<PAGE>
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 5, 1999
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 October 5, 1999 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 Goldstein Golub Kessler & Company, P.C.
as the Company's independent accountants; and
3. 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
August 25, 1999 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 1998 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
August 31, 1999 Secretary
<PAGE>
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 5, 1999
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 October 5, 1999,
at 10:00 A.M. New York 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 Goldstein Golub Kessler & Company, P.C. as the
Company's independent auditors; and
3. 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
<PAGE>
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 September 3, 1999.
VOTING SECURITIES
Only holders of Shares of Common Stock, par value $.09 per share and the holders
of shares of 1997 Preferred Stock (the "Shares"), of record as at the close of
business on August 25, 1999 are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. On the record date there were 4,117,444
shares of Common Stock issued and outstanding and 3,500 shares of 1997 Preferred
Stock issued and outstanding. Each outstanding share of Common Stock is entitled
to one vote upon all matters to be acted upon at the meeting and each share of
1997 Preferred Stock is entitled to 1,000 votes. The holders of the 1997
Preferred Stock vote as one group along with the holders of the shares of Common
Stock. The holders of a majority of the votes shall constitute a quorum. The
affirmative vote of the holders of the majority of votes present at the Annual
Meeting and voting is necessary for the election of directors and for the
approval of each resolution. Votes "withheld" will be counted as present at the
meeting and, accordingly, will have the effect of a negative vote.
The holders of shares of Common Stock 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 therefor, subject to the dividend preferences of the Preferred
Stock. Upon liquidation or dissolution of the Company, the holders of shares of
Common Stock are entitled to share ratably in all assets available for
distribution after payment of liabilities and liquidation preferences of the
Preferred Stock. Holders of shares of Common Stock have no preemptive rights, no
cumulative voting rights and no rights to convert their shares of Common Stock
into any other securities.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of July 31, 1999, 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, and by all officers and directors as a group. This table
includes the shares of 1997 Preferred Stock which have the right to cast 1000
votes per share of 1997 Preferred Stock.
<TABLE>
<CAPTION>
Percentage of
Class
Name of Beneficial Number of Shares of As of
Owner Common Stock Owned (1) July 31, 1999
- ------------------ ---------------------- --------------
<S> <C> <C>
Bonnie Septimus (2) 2,715,164 49.8%
72 Lord Avenue
Lawrence, NY
David Guttmann (3) 2,883,738 52.6%
170 53rd Street
Brooklyn, NY
Richard Helfman (4) 297,777 6.7%
170 53rd Street
Brooklyn, NY
Lala Bessler (5) 135,046 3.2%
170 53rd Street
Brooklyn, NY
All officers and
directors as a
group (4 persons)(6) 3,316,561 56.4%
</TABLE>
(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 Common Stock is owned by Mrs. Septimus as nominee for
certain members of her family and shares owned by her husband, as to which
she disclaims beneficial interest of. Also includes shares of Common Stock
issuable upon conversion of 1996-A Preferred Stock and 1,324.5 shares of
1997 Preferred Stock which represents the right to 1,324,500 votes.
(3) A portion of the Common Stock is currently being held by Mr. Guttmann as
nominee for certain members of his immediate family. Includes 16,666 shares
issuable upon exercise of stock options. Also includes shares of Common
Stock issuable upon conversion of 1996 and 1996-A Preferred Stock and of
1,357 shares of 1997 Preferred Stock which represents the right to
1,357,000 votes.
(4) Includes 275,000 shares underlying immediately exercisable options.
(5) Includes 125,000 shares underlying immediately exercisable options and
2,190 shares owned by her husband as to which she disclaims beneficial
ownership of.
(6) Includes the shares described in footnotes (3), (4) and (5) above.
3
<PAGE>
DIRECTORS OF THE COMPANY
Name Age Title
---- --- -----
David Guttmann 52 Chairman of the Board
Richard Helfman 52 Director and President of the Company and IHW
David Selengut 43 Secretary
Lala Bessler 51 Director and President of Ace
David Guttmann has been a Director and Chief Executive Officer of the
Company since May 1994 and Chairman of the Board since May 1997. From June 1983
until May 1994, Mr. Guttmann was Chief Executive Officer of Applied Microbiology
Inc., and was its chairman until October 1995.
Richard Helfman has been a Director of the Company since April 1990 and
President since March 1990. He has also been President of IHW, Inc. since July,
1997. 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 has been Secretary of the Company since September 1987. Mr.
Selengut has been an attorney with Ellenoff Grossman & Schole LLP since May
1998, was a partner at the law firm of Bernstein and Wasserman LLP from June
1997 to April 1998 and was a partner at the law firm of Singer Zamansky LLP from
May 1995 until April 1997. Those firms have 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.
Lala Bessler has been a Director of the Company since December 1998 and
President of Ace Surgical Supply Co., Inc. since 1986.
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 Officers continues to serve until his successor has been elected and
qualified.
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,
1998.
4
<PAGE>
EXECUTIVE COMPENSATION
The compensation paid to the Company's Chief Executive Officer and to each
of the other executive officers whose total compensation exceeded $100,000
during each of the preceding three fiscal years is as follows:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
Other Annual Awards
Name and Principal Salary Compensation Options
Position Year ($) ($) (#)
------------------ ---- ------ ------------ -------------
<S> <C> <C> <C> <C>
David Guttmann, 1998 $106,333
Chief Executive Officer 1997 $122,596 16,666(1)
1996 $50,000
Richard Helfman, 1998 $126,485 250,000
President 1997 $147,115 25,000(1)
1996 $180,000
Lala Bessler 1998 $116,406 125,000
</TABLE>
(1) Represents options previously granted with the exercise price lowered to
$.44 on August 21, 1997.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Percent of Total
Options Granted to
Name Options Granted Employees in Fiscal Exercise Price
(a) (b) Year 1998 $ Expiration Date
----- --------------- ------------------- -------------- ---------------
<S> <C> <C> <C> <C>
David Guttmann,
Chief Executive Officer none
Richard Helfman
President 250,000 43.0% $.28 November 30, 2003
Lala Bessler 125,000 21.5% $.28 November 30, 2003
</TABLE>
5
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND FOR YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised in-the-
Options at Fiscal Money Options at
Year-End Fiscal Year-End
(#) ($)
Shares Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
- ---- ------------------ -------------- ----------------- -------------------
<S> <C> <C> <C> <C>
David Guttmann -0- -0- 16,666/0 -0-
Richard Helfman -0- -0- 275,000/0 -0-
Lala Bessler -0- -0- 125,000/0 -0-
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barry Septimus and David Guttmann personally guaranteed certain
indebtedness of the Company in the amount of $2,814,000 as of June 30, 1999.
During May 1999, certain creditors demanded payment of a portion of their debt
from the Company. As Company was unable to meet these demands, payments totaling
$1,037,000 were made by these guarantors. The Company delivered a promissory
note to these guarantors in said amount. The principal and accrued interest at a
rate of 12% per year are due upon demand. Interest on the unpaid principal is
payable monthly. The Company pledged all of the shares of Ace and IHW to these
guarantors, subject to the prior security interest of the financial institution
and other noteholders.
The Company and Ace's executive offices and warehousing space at 170 53rd
Street, Brooklyn, New York, are leased from an entity owned by Barry Septimus
and David Guttmann. At June 30, 1999, the Company owed the entity $496,000 for
prior rental of these offices. During April 1999, this entity sold the building
occupied by the Company and the Company moved into substantially less office and
warhousing space at the same location.
In December 1996, the Company and Ace obtained lines of credit aggregating
$3,000,000 from Century Business Credit Corporation ("Century"). Currently Ace
and IHW can borrow $1,800,000 and $1,200,000, respectively. David Guttmann
guaranteed up to $1,000,000 of the Company's and its subsidiaries' obligations
to Century.
6
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, three 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 Lala Bessler, 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 APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors intends to appoint Goldstein Golub Kessler & Company,
P.C., independent public accountants, to audit the accounts of the Company for
the fiscal year ending December 31, 1999. Goldstein Golub Kessler & Company,
P.C. was initially appointed by the Board of Directors in 1997 in connection
with the audit of the Company's accounts for the fiscal year ended December 31,
1997 and was subsequently reappointed to audit the Company's accounts for fiscal
year ended December 31, 1998. Goldstein Golub Kessler & Company, P.C. 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 Goldstein Golub Kessler & Company, P.C. 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 the holders of a
majority of the Common Stock and the 1997 Preferred Stock, voting as a group,
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
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, 1998 (as
filed with the Securities and Exchange Commission), including financial
statements.
7
<PAGE>
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 2000 Annual Meeting materials must be received by the
Company's executive offices in Brooklyn, New York, no later than March, 2000.
By Order of the Board of Directors
Dated: August 31, 1999
David Selengut
Secretary
8
<PAGE>
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 substitute, and hereby authorizes them to
represent and to vote, as designated below, all the Shares of Creative
Technologies Corp. held of record by the undersigned on August 25, 1999 at the
Annual Meeting of Shareholders to be held on October 5, 1999 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)
Lala Bessler, Richard Helfman, David Guttmann
2. To ratify the appointment of Goldstein Golub Kessler & Company, P.C. as
the independent auditors for the Company for the fiscal year ending
December 31, 1999.
FOR ___ AGAINST ___ ABSTAIN ___
9
<PAGE>
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 and 2. Please sign exactly as name appears
below. When Shares are held by joint tenants, both must sign.
Dated: , 1999
----------------------
-----------------------------------
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.
10
