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 (Amendment No. __________)
Filed by the Registrant [x]
Filed by a Party other than the Registrant
Check the appropriate box:
[x] Preliminary Proxy Statement
Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e) (2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Creative Technologies Corp.
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rule 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:
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:
Schedule 14A
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 23, 1996
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Creative Technologies Corp.
(the "Company") will be held at the offices of the Company, 170
53rd Street, Brooklyn, New York on July 23, 1996 at 10:00 A.M.
New York time, to consider the following proposals:
1. To elect directors, each to serve for a term of
one year or until his respective successor is elected
and qualifies;
2. To ratify the appointment of Richard A. Eisner &
Company as independent accountants of the Company;
3. To change the name of the Company to Creative
Housewares, Inc.;
4. To authorize the private offering and sale of up
to 4,000,000 shares of the Companys Common Stock ;
5. To authorize a one for two reverse stock split of
the Companys Common Stock;
6. To transact such other business as may properly
come before the meeting.
Shareholders of record on the books of the Company at the close
of business on June 25, 1996 will be entitled to vote at the
meeting or any adjournment thereof. A copy of the annual report
containing the financial statements of the Company for the year
1995 is enclosed.
All shareholders are cordially invited to attend the meeting.
Whether or not you expect to attend, you are requested to sign,
date and return the enclosed proxy promptly. Shareholders who
execute proxies retain the right to revoke them at any time prior
to the voting thereof. A return envelope which requires no
postage if mailed in the United States is enclosed for your
convenience.
By Order of the Board of Directors
Dated: New York, New York David Selengut
June 25, 1996 Secretary
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JULY 23, 1996
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Creative Technologies
Corp. (the "Company") of proxies in the enclosed form for the
Annual Meeting of Shareholders to be held at the offices of the
Company, 170 53rd Street, Brooklyn, New York on July 23, 1996, at
10:00 A.M. local time, and for any adjournment or adjournments
thereof, for the purposes set forth in the foregoing Notice of
Annual Meeting of Shareholders.
At the Annual Meeting the Shareholders will vote to:
1. Elect the directors of the Company;
2. Ratify the selection of Richard A. Eisner and
Company as the Companys independent auditors;
3. Change the Companys name to Creative Housewares,
Inc.;
4. Authorize the private offering and sale of up to
4,000,000 shares of the Companys Common Stock;
5. Authorize a one for two reverse stock split of the
Companys Common Stock;
6. Transact such other business as may properly come
before the meeting.
The Company knows of no other matters to be presented at the
Annual Meeting. If any additional matters should be properly
presented, proxies shall be voted in accordance with the judgment
of the proxy holders.
Each shareholder of the Company is requested to complete, sign,
date and return the enclosed proxy without delay in order to
ensure that the shares owned by such shareholder are voted at the
Annual Meeting. Any shareholder may revoke a proxy at any time
before it is voted by: (i) delivering a written notice to the
Secretary of the Company, at the address of the Company set forth
above, stating that the proxy is revoked; (ii) executing a
subsequent proxy and delivering it to the Secretary of the
Company, or (iii) attending the Annual Meeting and voting in
person. Each properly executed proxy returned will be voted as
directed. In addition, if no directions are given or indicated,
the persons named in the accompanying proxy intend to vote
proxies in favor of the foregoing proposals.
The Company will bear the cost of soliciting proxies. Directors,
officers and employees of the Company may solicit proxies
personally or by telephone, telegram or mail. Such directors,
officers and employees will not be additionally compensated for
such solicitation but may be reimbursed for reasonable out-of-
pocket expenses incurred in connection therewith. Arrangements
will also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of proxy material to
the beneficial owners of the Common Stock held of record by such
persons and the Company will, upon request, reimburse such
custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred in connection therewith.
The principal executive offices of the Company are located at 170
53rd Street, Brooklyn, New York 11232. The approximate date on
which this Proxy Statement and the accompanying form of Proxy
will first be sent or given to the Company's shareholders is June
25, 1996.
VOTING SECURITIES
Only holders of Shares of Common Stock, par value $.03 per share
(the Shares), of record as at the close of business on June 25,
1996 are entitled to notice of and to vote at the Annual Meeting
or any adjournment thereof. On the record date there were issued
and outstanding 7,834,183 Shares. Each outstanding Share is
entitled to one vote upon all matters to be acted upon at the
meeting. The holders of a majority of the outstanding Shares
shall constitute a quorum. The affirmative vote of a majority of
the Shares issued and outstanding is necessary to approve the
change of name of the Company and the one for two reverse stock
split. The affirmative vote of the holders of the majority of
Shares present at the Annual Meeting and voting is necessary to
approve each other resolution. Votes withheld will not count
against the approval of any resolution. Brokers do not have
discretionary authority to vote on the proposals to approve the
private placement of the Companys Common Stock, to change the
name of the Company or to approve the one for two reverse stock
split.
The holders of Shares are entitled to receive such dividends, if
any, as may be declared, from time-to-time, by the Board of
Directors from funds legally available therefore, subject to the
dividend preferences of the Preferred Stock, if any. Upon
liquidation or dissolution of the Company, the holders of Shares
are entitled to share ratably in all assets available for
distribution after payment of liabilities and liquidation
preferences of the Preferred Stock, if any. Holders of Shares
have no preemptive rights, no cumulative voting rights and no
rights to convert their Shares into any other securities.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of May 31, 1996, certain
information as to the stock ownership of each person known by the
Company to own beneficially 5% or more of the Company's
outstanding Shares, by each director of the Company who owns any
Shares of the Company and by all officers and directors as a
group:
Percentage of
Class
Number of Shares of As of
Name of Beneficial Common Stock Owned May 31, 1996
Owner (1)
Bonnie Septimus (2) 509,133 6.5%
72 Lord Avenue
Lawrence, New York
David Guttmann (3) 737,332 9.4%
170 53rd Street
Brooklyn, NY 11232
Benjamin Sporn (4) 95,541 1.2%
170 53rd Street
Brooklyn, NY 11232
Richard Helfman (5) 118,333 1.5%
170 53rd Street
Brooklyn, NY 11232
All officers and
directors as a group 951,206
(5 persons)(6) 11.9%
(1) Except as otherwise indicated, all Shares are beneficially
owned and sole voting and investment power is held by the
persons named.
(2) A portion of the Shares is owned by Mrs. Septimus as nominee
for certain members of her family.
(3) A portion of the Shares is currently being held by Mr.
Guttmann as nominee for certain members of his immediate
family. Includes 50,000 shares issuable upon exercise of
stock options.
(4) Includes 50,000 Shares underlying immediately exercisable
installments of options.
(5) Includes 50,000 Shares underlying immediately exercisable
options.
(6) Includes the Shares described in footnotes (3), (4) and (5)
above.
DIRECTORS OF THE COMPANY
The Directors and Executive Officers of the Company are as
follows:
Name Age Title
Benjamin Sporn 57 Chairman of the Board
David Refson 50 Vice Chairman and
Director
David Guttmann 49 Director and Chief
Executive Officer
Richard Helfman 49 Director and President
David Selengut 40 Secretary
Benjamin Sporn has been a Director of the Company
since January 1985 and Chairman of the Board since March 1990.
Mr. Sporn has been an attorney in private practice since January
1990 and Vice President - Legal of Applied Microbiology, Inc.
since 1992. From 1964 until December 1989, Mr. Sporn was an
attorney with AT&T and retired as General Attorney for
Intellectual Property matters. Mr. Sporn is Chairman of the
Board of Micel Corp.
David Refson has been Vice Chairman and a Director of
the Company since January 1985. Mr. Refson is the President and
principal stockholder of Newmarket Co. Limited of Liberia
("Newmarket"), which invests in various entities. Mr. Refson has
been a private investor for more than the past five years and in
his capacity as President of Newmarket acts as a consultant to a
number of foreign companies.
David Guttmann has been a director and Chief Executive
Officer of the Company since May 1994. From June 1983 until May
1994 Mr. Guttmann was Chief Executive Officer of Applied
Microbiology Inc., and was its Chairman until October 1995. Mr.
Guttmann also serves as Chairman of Ace Surgical Supply Co., Inc.
(Ace), a supplier of disposable surgical materials to the
health care field.
Richard Helfman has been a Director of the Company
since April 1990 and President since March 1990. From May 1987
to June 1989, Mr. Helfman was a commercial lending officer at The
First New York Bank for Business, and from 1979 until May 1987,
was a commercial lending officer at Extebank.
David Selengut was elected Secretary of the Company in
September 1987. Mr. Selengut has been a partner at the law firm
of Singer, Bienenstock, Zamansky, Ogele & Selengut, LLP. since
May 1995. That firm has acted as counsel to the Company with
respect to certain matters. From May 1988 until April 1995 he
was an Associate in the law firm of Neiman Ginsburg & Mairanz
P.C., New York, New York.
Each of the Company's Directors has been elected to
serve until the next annual meeting of the stockholders. The
Company's executive officers are appointed annually by the
Company's Directors. Each of the Company's Directors and
executive officers continues to serve until his successor has
been elected and qualified. Pursuant to a management agreement
with Ace, Ace has the right to appoint two members of the Board
of Directors. Ace has never exercised this right. The Company
has an audit committee consisting of Benjamin Sporn and David
Refson.
To the Company's knowledge, there were no delinquent
16(a) filers for transactions in the Company's securities during
the year ended December 31, 1995.
To the Companys knowledge, there was no material
proceedings to which any Director or executive officer of the
Company, or any associate of any such Director or executive
officer, is a party adverse to the Company or has an interest
adverse to the Company. Each of the directors attended each of
the Board of Directors meetings in 1995.
EXECUTIVE COMPENSATION
The compensation paid to the Company's Chief Executive
Officer and to each of the other executive officers whose total
compensation exceeded $100,000 during each of the preceding three
fiscal years is as follows:
1995 SUMMARY COMPENSATION TABLE
Name and Principal Position Year Annual
Compensation Long-Term
Salary Other Annual Compensation
($) Compensation Award Options
($) (#)
David Guttman, 1995
$128,218 (1)
$50,000
Chief Executive Officer 1994 $88,269
(1) 0
Richard Helfman, 1995 $187,692
0 $50,000 (4)
President 1994
$234,576
1993
$175,000 $30,000 (3)
Benjamin Sporn, 1995 0
0 $50,000 (4)
Director
Alan Miller, 1995
$77,308
Chief Financial Officer 1994 $94,606
$30,000
(1) Represents compensation since May 1994. David Guttmann was
being compensated at the rate of $150,000 per annum. Mr.
Guttmann voluntarily reduced his salary to $50,000 per annum
during the latter part of 1995.
(2) Represents compensation and consulting fees in 1994. Mr.
Miller was compensated at the rate of $120,000 per annum.
Mr. Miller is no longer employed by the Company.
(3) Compensation received under the profit sharing plan.
(4) Represents options previously granted with the exercise
price lowered to $.685 on April 30,
1996.
.
OPTION GRANTS IN 1995
Name Options Granted
Percent of Total Options Exercise Expiration
Date
(a) (b)
Granted to Employees in Fiscal Price $
Year 1995
David Guttman, 50,000 (1) 17%
1.82 May 26, 2004
Chairman of the Board
Richard Helfman 50,000 (1) 17%
1.82 May 26, 2004
Benjamin Sporn 50,000 (1) 17%
1.82 June 10, 2003
(1) Represents options previously granted with the exercise
price lowered to $.685 per Share on April 30, 1996.
AGGREGATED OPTION EXERCISES IN 1995 AND FOR YEAR-END OPTION
VALUES
Name Shares Acquired on Value Realized
Number of Unexercised Options Value of
Exercise ($)
Options at Fiscal Year-End (#) Unexercised
Exercisable/ Options at Fiscal
Unexercisable Year-End ($)
Exercisable/
Unexercisable (a)
(b) (c) (d)
(e)
David Guttman 0 0
50,000/0 0
Benjamin Sporn 0 0
50,000/0 0
Richard Helfman 31,333 0
25,000/25,000 0
The Company maintained a Qualified Retirement Plan and Trust
for qualified employees effective as of January 1, 1993. Under
the plan, a profit sharing plan, the Company's contributions are
discretionary. The Company did not make contributions for the
Plan Year 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barry Septimus and David Guttmann, the shareholders of
Ace, personally guaranteed certain indebtedness of the Company in
the amount of $1,980,000. In addition, Mr. Guttmann guaranteed a
term loan of $1,000,000 issued to Shawmut Capital Corporation
(Shawmut). Pursuant to a workout arrangement with Shawmut in
March 1996, David Guttmann agreed to repay the remainder of the
term loan in the amount of $333,333. The Company agreed as part
of the Companys private placement in March 1996, to issue a
total of 333,333 Shares to his designees in consideration of the
assumption of this debt. Mr. Guttmann also purchased 10,000
shares at $1.00 per share in that private placement.
In March 1993 the Company borrowed $600,000 from an
affiliated entity of David Refson, a Director of the Company. In
January 1995 the Company borrowed an additional $400,000 from
that entity. Interest on these loans is 18% per annum and are
due September 30, 1996. These loans are also guaranteed by David
Guttmann and Barry Septimus.
In June 1991 the Company moved its executive offices
and in December 1991 moved its assembly line into a building at
170 53rd Street, Brooklyn, New York, which the Company leases
from Ace, an entity owned by Barry Septimus and David Guttmann.
The Company executed a 10-year lease with Ace which provides for
minimum annual rent of $467,000 for the first three years and
thereafter annual rents will be negotiated between the parties
based on the then-current economic conditions including rents for
comparable space in the local area in each year thereafter. The
Company is also responsible for its share of real estate tax
assessment. The Company believes that the rent is not higher
than would be paid to a non-affiliated company.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, four Directors will be elected by the
shareholders to serve until the next annual meeting of the
shareholders or until their successors are elected and shall
qualify. The accompanying form of Proxy will be voted for the re-
election as Directors of Benjamin Sporn, David Refson, Richard
Helfman and David Guttmann, unless the Proxy contains contrary
instructions. See Directors of the Company for a description
of such nominees business experience. Proxies cannot be voted
for a greater number of persons than the number of nominees named
in the Proxy Statement. Management has no reason to believe that
any of the nominees will not be a candidate or will be unable to
serve. However, in the event that any of the nominees should
become unable or unwilling to serve as a Director, the Proxy will
be voted for the election of such person or persons as shall be
designated by the Directors.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE ABOVE NAMED NOMINEES. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY
IN THEIR PROXIES A CONTRARY CHOICE.
PROPOSAL 2
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Richard A. Eisner & Company,
independent public accountants, to audit the accounts of the
Company for the fiscal year ending December 31, 1996. Richard A.
Eisner & Company was initially appointed by the Board of
Directors in March 1987 in connection with the audit of the
Company's accounts for the fiscal year ended December 31, 1986,
and was subsequently appointed auditors of the Company's accounts
for fiscal years ended December 31, 1987 through 1995. Richard
A. Eisner & Company has advised the Company that neither the firm
nor any of its members or associates has any direct financial
interest in the Company other than as auditors. Although the
selection and appointment of independent auditors is not required
to be submitted to a vote of shareholders, the Directors deem it
desirable to obtain the shareholders' ratification and approval
of this appointment.
Representatives of Richard A. Eisner & Company are expected to be
present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and are expected to be
available to respond to appropriate questions.
Approval of the proposal requires the affirmative vote of a
majority of the Shares voted with respect thereto. In the event
the proposal is not approved, the Board will consider the
negative vote as a mandate to appoint other independent auditors
of the Company for the next fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF THE AUDITORS
PROPOSAL 3
APPROVAL OF CHANGE OF NAME OF COMPANY TO CREATIVE HOUSEWARES,
INC.
The Companys Board of Directors has adopted a resolution
approving a proposal to amend the Companys Certificate of
Incorporation to change the name of the Company to Creative
Housewares, Inc. The Board of Directors believes such a name
change would be advantageous to the Company since the Company has
been concentrating its efforts over the past several years in
developing and marketing products specifically for the housewares
markets. The Company has been marketing a line of electric
grillers and Pasta machines. Since January 1, 1996, the Company
has been the exclusive distributor in the United States for
Brabantia International, a leading manufacturer of top of the
line houseware products in Europe. The Companys strategy is to
expand into other high-end housewares lines.
Approval of the proposal requires the affirmative vote of a
majority of the Shares issued and outstanding on the record date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL TO AMEND
THE COMPANYS CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF
THE COMPANY
PROPOSAL 4
AUTHORIZATION OF PRIVATE OFFERING AND SALE OF UP TO 4,000,000
SHARES
OF THE COMPANYS SHARES AT $1.00 PER SHARE
APPROVAL OF INVESTMENT TRANSACTION
The Board of Directors of the Company has proposed the issuance
by the Company of up to 4,000,000 Shares in a private placement
at a price of $1.00 per Share pre-split, on a best efforts all-
or-none basis. The Investment Transaction will be offered to a
limited number of accredited investors (Investors) pursuant to
the exemption from registration afforded by Regulation D under
the Securities act of 1933, as amended (the Securities Act).
The Board of Directors shall have the authority to decrease the
offering price per Share if it determines that a lower offering
price is necessary to consummate the Investment Transaction. The
Company intends to utilize any capital raised in this offering
for working capital and to repay indebtedness.
The Board of Directors has unanimously approved the Investment
Transaction. The Investment Transaction is subject to the
approval of the shareholders of the Company in order to comply
with certain rules of the Nasdaq Stock Market. Section
6(i)(1)(d)(ii) of Schedule D of the Nasdaq rules requires that,
prior to issuing shares of a listed class, such as the Common
Stock of the Company equaling 20% or more of the then outstanding
Common Stock in a private placement for less than the greater of
book or market value of the stock, the Company must obtain
approval of the proposed issuance by a majority of the votes cast
at a shareholders meeting. The consummation of the Investment
Transaction would result in the issuance of more than 20% of the
outstanding Common Stock of the Company and, therefore, approval
by the shareholders of the Company of the Investment Transaction
is requested at the Annual Meeting.
Background of Investment Transaction
Due primarily to a decrease in sales for 1995 and the first
quarter of 1996, attributable to the retail softness in demand
and the reduction in the unit selling price of the Companys
pasta machines caused by the large supply of competitive machines
available on the market and also reduced sales of the Grill
Express due to an inability to meet demand because of a shortage
of merchandise caused by production delays in 1995 by one of the
Companys major suppliers, who has since been replaced, the
Company suffered a net loss of approximately $7,251,000 for 1995
and a loss of $1,002,000 from operations in the quarter ended
March 31, 1996. The loss in 1996 was offset however, by an
extraordinary after tax gain of $1,150,000 related to the
negotiated settlement with Shawmut, its former secured lender.
On January 26, 1996, the shareholders approved a private
placement of up to 4,000,000 Shares of the Company at $1.00 per
Share. This offering will continue until the earlier of the sale
of the 4,000,000 Shares or July 23, 1996. Sales were made by
officers of the Company and no commissions were paid. As of June
1, 1996 the Company sold 1,656,333 shares at $1.00 per Share.
333,333 of such Shares were issued to designees of David Guttmann
upon the assumption of $333,333 of Companys debt owed to Shawmut
as part of the settlement with Shawmut. In addition, 300,000 of
such Shares were purchased by two independent sons of a director
of the Company.
During September 1995, the Company consummated a private
placement pursuant to which the Company raised $830,000 through
the sale of Shares of the Company for $1.00 per Share. Sales in
the private placement were made by officers of the Company and no
commissions were paid for the sale of such stock. Of the 830,000
Shares sold in the offering, a total of 100,000 Shares were
purchased by two independent sons of a director of the Company.
The remainder of the Shares were purchased by non-affiliates.
Terms of Proposed Offering:
The Board of Directors has approved, subject to shareholder
approval, the offering of up to 4,000,000 Shares on a best
efforts basis. The purchase price is expected to be $1.00 per
Share. Interim closings may be held at which time investors in
the offering will receive Shares upon payment of the purchase
price. The offering will continue until the earlier of the sale
of all of the Shares offered in the proposed private placement or
October 31, 1996, unless extended by the Company for an
additional 90 days (the Offering Period). It is anticipated
that the offering will be made only to accredited investors.
Affiliates of the Company will be permitted to participate in
purchasing Shares in the offering. The Board of Directors shall
have the authority to decrease the offering price per Share and
increase the amount of Shares offered if it shall determine that
the lower offering price is necessary to consummate the
Investment Transaction. The Board of Directors will take into
consideration, among other factors, the price of the Shares as
quoted on Nasdaq at the commencement of the offering, the average
daily volume for the Shares, the ability to obtain investors and
other sources of funding, the financial condition of the Company
and when the funds will be needed. Approving this proposal would
authorize the Company to offer the Shares at a discount to
market. Shareholders should therefore consider the potential
dilution before approving this proposal. In the event that this
proposal is not approved by the shareholders, the Company would
be required to obtain financing from other sources. The Company
does not currently have any alternative plans.
Approval of the proposal requires the affirmative vote of a
majority of the Shares voted with respect thereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE COMPANYS PRIVATE OFFERING OF SHARES
PROPOSAL 5
AUTHORIZATION OF A ONE FOR TWO REVERSE STOCK SPLIT
The Board of Directors of the Company has adopted a proposal
declaring advisable an amendment to the Certificate of
Incorporation of the Company to effect a one-for-two reverse
stock split of all of the authorized and outstanding Common
Stock. As of June 1, 1996, the Company had authorized 20,000,000
shares of Common Stock, $.03 par value. As of that date, there
were issued and outstanding 7,834,183 shares of Common Stock.
Except for the receipt of cash in lieu of fractional interest,
the proposed reverse stock split will not affect any shareholders
proportionate equity interest in the Company.
The Company also had 5,000,000 shares of Preferred Stock
authorized of which 1,725 were previously issued, but none are
currently outstanding. The Preferred Stock will not be affected
by this proposed reverse split.
The amendment will not have any material impact on the aggregate
capital represented by the Shares for financial statement
purposes. Adoption of the reverse stock split will reduce the
number of presently outstanding Shares, as indicated on the table
below and will provide for a corresponding increase in the par
value from $.03 per Share to $.06 per Share. In connection with
the reverse stock split, current shareholders would receive one
share of, or cash for any resulting fractional share, or both, in
exchange for two currently outstanding Shares.
Class of Stock Outstanding Before Split
Outstanding After Split
Common Stock 7,834,183
3,917,091
The number of outstanding shares after the reverse stock
split is approximate. Except for changes resulting from the
reverse stock split and the increase in the par value from $.03
to $.06 par value, the rights and privileges of holders of Shares
of Common Stock will remain the same, both before and after the
proposed reverse stock split.
Reasons for the Reverse Stock Split
The Company has been advised by the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq")
that it is not in compliance with the qualification for continued
listing of securities on the Nasdaq system since the bid price
has been less than $1.00 per share for more than ten consecutive
trading days. The closing bid price on May 31, 1996 was 7/8. It
is expected that the proposed reverse stock split will enable the
Company's Shares to meet this requirement.
Quotations for the Company's Shares have appeared on Nasdaq since
June 1986. Pursuant to Rule 15c2-6 (the "Rule") adopted by the
Securities and Exchange Commission ("Commission") under the
Securities Exchange Act of 1934, broker-dealers are required to
implement certain supplemental sales practice requirements when
recommending and selling "designated securities" to customers in
transactions not exempt under the Rule. The Rule was directed at
the elimination of certain practices in connection with the sale
of certain low priced securities. The Rule exempts from its
requirements the securities of issuers listed on national
securities exchanges and on Nasdaq. Management of the Company
believes that the market for the Company's Shares will be
improved by maintaining its listing on Nasdaq, thereby
maintaining the exemption of its Common Stock from the impact of
the Rule.
The decrease in the number of Shares of Common Stock outstanding
as a consequence of the proposed reverse stock split should
increase the per Share price of the Common Stock, which may
encourage greater interest in the Common Stock and possibly
promote greater liquidity for the Company's shareholders.
However, the increase in the per Share price of the Common Stock
as a consequence of the proposed reverse stock split may be
proportionately less than the decrease in the number of Shares
outstanding. In addition, any increased liquidity due to an
increased per Share price could be partially or entirely offset
by the reduced number of Shares outstanding after the proposed
reverse stock split. Nevertheless, the proposed reverse stock
split could result in a per Share price that adequately
compensates for the adverse-impact of the market factors noted
above. There can, however, be no assurance that the favorable
effects described above will occur, or that any increased per
Share price of the Common Stock resulting from the proposed
reverse stock split, if attained, will be maintained for any
period of time. The management of the Company does not currently
intend to engage in any future transactions or business
combinations which would qualify the Company for deregistration
of the Common Stock from the reporting and other requirements of
Federal securities laws.
The amendment, if adopted, will also increase the par value per
share of the Company's authorized Shares of Common Stock from
$.03 to $.06. The increase in the par value per Share is
intended to maintain the Company's capital stock accounts at
current levels.
It is expected that if the shareholders authorize this amendment
that the filing of the Certificate of Amendment will occur as
soon as practical after the date of the shareholders meeting.
The proposed reverse stock split will become effective on the
effective date of that filing (the "Effective Date"). Commencing
on the Effective Date, each currently outstanding certificate
will be deemed for all corporate purposes to evidence ownership
of the reduced number of Shares resulting from the reverse stock
split. Currently outstanding certificates do not have to be
surrendered in exchange for new certificates in connection with
the reverse stock split. Rather, new stock certificates
reflecting the number of Shares resulting from the stock split
will be issued only as currently outstanding certificates are
transferred. However, the Company will provide shareholders with
instructions as to how to exchange their certificates and
encourage them to do so. The company will obtain a new CUSIP
number for its Shares.
To the extent a shareholder holds a number of Shares that would
result in a residual fractional interest, the Company will pay,
as soon as is practicable after the Effective Date, $____ for
each Share of Common Stock outstanding prior to the reverse stock
split that comprises the factional interest. Shareholders will
not have the opportunity on or after the Effective Date to round
off their shareholdings to avoid resulting fractional interest.
The $____ price per Share figure for the Common Stock purchased
pursuant to the retirement of resulting interests is based on the
closing bid price of the Common Stock as reported on Nasdaq on
June 14, 1996. In view of this, the management of the Company
believes that the $____ price per Share figure is fair to all of
the shareholders whose fractional interests are retired, the
other shareholders of the Company and the Company. As of June 3,
1996, the Company has 293 shareholders of record and believes
that the approximate total number of beneficial holders of the
Common Stock of the Company to be approximately 1,200 based on
information received from the transfer agent and those brokerage
firms who hold the Company's securities in custodial or "street"
name. The Company estimates that, based on the shareholdings as
of June 3, 1996, it will continue to have approximately the same
number of shareholders after the reverse stock split is effected
as it did prior to the reverse split.
There can be no assurance that the market price of the Shares
after the proposed reverse stock split will be twice the market
price before the proposed reverse stock split, or that such price
will either exceed or remain in excess of the current market
price.
Warrants, Options and Preferred Stock
The Company currently has outstanding warrants owned by four
persons exercisable to purchase 124,805 Shares. In addition,
there are stock options outstanding under the Companys stock
option plans to purchase approximately 432,000 Shares. After
approval of the reverse stock split, the number of Shares to be
issued upon exercise of the outstanding warrants and options will
be reduced to one-half of the previous amount and the per Share
price will double.
Federal Income Tax Consequences
The federal income tax consequences of the proposed reverse stock
split will be as set forth below. The following information is
based upon existing law which is subject to change by
legislation, administrative action and judicial decision and is
therefore necessarily general in nature. Therefore, shareholders
are advised to consult with their own tax advisors for more
detailed information relating to their individual tax
circumstances.
The proposed reverse stock split will be a tax-free
recapitalization of the Company and its shareholders to the
extent that currently outstanding shares of stock are
exchanged for other shares of stock after the split.
The new shares of Common Stock in the hands of a shareholder
will have an aggregate basis for computing gain or loss equal
to the aggregate basis of shares of stock held by that
shareholder immediately prior to the proposed reverse stock
split if no fractional shares are present. If fractional
shares are present as a result of the split, and the
shareholder realizes a gain on the exchange, the shareholder
will recognize a taxable gain equal to the lesser of the cash
received or the gain realized. If fractional shares are
present and a loss is realized on the exchange, the loss is
not recognized, but rather the loss must be deferred until the
shareholder disposes of the new stock in a taxable
transaction. The stockholder's basis in the new stock is
equal to the basis in the stock exchanged, less any cash
received plus gain recognized, if any.
Shareholders who receive cash for fractional shares will be
treated as if they had received such fractional shares and
then sold them to the Company. Such shareholders will
recognize gain or loss equal to the difference between the
amount of cash received and their basis in the stock
exchanged.
Approval Required
The approval of a majority of the outstanding stock entitled to
vote will be necessary to approve the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO EFFECT A ONE
FOR TWO REVERSE STOCK SPLIT.
The Company will provide without charge to each person being
solicited by this Proxy Statement, on written request of any such
person, a copy of the Annual Report of the Company on Form 10-KSB
for the year ended December 31, 1995 (as filed with the
Securities and Exchange Commission), including financial
statements. All such requests should be directed to Henry Lam at
Creative Technologies Corp., 170 53rd Street, Brooklyn, New York
11232.
All proposals of shareholders intended to be included in the
proxy statement to be presented in the 1997 Annual Meeting
materials must be received by the Company's executive offices in
Brooklyn, New York, no later than February 1, 1997.
By Order of the Board of Directors
Dated: June__, 1996
David Selengut
Secretary
PROXY
This Proxy is Solicited
on Behalf of the Board of Directors
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
The undersigned hereby appoints David Selengut and Henry Lam as
Proxies, each with the power to appoint his or her substitute,
and hereby authorizes them to represent and to vote, as
designated below, all the Shares of the Shares of Creative
Technologies Corp. held of record by the undersigned on June 25,
1996 at the Annual Meeting of Shareholders to be held on July 23,
1996 or any adjournment thereof.
1. Election of Directors FOR all nominees listed
below
(except as marked to the contrary
below)_
WITHHOLD AUTHORITY
to vote for all nominees below_
(INSTRUCTION: To withhold authority to vote
for any individual nominee strike a line
through the nominee's name in the list below)
Benjamin Sporn, David Refson, Richard Helfman, David Guttmann
2. To ratify the appointment of Richard A. Eisner & Company as
the independent auditors for the Company for the fiscal year
ending December 31, 1996.
FOR ___ AGAINST ___ ABSTAIN ___
3. Change of name of Company to _______________.
FOR ___ AGAINST ___ ABSTAIN ___
4. Authorization of the offering and sale of up to 4,000,000
Shares of the Companys Shares.
FOR ___ AGAINST ___ ABSTAIN ___
5. Authorization of a reverse split of the Companys Shares on
the basis of one Share for each two Shares issued and
outstanding.
FOR ___ AGAINST ___ ABSTAIN ___
This proxy when properly executed will be voted in the
manner directed herein by the undersigned shareholder. If
no direction is made, this proxy will be voted for Proposals
1, 2, 3, 4 and 5.
Please sign exactly as name appears below. When Shares are
held by joint tenants, both must sign.
Dated: , 1996
Signature
Signature if held jointly
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.
