SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Applied Computer Technology, 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 14a-6(i)(1) 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:
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:
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2) Form, Schedule or Registration No.:
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3) Filing Party:
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4) Date Filed:
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Preliminary Proxy Material
APPLIED COMPUTER TECHNOLOGY, INC.
2573 Midpoint Drive
Fort Collins, CO 80252
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _____, 1999
AND PROXY STATEMENT
To the Shareholders:
Notice is hereby given that a special meeting of the shareholders of
Applied Computer Technology, Inc. (the "Company") will be held at the Company's
Tabor Center facility (1200 17th Street, Suite 101, Denver, CO 80202) on _____,
1999 at 2:30 P.M. for the following purposes:
(1) To approve the sale of the assets of Act-Net, Inc;
(2) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on _______, 1999 as the
record date for the determination of shareholders entitled to notice of and to
vote at such meeting. Shareholders are entitled to one vote for each share held.
As of __________, 1999 there were 4,810,192 shares of the Company's common stock
issued and outstanding.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IF YOU
CANNOT ATTEND, PLEASE COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY SO
THAT YOUR SHARES MY BE VOTED AT THE MEETING. YOUR VOTE IS IMPORTANT.
APPLIED COMPUTER TECHNOLOGY, INC.
Fort Collins, Colorado By: Wiley E. Prentice, Jr.
_____________, 1999 Chief Executive Officer
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PLEASE INDICATE YOUR VOTING INSRTUCTIONS ON THE ENCLOSED PROXY CARD, AND SIGN,
DATE AND RETURN THE PROXY CARD.
TO SAVE THE COST OF FURTHER SOLICITATION PLEASE MAIL YOUR PROXY CARD PROMPTLY.
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APPLIED COMPUTER TECHNOLOGY, INC.
2573 Midpoint Drive
Fort Collins, CO 80252
(970) 221-2555
(970) 482-7955 (FAX)
PROXY STATEMENT
IN GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Applied Computer Technology, Inc. (the
"Company") to be used at a Special Meeting of Stockholders to be held at the
Company's Tabor Center facility (1200 17th Street, Suite 101, Denver, CO 80202)
on _____, 1999 at _____P.M. local time to consider and act upon a proposal to
sell substantially all of the assets of Act-Net, a wholly owned subsidiary of
the Company. The assets which are proposed to be sold constitute substantially
all of the assets of the Company:
The shares covered by the enclosed proxy, if such is properly executed and
received prior to the meeting, will be voted for the proposal to sell the assets
of Act-Net. A proxy may be revoked at any time before it is exercised by giving
written notice to the Company and stockholders may vote their shares of they
attend the meeting in person even if they have executed and returned a proxy.
Distribution of this Proxy Statement commenced on or about _______, 1999.
Management of the Company does not intend to present and does not have
reason to believe that others will present any others items of business at the
Special Meeting. However, if other matters are properly presented to the meeting
for a vote, the proxies will be voted upon such matters in accordance with the
judgement of the persons acting under the proxies.
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement, and all other costs in connection with
solicitation of proxies will be paid by the Company including any additional
solicitation made by letter, telephone or facsimile.
SALE OF ACTNET
The Company was incorporated in Colorado in January 1989. Between January
1989 and November 1998 the Company sold, installed, serviced, and supported
microcomputer systems (PC's") and related peripheral products principally for
use by businesses and large institutional customers active in the corporate,
government and retail markets.
The Company completed its initial public offering in October 1995. In its
public offering offering, the Company sold 1,150,000 Units at a price of $3.60
per Unit. Each Unit consisted of one share of Common Stock and one Warrant.
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In October 1996, the Company, in an effort to diversify its business,
began offering internet access and related services to the Company's customers
and the general public in Ft. Collins, Denver, Colorado Springs, and Boulder,
Colorado. These internet services are provided through ActNet, Inc. a wholly
owned subsidiary of the Company. As an Internet Service Provider ("ISP"), ActNet
provides Internet access to persons wishing to view and/or use information
stored in the Internet. Persons using ActNet for Internet access have unlimited
e-mail usage through the Internet. In addition, ActNet offers World Wide Web
("Web") sites (one or more pages of information on the Internet) to businesses
that want to advertise their products or services on the Web. For an additional
fee, ActNet helps these businesses create and design the pages for their Web
site. ActNet's customers can access the Internet using ActNet's dial-up service
and standard analog modems. As of May 31,1999 ActNet was operating on a
breakeven basis.
During 1996 the Company lost $(1,342,000). The Company continued to suffer
losses in subsequent periods and in November 1998 the Company closed its
manufacturing operations and laid off substantially all of the employees engaged
in the manufacture and sale of computers. The Company retained certain employees
who are involved with ActNet as well as a minimal administrative staff.
Most of the Company's assets that were related to the Company's computer
manufacturing operations have been sold to pay outstanding obligations or are
subject to liens of secured creditors. As of June 30 1999 the Company's
liabilities, depending upon the resolution of disputed claims, ranged between
$4,000,000 and $5,000,000. The Company's only significant asset is its interest
in ActNet.
At this point the Company has two options:
1. Declare bankruptcy and liquidate WebAccess, in which case all proceed from
the sale of ActNet would be use to pay a portion of the $4,000,000 to
$5,000,000 owed to the Company's creditors. The Company estimates that it
would receive approximately $400,000 from the sale of ActNet.
2. Attempt to increase the value of ActNet through acquisitions of other
ISP's and then either sell Actnet or take ActNet public through an initial
public offering. Although there can be no assurance such would be the
case, the Company believes that the possibility exists that both the
Company's creditors and shareholders would receive substantially more for
their claims and/or shares if the value of ActNet can be increased.
In order to acquire other ISP's ActNet will need to raise additional
capital. However in discussions the Company has had with potential investors,
investors are reluctant to invest in either the Company or ActNet due to the
substantial amounts owed by the Company to its creditors. As a result the
Company has developed the following plan:
1. Form of a new corporation with the name WebAccess.
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2. Sell substantially all of the assets of ActNet to WebAccess for 200,000
shares of the common stock of WebAccess plus cash payments and assumption
of liabilities in the amount of $600,000.
3. Fund WebAccess with between $700,000 and $1,750,000 from the private sale
of shares of WebAccess common stock at $1.75 per share.
4. Have WebAccess acquire four other ISP's using cash and shares of WebAccess
common stock.
5. Sell additional shares of the common stock of WebAccess either in a
private or public offering.
6. Have WebAccess acquire additional ISP's so as to expand its customer base.
The agreement between WebAccess and ActNet provides that WebAccess will
acquire substantially all the assets of ActNet for 200,000 shares of WebAccess
common stock plus cash payment and the assumption of liabilities in the amount
of $600,000. The cash payments to ActNet will be used to satisfy certain
priority claims of the Company, including claims of the Internal Revenue Service
and creditors who have a lien on the assets on ActNet. As a result it is not
expected that any of the cash payments will be available to satisfy the claims
of the Company's general creditors nor will any of such funds be distributed to
the Company's shareholders. The 200,000 shares to be issued by WebAccess as
partial consideration for the sale of ActNet's assets may not be sold until July
31, 2009 unless 100,000 shares are transferred to a trustee who will hold such
shares for the benefit of the Company's shareholders free and clear of any
claims of any creditors. At such time as the trustee is able to hold such shares
for the benefit of the Company's shareholders, free and clear of any creditor
claims, these shares may be sold pursuant to the provisions of Rule 144 of the
Securities and Exchange Commission. Rule 144 generally provides that holders of
securities (which have not been sold in a public offering) may resell the shares
in the public market after a one year holding period.
If the value of the 100,000 shares which are to be transferred to the
trustee can be held free of the claims of any creditors then the trustee, in the
trustee's discretion, will resell the shares and distribute the proceeds to the
shareholders of the Company on a pro rata basis. Bud Prentice and Cindy Koehler,
who collectively own approximately 27% of the Company's common stock, have
waived any right to such proceeds, thereby increasing the amount that may be
available to the other shareholders of the Company.
Although after the second stage of funding referred to in No.5 above the
200,000 shares to be received by ActNet may represent less then 10% of the total
outstanding shares of the common stock of WebAccess, the Company nevertheless
believes there is a possibility that these shares may have a value which is
substantially greater then the present value of ActNet.
The amount which any Company shareholder will receive upon the sale of the
shares of WebAccess will depend upon a number of factors including, but not
limited to: (i) the agreement of the Company's creditors to allow 100,000 shares
of WebAccess common stock to be held for the benefit of the Company's
shareholders; (ii) the establishment of a public market for the common stock of
WebAccess, or in the alternative, the ability of management to sell WebAccess at
a price substantially greater than the price which could presently be obtained
for the assets of ActNet; and (iii) the ability of WebAccess to implement its
business plan.
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As a result of the foregoing, there can be no assurance that the sale of
the assets of ActNet will result in any benefit to the Company's shareholders.
However, it is certain that the liquidation of ActNet at the present time will
result in absolutely no benefit to the Company's shareholders since the proceeds
from any such sale will be used to pay a portion of the Company's outstanding
liabilities. Accordingly, the Company believes that it is in the best interest
of the Company's shareholders to approve the sale of the assets of ActNet to
WebAccess, upon the terms described in this Proxy Statement, thereby providing
the Company's shareholders with at least a chance that they may derive some
value from their investment in the Company. Management of the Company therefore
recommends that the Company's shareholders vote in favor of the proposed sale of
the assets of ActNet to WebAccess.
Certain Information Concerning the Management of the Company and WebAccess.
Certain officers and directors of WebAccess are or were officers and/or
directors of the Company and have purchased shares and/or acquired options to
acquire shares of the common stock of WebAccess. In addition, certain officers
and directors of the Company who are now affiliated with WebAccess will receive
salaries and consulting fees from WebAccess.
The following describes the officers and directors of WebAccess who are or
were officers and directors of the Company, as well as the interests such
persons have in WebAccess, whether by ownership of common stock or options to
acquire shares of common stock, and the compensation which is proposed to be
paid to such persons by WebAccess. If WebAccess is successful in the
implementation of its business plan as outlined in this proxy statement, the
value of the shares held by the management of WebAccess, or the shares which
could be acquired upon the exercise of options, may increase substantially.
Position with Position with Shares Owned Options in
Name ACT WebAccess in WebAccess (1) WebAccess (2)
- ---- --------- --------- ---------------- -------------
J. Roger Moody Former Director 600,000 50,000
Director
Wiley Prentice, Jr. Officer and President and -- --
Director Director
Cynthia E. Koehler Officer and Consultant -- 100,000
Director
(1) The shares were acquired at a price of $0.25 per share.
(2) Each option represents the right to acquire one share of WebAccess common
stock.
WebAccess has an employment agreement with Mr. Prentice that may be
terminated by either party upon 30 days notice. The employment agreement
provides for an annual salary of $50,000 per year, with performance based
adjustments at the end of each year, and up to $20,000 annually in bonuses. The
employment agreement also provides for certain usual and customary benefits such
as medical insurance, an automobile allowance and training reimbursements.
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WebAccess has a consulting agreement with Cynthia E. Koehler which expires
on August 31, 1999. During the term of the consulting agreement WebAccess has
agreed to pay Ms. Koehler $2,500 per month plus certain other benefits. Ms.
Koehler also received options for the purchase of 100,000 shares of WebAccess
common stock. The options are exercisable at $1.00 per share provided there is
an established public market for WebAccess common stock and the bid price of the
WebAccess common stock is at least $2.00 per share. The options expire on June
15, 2002.
J. Roger Moody will not receive any cash compensation for his first year
of service but received options to purchase 50,000 shares for one year of
service. The options are exercisable at $1.00 per share provided there is an
established public market for WebAccess common stock and the bid price of the
WebAccess common stock is at least $2.00 per share. The options expire on June
15, 2002.
As a result of the relationship between the management of WebAccess and
the management of the Company the terms of the proposed sale of ActNet's assets
to WebAccess cannot be considered to have been negotiated at arms length,
although the Company believes that the terms of such sale are more favorable
than those which the Company could obtain from an unrelated third party.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of ____, 1999 by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's common stock, (ii) each of the Company's executive officers and
directors, and (iii) all executive officers and directors as a group. Each
person has sole voting and sole investment power with respect to the shares
shown below.
Name and Address Shares Beneficially Owned Percentage Ownership (1)
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Wiley E. Prentice, Jr. 918,272 19.1%
2573 Midpoint Drive
Fort Collins, CO 80525
Cynthia E. Koehler 355,000 7.4%
2573 Midpoint Drive
Fort Collins, CO 80525
All directors and officers
as a group (two persons) 1,273,272 26.5%
All shareholders of the Company have the right to exercise dissenter's
rights with respect to the proposed sale of the assets of Act-Net, and may
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obtain payment for their shares by complying with the terms of Sections
7-113-101 through 7-113-302 of the Colorado Business Corporation Act, a copy of
which is attached. Based upon the Company's book value at May 31, 1999, the
Company estimates that it will pay $0.001 per share to any shareholder
dissenting from the merger.
VOTE REQUIRED
As of June 30, 1999, there were 4,810,192 outstanding shares of the
Company's common stock, with each share entitled to one vote. A majority of the
outstanding shares of common stock will constitutes a quorum for the transaction
of business at the meeting.
The adoption of the proposal to sell the assets of Act-Net will require
the approval by the holders owning a majority of the Company's issued and
outstanding common stock. The adoption of any other proposals to come before the
meeting will require the approval of a majority of votes cast at the meeting.
The Company's officers and directors, who collectively own 1,272,272
shares of the Company's common stock, intend to vote their shares in favor of
the proposal to sell the assets of ActNet.
DISSENTERS' RIGHTS
All shareholders of the Company have the right to exercise dissenter's
rights with respect to the proposed sale of the assets of ActNet, and may obtain
payment for their shares by complying with the terms of Title 7, Article 113 of
the Colorado Business Corporation Act, a copy of which is attached. Based upon
the Company's book value at June 30, 1999, the Company estimates that it will
pay $0.001 per share to any shareholder dissenting from the asset sale.
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Applied Computer Technology, Inc.
PROXY
This Proxy is Solicited by the Board of Directors
The undersigned stockholder of Applied Computer Technology, Inc.,
acknowledges receipt of the Notice of the Special Meeting of Stockholders, to be
held _______, 1999, at ____a.m., local time, at ___________________, and hereby
appoints Wiley E. Prentice Jr. or Cynthia E. Koehler, or either of them, each
with the power of substitution, as Attorneys and Proxies to vote all the shares
of the undersigned at said special meeting of stockholders and at all
adjournments thereof, hereby ratifying and confirming all that said Attorneys
and Proxies may do or cause to be done by virtue hereof. The above-named
Attorneys and Proxies are instructed to vote all of the undersigned's shares as
follows:
1. To approve the sale of the assets of ActNet upon the terms disclosed
in the Company's Proxy Statement.
__ FOR __ AGAINST __ ABSTAIN
In their discretion, upon such other business as may properly come
before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DISCRETION IS INDICATED, THIS PROXY
WILL BE VOTED IN FAVOR OF ITEM 1.
Please sign your name exactly as it appears on your stock certificate. If shares
are held jointly, each holder should sign. Executors, trustees, and other
fiduciaries should so indicate when signing.
Please Sign, Date and Return this Proxy so that your shares may be voted at the
meeting.
Dated this ___day of _____, 1999
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Signature Signature
