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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 Rule 14a-11(c) or Rule 14a-12
SALIVA DIAGNOSTIC SYSTEMS, 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 per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] 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.
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[SDS LOGO]
SALIVA DIAGNOSTIC SYSTEMS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held February 26, 1998
A Special Meeting of Shareholders of Saliva Diagnostic Systems, Inc., a
Delaware Corporation (the "Company"), will be held on Thursday, February 26,
1998 at 10:00 a.m., Pacific time, at the George C. Marshall House, 1301
Officer's Row, Vancouver, Washington 98661, for the following purposes:
1. AUTHORIZE REVERSE STOCK SPLIT. To approve an amendment to the
Company's Certificate of Incorporation authorizing a reverse stock
split of the Company's Common Stock, par value $.01 per share; and
2. OTHER BUSINESS. To consider and act upon such other business as
may properly come before the meeting or any adjournments thereof.
Only shareholders of record at the close of business on January 23, 1998
are entitled to notice of and to vote at the meeting. A list of such
shareholders will be available for inspection by shareholders at the Company's
principal office for a period of ten days prior to the meeting date and at the
meeting on the meeting date.
You are requested to date and sign the enclosed proxy and return it in the
postage-prepaid envelope enclosed for that purpose whether or not you expect to
attend the meeting. You may attend the meeting in person even though you send in
your proxy; retention of the proxy is not necessary for admission to or
identification at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
KENNETH J. MCLACHLAN
President and Chief Executive Officer
Vancouver, Washington
January 27, 1998
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[SDS LOGO]
SALIVA DIAGNOSTIC SYSTEMS, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 26, 1998
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed Proxy is solicited on behalf of the Board of Directors of
Saliva Diagnostic Systems, Inc., a Delaware corporation (the "Company"), for use
at the Special Meeting of Shareholders to be held on Thursday, February 26,
1998, at 10:00 a.m., Pacific time, or at any adjournment thereof, at the George
C. Marshall House, 1301 Officer's Row, Vancouver, Washington 98661, for the
purposes set forth herein and in the accompanying notice of Special Meeting of
Shareholders. All expenses associated with this solicitation will be borne by
the Company. The solicitation of proxies by mail may be followed by personal
solicitation of certain shareholders by officers or regular employees of the
Company. In addition, the Company intends to hire Beacon Hill Partners to aid in
the solicitation of proxies, for whose services the Company will pay a fee
estimated at $5,000, plus expenses. Copies of solicitation materials will be
furnished to fiduciaries, custodians and brokerage houses for forwarding to
beneficial owners of the shares of the Company's Common Stock, par value $.01
per share (the "Common Stock"), held in their names.
All properly executed proxies will be voted (except to the extent that
authority to vote has been withheld), and where a choice has been specified by
the shareholder as provided in the proxy card, such proxies will be voted in
accordance with the specification so made. Proxies submitted without
specification will be voted FOR Proposal No. 1 to approve an amendment to the
Company's Certificate of Incorporation authorizing a reverse stock split of the
Common Stock. If any other business is properly presented at the Special
Meeting, the proxies will be voted by the named proxies in their best judgment.
A proxy may be revoked by a shareholder prior to its exercise by written
notice to the Company, by submission of another proxy prior to the meeting
bearing a later date or by voting in person at the Special Meeting of
Shareholders. The mailing address of the principal executive offices of the
Company is 11719 NE 95th Street, Vancouver, Washington 98682.
This Proxy Statement, the accompanying Notice of Special Meeting and the
Proxy Card are first being mailed on or about January 27, 1998.
VOTING AT THE MEETING
The Board of Directors has fixed January 23, 1998 as the record date for
determination of shareholders entitled to notice of and to vote at the Special
Meeting. The Company has one class of voting securities outstanding, designated
Common Stock. At the record date, 30,543,475 shares of the Common Stock were
outstanding and entitled to vote. The Common Stock does not have cumulative
voting rights.
Each share of Common Stock outstanding on the record date is entitled to
one vote per share at the Special Meeting. If a quorum is present at the Special
Meeting, Proposal No. 1 to approve an amendment to the Company's Certificate of
Incorporation authorizing a reverse stock split of the Common Stock will be
approved if it receives the affirmative vote of the holders of at least a
majority of the shares of Common Stock
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entitled to vote, present in person or represented by proxy, at the Special
Meeting. Abstention from voting will have the same effect as voting against the
proposals.
A broker "non-vote" occurs when a nominee holding shares for a beneficial
owner does not vote upon a particular proposal because the nominee does not have
discretionary voting power with respect to that proposal and has not received
instructions from the beneficial owner. Broker non-votes are counted for
purposes of determining whether a quorum exists at the Special Meeting but are
not counted and have no effect on the results of the vote on the proposals.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of January 23, 1998, except where
otherwise noted, as to (i) each person who is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
director of the Company, (iii) each of the executive officers whose total annual
salary and bonus exceeded $100,000 for the fiscal year ended December 31, 1997
and (iv) all directors and executive officers as a group. Except as otherwise
noted, the Company believes the persons listed below have sole investment and
voting power with respect to the Common Stock owned by them.
<TABLE>
<CAPTION>
COMMON STOCK
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NUMBER OF SHARES % SHARES
NAME AND ADDRESS BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
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<S> <C> <C>
Kenneth J. McLachlan...................................... 1,700,000(2) 5.8%
c/o SDS International Ltd. (UK)
11 Sovereign Close
Sovereign Court
London, England E1 9HW, UK
Hans R. Vauthier.......................................... 250,000(3) *
Eric F. Stoer............................................. 250,000(4) *
David Barnes.............................................. 358,000(5) 1.2%
Paul D. Slowey............................................ 77,800(6) *
Michael Grant............................................. 75,832(7) *
All Executive Officers and Directors as a group
(5 persons)(8)....................................... 2,636,000(9) 9.2%
</TABLE>
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* Does not exceed one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes voting power and investment
power with respect to shares. Shares of Common Stock issuable upon the
exercise of outstanding stock options that are currently exercisable or
become exercisable within 60 days from January 23, 1998 are considered
outstanding for the purpose of calculating the percentage of Common Stock
owned by such person but not for the purpose of calculating the percentage
of Common Stock owned by any other person.
(2) Includes 200,000 shares registered in the name of Bank of Bermuda Trust
Company, trustee for the Morar Trust, an irrevocable trust established for
the benefit of Mr. McLachlan's children. Also includes 500,000 shares
registered in the name of Reads Trust Company Limited, trustee of an
irrevocable trust established for the benefit of Mr. McLachlan's children.
Mr. McLachlan has no power to vote or dispose of these shares pursuant to
the terms of the trusts. Also includes options to purchase 1,000,000 shares
of Common Stock which were granted to International Business Consultants, a
Jersey company, of which Mr. McLachlan is a principal.
(3) Includes options to purchase 250,000 shares of Common Stock.
(4) Includes options to purchase 250,000 shares of Common Stock.
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(5) Includes options to purchase 358,000 shares of Common Stock.
(6) Includes options to purchase 75,000 shares of Common Stock.
(7) Includes options to purchase 75,832 shares of Common Stock.
(8) Includes Kenneth J. McLachlan, Eric F. Stoer, Hans R. Vauthier, David Barnes
and Paul D. Slowey, the current directors and executive officers of the
Company.
(9) Includes options to purchase an aggregate of 1,933,000 shares of Common
Stock.
APPROVAL OF AMENDMENT AUTHORIZING REVERSE STOCK SPLIT
(PROPOSAL NO. 1)
On January 8, 1998 the Board of Directors approved, and recommends that the
shareholders of the Company approve, an amendment to the Company's Certificate
of Incorporation authorizing a reverse stock split of the Common Stock ("Reverse
Stock Split").
The continued listing requirements of the Nasdaq Small Cap Market
("Nasdaq") for the Common Stock require a company to maintain, among other
things, a minimum bid price per share of $1.00. As of the date of this proxy,
the Company is not in compliance with such requirement. The Board of Directors
believes that the Reverse Stock Split may have the effect of increasing the
market price per share of the Common Stock and allowing the Common Stock to
continue to be included on the Nasdaq system, although there can be no assurance
that the market price of the Common Stock will rise in proportion to the
reduction in the number of outstanding shares resulting from the Reverse Stock
Split or that the post-Reverse Stock Split market price can be maintained.
The Board of Directors has determined that continued listing of the Common
Stock on the Nasdaq system is in the best interests of the shareholders. If the
Company were removed from the Nasdaq system, trading, if any, would thereafter
be conducted in the over-the-counter market on an electronic bulletin board
established for securities that do not meet the Nasdaq inclusion requirements or
in what are commonly referred to as the "pink sheets." As a result, an investor
would find it more difficult to dispose of, or to obtain accurate quotations as
to the price of, the Common Stock. In addition, if the Common Stock were removed
from the Nasdaq system, it would be subject to so-called "penny-stock" rules
that impose additional sales practice requirements on broker-dealers who sell
such securities. Consequently, removal from the Nasdaq system, if it were to
occur, could affect the ability or willingness of broker-dealers to sell the
Common Stock and the ability of purchasers to sell the Common Stock in the
secondary market. Delisting by Nasdaq also could adversely affect the Company's
performance under certain agreements with some investors relating to maintenance
of the Nasdaq listing and to registration of certain shares for resale.
Pursuant to the Reverse Stock Split, each holder of a certain number of
shares of Common Stock, par value $.01 per share (the "Old Common Stock"),
immediately prior to the effectiveness of the Reverse Stock Split shall become
the holder of one share of Common Stock, par value $.01 per share (the "New
Common Stock"). The exact number of shares of Old Common Stock required to
receive one share of New Common Stock is called the Authorized Number and will
be determined by the Board of Directors following approval of the Reverse Stock
Split based on market conditions, the likely effect of the Reverse Stock Split
on the market price of the Common Stock and other relevant factors. In no event,
however, will the Authorized Number be greater than ten.
No fractional shares of New Common Stock will be issued in connection with
the Reverse Stock Split. Instead, holders of Old Common Stock who would
otherwise be entitled to receive a fractional share of New Common Stock because
they hold a number of Old Common Shares not evenly divisible by the Authorized
Number will be entitled to receive from the Company a cash payment equal to the
fair market value, as determined by the Board of Directors, of any fractional
shares of New Common Stock resulting from the Reverse Stock Split. The fair
market value shall be based on the average of the closing bid prices for the Old
Common Stock as determined by the Nasdaq Stock Market on each of the five days
preceding the date on which the Reverse Stock Split becomes effective.
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The Reverse Stock Split would become effective upon the filing of a
Certificate of Amendment of the Certificate of Incorporation related thereto
with the Delaware Secretary of State. If the Reverse Stock Split is approved by
the shareholders, the Board of Directors intends to cause the Certificate of
Amendment to be filed as soon as practicable after the date of the Special
Meeting. Upon the effectiveness of the proposed amendment, Article Fourth of the
Company's Articles of Incorporation would include an additional paragraph
reading substantially as follows:
The corporation hereby declares that each [Authorized Number] of
outstanding shares of the corporation's Common Stock, par value $.01
per share, as of the date of filing of this Certificate of Amendment,
be converted and reconstituted into one share of Common Stock, par
value $.01 per share. No fractional shares shall be issued upon such
conversion and reconstitution, and the number of shares of Common
Stock to be issued shall be rounded down to the nearest whole share.
If a fractional interest in a share of Common Stock would, except for
the provisions of the preceding sentence, be deliverable upon such
conversion and reconstitution, the corporation shall pay an amount in
cash equal to the fair market value of such fractional interest, as
determined by the corporation's Board of Directors, to each holder of
shares of Common Stock to whom such fractional interest would have
been deliverable.
Upon the effectiveness of such Certificate of Amendment, the Reverse Stock
Split will occur without any further action on the part of shareholders of the
Company and without regard to the date or dates on which stock certificates are
physically surrendered in exchange for certificates representing the number of
shares of New Common Stock such shareholders are entitled to receive as a
consequence of the Reverse Stock Split. As soon as practicable after the
effectiveness of the Reverse Stock Split, transmittal letters will be mailed to
each record holder of the Company's Common Stock on the date of such
effectiveness to be used in forwarding their certificates for surrender and
exchange for certificates representing the number of shares of New Common Stock
such shareholders are entitled to receive as a result of the Reverse Stock
Split. After receipt of such transmittal letter, each such shareholder should
surrender the stock certificates issued prior to the Reverse Stock Split and
such shareholder will receive in exchange therefor certificates representing the
whole number of shares of New Common Stock to which he or she is entitled and
any cash which may be payable in lieu of any fractional share. Such transmittal
letters will be accompanied by instructions specifying other details of the
exchange. Shareholders should not send in their certificates until they receive
a transmittal letter.
After the effectiveness of the Reverse Stock Split, each certificate
representing shares of Old Common Stock will, until surrendered and exchanged as
provided above, be deemed, for all corporate purposes, to evidence ownership of
the whole number of shares of New Common Stock, and the right to receive from
the Company the amount of cash for any fractional shares, into which the shares
evidenced by such certificate have been converted.
With the exception of the number of issued and outstanding shares, the
rights and preferences of the shares of Common Stock prior and subsequent to the
Reverse Stock Split will remain the same. After the effectiveness of the Reverse
Stock Split, it is not anticipated that the financial condition of the Company,
the percentage ownership of management, the number of the Company's
shareholders, or any aspect of the Company's business would materially change as
a result of the Reverse Stock Split.
The Company is presently authorized to issue a maximum of 50,000,000 shares
of Common Stock and 1,000,000 shares of preferred stock, par value $.01 per
share (the "Preferred Stock"). As of January 23, 1998, 30,543,475 shares of
Common Stock and no shares of Preferred Stock were issued. The authorized number
of shares will not change in connection with the Reverse Stock Split. The
Company has obligations to set aside approximately 4,165,131 shares of Common
Stock for the exercise of outstanding warrants, options or other contractual
commitments, including additional shares which may be issued in accordance with
the exercise of certain reset rights. The exercise price or conversion rate of
these commitments will be adjusted proportionately upon the effectiveness of the
Reverse Stock Split.
In addition, in connection with its ongoing financing efforts, the Company
currently is engaged in negotiations to raise additional capital through the
sale of its securities, including possibly the sale of shares of Common Stock
and other securities convertible into shares of Common Stock.
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The conversion and reconstitution of the Old Common Stock into the New
Common Stock should have no material federal tax consequences to most
shareholders. Nonetheless, shareholders should consult their own tax advisors as
to the federal, state, local and foreign tax effects of the Reverse Stock Split
in light of their individual circumstances.
In order for the shareholders of the Company to authorize the Reverse Stock
Split by adoption of the aforementioned amendment, a majority of the shares of
outstanding Common Stock entitled to vote, present in person or by proxy, at the
Special Meeting must vote in favor of this proposal.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE TO AUTHORIZE AN
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION AUTHORIZING A REVERSE
STOCK SPLIT OF THE COMPANY'S COMMON STOCK.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
As previously disclosed to shareholders, proposals of shareholders intended
to be presented at the Company's 1998 Annual Meeting of Shareholders should have
been received by the Company at its principal office no later than December 29,
1997 in order that they could be considered for inclusion in the proxy statement
and form of proxy relating to that meeting.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If
any other matters properly come before the meeting, the persons named in the
enclosed Proxy Card will have the discretionary authority to vote in accordance
with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS:
KENNETH J. MCLACHLAN
President and Chief Executive Officer
Dated: January 27, 1998
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SALIVA DIAGNOSTIC SYSTEMS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 26, 1998
The undersigned hereby names, constitutes and appoints Kenneth J.
McLachlan and Eric F. Stoer, and each of them with full powers of substitution
to act as true and lawful attorneys and proxies for the undersigned, and in the
place and stead of the undersigned to attend the Special Meeting of the
Shareholders of Saliva Diagnostic Systems, Inc. (the "Company") to be held at
10:00 a.m. on Thursday, February 26, 1998, and at any adjournment thereof, and
to vote all the shares of Common Stock held of record in the name of the
undersigned on January 23, 1998, with all the powers that the undersigned would
possess if he or she were personally present.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED REPLY ENVELOPE
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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<TABLE>
<S> <C>
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE 1. To authorize the FOR AGAINST ABSTAIN
FOR THE APPROVAL OF PROPOSAL 1. Reverse Stock Split.
Should the undersigned be present and elect to vote at the Special 2. The transaction of
Meeting or at any adjournment thereof and after notification to the such other business
Company at the Special Meeting of the stockholder's decision to as may properly come
terminate this proxy, then the power of said attorneys and proxies before the meeting
shall be deemed terminated and of no further force and effect. and any and all
adjournments thereof.
IF NO SPECIFIC DIRECTION IS GIVEN AS TO ANY OF THE ABOVE ITEMS,
THIS PROXY WILL BE VOTED FOR PROPOSAL 1. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE
NAMED PROXIES IN THEIR BEST JUDGMENT. AT PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE SPECIAL MEETING.
The undersigned acknowledges receipt from the Company prior to
the execution of this proxy of the Notice of Special Meeting of
Shareholders and a Proxy Statement.
I do[ ] do not[ ] plan to attend the
DATED______ SHAREHOLDER (print name)________________ SHAREHOLDER (sign name)_______________ meeting.
(Please check)
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</TABLE>
NOTE: Please sign exactly as your name appears on the enclosed card. When
signing as attorney, executor, administrator, trustee or guardian, please give
your full title. If shares are held jointly, each holder should sign.
