SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. 1)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5((d)(2))
[ ] Definitive Information Statement
ELEGANT ILLUSIONS, INC.
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(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:_____
2) Aggregate number of securities to which transaction applies:________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):______
4) Proposed maximum aggregate value of transaction:________
5) Total fee paid:_______
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:________
(2) Form, Schedule or Registration Statement No.:________
(3) Filing Party:________
(4) Date Filed:________
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PRELIMINARY COPY
ELEGANT ILLUSIONS, INC.
542 Lighthouse Ave.
Suite 5
Pacific Grove, CA 93950
NOTICE OF ACTION BY WRITTEN CONSENT
To the Stockholders of Elegant Illusions, Inc.:
Notice is hereby given that James Cardinal, Gavin Gear and Tamara Gear, as
the collective holders of approximately 75% of the issued and outstanding Common
Stock, par value $0.001 per share (the "Common Stock"), of Elegant Illusions,
Inc., a Delaware corporation (the "Company"), have approved and adopted, by
written consent in lieu of a meeting of stockholders, a proposal (the "Charter
Amendment") to amend the Company's Certificate of Incorporation to reverse split
the outstanding shares of the Company's Common Stock. The Board of Directors
retains the right to: (i)set the ratio of the reverse split as low as
one-for-two or as high as one-for-six; or (ii) not proceed with any reverse
split. By way of example only, if the Board of Directors authorizes a
one-for-three reverse split, every three issued and outstanding shares of Common
Stock, before the split, would represent one share of Common Stock after the
split, and as a result of such split, the Company's 17,434,338 shares of Common
Stock currently outstanding would become approximately 5,811,446 shares of
Common Stock. All fractional shares resulting from the split will be rounded up
to the next whole share. If and when the Board of Directors determines to effect
a reverse split of the Company's issued and outstanding Common Stock, at least
10 days prior to the anticipated effective date of the reverse split, the
Company will file a Current Report on Form 8-K and issue a press release stating
the ratio and the anticipated effective date of the reverse split.
The Board of Directors of the Company has approved the Charter Amendment.
The record date for the determination of stockholders of the Company entitled to
receive this Notice of Action by Written Consent and the accompanying
Information Statement and the determination of the number of shares of Common
Stock necessary to approve the Charter Amendment has been fixed as of the close
of business on December 15, 1997.
NO STOCKHOLDERS' MEETING WILL BE HELD TO VOTE ON OR DISCUSS THE
PROPOSAL. ACCORDINGLY, WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
By Order of the Board of Directors
By: /s/ Tamara Gear
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Tamara Gear, Secretary
January 2, 1998
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PRELIMINARY COPY
ELEGANT ILLUSIONS, INC.
542 Lighthouse Ave.
Suite 5
Pacific Grove, CA 93950
INFORMATION STATEMENT
AMENDMENT TO
CERTIFICATE OF INCORPORATION
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
Approximate Date of Mailing of this Information Statement: January 2, 1998.
INTRODUCTION
This Information Statement is being furnished by the Board of Directors of
Elegant Illusions, Inc., a Delaware corporation (the "Company"), in connection
with the proposed adoption of a Certificate of Amendment (the "Charter
Amendment") to the Company's Certificate of Incorporation (the "Certificate of
Incorporation"), by the written consent of the holders of a majority of the
Company's outstanding Common Stock, par value $0.001 per share (the "Common
Stock").
James Cardinal, Gavin Gear and Tamara Gear (collectively referred to
herein as the "Stockholders"), collectively hold approximately 75% of the issued
and outstanding Common Stock. By written consent, the Stockholders have approved
and adopted the Charter Amendment to amend the Company's Certificate of
Incorporation to reverse split the outstanding shares of the Company's Common
Stock. The Board of Directors retains the right to: (i)set the ratio of the
reverse split as low as one-for-two or as high as one-for-six; or (ii) not
proceed with any reverse split. By way of example only, if the Board of
Directors authorizes a one-for-three reverse split, every three issued and
outstanding shares of Common Stock, before the split, would represent one share
of Common Stock after the split, and as a result of such split, the Company's
17,434,338 shares of Common Stock currently outstanding would become
approximately 5,811,446 shares of Common Stock. All fractional shares resulting
from the split will be rounded up to the next whole share. If and when the Board
of Directors determines to effect a reverse split of the Company's issued and
outstanding Common Stock, at least 10 days prior to the anticipated effective
date of the reverse split, the Company will file a Current Report on Form 8-K
and issue a press release stating the ratio and the anticipated effective date
of the reverse split.
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The Board of Directors has unanimously approved the Charter Amendment.
Approval of the Charter Amendment requires the vote of stockholders who own a
majority of the Company's Common Stock. There are no other classes of Company
stock. The Company has received written consents to the Charter Amendment from
the Stockholders, who collectively hold approximately 75% of the Company's
outstanding Common Stock, which consents are dated December 12, 1997.
Only stockholders of record of the Company's 17,434,338 shares of Common
Stock outstanding at the close of business on December 15, 1997 (the "Record
Date") are entitled to receive this Information Statement and Notice of Action
by Written Consent.
The Company has asked brokers and other custodians and fiduciaries to
forward this Information Statement to the beneficial owners of the Common Stock
held of record by such persons and will reimburse such persons for out-of-pocket
expenses incurred in forwarding such materials.
The holders of Common Stock have no dissenters' rights or preemptive
rights in connection with the Charter Amendment or the resulting reverse stock
split.
THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION HAS BEEN APPROVED BY
STOCKHOLDERS WHO HOLD SUFFICIENT VOTING SECURITIES TO APPROVE THE ACTION. THIS
INFORMATION STATEMENT IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. WE
ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY TO THE
COMPANY.
The date of this Information Statement is January 2, 1998.
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
The Stockholders and the Board of Directors of the Company have approved
the Charter Amendment to increase the market price per share. The Company's
Common Stock is listed on the NASDAQ SmallCap Market. A minimum bid price of
$1.00 per share is required to assure continued listing of the Company's Common
Stock on the NASDAQ SmallCap Market. The Charter Amendment will effect a reverse
split of the outstanding shares of the Company's Common Stock. The Board of
Directors retains the right to: (i)set the ratio of the reverse split as low as
one- for-two or as high as one-for-six; or (ii) not proceed with any reverse
split. By way of example only, if the Board of Directors authorizes a
one-for-three reverse split, every three issued and outstanding shares of Common
Stock, before the split, would represent one share of Common Stock after the
split, and as a result of such split, the Company's 17,434,338 shares of Common
Stock currently outstanding would become approximately 5,811,446 shares of
Common Stock. All fractional shares resulting from the split will be rounded up
to the next whole share. If and when the Board of Directors determines to effect
a reverse split of the Company's issued and outstanding Common Stock, at least
10 days prior to the anticipated effective date of the reverse split, the
Company will file a Current Report on Form 8-K and issue a press release stating
the ratio and the anticipated effective date of the reverse split.
The Charter Amendment will become effective upon (i) The date specified by
the Company in its planned Current Report on Form 8-K; or (ii) the filing of the
Charter Amendment with the Secretary of State of the State of Delaware, which
ever occurs later. See the form of Certificate of Amendment appended hereto as
APPENDIX "A."
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REASONS FOR CHARTER AMENDMENT; PROPOSED TRANSACTIONS
The Stockholders and the Board of Directors of the Company have approved
the Charter Amendment to increase the market price per share. The Company's
Common Stock is listed on the NASDAQ SmallCap Market. A minimum bid price of
$1.00 per share is required to assure continued listing of the Company's Common
Stock on the NASDAQ SmallCap Market. During the quarter ended September 30,
1997, the bid price for the Common Stock remained below $1.00. The bid price has
been as low as $.50 per share. Management believes but cannot assure that, by
reverse splitting the outstanding shares of Common Stock at a sufficient ratio,
the bid price for the Common Stock will exceed $1.00 per share. The Board of
Directors retains the right to: (i) set the ratio of the reverse split as low as
one-for-two or as high as one-for-six; or (ii) not proceed with any reverse
split.
Current stockholders of the Company have no dissenters' rights or
preemptive rights in connection with the reverse split of the outstanding Common
Stock.
CERTAIN EFFECTS OF THE CHARTER AMENDMENT
AND THE PROPOSED REVERSE SPLIT
Stockholders will not realize any dilution in their percentage of
ownership of the Company or their voting rights as a result of the Charter
Amendment and reverse split. The reverse split may, however, affect the market
value of the Common Stock. No assurance can be given that the market value of
the Common Stock will increase in inverse proportion to the ratio of the reverse
split.
As a result of the reverse split, there will be more shares of Common
Stock authorized but unissued. If, for example, the ratio of the reverse split
is one-for-six, as many as 27,094,277 shares could be authorized but unissued.
The Board of Directors has total discretion in the issuance of any shares of
Common Stock which may be issued in the future. The Board of Directors could
issue shares of Common Stock to discourage attempts by others to obtain control
of the Company through merger, tender offer, proxy contest or otherwise by
making such attempts more difficult to achieve or more costly. All issuances of
additional shares will dilute current stockholders' percentage of ownership of
the Company and voting rights.
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MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S
COMMON STOCK AND OTHER STOCKHOLDER MATTERS
The principal U.S. market in which the Company's Common Stock ($.001 par
value, all of which are one class) is traded is in the over-the-counter market
(NASDAQ SmallCap Symbol: "EILL"). The Company's Common Stock was listed for
trading on the NASDAQ Smallcap Market on August 16, 1996. Prior thereto, it
traded in the over-the-counter market (Bulletin Board Symbol: "EILL").
The following tables set forth the range of high and low bid prices for
the Company's Common Stock on a quarterly basis for the past two fiscal years
and the first three quarters of fiscal 1997 as reported by the National
Quotation Bureau (which reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and may not necessarily represent actual transactions).
As of December 15, 1997, the last sale price for the Company's Common Stock was
$.53 per share.
COMMON STOCK
Bid Prices
----------
High Low
Fiscal Year 1997 ---- ----
First Quarter ending March 31, 1997 2.875 1.25
Second Quarter ending June 30, 1997 1.6875 0.6875
Third Quarter ending September 30, 1997 1.1875 0.6525
Fiscal Year 1996
First Quarter ending March 31, 1996 3 2
Second Quarter ending June 30, 1996 3.125 3
July 1, 1996 - August 15, 1996 3.125 2.75
August 16, 1996 - September 30, 1996 3.1875 3
Fourth Quarter ending December 31, 1996 3.25 1.625
Fiscal Year 1995
First Quarter ending March 31, 1995 2 1
Second Quarter ending June 30, 1995 2 3/4
Third Quarter ending September 30, 1995 2 1
Fourth Quarter ending December 31, 1995 2 1
There were approximately 74 holders of record of the Company's Common
Stock as of December 15, 1997, the record date, inclusive of those brokerage
firms and/or clearing houses holding the Company's securities for their
clientele (with each such brokerage house and/or clearing house being considered
as one holder).
The Company has not paid or declared any dividends upon its Common Stock
since its inception and, by reason of its present financial status and its
contemplated financial requirements, does not contemplate or anticipate paying
any dividends upon its Common Stock in the foreseeable future.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of Common Stock as of the date of this Information Statement by: (i)
each of the Company's directors and executive officers; (ii) each person who is
known by the Company to be the beneficial owner of five percent or more of the
outstanding shares of Common Stock; and (iii) all of the Company's directors and
executive officers as a group:
Name and Address Amount of Record
of Beneficial and Beneficial Percent of
Owner Ownership(1) Class
- ---------------- ---------------- ----------
James C. Cardinal 6,380,000 36.6%
542 Lighthouse Ave., Suite 5
Pacific Grove, CA 93950
Gavin M. Gear 3,343,430(2) 19.2%
542 Lighthouse Ave., Suite 5
Pacific Grove, CA 93950
Tamara Gear 3,319,930(2) 19.0%
542 Lighthouse Ave., Suite 5
Pacific Grove, CA 93950
All Officers and
Directors as a Group
(3 Persons) 13,043,360 74.8%
- ------------
(1) Prior to anticipated reverse split.
(2) Gavin and Tamara Gear are husband and wife. The shares listed for Gavin
Gear do not include the shares owned by Tamara Gear and the shares listed
for Tamara Gear do not include the shares owned by Gavin Gear.
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APPENDIX "A"
[FOR ILLUSTRATION PURPOSES ONLY, ASSUMES A RATIO OF ONE-FOR-THREE]
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CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
ELEGANT ILLUSIONS, INC.
Under Section 242 of the
Corporation Law of the State of Delaware
James Cardinal and Tamara Gear, respectively, the Chief Executive Officer
and the Secretary of ELEGANT ILLUSIONS, INC. (the "Company"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DO HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by written consent filed
with the minutes of the Board, adopted the following resolution proposing and
declaring advisable the following amendment to the Certificate of Incorporation
of said corporation:
"1. The Certificate of Incorporation is hereby amended to effect a reverse
split of the Company's outstanding Common Stock in the ratio of one share for
every_____ shares outstanding. The Company currently has authorized 30,000,000
shares of Common Stock with a par value of $.001 per share, of which 17,434,338
shares of Common Stock are issued and outstanding, and 12,565,662 shares are
unissued. Under the new structure, the Company will have 30,000,000 shares of
Common Stock, par value $.001, authorized, of which approximately _________
shares will be issued and outstanding and __________ shares will be unissued.
All fractional shares resulting from the reverse split will be rounded up to the
next whole share. The number of authorized shares shall not change. The reverse
split shall take effect (i) at 12:01 a.m. Eastern Standard Time on ________ __,
1998: or (ii) the filing of the Charter Amendment with the Secretary of State of
the State of Delaware, which ever occurs later."
SECOND: That the aforesaid amendments were duly adopted in accordance with the
applicable provisions of section 242 of the General Corporation Law of the State
of Delaware by obtaining the written consent of the holders of the majority of
the stock of the Company entitled to vote at a meeting of stockholders pursuant
to section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, we, the undersigned, have executed and subscribed
this certificate this ___ day of ________, 1998.
/s/ James Cardinal /s/ Tamara Gear
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James Cardinal, Chief Executive Officer Tamara Gear, Secretary
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