SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
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
Liuski International, Inc.
(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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P R E L I M I N A R Y C O P Y
LIUSKI INTERNATIONAL, INC.
6585 Crescent Drive
Norcross, Georgia 30071
INFORMATION STATEMENT
(Dated December , 1997)
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. THE SHARE INCREASE, DEFINED BELOW, HAS ALREADY BEEN APPROVED BY WRITTEN
CONSENT OF MR. DUKE LIAO, WHO OWNS A MAJORITY OF THE COMPANY'S OUTSTANDING
SHARES OF COMMON STOCK. A VOTE OF THE REMAINING STOCKHOLDERS IS NOT NECESSARY.
GENERAL
Liuski International, Inc., a Delaware corporation (the "Company"), is
furnishing this Information Statement on or about December , 1997 to holders of
record as of the close of business on November 20, 1997 of the Company's common
stock, $.01 par value per share ("Common Stock"), in connection with the
amendment of the Company's Certificate of Incorporation ("Certificate of
Incorporation") to increase the total number of shares of Common Stock which the
Company has authority to issue from 7,000,000 to 20,000,000 (the "Share
Increase").
The Board of Directors of the Company (the "Board") has approved, and
Mr. Duke Liao ("Liao"), who owned 3,598,382 (approximately 58%) of the 6,195,287
shares of Common Stock outstanding as of November 20, 1997, has consented in
writing to, the Share Increase. Liao is the Chairman, President and Chief
Executive Officer of the Company.
Such approval and consent are sufficient under Section 228 of the
Delaware General Corporation Law and the Company's By-Laws to approve the Share
Increase. Accordingly, the Share Increase will not be submitted to the other
Company stockholders for a vote and this Information Statement is being
furnished to stockholders solely to provide them with certain information
concerning the Share Increase in accordance with the requirements of Delaware
law and the Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder, including particularly Regulation 14C.
The Share Increase will be effective on the date that a Certificate of
Amendment of the Certificate of Incorporation with respect to the Share Increase
is filed with the Secretary of State of the State of Delaware. This filing will
occur on or after the 20th day following the date on which this Information
Statement is mailed to stockholders.
The principal executive offices of the Company are located at 6585
Crescent Drive, Norcross, Georgia 30071 and the Company's telephone number is
(770) 447-9454.
<PAGE>
AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 7,000,000 TO 20,000,000
The Certificate of Incorporation will be amended to increase the
number of shares of authorized Common Stock from 7,000,000 to 20,000,000. Such
increase will be effected by amending the first sentence of Article Fourth of
the Certificate of Incorporation to read as follows:
"FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authorized to issue is 21,000,000 shares consisting of:
a) 20,000,000 shares of common stock, par value $0.01; and
b) 1,000,000 shares of preferred stock, par value $0.01."
As described below, additional authorized shares are required for the
issuance of shares upon conversion of preferred stock owned by Liao and for
other corporate purposes.
On June 27, 1997, Liao purchased 1,783,620 shares of Common Stock from
Mr. Morries Liu, the founder and former principal stockholder of the Company,
representing approximately 41% of the 4,380,525 shares of Common Stock then
outstanding. The purchase price was $2,497,068, subsequently reduced to
$1,497,068. Simultaneously, the Board elected Liao as Chairman of the Board and
Chief Executive Officer of the Company. In order to provide working capital for
the Company, Liao, after the date of such purchase and up to October 15, 1997,
made loans to the Company of $9,219,928.01 (the "Loans") on which interest of
$158,454.97 (the "Interest") had accrued through October 15, 1997 at the bank
prime loan rate, which was 8.5% at September 30, 1997. By agreement dated
October 15, 1997, Liao and the Company agreed to convert the Loans and Interest
into equity of the Company.
The plan of such conversion was set forth in a letter to stockholders,
mailed on October 24, 1997, in which the stockholders were advised that the
Nasdaq Stock Market had granted the Company a one-time exception to Nasdaq's
stockholder approval requirement based on the Company's belief, verified by its
Audit Committee, that the delay, which would result from seeking stockholder
approval for the conversion of the Loans and Interest, would seriously
jeopardize the financial viability of the Company. The stockholders were also
advised in such letter that the Company believes that the improvement in its
balance sheet which will result from this conversion of debt into equity may
result in improving the Company's relationship with its bank and its vendors.
On November 4, 1997, Loans of $2,223,421.16 and the $158,454.97 in
Interest (aggregating $2,381,876.13) were converted into 1,814,762 restricted
shares of Common Stock at $1.3125 per share, the last sale price of the Common
Stock on the Nasdaq National Market on October 15, 1997 (the "Market Price"). As
a result, Liao owns 3,598,382 shares of Common Stock, or approximately 58%, of
the 6,195,287 shares outstanding. Because sufficient shares of Common Stock were
not available under the Certificate of Incorporation to allow for the conversion
into Common Stock of the total outstanding Loans and Interest, additional Loans
were not converted at such time. On November 7, 1997, the remaining
$6,996,506.85 of the Loans were converted into 100 shares of a non-voting,
non-dividend-bearing series of the Company's preferred stock (the "Preferred
Stock") which, pursuant to their terms as set forth in the Certificate of
Designations filed with the Delaware Secretary of State, will convert
automatically at the Market Price into 5,330,671 restricted shares of Common
Stock immediately after the Share Increase is effected.
Thus, the Share Increase is necessary for the completion of the
conversion of the Loans and Interest into shares of Common Stock. However, if
the Preferred Stock is not converted into Common Stock by March 31, 1998, the
holder of the Preferred Stock will have the option to cause the Company to
redeem all of the outstanding shares of Preferred Stock for $6,996,506.85 plus
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interest thereon at the annual rate of 8.5% accruing from October 16, 1997. The
Company estimates that, after the Loans and Interest are fully converted into
shares of Common Stock, Liao will own approximately 77.5% of the outstanding
shares of Common Stock (73.8% of the outstanding Common Stock on a fully diluted
basis after taking into account outstanding options to purchase approximately
577,250 shares of Common Stock).
As of September 30, 1997, Liao had advanced $8,219,928.01 of the Loans
to the Company. The following table shows the pro forma effect of the conversion
of such amount of the Loans into equity of the Company as of September 30, 1997
(unaudited):
<TABLE>
<CAPTION>
As Reported
September 30, 1997 (unaudited) Adjustment Pro forma
<S> <C> <C> <C>
ASSETS
Current Assets $ 55,698,268 $ - $ 55,698,268
Fixed Assets 2,434,161 - 2,434,161
Other Assets 263,503 - 263,503
=========================================================
Total Assets $ 58,395,932 $ - $ 58,395,932
LIABILITIES
Current Liabilities $ 47,812,594 $(8,219,928) $ 39,592,666
Long-Term Liabilities 466,479 - 466,479
=========================================================
Total Liabilities 48,279,073 (8,219,928) 40,059,145
STOCKHOLDERS' EQUITY 10,116,859 8,219,928 18,336,787
=========================================================
Total Liabilities and
Stockholders' Equity $ 58,395,932 $ - $ 58,395,932
</TABLE>
The Board believes that it is desirable to have additional shares of
Common Stock available, as the occasion may arise, for possible future
financings and acquisitions, stock dividends, stock issuances pursuant to
employee benefit plans and other proper corporate purposes. Having such
additional shares available for issuance in the future would give the Company
greater flexibility by allowing shares to be issued without incurring the delay
and expense of obtaining stockholder approval. Except as described in this
Information Statement and shares to be issued upon exercise of outstanding
options, the Company has no definitive plans or commitments to issue additional
shares of Common Stock. Stockholders of the Company do not have preemptive
rights to acquire additional shares of Common Stock which may be issued.
The additional shares of Common Stock, together with other authorized
and unissued shares, generally would be available for issuance without any
requirement for further stockholder approval, unless stockholder action is
required by applicable law, the Company's governing documents or by the rules of
the National Association of Securities Dealers, Inc. or any stock exchange on
which the Company's securities may then be listed.
Although the Board will authorize the issuance of additional shares of
Common Stock only when it considers doing so to be in the best interests of
stockholders, the issuance of additional shares of Common Stock may, among other
effects, have a dilutive effect on the earnings and equity per share of Common
Stock and on the voting rights of holders of shares of Common Stock.
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Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as of November 20,
1997 pertaining to the beneficial ownership of the Common Stock by (i) persons
known to the Company to own 5% or more of the outstanding Common Stock, (ii)
each director of the Company, (iii) each executive officer of the Company and
(iv) directors and executive officers of the Company as a group. Each such
person has sole voting and investment powers with respect to his or her shares.
This information has been obtained from the Company's records, or from
information furnished directly by the individual or entity to the Company.
Number of Shares Percentage of
Name of Beneficial Owner Beneficially Owned Outstanding Shares
Duke Liao 8,929,053(1) 77.5%
Morries Liu 46,334(2)(3)(4) .7%
Shirley Lee 70,168(3)(4) 1.1%
Edwin Feinberg 13,000(3) .2%
Martin Tsai 24,501(3)(4) .4%
Kenny Liu 12,500(4) .2%
All directors and executive
officers as a group
(6 individuals) 9,095,556(1)(2)(3)(4) 78.2%
- -----------------------------
(1) Assumes that the 100 shares of Preferred Stock owned by Liao have been
converted into 5,330,671 shares of Common Stock as described above.
(2) Excludes shares owned by Mr. Liu's three sisters and brother-in-law as
follows: Ms. Tina Peng, 34,267 shares; Ms. Shing-Gyy Hu, 24,267 shares; and
Ms. Li Shin Liu and Mr. Jin Yao Shen, 34,008 shares jointly.
(3) Represents or includes shares subject to stock options granted by the
Company as follows: Mr. M. Liu, 33,334 shares; Ms. Lee, 31,601 shares; Mr.
Feinberg, 13,000 shares; Mr. Tsai, 11,000 shares; and Mr. K. Liu, 12,500
shares.
(4) Excludes shares of Common Stock that are subject to options which are not
currently exercisable as follows: Mr. M. Liu, 16,666 shares; Ms. Lee, 8,333
shares; Mr. Tsai, 25,000 shares; and Mr. K. Liu, 2,500 shares.
By Order of the Board of Directors,
Martin Tsai
Vice President-Finance and
Dated: December , 1997 Chief Financial Officer
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