE HOLDERS THEREOF TO VOTE YOUR SHARES FOR THE NOMINEES AS
THEY DETERMINE IS APPROPRIATE. THE SEVEN NOMINEES RECEIVING
THE HIGHEST NUMBER OF VOTES WILL BE ELECTED.
The undersigned hereby acknowledges receipt of (i) the Notice
of Annual Meeting, (ii) the Proxy Statement, and (iii) the
Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
Dated_________________________, 1998
____________________________________
(Signature)
____________________________________
(Signature if held jointly)
IMPORTANT: Please sign exactly as your name appears hereon
and mail it promptly even though you now plan to attend the
meeting. 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.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD
AND PROMPTLY RETURN IT IN THE ENVELOPE PROVIDED.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
