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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
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NEWSTATE HOLDINGS, INC.
(Name of Registrant as Specified in its Charter
and
Name of Person Filing Proxy Statement)
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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 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 with 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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<PAGE>
NEWSTATE HOLDINGS, INC.
156 W. 56th Street, Suite 2005
New York, New York 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 9, 2000
<TABLE>
<CAPTION>
<S> <C>
TIME.............................. 9:00 a.m. local time on Thursday, November 9, 2000
PLACE........................... Law Offices of Pitney, Hardin, Kipp & Szuch LLP
711 Third Avenue
New York, New York 10017
ITEMS OF BUSINESS......... 1. To elect 4 directors.
2. Such other business as may properly come before the meeting.
RECORD DATE................ Stockholders of record at the close of business on September 29, 2000 are
entitled to notice of and to vote at the meeting.
ANNUAL REPORT............ The Corporation's Form 10-KSB for the fiscal year ending March 31, 2000,
which is not a part of the proxy soliciting material, is enclosed.
PROXY VOTING............... You may vote by mail or in person at the Annual Meeting. You may revoke
your proxy at any time prior to its exercise by delivering to NewState
Holdings, Inc. a later-dated proxy or written notice of revocation.
</TABLE>
October 6, 2000
IMPORTANT - PLEASE RETURN YOUR PROXY PROMPTLY
<PAGE>
NEWSTATE HOLDINGS, INC.
156 W. 56th Street, Suite 2005
New York, New York 10019
-------------------------
PROXY STATEMENT
Dated October 6, 2000
GENERAL PROXY STATEMENT INFORMATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of NewState Holdings, Inc. ("NewState Holdings, Inc."
or the "Corporation") of proxies for use at the Annual Meeting of Stockholders
of the Corporation (the "Annual Meeting") to be held at the offices of Pitney,
Hardin, Kipp & Szuch LLP, 711 Third Avenue, New York, New York 10017 on
Thursday, November 9, 2000 at 9:00 a.m. local time. The business expected to be
voted upon at the Annual Meeting is the election of four persons named in this
proxy statement to serve as directors. This proxy statement is first being
mailed to stockholders on approximately October 6, 2000.
Proxies
Your vote is important.
Because many stockholders cannot attend the Annual Meeting in person,
it is necessary that a large number be represented by proxy. Any stockholder of
record giving a proxy has the right to attend and to vote at the Annual Meeting
in person.
Who Can Vote
The record date for determining stockholders entitled to notice of, and
to vote at, the Annual Meeting is September 29, 2000. Only stockholders of
record as of that date will be entitled to notice of, and to vote at, the Annual
Meeting. On the record date, 11,508,684 shares of common stock, $0.01 par value,
were outstanding and eligible to be voted at the Annual Meeting. Each share of
common stock is entitled to one vote per share.
How to Vote Your Shares
Your vote is important and you are encouraged to vote your shares
promptly.
Each proxy submitted will be voted as directed. However, if a proxy
solicited by the Board of Directors does not specify how it is to be voted, it
will be voted as the Board recommends - that is, FOR the election of the 4
nominees for director named in this proxy statement. If any other matters are
properly presented at the meeting for consideration that are not described in
this proxy statement, the proxies will use their own judgement to determine how
to vote your shares. At the date this proxy statement went to print, we did not
anticipate that any other matters would be raised at the meeting.
You may vote your shares by mail. To vote by mail, please date, sign,
and mail your proxy card in the envelope provided as soon as possible.
Regardless of whether you elect to vote your shares by mail, you will
be able to vote in person or revoke your proxy if you follow the instructions
provided below in the section entitled "To Revoke Your Proxy Instructions."
If you hold your shares through a bank, broker or other nominee, they
will give you separate instructions for voting your shares.
To Revoke Your Proxy Instructions
The method by which you vote will not limit your right to vote at the
meeting if you later decide to attend in person. If your shares are held in the
name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record, to be able to vote at the
meeting. If you submit a proxy and then wish to change your vote or vote in
person at the meeting, you will need to revoke the proxy that you have
submitted. You can revoke your proxy at any time before it is exercised by
delivery of a properly executed, later-dated proxy or a written revocation of
your proxy. A later dated proxy or written revocation must be received before
the meeting by the Secretary of the Corporation, Jin K. Kim, at 156 W. 56th
Street, Suite 2005, New York, New York 10019, or it must be delivered to the
Secretary of the Annual Meeting before proxies are voted. You will be able to
change your vote as many times as you wish and the last vote received
chronologically will supercede any prior votes.
Required Vote
Directors will be elected by a plurality of the votes cast at the
Annual Meeting. At the Annual Meeting, an inspector of election will tabulate
ballots cast by stockholders present and voting in person and votes cast by
proxy. Under applicable state law and NewState Holdings, Inc.'s Certificate of
Incorporation and By-laws, abstentions and broker non-votes are counted for
purposes of establishing a quorum but otherwise do not count. Generally, the
approval of a specified percentage of shares voted at a stockholder meeting is
required to approve a proposal and thus abstentions and broker non-votes have no
effect on the outcome of a vote.
All shares represented by valid proxies received pursuant to this
solicitation will be voted in favor of the four nominees named in this Proxy
Statement unless the stockholder specifies a different choice by means of his
proxy or revokes the proxy prior to the time it is exercised. Should any other
matters properly come before the Annual Meeting, the persons named as proxies
will vote upon such matters in their discretion.
Solicitation of Proxies
This proxy solicitation is being made by the Board of Directors of the
Corporation and the cost of the solicitation will be paid by the Corporation. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or facsimile transmission by officers, directors and employees of the
Corporation who will not be paid for solicitation activities. Arrangements may
be made with brokerage houses and other custodians, nominees and fiduciaries for
forwarding solicitation material to the beneficial owners of shares held of
record by such persons, and the Corporation will reimburse them for their
reasonable expenses incurred in forwarding the materials.
Stockholder Proposals
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
stockholders who intend to submit proposals at the 2001 Annual Meeting must
submit such proposals to the Secretary of the Corporation no later than June 6,
2001 in order for them to be included in the Proxy Statement and the form of
Proxy to be distributed by the Board in connection with that meeting.
If a stockholder wishes to have a proposal considered at the 2001
Annual Meeting but does not utilize the process set forth in Rule 14a-8, Rule
14a-4(c) controls the timely filing of such proposals. Under Rule 14a-4(c), a
stockholder proposal for the 2001 Annual Meeting is not timely unless delivered
to or mailed to the Secretary of the Corporation no later than August 21, 2001.
It is recommended that stockholders submitting proposals or notices of
proposals direct them to the Secretary of the Corporation and utilize Certified
Mail-Return Receipt Requested. Stockholders' proposals should be submitted to
NewState Holdings, Inc., 156 W. 56th Street, New York, New York 10019 Attn:
Secretary.
If the Corporation changes its 2001 Annual Meeting date to a date more
than 30 days from the date of its 2000 Annual Meeting, then the deadline
referred to above will be changed to a reasonable time before the Corporation
begins to print and mail its proxy materials. If the Corporation changes the
date of its 2001 Annual Meeting in a manner that alters the deadline, the
Corporation will so state under Item 5 of the first quarterly report on Form
10-QSB it files with the SEC after the date change, or will notify its
stockholders by another reasonable method.
GOVERNANCE OF THE CORPORATION
Pursuant to Delaware corporation law and the Corporation's Certificate
of Incorporation and By-laws, the business and affairs of the Corporation are
managed under the direction of the Board of Directors. Members of the Board are
kept informed of the Corporation's business through discussions with the
Chairman and officers, by reviewing materials provided to them and by
participating in meetings of the Board and its committees. Ernest B. Kim,
Chairman, President and Chief Executive Officer of the Corporation, also serves
as a director of the Corporation's operating subsidiary in Korea, NewState
Capital Co., Ltd.
Compensation of Directors
Our inside directors do not currently receive cash compensation from
the Corporation for their service as members of the Board of Directors, although
they are reimbursed for certain expenses in connection with attendance at Board
meetings. Our outside directors receive $500 per month as compensation for
service as members of the Board of Directors. There are currently two outside
members of the Board of Directors. We do not provide additional compensation for
committee participation or special assignments of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers to file reports relating to their
ownership and changes in ownership of the Corporation's common stock with the
Securities and Exchange Commission. Based on information provided by the
Corporation's directors and executive officers and a review of such reports, the
Corporation believes that all required reports were filed on a timely basis
during the 1999 fiscal year ending on March 31, 2000.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and accompanying notes sets forth information
regarding beneficial ownership of NewState Holdings, Inc. common stock by all
stockholders who own 5% or more of the Corporation's common stock, by Mr. Ernest
B. Kim, the only director and executive officer for whom individual information
is required to be set forth in this Proxy Statement pursuant to the rules of the
Securities and Exchange Commission, and by directors and all executive officers
as a group. The ownership reflected in the table is accurate as of August 31,
2000. Beneficial ownership has been determined for purposes of completing this
table in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as
amended.
<TABLE>
<CAPTION>
Beneficial Ownership of NewState Holdings, Inc. Common Stock
Number of Common Shares Beneficially
Name of Beneficial Owner Owned (1) Percent of Class
------------------------ --------- ----------------
<S> <C> <C>
NewState Capital Corp. 8,000,000 (2) 69.51%
Ernest B. Kim, Chairman, President 8,000,000 (3) 69.51%
and Chief Executive Officer
Misoo Kim 8,000,000 (4) 69.51%
The Kim Voting Trust 8,000,000 (5) 69.51%
Directors and Executive Officers of 8,000,000 (6) 69.51%
NewState Holdings, Inc. as a group (4
persons)
</TABLE>
NOTES:
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared
investment power. Beneficially owned shares also include shares owned
(i) by a spouse, minor children or by relatives sharing the same home,
(ii) by entities owned or controlled by the named person, and (iii) by
other persons if the named person has the right to acquire such shares
within 60 days by the exercise of any right or option. Unless otherwise
noted, all shares are owned of record and beneficially by the named
person.
(2) NewState Capital Corp., a privately held New York corporation, is the
record owner of these shares. Mr. Kim is the record owner of 20.9% of
the outstanding shares of NewState Capital Corp. Mr. Kim's wife is the
record owner of 16.7% of the outstanding shares, and 62.4% of the
outstanding shares are held in a voting trust for the benefit of Mr.
Kim's three (3) children. Mr. Kim's wife is the trustee of the trust.
(3) NewState Capital Corp. is the record owner of these shares. Mr. Kim is
the record owner of 20.9% of the outstanding shares of NewState Capital
Corp. Mr. Kim's wife is the record owner of 16.7% of the outstanding
shares, and 62.4% of the outstanding shares are held in a voting trust
for the benefit of Mr. Kim's three (3) children. Mr. Kim's wife is the
trustee of the trust.
(4) NewState Capital Corp. is the record owner of these shares. Mrs. Kim is
the record owner of 16.7% of the outstanding shares of NewState Capital
Corp. Mrs. Kim's husband is the record owner of 20.9% of the
outstanding shares, and 62.4% of the outstanding shares are held in a
voting trust for the benefit of Mrs. Kim's three (3) children. Mrs. Kim
is the trustee of the trust.
(5) NewState Capital Corp. is the record owner of these shares. Mr. Kim is
the record owner of 20.9% of the outstanding shares of NewState Capital
Corp. Mr. Kim's wife is the record owner of 16.7% of the outstanding
shares, and 62.4% of the outstanding shares are held in a voting trust
for the benefit of Mr. Kim's three (3) children. Mr. Kim's wife is the
trustee of the voting trust and has the exclusive power to: (i) vote,
or to direct the voting of, the securities, and (ii) dispose, or to
direct the disposition of, the securities.
(6) NewState Capital Corp. is the record owner of these shares. Mr. Kim is
the record owner of 20.9% of the outstanding shares of NewState Capital
Corp. Mr. Kim's wife is the record owner of 16.7% of the outstanding
shares, and 62.4% of the outstanding shares are held in a voting trust
for the benefit of Mr. Kim's three (3) children. Mr. Kim's wife is the
trustee of the trust.
PROPOSAL 1 - ELECTION OF DIRECTORS
NewState Holdings, Inc.'s Certificate of Incorporation and By-laws
authorizes a maximum of six directors, but leaves the exact number to be fixed
by resolution of the Corporation's Board of Directors. The Corporation's Board
has fixed the number of directors at four (4), effective November 9, 2000.
Pursuant to NewState Holdings, Inc.'s By-Laws, the directors of the
Corporation are elected annually.
Ernest B. Kim, Jin K. Kim, Sun W. Young and A. Sungil Noh are each
being nominated for one year terms extending to the 2001 Annual Meeting, If, for
any reason, any of the nominees become unavailable for election, the proxy
solicited by the Board of Directors will be voted for a substitute nominee
selected by the Board. The Board has no reason to believe that any of the named
nominees is not available or will not serve if elected.
The names of the nominees for election and certain information about
each of them are set forth below.
<PAGE>
Nominees for 2000 Annual Meeting
ERNEST B. KIM, 46. Mr. Kim is the founder of NewState Capital Co., Ltd., the
Corporation's operating subsidiary in Korea. He is the primary decision maker
for management. From December 1998 to the present, Mr. Kim has been the chairman
of the board and the chief executive officer of NewState Capital, and from July
1999 to the present the chairman of the board and chief executive officer of
NewState Holdings, Inc. From 1991 to 1998, Mr. Kim was the district manager for
Massachusetts Mutual Financial Services, a financial consulting and planning
firm.
JIN K. KIM, 43. From July 1999 until present, Mr. Kim has been a Vice President
and Director of NewState Holdings, Inc. Mr. Kim was also elected Secretary of
NewState Holdings, Inc. on May 1, 2000 by the Board of Directors. From 1996 to
1999, Mr. Kim was manager of mortgage originations at NewLife Financial Co., a
licensed mortgage broker. From 1994 to 1996, Mr. Kim was a manager of
export/import at Grace International, Inc., a general merchandise trading
company.
SUN W. YOUNG, 51. Mr. Young has been a Director of the Corporation since July
1999. He also served as Secretary of NewState from July 1999 until January 2000.
Mr. Young received his law degree from Hofstra University School of Law in 1989
and has been an attorney at law licensed in the States of New York and New
Jersey since that time.
A. SUNGIL NOH, 40. Mr. Noh has been a Director of NewState since June 9, 2000.
Mr. Noh is the principal of the accounting firm, A. Sungil Noh, CPA, and
practices in the States of New York, New Jersey and Massachusetts. Prior to
establishing his firm in August 1997, he worked with two of the world's largest
accounting and consulting firms, Ernest & Young L.L.P. and
PricewaterhouseCoopers L.L.P., for twelve (12) years as Practice Leader of
Korean Business Group and Senior Manager. His responsibilities included
providing tax and consulting services to U.S., Korean, Japanese, and European
companies in a variety of industries, including investment banking and broker
dealers. His business and community services include; financial and tax advisor
to the Korean Chamber of Commerce and Industry of U.S.A., Inc., internal auditor
of the Palisades Park Chamber of Commerce, internal accountant of Presbyterian
Church of Palisades, and President of the Binghamton University Korean Alumni
Association. His professional affiliations comprise memberships in the American
Institute of Certified Public Accountants and the New York State Society of
Certified Public Accountants and a register CPA of the States of New York, New
Jersey and Commonwealth of Massachusetts.
No director of NewState Holdings, Inc. is also a director of any other
company registered pursuant to Section 12 of the Exchange Act or subject to the
requirements of Section 15(d) of the Exchange Act or any company registered as
an investment company under the Investment Company Act of 1940.
Recommendation and Vote Required on Proposal 1
THE NEWSTATE HOLDINGS, INC. BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE NOMINATED SLATE OF DIRECTORS INCLUDED IN PROPOSAL 1.
Directors will be elected by a plurality of the votes cast at the
NewState Holdings, Inc. Meeting, whether in person or by proxy.
<PAGE>
EXECUTIVE COMPENSATION
The following table provides summary information for each of the last
two fiscal years concerning cash and non-cash compensation paid to or accrued
for Ernest B. Kim, the Corporation's chief executive officer and president for
the past two years. No compensation in excess of $100,000 was awarded to, earned
by, or paid to any other executive officer of the Corporation during the fiscal
years 1999 and 1998.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards
------------------- ------
Securities
Restricted Underlying All Other
Name and Principal Stock Options/ Compensation
Position Year Salary ($) Bonus ($) Award (s) $ SARs(#) ($)
-------- ---- ---------- --------- ----------- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Ernest B. Kim, Chairman, 1999 $532,881 -0- -0- -0- -0-
President & CEO 1998 $42,000 -0- -0- -0- -0-
</TABLE>
Employment Contracts
On January 3, 2000, NewState Capital entered into an employment
agreement with Kwang Yong Koh, Vice President and Chief Operating Officer of
NewState Capital. This agreement obligates NewState Capital to pay Mr. Ko an
annual salary of 56 million Korean Won (US$ 50,000), plus a 0.05% commission on
the total amount of new mortgage originations per year received by the branch
offices under Mr. Koh's control and supervision. This agreement is terminable at
will by NewState Capital.
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation's independent public accountants, Young Wha
Corporation, the Ernest & Young International member firm in Korea ("Young
Wha"), have audited the books and records of NewState Holdings, Inc., as well as
the books and records of NewState Capital Co., Ltd., its operating subsidiary in
Korea, for fiscal year ending March 31, 2000. Selection of NewState Holdings,
Inc.'s independent public accountants for the 2001 fiscal year will be made by
the Board of Directors subsequent to the Annual Meeting.
Young Wha has advised NewState Holdings, Inc. that one or more
representatives from Ernst & Young LLP in New York will be present at the Annual
Meeting to make a statement if they so desire and to respond to appropriate
questions.
The Corporation dismissed its prior independent auditors, Arthur
Andersen LLP, effective March 23, 2000. On that date the Corporation appointed
Young Wha as its independent auditors. These actions were approved by the Board
of Directors of the Corporation on March 23, 2000. The dismissal resulted from a
mutual agreement between Arthur Andersen LLP and the Corporation.
The Corporation selected and approved Young Wha after an extensive
evaluation process initiated by the Corporation's Board of Directors. The
Corporation had not sought the advice of Young Wha on specific audit or
accounting issues relating to its financial statements prior to engagement of
that firm.
The report of Arthur Andersen LLP on the Corporation's financial
statements for the years ended December 31, 1998 and 1997 were modified due to
substantial doubt about the Corporation's ability to continue as a going
concern.
In connection with the audits of the Corporation's financial statements
for the two most recent fiscal years and through March 28, 2000, there had been
no disagreements with Arthur Andersen LLP on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which if not resolved to the satisfaction of Arthur Andersen LLP,
would have caused them to make reference thereto in their report on the
Corporation's financial statements for such years.
OTHER MATTERS
The Board of Directors is not aware of any other matters that may come
before the Annual Meeting. However, in the event such other matters come before
that meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.
Stockholders are urged to sign the enclosed proxy, which is solicited
on behalf of the Board of Directors, and return it to the Corporation in the
enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
ERNEST B. KIM
___________________________________
Ernest B. Kim
Chairman, President and
Chief Executive Officer
New York, New York
October 6, 2000