<PAGE>
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[_] Preliminary Information Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14c-5(d)(2))
[X] Definitive Information Statement
CYPRESS FINANCIAL SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
CYPRESS FINANCIAL SERVICES, INC.
5400 Orange Avenue, Suite 200
Cypress, California 90630
To Our Stockholders:
On December 22, 1999, the holders of a majority of the outstanding voting
securities (the "Consenting Stockholders") of CYPRESS FINANCIAL SERVICES, INC.
("CYPRESS" or the "Company") executed written consents approving the following
action by the Company:
Election of five (5) Directors to serve until the next annual meeting
of stockholders and until their respective successors are duly elected
and qualified.
The Board of Directors had previously approved the above action and fixed the
close of business on November 30, 1999 as the record date for the determination
of stockholders entitled to vote with respect to the above action. The
Consenting Stockholders, whose shares represent approximately 66% of the
Company's outstanding voting securities entitled to vote, have consented to the
above action. Therefore, no annual meeting of stockholders will be held.
Management is not soliciting proxies in connection with this Information
Statement and stockholders are requested not to send proxies to the Company. A
copy of the Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1999, which includes audited financial statements of the Company,
will be mailed with this Information Statement to all stockholders of record as
of the record date.
Your attention is directed to the enclosed Information Statement.
By Order of the Board of Directors
/s/ Farrest Hayden
--------------------------
Farrest Hayden
Chairman of the Board
Cypress, California
January 28, 2000
<PAGE>
CYPRESS FINANCIAL SERVICES, INC.
5400 Orange Avenue, Suite 200
Cypress, California 90630
____________________________________________
INFORMATION STATEMENT
____________________________________________
INTRODUCTION
This Information Statement is furnished by the Board of Directors of
CYPRESS FINANCIAL SERVICES, INC. (the "Company") in connection with the election
of Directors. This Information Statement and enclosed materials are first being
sent on or before the close of business on January 28, 2000, to stockholders of
record as of November 30, 1999 (the "Record Date"). On December 22, 1999, the
holders of a majority of the outstanding voting securities of the Company on the
Record Date (the "Consenting Stockholders") executed written consents approving
the above action. The Company will cause the election of Directors to become
effective 20 days after this Information Statement is first sent to the
stockholders.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
The information included herein should be reviewed in conjunction with the
financial statements, notes to financial statements, auditor's report and other
information included in the Company's 1999 Annual Report on Form 10-KSB that is
being mailed with this Information Statement to all stockholders of record as of
the Record Date.
Outstanding Securities and Voting Rights
As of the Record Date, there were issued and outstanding 6,526,911 shares
of the Company's Common Stock, $.001 par value (the "Common Stock") and 345,000
shares of the Company's Preferred Stock, $.001 par value (the "Preferred Stock")
(collectively the "Voting Securities"), for the purpose of determining
stockholders entitled to receive this Information Statement. The Consenting
Stockholders held approximately 4,276,457 shares of Common Stock and 238,148
shares of Preferred Stock or approximately 66% of the Company's issued and
outstanding Voting Securities.
Each holder of Voting Securities would normally be entitled to one vote in
person or by proxy for each share of Voting Securities in his or her name on the
books of the Company, as of the Record Date, on any matter submitted to the vote
of the stockholders. However, under Nevada law, any action which may be taken at
any stockholders' meeting may be taken by written consent of the requisite
number of stockholders required to take such action. The election of Directors
requires the affirmative vote or written consent of a majority of the Company's
outstanding Voting Securities. On December 22, 1999, the Consenting
Stockholders, who hold approximately 66% of the Company's outstanding Voting
Securities, consented to the election of Directors as set forth herein.
Therefore, the Company is not soliciting proxies and will not hold a meeting on
this matter.
1
<PAGE>
ELECTION OF DIRECTORS
Information Concerning Nominees
The Bylaws of the Company authorize the Board of Directors to fix the
number of Directors up to a maximum of nine (9). On December 22, 1999, the Board
of Directors fixed the number of Directors at five (5) and nominated the persons
listed below for election to the Board. Four (4) of the five (5) nominees were
incumbent Directors and one (1) nominee was selected by the Board to replace a
Director who resigned on December 22, 1999. Each Director will be elected to
hold office until the next annual meeting of stockholders and until his or her
successor has been duly elected and qualified.
Each of the nominees has consented to be named in this Information
Statement and has consented to serve as a Director. However, should any nominee
named herein for the office of Director become unable or unwilling to accept
nomination or election, the Board of Directors may recommend and nominate
another person in the place and stead of such person. The Board of Directors has
no reason to believe that any substitute nominee will be required.
Farrest Hayden, 54, founded the Company as the Chief Executive Officer and
Chairman of the Board in 1995 and currently serves as Chairman of the Board. Mr.
Hayden is the founder of Medical Control Services, Inc. ("MCSI"), the Company's
predecessor, which was founded in 1977. He served as President of the Company
until December 22, 1999.
Otto J. Lacayo, 64, joined the Company as the Chief Financial Officer,
Secretary and Director in 1995 and currently serves as a Director. Mr. Lacayo is
a co-founder of MCSI, the Company's predecessor. He served as Executive Vice
President of the Company until December 22, 1999.
Graham E. Gill, 69, was elected to serve as a Director in 1995. He has been
the President of The Belgravia Fund (London) Ltd., a London-based mutual fund,
since 1990. He has also served as President of Euro-American Productions, Ltd.
since 1989.
Diane W. Dales, 43, was elected to serve as a Director in 1998. She has
served as Assistant Vice President at Pacific Life Insurance Company since
January 1988 and is currently Director, Private Placements, at Pacific Life. She
is responsible for the origination and monitoring of private placement
securities and credit analysis of investment grade public securities.
John C. Hindman, 28, joined the Company on September 4, 1998 as Chief
Financial Officer. On December 22, 1999, the Board of Directors appointed Mr.
Hindman interim Chief Executive Officer and elected him as a Director. He will
also continue to serve as Chief Financial Officer. Mr. Hindman served as Vice
President of Finance for West Capital Financial Services from June 1996 until
September 1998. From September 1993 to June 1996, he was employed by Arthur
Andersen LLP in public accounting.
2
<PAGE>
Effective December 22, 1999, Mr. Hayden and Mr. Lacayo relinquished their
office and daily operational responsibilities with the Company, although each
will continue serving as a Director, with Mr. Hayden as Chairman of the Board.
Additional Executive Officers and Key Employees
Daniel R. Eder, 43, became Chief Operating Officer of the Company in July
1998. He has served as the General Manager of MCSI, the Company's predecessor,
since 1987.
Board of Directors and Committees
The Board of Directors meets during its fiscal year to review significant
developments affecting the Company and to act on matters requiring Board
approval. The Board of Directors met six (6) times and acted by unanimous
written consent four (4) times during the 1999 fiscal year. During that period,
all members of the Board participated in at least 75% of all Board and
applicable committee meetings.
The Board of Directors has established audit, executive, stock option and
nominating and compensation committees to devote attention to specific subjects
and to assist in the discharge of its responsibilities. The functions of those
committees, their members and the number of meetings held during the 1999 fiscal
year are described below:
Audit Committee. The Audit Committee was established to recommend to the
Board of Directors the appointment of the firm selected to be the independent
public accountants for the Company and to monitor the performance of such firm;
to review and approve the scope of the annual audit and quarterly reviews and
evaluate with the independent public accountants the Company's annual audit and
annual financial statements; to review with management the status of internal
accounting controls; to evaluate any problem areas having a potential financial
impact on the Company which may be brought to its attention by management, the
independent public accountants or the Board of Directors; and to evaluate all
public financial reporting documents of the Company. Mr. Gill and Ms. Dales are
presently the members of the Audit Committee. The Audit Committee met on January
11, 2000 with Arthur Andersen LLP, the Company's accountants, in connection with
their audit for the fiscal year ended September 30, 1999, and found no material
deficiencies.
Executive Committee. The Executive Committee is empowered to act in lieu of
the Board of Directors on any matter except that for which the Board of
Directors has specifically reserved authority to itself and except for those
matters specifically reserved to the full Board of Directors by law. Mr. Hayden,
Mr. Hindman and Ms. Dales are members of the Executive Committee. Manuel Occiano
was a member of the Executive Committee until December 22, 1999 when he resigned
from his position as a Director. The Executive Committee met twice during the
fiscal year.
Stock Option Committee. The Stock Option Committee develops and administers
incentive plans, including the Company's 1995 Stock Option Plan. Mr. Hindman and
Ms. Dales are members of the Stock Option Committee, which held one meeting
during the fiscal year.
3
<PAGE>
Nominating and Compensation Committee. The Nominating and Compensation
Committee was established to recommend and nominate qualified persons to serve
as independent Directors of the Company and to determine the compensation of
executive officers and key employees of the Company. Mr. Gill and Ms. Dales are
presently the members of the Committee. The Committee has not adopted procedures
for the consideration of nominees recommended by security holders. The Committee
met three times during the fiscal year to recommend the election of three
Directors.
The Company compensates independent Directors at the rate of $4,000 per
year for service on the Board of Directors, plus $500 per Board meeting. The
Board agreed to consider adopting an appropriate stock option formula for
independent Directors at a future meeting. The Company did not grant any stock
options to any of the Company's independent Directors during the fiscal year.
The Consenting Stockholders
Stockholders of the Company, including four of the five Directors of the
Company, representing voting rights equal to approximately 66% of the shares
entitled to vote on Company matters, have delivered written consents to the
election of the above nominees as Directors of the Company to serve until the
next annual meeting of stockholders and until their successors are duly elected
and qualified as set forth in this Information Statement.
The names of such stockholders (the "Consenting Stockholders") and the
number of shares of Common Stock and Preferred Stock such persons are entitled
to vote on matters such as those proposed in this Information Statement are as
follows:
<TABLE>
<CAPTION>
Number of Common Percentage of
Shares Entitled to Vote Common Stock
Name As of Record Date As of Record Date
- ------------------------------------ ----------------------- -----------------
<S> <C> <C>
Pacific Life Insurance Company (1) 2,300,000 35.2%
Farrest Hayden 880,109 13.5%
Lacayo Family Trust (2) 672,048 10.3%
Euro-American Production, Ltd (3) 350,900 5.4%
The Belgravia Fund, Ltd. (3) 73,400 1.1%
--------- ----
Total: 4,276,457 65.5%
<CAPTION>
Number of Preferred Percentage of
Shares Entitled to Vote Preferred Stock
Name As of Record Date As of Record Date
- ----- ----------------------- -----------------
Farrest Hayden 121,088 35.1%
Otto J. Lacayo 117,060 33.9%
--------- ----
Total: 238,148 69.0%
</TABLE>
_________________________
(1) Ms. Diane W. Dales, a Director of the Company, is a Director, Private
Placements at Pacific Life Insurance Company ("Pacific Life"). Pacific Life
is holder of the stock and Ms. Dales has voting power over these shares.
(2) Mr. Otto J. Lacayo, a Director of the Company, is a Trustee for the Lacayo
Family Trust, the holder of the stock.
(3) Mr. Graham E. Gill, a Director of the Company, is the President of the
Belgravia Fund, Ltd. and Euro-American Production, Ltd., the holders of the
stock, and has voting power over these shares
4
<PAGE>
These shares represent approximately 66% of the outstanding Voting
Securities of the Company. Therefore, the proposals have been approved by
written consent of the Consenting Stockholders and will take effect 20 days
after the Information Statement is sent to stockholders.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual and long-term cash and non-cash
compensation paid by the Company for services rendered in all capacities during
the fiscal years ended September 30, 1999, 1998 and 1997 to those persons who
were, as of September 30, 1999, Chief Executive Officer and the other most
highly compensated executive officers of the Company whose total annual salary
and bonus exceeded $100,000 during the fiscal year ended September 30, 1999 (the
"Named Executive Officers"):
<TABLE>
<CAPTION>
Long-Term Compensation
- -----------------------------------------------------------------------------------------------------------------
Annual Compensation
Awards Payout
- ---------------------------------------------------------------------------------------------------------------------
Restricted All Other
Name and Principal Fiscal Stock Options/ LTIP Compen-
Position Year Salary($) Bonus ($) Other($) Award(s)($) SARs(#) Payout($) sation($)(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Farrest Hayden, 1999 169,000 -0- -0- -0- -0- -0- -0-
Chairman of the 1998 221,000 -0- -0- -0- -0- -0- -0-
Board and 1997 221,000 -0- -0- -0- -0- -0- -0-
President
- ---------------------------------------------------------------------------------------------------------------------
Manuel Occiano, (2) 1999 180,000 -0- -0- -0- -0- -0- -0-
Chief Executive 1998 7,500 -0- -0- -0- 300,000 -0- -0-
Officer 1997 0 -0- -0- -0- -0- -0- -0-
---------------------------------------------------------------------------------------------------------------------
John C. Hindman, (3) 1999 125,000 -0- -0- -0- -0- -0- -0-
Chief Financial 1998 8,996 -0- -0- -0- 100,000 -0- -0-
Officer 1997 0 -0- -0- -0- -0- -0- -0-
- ---------------------------------------------------------------------------------------------------------------------
Daniel R. Eder, 1999 115,000 -0- -0- -0- -0- -0- -0-
Chief Operating 1998 127,023 -0- -0- -0- 50,000 -0- -0-
Officer 1997 126,929 -0- -0- -0- -0- -0- -0-
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The remuneration described in the table does not include the cost to the
Company of benefits furnished to the Named Executive Officers, including
premiums for health insurance and other personal benefits provided to such
individuals in connection with their employment. The value of such benefits
cannot be precisely determined; however, the Named Executive Officers did
not receive other compensation in excess of the lesser of $50,000 or 10% of
such officers' cash compensation.
(2) Mr. Occiano began his employment with the Company on September 16, 1998
under a three-year contract. He resigned his positions as Director and Chief
Executive Officer on December 22, 1999. See "Employment Agreements" below.
(3) Mr. Hindman began his employment with the Company on September 1, 1998 under
a three-year contract. On December 22, 1999, he was appointed as interim
Chief Executive Officer and elected as a Director. See "Employment
Agreements" below.
5
<PAGE>
Employment Agreements
Mr. Manuel Occiano served as Chief Executive Officer and a Director of the
Company from September 16, 1998 until December 22, 1999 when he resigned his
positions. His employment as Chief Executive Officer was subject to a three-year
employment agreement. He received a base salary of $180,000 per year. His base
salary was subject to an increase of up to 20% each year if he met certain
performance criteria as mutually agreed to with the Compensation Committee of
the Board of Directors. He was eligible to participate in the management bonus
pool to be established by the Board of Directors and was entitled, during 1999
only, to quarterly advances of $22,500 to be credited against the management
bonus when earned. Mr. Occiano was granted options to purchase 300,000 shares of
the Company's Common Stock at an exercise price of $1.3125 per share. 160,000 of
the options are currently vested and the remaining options will vest at the rate
of 20,000 per quarter until September 2001. As of the date of this Information
Statement, the terms of a Separation and Release Agreement for Mr. Occiano were
being negotiated.
Mr. John C. Hindman serves as Chief Financial Officer under a three-year
agreement expiring August 31, 2001. On December 22, 1999, the Board of Directors
appointed him to serve as interim Chief Executive Officer as well as continuing
as Chief Financial Officer. Mr. Hindman receives a base salary of $125,000 per
year. He is eligible to participate in the management bonus pool to be
established by the Board of Directors. Mr. Hindman was granted an option to
purchase 100,000 shares of the Company's Common Stock at an exercise price of
$1.3125 per share. 47,500 of the options are currently vested and the remaining
options will vest at the rate of 7,500 per quarter until September 2001.
Stock Option Grants
No options were granted during the fiscal year ended September 30, 1999.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners and Management
The following tables set forth information, as of November 30, 1999,
concerning shares of the Company's Voting Securities beneficially owned by (i)
each stockholder known by the Company to be the beneficial owner of more than 5%
of any class of the Company's outstanding Voting Securities, (ii) each Director
of the Company, (iii) each of the Named Executive Officers, and (iv) all
officers and Directors of the Company as a group. Unless otherwise indicated,
each person listed has sole voting and investment power over the shares
beneficially owned by him.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership(1) of Class
- -------------- ----------------------------------- ----------------------- ---------
<S> <C> <C> <C>
Common Stock Pacific Life Insurance Company (2) 2,300,000 35.2%
700 Newport Center Drive
Newport Beach, CA 92660
Common Stock Farrest Hayden (3) 880,109 13.5%
Preferred Stock 5400 Orange Ave., Suite 200 121,088 35.1%
Cypress, CA 92026
Common Stock Lacayo Family Trust (4) 672,048 10.3%
Preferred Stock 5400 Orange Ave., Suite 200 117,060 33.9%
Cypress, CA 92026
Common Stock Euro-American Productions, Ltd. (5) 350,900 5.4%
The Belgravia Fund, Ltd (5) 73,400 1.1%
Common Stock Manuel Occiano (6) 66,000 1.0%
Common Stock John C. Hindman (7) 33,000 *
Common Stock Daniel Eder (8) 4,800 *
All Directors 4,380,257 67.0%
and officers Common Stock
as a Group Preferred Stock 238,148 69.0%
(7 persons)
</TABLE>
____________________
(1) Beneficial ownership is determined in accordance with the applicable rules
under the Securities Exchange Act of 1934. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are
currently exercisable, or become exercisable within 60 days from the date
hereof, are deemed outstanding. However, such shares are not deemed
outstanding for purposes of computing the percentage ownership deemed
outstanding of any other person. Percentage of ownership is based on
6,526,911 shares of Common Stock and 345,000 shares of Preferred Stock.
(2) Ms. Diane W. Dales, a Director of the Company, is a Director, Private
Placements at Pacific Life Insurance Company.
(3) Mr. Farrest Hayden is Chairman of the Board.
(4) Mr. Otto J. Lacayo, a Director of the Company, is a Trustee for the Lacayo
Family Trust.
(5) Mr. Graham E. Gill, a Director of the Company, is the President of Euro-
American Production, Ltd and the Belgravia Fund, Ltd.
(6) Mr. Manuel Occiano was a Director of the Company and Chief Executive Officer
until he resigned both positions on December 22, 1999.
(7) Mr. John C. Hindman is Chief Financial Officer and was appointed by the
Board of Directors on December 22, 1999 to serve as a Director as well as
interim Chief Executive Officer.
(8) Mr. Eder is Chief Operating Officer.
*Represents less than 1% of the class of shares
7
<PAGE>
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS AND NOTES
THERETO, IS BEING MAILED TO EACH STOCKHOLDER TOGETHER WITH THIS INFORMATION
STATEMENT. ADDITIONAL COPIES OF THE ANNUAL REPORT MAY BE OBTAINED BY
STOCKHOLDERS WITHOUT CHARGE BY WRITING TO THE COMPANY AT THE ADDRESS OF THE
COMPANY SET FORTH ON THE COVER OF THIS INFORMATION STATEMENT.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and certain of its officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, Directors and greater than 10% stockholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for those persons, the Company believes that during the fiscal year
ended September 30, 1999, all filing requirements applicable to its officers,
Directors and greater than 10% beneficial owners were complied with during the
fiscal year.
OTHER BUSINESS
No further business will be transacted by Written Consent to corporate
action in lieu of a meeting of stockholders to which this Information Statement
pertains.
8
<PAGE>
COSTS OF INFORMATION STATEMENT
This Information Statement has been prepared by the Company and its Board of
Directors, and the Company will bear the costs of distributing this Information
Statement to stockholders, including the expense of preparing, assembling,
printing, and mailing the Information Statement and attached materials. Although
there is no formal agreement to do so, the Company may reimburse banks,
brokerage houses, and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding this Information Statement and related
materials to stockholders. The Company may pay for and use the services of other
individuals or companies not regularly employed by the Company in connection
with the distribution of this Information Statement if the Board of Directors of
the Company determines that this is advisable.
By the order of the Board of Directors,
/s/ Farrest Hayden
---------------------------
Farrest Hayden
Chairman of the Board
Cypress, California
January 28, 2000
9
