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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
LEC Technologies, Inc.
- -------------------------------------------------------------------
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and O-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 O-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 O-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration 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:
__________________________________________________
LEC TECHNOLOGIES, INC.
6540 South Pecos Road
Suite 103
Las Vegas, Nevada 89120
-------------------------
NOTICE OF ANNUAL MEETING
To Be Held September 15, 1998
To all Stockholders of
LEC TECHNOLOGIES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of LEC TECHNOLOGIES, INC., a Delaware corporation (the "Company"),
will be held at the Company's headquarters at 6540 South Pecos
Road, Suite 103, Las Vegas, Nevada 89120 on September 15, 1998 at
the hour of 9:30 a.m., Pacific Standard Time, for the following
purposes:
1. To elect four Directors to hold office for the term until
the next Annual Meeting and until their successors are
duly elected and qualified;
2. To consider and act upon a proposal to amend the
Company's Certificate of Incorporation to authorize
a one-for-four reverse stock split (the "Reverse Split")
of the presently issued and outstanding shares of the
Company's Common Stock by changing each four issued and
outstanding shares of Common Stock into one issued and
outstanding share of Common Stock; and
3. To transact such other business as may properly come
before the Annual Meeting or any adjournment or
adjournments thereof.
Only stockholders of record at the close of business on July 20,
1998 are entitled to notice of and to vote at such meeting or any
adjournments thereof.
By order of the Board of Directors.
MICHAEL F. DANIELS
-----------------------------------
Michael F. Daniels,
President
Las Vegas, Nevada
August 21, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY
THE COMPANY'S BOARD OF DIRECTORS AND RETURN IT TO THE COMPANY. THE
PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED. ANY
STOCKHOLDERS EXECUTING PROXIES MAY ATTEND THE MEETING AND VOTE IN
PERSON SHOULD THEY SO DESIRE.
LEC TECHNOLOGIES, INC.
6540 South Pecos Road
Suite 103
Las Vegas, Nevada 89120
----------------------------
PROXY STATEMENT FOR ANNUAL
MEETING OF STOCKHOLDERS
----------------------------
The Board of Directors of LEC Technologies, Inc. (the
"Company") presents this Proxy Statement to all Stockholders of the
Company and solicits their proxies for the Annual Meeting of
Stockholders to be held on September 15, 1998 (the "Annual
Meeting"). All proxies duly executed and received will be voted on
all matters presented at the Annual Meeting in accordance with the
instructions given by such proxies. In the absence of specific
instructions, proxies so received will be voted for the named
nominees for election to the Company's Board of Directors, and for
the proposal to amend the Company's Certificate of Incorporation to
authorize, if necessary, a one-for-four reverse stock split (the
"Reverse Split") of the presently issued and outstanding shares of
the Company's Common Stock by changing each four issued and
outstanding shares of Common Stock into one issued and outstanding
share of Common Stock. The Board of Directors anticipates that all
of the nominees will be available for election and does not know of
any other matter that may be brought before the Annual Meeting. In
the event that any other matter should come before the Annual
Meeting or that any nominee is not available for election, the
persons named in the enclosed proxy will have discretionary
authority to vote all proxies not marked to the contrary with
respect to such matter in accordance with their best judgment. The
proxy may be revoked at any time before being voted. This Proxy
Statement is being mailed on or about July 31, 1998.
A total of 4,704,069 shares of Common Stock of the Company
were outstanding as of July 20, 1998. The Common Stock is the only
outstanding class of securities of the Company entitled to vote.
Each share of Common Stock has one vote. Only Stockholders of
record as of the close of business on July 20, 1998 will be
entitled to vote at the Annual Meeting or any adjournment or
adjournments thereof.
Directors will be elected by a plurality of the votes cast for
Directors. The affirmative vote by Stockholders holding a majority
of the outstanding shares of Common Stock entitled to vote is
required to approve the proposal to authorize a reverse split of
the Company's Common Stock. Shares represented by proxies that are
marked "abstain" with respect to all matters other than the
election of Directors and proxies that are marked to deny
discretionary authority on all other matters will only be counted
for the purpose of determining the presence of a quorum. Votes
withheld in connection with the election of one or more nominees
for Director will not be counted as votes cast for such
individuals. In addition, where brokers are prohibited from
exercising discretionary authority for beneficial owners who have
not provided voting instructions (commonly referred to as "broker
non-votes"), those shares will not be included in the vote totals.
A list of stockholders entitled to vote at the Annual Meeting
will be available at the Company's offices, 6540 South Pecos Road,
Suite 103, Las Vegas, Nevada 89120 for a period of ten days prior
to the Annual Meeting for examination by any stockholder and at the
Annual Meeting.
ACTIONS TO BE TAKEN AT THE ANNUAL MEETING
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees to the Board of Directors
Four directors will be elected at the 1998 Meeting to hold
office for the term until the next Annual Meeting and until their
successors are duly elected and qualified. Unless otherwise
indicated, the accompanying form of proxy will be voted for the
persons listed below. In the event that any nominee for Director
should become unavailable to serve, it is intended that votes will
be cast, pursuant to the enclosed form of proxy, for such
substitute nominee as may be nominated by the Company. At this
time, the Board of Directors knows of no reason why any nominee may
be unable to serve. There is no arrangement or understanding
between any director or nominee and any other person pursuant to
which such person was selected as a director or nominee.
The following table sets forth information concerning the
nominees:
Name Age Position
- -------------------- --- --------------------------------
Michael F. Daniels 50 Chairman of the Board, President
and Chief Executive Officer
Larry M. Segall 43 Director
L. Derrick Ashcroft 69 Director
Richard D. Falcone 45 Director
Biographical Information About Nominees
Michael F. Daniels. Michael F. Daniels has served as Chairman
of the Board of Directors, President and Chief Executive Officer
since April 1994 and as a Director of the Company since 1983. He
served as Chief Operating Officer from March 1993 to April 1994 and
as Senior Vice President - Marketing for more than five years prior
thereto. From 1970 to 1983 he was a Senior Systems Engineer with
Metropolitan Life Insurance Company.
Larry M. Segall. Larry M. Segall has served as a Director of
the Company since November 1989. Mr. Segall has been the Chief
Financial Officer of Vitamin Shoppe Industries, Inc. since October
1997. From 1985 through October 1997 he was Vice President,
Treasurer and Controller of Tiffany & Co. From 1983 to 1985 he was
the Controller of Murijani International Ltd. From 1977 to 1983 he
was employed as an auditor with Touche Ross & Co.
L. Derrick Ashcroft. L. Derrick Ashcroft has served as a
Director of the Company since August 1994. From 1988 to 1995 he
was Chairman of the Board of Cardiopet, Inc., an animal diagnostic
firm and from 1986 to 1988 he was Chairman of the Board and
President of Ashcroft Rubin, Inc., an equipment leasing company
specializing in tax-driven equipment leases. He also currently
serves as a director on the board's of Tatatech, Inc., a high-tech
venture capital firm and Telco Technologies, Inc., a
telecommunications services company. Mr. Ashcroft is a graduate of
Oxford University, England.
Richard D. Falcone. Richard D. Falcone has been Executive
Vice President, Chief Financial Officer, Chief Operating Officer,
Secretary and Treasurer of Netgrocer, Inc., a seller of non
perishable goods on the Internet, since 1997. From 1994 to 1996,
he was the Executive Vice President and Chief Operating Officer of
National Merchants Management Corporation, a book retailer and
wholesaler. From 1990 to 1994, he was the Chief Financial Officer
of Bed, Bath & Beyond, Inc., a retailer of home products.
INFORMATION ABOUT THE BOARD OF DIRECTORS, COMMITTEES OF THE
BOARD AND EXECUTIVE OFFICERS
Other Executive Officer
William J. Vargas. William J. Vargas has served as Vice
President - Finance, Chief Financial Officer and Treasurer since
May 1995 and as Secretary since February 1996. From July 1993 to
January 1995 he was the Senior Director of Finance for Fitzgeralds
Casino/Hotel and from February 1995 through April 1995 he was an
independent financial consultant. From July 1990 to December 1991
and from January 1992 to July 1993 he was the Chief Financial
Officer of Electronic Data Technologies, Inc. and Sport of Kings,
Inc., respectively, two publicly traded gaming companies. From
1984 to 1990 he was employed as an auditor with Arthur Andersen &
Co.
Meetings of the Board of Directors and Information Regarding
Committees
The Board of Directors held a total of seven meetings during
the fiscal year ended December 31, 1997. All incumbent directors
attended at least seventy-five percent of those meetings and of its
committees of the Board on which they served.
The Board of Directors has the following committees: the
Compensation Committee (comprised of Messrs. Daniels, Segall and
Ashcroft); the Audit Committee (comprised of Messrs. Segall and
Ashcroft); and the Stock Option Plan Committee (comprised of
Messrs. Segall and Ashcroft).
The Compensation Committee is charged with periodically
reviewing the compensation of the Company's officers and employees
and recommending appropriate adjustments. The Compensation
Committee met once during fiscal year 1997.
The Audit Committee recommends engagement of the Company's
independent accountants and is primarily responsible for reviewing
their performance and their fees and for reviewing and evaluating
with the independent auditors and management the Company's
accounting policies and its system of internal controls. The Audit
Committee met twice during fiscal year 1997.
The Stock Option Plan Committee administers the Company's
stock option plans and makes awards under such plans. The Stock
Option Plan Committee met twice during fiscal year 1997.
Compliance with Section 16(a) of the Exchange Act
Pursuant to Section 16 of the Securities Exchange Act of 1934,
the Company's Directors and executive officers and beneficial
owners of more than ten percent of the Company's Common Stock are
required to file certain reports, within specified time periods,
indicating their holdings of and transactions in the Common Stock
and derivative securities. Based solely on a review of such
reports provided to the Company and written representations from
such persons regarding the necessity to file such reports, the
Company is not aware of any failures to file reports or report
transactions in a timely manner during the Company's fiscal year
ended December 31, 1997.
Compensation of Directors
Each non-employee director of the Company is paid $1,000 per
month. In addition, each director is entitled to participate in
the Company's 1991 and 1993 Director Stock Option Plan and the 1994
Stock Option Plan, and, other than directors who act as members of
the Stock Option Plan Committee, the 1996 Stock Option Plan and the
1997 Stock Option Plan. Issuances of options to directors under
the 1991 and 1993 Director Stock Option Plans and the 1994 Stock
Option Plan were determined by the Director Stock Option Plan
Committee then in effect. The Company does not pay its directors
any additional fees for committee participation.
Executive Compensation
The following table sets forth certain information with
respect to the compensation paid and/or accrued to the Chief
Executive Officer of the Company for services rendered to the
Company during the three fiscal years ended December 31, 1997 and
the compensation paid and/or accrued to the Chief Financial Officer
of the Company for services rendered to the Company during the two
years ended December 31, 1997. No other executive officer received
annual compensation in excess of $100,000 in any of the three years
ended December 31, 1997. This information includes the dollar
value of base salaries, bonuses, awards, the number of stock
options granted and certain other compensation, if any, whether
paid or deferred.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Other Annual
Name and Salary Bonus Compensation
Principal Position Year ($) ($) ($)
- ------------------ ---- -------- --------- --------------
<S> <C> <C> <C> <C>
Michael F. Daniels 1997 $336,519 $ - $181,653 (2)
President & CEO 1996 273,077 - 258,619 (2)
1995 254,808 25,000(1) 198,987 (2)
William J. Vargas 1997 128,871 - -
CFO & Secretary 1996 115,341 - -
</TABLE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
Securities
Restricted Underlying All Other
Name and Stock Options/ Compensation
Principal Position Year Awards SARs (#) ($)
- ------------------ ---- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Michael F. Daniels 1997 - - (4) $4,750 (3)
President & CEO 1996 - 250,000(4) 4,750 (3)
1995 - 79,000(4) 4,500 (3)
William J. Vargas 1997 - - (4) 4,750 (3)
CFO & Secretary 1996 - 70,000(4) 1,900 (3)
</TABLE>
(1) Consists of accrued bonus pursuant to employment contract.
(2) Consists of commission income based upon realization of excess
residual values related to leases entered into prior to May
15, 1993.
(3) Represents Company matching contribution to 401(k) Profit
Sharing Plan.
(4) In January of 1997 and August of 1997, Messrs. Daniels and
Vargas were granted stock options to purchase an aggregate of
816,000 shares and 345,000 shares, respectively. On December
8, 1997, Messrs. Daniels and Vargas voluntarily rescinded
their respective 1997 option grants, together with all grants
received prior thereto, with the exception of 58,125 stock
options received by Mr. Daniels in 1993. Messrs. Daniels and
Vargas received no compensation for such rescissions.
The following table discloses for the Chief Executive Officer
and the Chief Financial Officer each stock option grant in the last
fiscal year as a percentage of total options granted to Employees
in such fiscal year.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options/
Underlying SAR's Granted Exercise
Options/SAR's to Employees or Base Expiration
Name Granted (#) In Fiscal Year Price($/Sh) Date
- ----------- ------------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
Michael F.
Daniels - - - -
William J.
Vargas - - - -
</TABLE>
The following table discloses for the Chief Executive Officer
and the Chief Financial Officer each stock option exercised in the
last fiscal year and the value of all options at the end of the
last fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Value of
Securities Unexercised
Underlying In-The-Money
Options/SAR's Options/SAR's
At FY-END (#) At FY-END ($)*
Shares
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
- ----------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Michael F. - - 58,125/ $37,200/
Daniels - -
William J. 0 0 - / - /
Vargas - -
</TABLE>
* The last sales price for the Common Stock on the Nasdaq
SmallCap Market tier of the Nasdaq Stock Market on December 31,
1997 was $0.64.
Employment Contracts
Michael F. Daniels serves as the Company's President and Chief
Executive Officer under an employment agreement dated July 1, 1995
and expiring June 30, 2000. Mr. Daniels' compensation under such
agreement is $300,000 per annum and he is eligible for a bonus
based on company performance. In addition, Mr. Daniels is entitled
to receive commissions equal to 25% of the net proceeds realized by
the Company in excess of the residual value of equipment subject to
leases which commenced prior to May 15, 1993 and for which Mr.
Daniels was the lead salesperson.
William J. Vargas serves as the Company's Chief Financial
Officer, Treasurer and Secretary under an employment agreement
dated July 1, 1995 and expiring June 30, 2000. Mr. Vargas'
compensation under such agreement is $110,000 per annum.
SECURITY OWNERSHIP AND CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of June 10, 1998, certain
information concerning those persons known to the Company, based on
information obtained from such persons, with respect to the
beneficial ownership (as such term is defined in Rule 13d-3 under
the Securities Act of 1934) of shares of Common Stock of the
Company by (i) each person known by the Company to be the owner of
more than 5% of the outstanding shares of Common Stock, (ii) each
Director of the Company, (iii) each executive officer of the
Company named in the Summary Compensation Table and (iv) all
executive officers and Directors as a group:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Own- Percentage of
Beneficial Owner (1) ership (2) Class (3)
- ---------------------- ------------------ -------------
<S> <C> <C>
Michael F. Daniels 1,212,500 (4) 21.8%
William J. Vargas 331,000 (5) 6.6%
Larry M. Segall 337,875 (6) 6.7%
L. Derrick Ashcroft 255,000 (7) 5.1%
Alden Capital Markets, Inc. 800,000 (8) 14.5%
Continental Capital and
Equity Corporation 650,000 (9) 12.1%
All Directors and
Executive Officers
as a Group (4 persons) 2,136,375 33.2%
</TABLE>
(1) The address for all individuals identified herein is 6540 S.
Pecos Road, Suite 103, Las vegas, Nevada 89120.
(2) Unless otherwise noted, the Company believes that all persons
named in the table have sole investment power with respect to
all shares of common stock beneficially owned by them. A
person is deemed to be the beneficial owner of securities that
can be acquired by such person within 60 days from the date
hereof upon the exercise of warrants or options or upon the
conversion of convertible securities. Each beneficial owner's
percentage ownership is determined by assuming that options or
warrants or shares of Series A Convertible Preferred Stock
that are held by such person (but not those held by any other
person) and which are exercisable or convertible within 60
days from June 10, 1998 have been exercised or converted.
(3) Based on 4,704,069 shares of common stock outstanding as of
June 10, 1998.
(4) Includes options to purchase 58,125 shares of common stock
granted to Mr. Daniels which are currently exercisable and
options to purchase 800,000 shares of common stock which are
exercisable within 60 days from the date hereof.
(5) Includes options to purchase 300,000 shares of common stock
granted to Mr. Vargas which are exercisable within 60 days
from the date hereof.
(6) Includes options to purchase 325,000 shares of common stock
granted to Mr. Segall which are currently exercisable.
(7) Includes options to purchase 250,000 shares of common stock
granted to Mr. Ashcroft which are currently exercisable.
(8) Includes options to purchase 800,000 shares of common stock
which are currently exercisable.
(9) Includes options to purchase 650,000 shares of common stock
which are currently exercisable.
Certain Relationships and Related Transactions
Customer Relationship. Mr. Segall, a director of the Company,
was formerly an officer of Tiffany & Co., one of the Company's
customers. Tiffany & Co. leases from the Company electronic data
processing and related equipment for approximately $4,600,000
annually. Mr. Segall is currently the Chief Financial Officer of
Vitamin Shoppe Industries, Inc., one of the Company's customers.
Vitamin Shoppe Industries< Inc. leases from the Company electronic
data processing and related equipment for approximately $100,000
annually. The Company believes that the terms of its lease
arrangements with Tiffany & Co. and Vitamin Shoppe Industries, Inc.
are fair and have been reached on an arms-length basis. Mr. Segall
receives no cash or other remuneration from the Company other than
a fee for his services as a director and participation in certain
of the Company's stock option plans.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL 1.
PROPOSAL 2:
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
AUTHORIZE, IF NECESSARY, A ONE-FOR-FOUR REVERSE STOCK SPLIT.
General
The Board of Directors has approved a proposal to amend the
Company's Certificate of Incorporation to authorize, if necessary,
a one-for-four reverse stock split of the presently issued and
outstanding shares of the Company's Common Stock (the "Reverse
Split") to maintain listing of the Common Stock on the Nasdaq
SmallCap Market ("Nasdaq SmallCap") by changing each four issued
and outstanding shares of Common Stock into one issued and
outstanding share of Common Stock. If the Stockholders approve
Proposal 2, the Reverse Split will be authorized even if none of
the other Proposals is adopted.
Reasons for the Reverse Split
The shares of the Company's Common Stock have been listed, and
have traded, on the Nasdaq SmallCap since October 6, 1996. For
continued listing on the Nasdaq SmallCap, it is necessary that,
among other things, the minimum bid price of the Company's shares
of Common Stock exceed $1.00.
The bid price for the Common Stock has not exceeded $1.00
since October 1997. The Company had been notified by the Nasdaq
Stock Market, Inc. ("Nasdaq") that since it no longer satisfied the
minimum bid price criteria for continued listing, the Common Stock
may be delisted. The Company requested and was granted a hearing
by Nasdaq to maintain such listing. By letter dated July 29, 1998,
Nasdaq granted the Company an exception to the bid price
requirement, subject to the Company effecting the Reverse Split on
or before September 16, 1998 and otherwise complying with Nasdaq
listing criteria. The Board of Directors believes that if Proposal
2 is approved, the Company's shares of Common Stock will have a
minimum bid price in excess of $1.00 per share and, therefore,
continue to be listed and traded on the Nasdaq SmallCap.
If Proposal 2 is not approved by the Stockholders, then it is
possible that the Company's shares of Common Stock will cease to be
listed and traded on the Nasdaq SmallCap. The Company's shares of
Common Stock would likely be quoted on the NASD's OTC Bulletin
Board or in the "pink sheets" maintained by the National Quotation
Bureau, Inc. In such event, the spread between the bid and ask
prices of the shares of Common Stock is likely to be greater than
at present, and Stockholders may experience a greater degree of
difficulty in engaging in trades of shares of Common Stock.
Exchange of Shares
If the Stockholders approve the Reverse Split and it is
determined by the Board of Directors that the Reverse Split is
necessary, upon the filing of the following amendment to the
Company's Certificate of Incorporation with the Secretary of State
of Delaware, the Reverse Split will be deemed effective. The
Reverse Split will be formally implemented by amending the Article
FOURTH of the Company's Certificate of Incorporation, as amended,
to add the following:
Effective as of 5:00 p.m., Pacific time, on (Date to be
determined), 1998, all outstanding shares of Common Stock
held by each holder of record on such date shall be
automatically combined at the rate of one-for-four
without any further action on the part of the holders
thereof or this Corporation. All fractional shares will
be increased to the next higher whole number of shares.
Following the effectiveness of the amendment, each certificate
representing shares of Common Stock outstanding immediately prior
to the Reverse Split (the "Old Shares") will be deemed
automatically, without any action on the part of the Stockholders,
to represent 1/4 of the number of shares of Common Stock after the
Reverse Split (the "New Shares"). However, no fractional New
Shares will be issued as a result of the Reverse Split. In lieu
thereof, each Stockholder whose Old Shares aggregate less than one
New Share will be paid cash by the Company upon surrender of
certificates formally representing Old Shares held by such
Stockholder in an amount equal to the product of such fraction
multiplied by the closing price of the Old Shares on the Nasdaq
SmallCap on the date of the Reverse Split. Each Stockholder whose
Old Shares aggregate one or more New Shares but whose New Shares
are not evenly divisible by four (4) will receive one additional
New Share for the fractional New Share that such Stockholder would
otherwise be entitled to receive as a result of the Reverse Split.
After the Reverse Split becomes effective, Stockholders will be
asked to surrender certificates representing Old Shares in
accordance with the procedures set forth in a letter of transmittal
to be sent by the Corporation. Stockholders should not submit any
certificates until requested to do so. Upon such surrender, a
certificate representing the New Shares will be issued and
forwarded to the Stockholders. However, each certificate
representing Old Shares will continue to be valid and represent New
Shares equal to one-fourth the number of Old Shares (plus one
additional New Share where such Old Shares are not evenly divisible
by four).
Stockholders may approve or reject Proposal 2 in whole, but
not in part. If approved by the Stockholders and determined by the
Board of Directors that the Reverse Split is necessary, the Reverse
Split will become effective upon filing of a Certificate of
Amendment of the Certificate of Incorporation with the Secretary of
State of Delaware, which if necessary, will occur shortly after the
Annual Meeting.
Principal Effects of the Reverse Split
Stockholders have no right under Delaware General Corporation
Law to dissent from the Reverse Split or to dissent from the
rounding to the nearest whole share of any fractional share
resulting from the Reverse Split in lieu of issuing fractional
shares.
The authorized capital stock of the Company will not be
reduced or otherwise affected by the Reverse Split. The number of
issued and outstanding shares of the Common Stock of the Company on
June 10, 1998, was 4,882,269 and 4,704,069, respectively. The
Company' stated capital was $48,823. Based upon these figures, the
aggregate number of shares of Common Stock that will be issued and
outstanding if the Reverse Split is effected will be approximately
1,220,567 and 1,176,017, respectively, and the stated capital will
be approximately $12,206.
The Reverse Split may result in some Stockholders owning "odd-
lots" of less than 100 shares of Common Stock. Brokerage
commissions and other costs of transactions in odd-lots are
generally somewhat higher than the costs of transactions in "round-
lots" of even multiples of 100 shares.
There can be no assurance that any or all of the foregoing
effects will occur. In particular, there can be no guarantee that
the market price for each New Share after the Reverse Split will be
its sum multiple of the market price (per Old Share) before the
Reverse Split and the number of shares of Common Stock changed for
one share of Common Stock, or that such price will either exceed or
remain in excess of the current market price. Furthermore, there
can be no assurance that the market for shares of Common Stock will
be improved or that the Common Stock will not be delisted from the
Nasdaq SmallCap. The Board of Directors cannot predict what effect
the Reverse Split will have on the market for or the market price
of the Common Stock.
Dilution
The Company has suffered recurring losses from operations.
The Company may issue additional shares of its Common Stock on an
ongoing basis in order to satisfy all or a portion of its need for
cash. If and to the extent that the Company issues additional
shares of Common Stock, either prior or subsequent to the
implementation of the Reverse Split, each Shareholder's percentage
ownership interest in the Company and proportional voting power
will be proportionately reduced.
Federal Income Tax Consequences
The following description of federal income tax consequences
is based upon the Internal Revenue Code of 1986, as amended, the
applicable Treasury Regulations promulgated thereunder, judicial
authority, and current administrative rulings and practices as in
effect on the date of this Proxy Statement. This discussion is for
general information only and does not discuss consequences that may
apply to special classes of taxpayers (e.g., non-resident aliens,
broker-dealers or insurance companies). Stockholders are urged to
consult their own tax advisors to determine the particular
consequences to them.
The exchange of Old Shares of Common Stock for New Shares of
Common Stock will not result in recognition of gain or loss. The
holding period for the New Shares will include the Shareholder's
holding period for the Old Shares exchanged therefor, provided that
the Old Shares were held as a capital asset. The adjusted basis of
the New Shares will be the same as the adjusted basis for the Old
Shares exchanged therefor.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" PROPOSAL 2.
OTHER MATTERS
The Board of Directors is not aware of any business to be
presented at the Annual Meeting except the matters set forth in the
accompanying Notice and described in this Proxy Statement. Unless
otherwise directed, all shares represented by Board of Directors'
Proxies will be voted in favor of the proposals of the Board of
Directors described in this Proxy Statement. If any other matters
come before the Annual Meeting, the persons named in the
accompanying Proxy will vote on those matters according to their
best judgment.
EXPENSES
The entire cost of preparing, assembling and mailing this
Proxy Statement, the enclosed Proxy and other materials, and the
cost of soliciting Proxies with respect to the Annual Meeting, will
be borne by the Company. The Company will request banks and
brokers to solicit their customers who beneficially own shares
listed of record in names of nominees and will reimburse those
banks and brokers for the reasonable out-of-pocket expenses of such
solicitations. The original solicitation of Proxies by mail may be
supplemented by telephone and telegram by officers and other
regular employees of the Company, but no additional compensation
will be paid to such individuals.
STOCKHOLDER PROPOSALS
A proposal to be included in the proxy statement or proxy for
the Company's next Annual Meeting of Stockholders will be submitted
timely only if the proposal has been received at the Company's
principal executive offices no later than May 18, 1999. If
the date of such meeting is changed by more than 30 calendar days
from the date such meeting is scheduled to be held under the
company's By-Laws, or if the proposal is to be presented at any
meeting other than the next Annual Meeting of Stockholders, the
proposal must be received at the Company's principal executive
office at a reasonable time before the solicitation of proxies for
such meeting is made.
AVAILABLE INFORMATION
Copies of the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1997 as filed with the Securities
and Exchange Commission, including the financial statements, can be
obtained without charge by Stockholders (including beneficial
owners of the Company's Common Stock) upon written request to
Michael F. Daniels, the Company's President, 6540 South Pecos Road,
Las Vegas, Nevada, 89120, or on the Commission's web site at
http://www.sec.gov.
By order of the Board of Directors,
MICHAEL F. DANIELS
Michael F. Daniels, President
Las Vegas, Nevada
August 21, 1998
LEC TECHNOLOGIES, INC.
6540 South Pecos Road
Suite 103
Las Vegas, Nevada 89120
PROXY
The undersigned, a holder of Common Stock of LEC TECHNOLOGIES,
INC., a Delaware corporation (the "Company"), hereby appoints
MICHAEL F. DANIELS and WILLIAM J. VARGAS, and each of them, the
proxy of the undersigned, with full power of substitution, to
attend, represent and vote for the undersigned, all of the shares
of the Company which the undersigned would be entitled to vote, at
the Annual Meeting of Stockholders of the Company to be held on
September 15, 1998, and any adjournments thereof, as follows:
1. The election of four Directors of the Company to serve until
the next annual meeting of stockholders and until their successors
are duly elected and qualified.
[ ] FOR all nominees listed below.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
(Instructions: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH OR OTHERWISE STRIKE OUT
HIS NAME BELOW)
Michael F. Daniels, Larry M. Segall, L. Derrick Ashcroft and
Richard D. Falcone
2. The approval of an amendment to the Certificate of
Incorporation of the Company to authorize a one-for-four reverse
stock split (the "Reverse Split") of the presently issued and
outstanding shares of the Company's Common Stock into one issued
and outstanding share of Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Upon such other matters as may properly come before the
meeting or any adjournments thereof.
The undersigned hereby revokes any other proxy to vote at such
Annual Meeting, and hereby ratifies and confirms all that said
attorneys and proxies, and each of them, may lawfully do by virtue
hereof. With respect to matters not known at the time of the
solicitation hereby, said proxies are authorized to vote in
accordance with their best judgment.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
ACCORDANCE WITH THE INSTRUCTIONS ON THE OTHER SIDE HEREOF. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
FOUR DIRECTORS NAMED IN PROPOSAL 1 AND FOR THE ADOPTION OF PROPOSAL
2, AND AS SAID PROXIES SHALL DEEM ADVISABLE ON SUCH OTHER BUSINESS
AS MAY COME BEFORE THE MEETING.
The undersigned acknowledges receipt of a copy of the Notice
of Annual Meeting dated August 21, 1998 relating to the Annual
Meeting.
___________________________________
Signature(s) of Stockholder(s)
The signature(s) hereon should correspond exactly with the
name(s) of the Stockholder(s) appearing on the Stock Certificate.
If stock is jointly held, all joint holders should sign. When
signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign the
full corporate name, and give title of signing officer.
Date: _____________________, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
LEC TECHNOLOGIES, INC.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
