SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INFORMATION STATEMENT
PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
SCHEDULE 14C
(PURSUANT TO RULE 14C-2(A))
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
CONVERSION SERVICES 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: Common Stock, par value $.001 per share
(2) Aggregate number of securities to which the transaction
applies: 766,129,715 shares of Common Stock, par value $.001
per share
(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:
CONVERSION SERVICES INTERNATIONAL, INC.
100 EAGLE ROCK AVENUE
EAST HANOVER, NEW JERSEY 07936
INFORMATION STATEMENT
PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
TO THE COMPANY'S STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the following action was taken pursuant to a
written consent of the majority stockholders of the Company:
The board of directors shall be authorized to effectuate, in its
discretion: (i) a reverse split of the Company's issued and outstanding
common stock of between a one-for-twenty (1-20) and a one-for-fifty (1-50)
Reverse Stock Split in the discretion of the board of directors; and (ii)
a reduction in the amount of the Company's authorized common stock from
one billion to between thirty million (30,000,000) and seventy five
million (75,000,000), in the discretion of the board of directors, to be
effective as of the filing of an amendment to the Company's Certificate of
Incorporation with the Delaware Secretary of State, attached hereto as
APPENDIX A.
The board of directors has fixed the close of business on July 14, 2004,
as the record date for determining the stockholders entitled to notice of the
foregoing.
The Company has asked brokers and other custodians, nominees 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 material.
This Information Statement will serve as written notice to stockholders
pursuant to Section 228(e) of the Delaware General Corporation Law.
THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS' MEETING
WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
By order of the Board of Directors,
/s/ Scott Newman
-----------------------------
July __, 2004 Scott Newman
President, Chief Executive Officer and Chairman
CONVERSION SERVICES INTERNATIONAL, INC.
100 EAGLE ROCK AVENUE
EAST HANOVER, NEW JERSEY 07936
INFORMATION STATEMENT
PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
THE COMPANY IS NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY
INTRODUCTION
This notice and information statement (the "INFORMATION STATEMENT") was
mailed on or about July __, 2004 to the stockholders of record, as of July 14,
2004, of Conversion Services International, Inc., a Delaware corporation (the
"COMPANY" or "CSI") pursuant to: Section 14(c) of the Exchange Act to inform the
stockholders that the majority stockholders of the Company executed a written
consent dated July 12, 2004 providing for: (i) a reverse split of the Company's
issued and outstanding common stock, par value $.001 per share (the "COMMON
STOCK") of between a one-for-twenty (1-20) and a one-for-fifty (1-50) reverse
stock split in the discretion of the board of directors (the "REVERSE STOCK
SPLIT"); and (ii) a reduction in the amount of the Company's authorized Common
Stock from one billion to between thirty million (30,000,000) and seventy five
million (75,000,000), in the discretion of the board of directors (the
"REDUCTION OF AUTHORIZED"), to be effective as of the filing of an amendment to
the Company's Certificate of Incorporation with the Delaware Secretary of State,
attached hereto as APPENDIX A. This Information Statement shall be considered
the notice required under Section 228(e) of the Delaware General Corporation Law
(the "DGCL").
The board of directors has unanimously approved the Reverse Stock Split
and the Reduction of Authorized, as have stockholders representing a majority of
the Company's issued and outstanding shares of Common Stock. Accordingly, your
approval is not required and is not being sought.
Please read this Information Statement carefully. It describes the
essential terms of, and contains certain information concerning, the Reverse
Stock Split and the Reduction in Authorized. Additional information about the
Company is contained in its periodic and current reports filed with the United
States Securities and Exchange Commission (the "COMMISSION" or "SEC"). These
reports, their accompanying exhibits and other documents filed with the
Commission may be inspected without charge at the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549.
Copies of such material may also be obtained from the Commission at prescribed
rates. The Commission also maintains a Web site that contains reports, proxy and
information statements and other information regarding public companies that
file reports with the Commission. Copies of these reports may be obtained from
the Commission's EDGAR archives at http://www.sec.gov/index.htm.
The principal executive office of the Company is located at 100 Eagle Rock
Avenue, East Hanover, NJ 07936. The Company's telephone number is (973)
560-9400.
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TABLE OF CONTENTS
Page
INTRODUCTION 1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 3
REVERSE STOCK SPLIT AND REDUCTION IN THE AMOUNT OF AUTHORIZED SHARES 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 6
DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS 8
EXECUTIVE COMPENSATION 10
SUMMARY COMPENSATION TABLE 11
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 16
PURPOSE, RISKS AND PROCEDURES 17
FEDERAL INCOME TAX CONSEQUENCES 21
DISSENTER'S RIGHTS 22
DESCRIPTION OF CAPITAL STOCK 22
MAILING COSTS 23
STOCKHOLDER PROPOSALS 23
STOCKHOLDER COMMUNICATIONS WITH DIRECTORS 23
WHERE YOU CAN FIND MORE INFORMATION 24
DOCUMENTS INCORPORATED BY REFERENCE 24
APPENDIX A - Amendment to Certificate of Incorporation
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information included in this Information Statement may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "SECURITIES ACT") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"). This information may
involve known and unknown risks, uncertainties and other factors which may cause
the Company's actual results, performance or achievements to be materially
different from future results, performance or achievements expressed or implied
by any forward-looking statements. Forward-looking statements, which involve
assumptions and describe the Company's future plans, strategies and
expectations, are generally identifiable by use of the words "may," "should,"
"expect," "anticipate," "estimate," "believe," "intend" or "project" or the
negative of these words or other variations on these words or comparable
terminology. These forward-looking statements are based on assumptions that may
be incorrect, and there can be no assurance that these projections included in
these forward-looking statements will come to pass. The Company's actual results
could differ materially from those expressed or implied by the forward-looking
statements as a result of various factors. The Company undertakes no obligation
to update publicly any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.
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REVERSE STOCK SPLIT AND REDUCTION IN THE AMOUNT OF AUTHORIZED SHARES
GENERAL
The Information Statement is furnished only to inform the Company's
stockholders of the actions described below before they take place. Your vote is
not required to approve any of the actions as set forth herein. This Information
Statement does not relate to an annual meeting or special meeting in lieu of an
annual meeting.
Pursuant to the rules and regulations promulgated by the SEC under the
Exchange Act, including Rule 14c-2 promulgated thereunder, an information
statement must be sent to the holders of voting stock who do not sign the
written consent at least 20 days prior to the effective date of any corporate
action taken or authorized pursuant to the consent of the Company's
stockholders.
This Information Statement was first mailed on or around July __, 2004
(the "MAILING DATE") to the Company' stockholders of record as of July 14, 2004
(the "RECORD DATE").
The actions described below will be effective no sooner than approximately
August __, 2004, which is twenty days after the estimated date on which this
Information Statement will first be mailed to the Company's stockholders.
This Information Statement has been prepared by the Company's management,
and the entire cost of furnishing this Information Statement will be borne by
us. The Company will request brokerage houses, nominees, custodians, fiduciaries
and other like parties to forward this Information Statement to the beneficial
owners of the Company's voting securities held of record by them and the Company
will reimburse such persons for out-of-pocket expenses incurred in forwarding
such material.
BOARD OF DIRECTORS AND STOCKHOLDERS APPROVAL
The Company's board of directors has unanimously approved the actions
described herein.
As of the Record Date, the Company had 766,129,715 shares of Common Stock
issued and outstanding. As of this same date, stockholders representing
530,050,000 shares of Common Stock, or approximately 69% of the issued and
outstanding shares of Common Stock, have approved the actions described herein.
No further vote of the stockholders is required for the Company to approve the
actions. Stockholders who did not consent to the actions described herein are
not entitled to dissenter's rights under Delaware law.
Notwithstanding the approval of the actions described herein by the
Company's board of directors and a majority of the Company's stockholders, the
Company's board of directors may, in its sole discretion, determine not to
implement such actions.
REVERSE STOCK SPLIT AND REDUCTION OF AUTHORIZED
The board of directors and a majority of the stockholders of the Company
have approved a proposal providing for: (i) a reverse split of the Company's
issued and outstanding Common Stock of between a one-for-twenty (1-20) and a
one-for-fifty (1-50) reverse stock split in the discretion of the board of
directors; and (ii) a reduction in the amount of the Company's authorized Common
Stock from one billion to between thirty million (30,00,000) and seventy five
million (75,000,000), in the discretion of the board of directors, to be
effective as of the filing of an amendment to the Company's Certificate of
Incorporation with the Delaware Secretary of State, attached hereto as APPENDIX
A. The Reverse Stock Split and Reduction in Authorized would become effective on
any date selected by the board of directors prior to the next annual meeting of
stockholders. The board of directors intends to effect either both or neither of
such proposals.
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In determining the specific ratio of the Reverse Stock Split and the
amount of the Reduction of Authorized, the board of directors will consider
numerous factors including the historical and projected performance of the
Company's Common Stock, prevailing market conditions, general economic trends
and the future needs of the Company, and will place emphasis on the expected
closing price of the Common Stock in the period following the effectiveness of
the Reverse Stock Split. The board of directors will also consider the impact of
the Reverse Stock Split ratio on investor interest. The purpose of selecting a
range for the proposed Reverse Stock Split is to give the board of directors the
flexibility to provide for a post Reverse Stock Split market price that may
allow the Company to maximize and support future growth.
The Company reserves the right not to effect the Reverse Stock Split and
the Reduction in Authorized if the board of directors does not deem it to be in
the best interests of the Company and its stockholders. There will be no changes
in the amount or designation of the Company's preferred stock.
INTERESTS OF CERTAIN PERSONS IN THE REVERSE SPLIT
No director, executive officer, associate of any director or executive
officer or any other person has any substantial interest, direct or indirect, by
security holdings or otherwise, in the proposals to effectuate the Reverse Stock
Split and Reduction of Authorized and take all related actions which is not
shared by all other holders of the Common Stock. See "Security Ownership of
Certain Beneficial Owners and Management."
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the date hereof, the Company's authorized capitalization consisted
of (1) Twenty Million (20,000,000) shares of preferred stock, par value $.001
per share; and (2) One Billion (1,000,000,000) shares of Common Stock. As of the
Record Date, there were 766,129,715 shares of Common Stock outstanding, all of
which were fully paid, non-assessable and entitled to vote and no shares of
preferred stock outstanding. Each share of Common Stock entitles its holder to
one vote on each matter submitted to the stockholders.
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock, the Company's only class of
outstanding voting securities as of the Record Date by: (i) each person who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock with the address of each such person, (ii) each of the
Company's present directors and officers, and (iii) all officers and directors
as a group:
NAME AND ADDRESS OF AMOUNT OF COMMON STOCK PERCENTAGE OF OUTSTANDING COMMON STOCK
BENEFICIAL OWNER(1)(2) BENEFICIALLY OWNED BENEFICIALLY OWNED
---------------------------------------------------------------------------------------------------------------------
Scott Newman(3) 300,050,000 39.2%
Glenn Peipert(4) 150,000,000 19.6%
Mitchell Peipert(5) ___ ___
Robert C. DeLeeuw(6) 80,000,000 10.4%
Lawrence K. Reisman(7) ___ ____
WHRT I Corp. (8) 72,543,956 9.5%
All directors and officers as a group 530,050,000 69.2%
(5 persons)
---------------------------------------------------------------------------------------------------------------------
(1) Each stockholder, director and executive officer has sole voting power and
sole dispositive power with respect to all shares beneficially owned by
him, unless otherwise indicated.
(2) All addresses except for WHRT I Corp. are c/o Conversion Services
International, Inc., 100 Eagle Rock Avenue, East Hanover, New Jersey
07936.
(3) Mr. Newman is the Company's President, Chief Executive Officer and
Chairman of the Board.
(4) Mr. Glenn Peipert is the Company's Executive Vice President, Chief
Operating Officer and Director
(5) Mr. Mitchell Peipert is the Company's Vice President, Chief Financial
Officer, Secretary and Treasurer. Does not include 4,500,000 options to
purchase Common Stock granted on March 29, 2004 at an exercise price of
$0.165 per share. One-third of the options granted vest on the first
anniversary, one-third of the options granted vest on the second
anniversary and one-third of the options granted vest on the third
anniversary. The option grant expires on March 28, 2014.
6
(6) Mr. DeLeeuw is the Company's Senior Vice President and the President of
the Company's wholly owned subsidiary DeLeeuw Associates, LLC.
(7) Mr. Reisman is a Director.
(8) Based on a Schedule 13G filed with the SEC on July 8, 2004. WHRT I Corp.'s
address is c/o Tudor Ventures, 50 Rowes Wharf, 6th Floor, Boston,
Massachusetts 02420.
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DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
The following table sets forth the names and ages of the Company's current
directors and executive officers, the principal offices and positions with the
Company held by each person and the date such person became a director or
executive officer. The Company's board of directors elects the Company's
executive officers annually. Each year the stockholders elect the members of the
Company's board of directors.
The Company's directors and executive officers are as follows:
---------------------------------------------------------------------------------------------------------------------
YEAR
FIRST ELECTED
AS AN OFFICER
NAME OR DIRECTOR AGE POSITIONS HELD
---------------------------------------------------------------------------------------------------------------------
Scott Newman 2004 45 President, Chief Executive Officer and
Chairman
Glenn Peipert 2004 42 Executive Vice President,
Chief Operating Officer and Director
Mitchell Peipert 2004 45 Vice President, Chief Financial Officer,
Secretary and Treasurer
Lawrence K. Reisman 2004 45 Director
Robert C. DeLeeuw 2004 47 Senior Vice President and
President of DeLeeuw Associates, LLC
---------------------------------------------------------------------------------------------------------------------
SCOTT NEWMAN has been the Company's President, Chief Executive Officer and
Chairman since January 2004. Mr. Newman founded the former Conversion Services
International, Inc. in 1990 (before its merger with and into LCS Group, Inc.)
and is the Company's largest stockholder. He has over twenty years of experience
providing technology solutions to major companies internationally. Mr. Newman
has direct experience in strategic planning, analysis, design, testing and
implementation of complex big-data solutions. He possesses a wide range of
software and hardware architecture/discipline experience, including,
client/server, data discovery, distributed systems, data warehousing, mainframe,
scaleable solutions and s-business. Mr. Newman has been the architect and lead
designer of several commercial software products used by Chase, Citibank,
Merrill Lynch and Jaguar Cars. Mr. Newman advises and reviews data warehousing
and business intelligence strategy on behalf of the Company's Fortune 1000
clients, including AT&T Capital, Jaguar Cars, Cytec and Chase. Mr. Newman is a
member of the Young Presidents Organization, a leadership organization that
promotes the exchange of ideas, pursuit of learning and sharing strategies to
achieve personal and professional growth and success. Mr. Newman received his
B.S. from Brooklyn College in 1980.
GLENN PEIPERT has been the Company's Executive Vice President, Chief
Operating Officer and Director since January 2004. Mr. Peipert held the same
positions with the former Conversion Services International, Inc. since its
inception in 1990. Mr. Peipert has over two decades of experience consulting to
major organizations about leveraging technology to enable strategic change. He
has advised clients representing a broad cross-section of rapid growth
industries worldwide. Mr. Peipert has hands on experience with the leading data
warehousing products. His skills include architecture design, development and
project management. He routinely participates in architecture reviews and
8
recommendations for the Company's Fortune 1000 clients. Mr. Peipert has managed
major technology initiatives at Chase, Tiffany, Morgan Stanley, Cytec and the
United States Tennis Association. He speaks nationally on applying data
warehousing technologies to enhance business effectiveness and has authored
multiple white papers regarding business intelligence. Mr. Peipert is a member
of the Institute of Management Consultants, as well as TEC International, a
leadership organization whose mission is to increase the effectiveness and
enhance the lives of chief executives and those they influence. Mr. Peipert is
the brother of Mitchell Peipert, the Company's Vice President, Chief Financial
Officer, Secretary and Treasurer. Mr. Peipert received his B.S. from Brooklyn
College in 1982.
MITCHELL PEIPERT has been the Company's Vice President, Chief Financial
Officer, Secretary and Treasurer since January 2004. Mr. Peipert is a Certified
Public Accountant who held the same positions with the former Conversion
Services International, Inc. from January 2001 to September 2002. From September
2002 to December 2003, Mr. Peipert was Senior Sales Executive for HIA Group and
President of E3 Management Advisors. From April 1992 until January 2001, Mr.
Peipert served as Senior Vice President of Operations and Controller of TSR
Wireless LLC, where he directed the accounting, operations and human resources
functions. He also assisted the chief executive officer in strategic planning,
capital raising and acquisitions. Prior to his employment by TSR, he held
various managerial roles for Anchin, Block & Anchin, certified public
accountants, Merrill Lynch and Grant Thornton. Mr. Peipert is the brother of
Glenn Peipert, the Company's Executive Vice President, Chief Operating Officer
and Director. Mr. Peipert received his B.S. from Brooklyn College in 1980 and
received his M.B.A. in Finance from Pace University in 1986.
LAWRENCE K. REISMAN has been a Director of the Company's company since
February 2004. Mr. Reisman is a Certified Public Accountant who has been the
principal of his own firm, The Accounting Offices of L.K. Reisman, since 1986.
Prior to forming his company, Mr. Reisman was a tax manager at Coopers & Lybrand
and Peat Marwick Mitchell. He routinely provides accounting services to small
and medium-sized companies, which services include auditing, review and
compilation of financial statements, corporate, partnership and individual
taxation, designing accounting systems and management consulting services. Mr.
Reisman received his B.S. and M.B.A. in Finance from St. John's University in
1981 and 1985, respectively.
ROBERT C. DELEEUW has been the Company's Senior Vice President and the
President of the Company's wholly owned subsidiary, DeLeeuw Associates, LLC,
since March 2004. Mr. DeLeeuw founded DeLeeuw Associates, LLC, formerly known as
DeLeeuw Associates, Inc., in 1991. Mr. DeLeeuw has over twenty-five years
experience in banking and consulting. During this time, he has managed and
supported some of the largest merger projects in the history of the financial
services industry and has implemented numerous large-scale business and process
change programs for his clients. He has been published in American Banker,
Mortgage Banking Magazine, The Journal of Consumer tending and sank Technology
News where he has also served as a member of the Editorial Advisory Board. Mr.
DeLeeuw received his B.S. from Rider University in 1979 and received his M.S. in
Management from Stevens Institute of Technology in 1986.
Directors do not receive compensation for their duties as directors.
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EXECUTIVE COMPENSATION
Scott Newman, the Company's President and Chief Executive Officer, agreed
to a five-year employment agreement dated as of March 26, 2004. The agreement
provides for an annual salary to Mr. Newman of $500,000 and an annual bonus to
be awarded by the Company's to-be-appointed Compensation Committee. The
agreement also provides for health, life and disability insurance, as well as a
monthly car allowance. In the event that Mr. Newman's employment is terminated
other than with good cause, he will receive a payment of three year's base
salary.
Mr. Glenn Peipert, Executive Vice President and Chief Operating Officer,
agreed to a five-year employment agreement dated as of March 26, 2004. The
agreement provides for an annual salary to Mr. Peipert of $375,000 and an annual
bonus to be awarded by the Company's to-be-appointed Compensation Committee. The
agreement also provides for health, life and disability insurance, as well as a
monthly car allowance. In the event that Mr. Peipert's employment is terminated
other than with good cause, he will receive a payment of three year's base
salary.
Mr. Mitchell Peipert, Vice President, Chief Financial Officer, Treasurer
and Secretary, agreed to a three-year employment agreement dated as of March 26,
2004. The agreement provides for an annual salary to Mr. Peipert of $200,000 and
an annual bonus to be awarded by the Company's to-be-appointed Compensation
Committee. The agreement also provides for health, life and disability
insurance, as well as a monthly car allowance. In the event that Mr. Peipert's
employment is terminated other than with good cause, he will receive a payment
of three year's base salary.
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, paid to or earned by the following type of executive
officers for the fiscal years ended December 31, 2001, 2002 and 2003: (i)
individuals who served as, or acted in the capacity of, the Company's principal
executive officer for the fiscal year ended December 31, 2003; and (ii) the
Company's other most highly compensated executive officer, who together with the
principal executive officer are the Company's most highly compensated officers
whose salary and bonus exceeded $100,000 with respect to the fiscal year ended
December 31, 2003 and who were employed at the end of fiscal year 2003.
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SUMMARY COMPENSATION TABLE*
LONG TERM COMPENSATION
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
------------------------- -------------------------- --------------------
YEAR SALARY BONUS OTHER RESTRICTED SECURITIES LTIP ALL OTHER
---- ------ ----- -----
ANNUAL
NAME AND PRINCIPAL COMPEN
POSITION SATION
($) ($) ($) ($) (#) ($) ($)
Scott Newman 2003 244,452 -- -- -- -- -- 206,686 (2)
President, Chief Executive
Officer and Chairman
2002 143,750 -- -- -- -- -- 259,418 (2)
2001 250,000 -- -- -- -- -- 220,000 (2)
Glenn Peipert 2003 223,016 -- -- -- -- -- 171,309 (2)
Executive Vice President,
Chief Operating Officer
and Director
2002 143,750 -- -- -- -- -- 199,166 (2)
2001 187,500 -- -- -- -- -- 165,633 (2)
-------------------------
*Salary reflects total compensation paid to these executives (both before
and after the reverse merger with LCS Group, Inc.).
(1)The annual amount of perquisites and other personal benefits, if any,
did not exceed the lesser of $50,000 or 10% of the total annual salary reported
for each named executive officer and has therefore been omitted.
(2)Amounts shown reflect distributions resulting from the Company's past
tax status as a Subchapter S corporation, as well as expenses paid for by us.
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OPTION GRANTS AS OF MARCH 31, 2004
The only executive officer or director to receive options as of March 31,
2004 was Mitchell Peipert, who was granted options to purchase 4,500,000 shares
of Common Stock on March 29, 2004 at an exercise price of $0.165 per share.
One-third of the options granted vest on the first anniversary, one-third of the
options granted vest on the second anniversary and one-third of the options
granted vest on the third anniversary. The options expire on March 28, 2014.
As of March 31, 2004, options to purchase a total of 14,700,000 shares of
Common Stock were granted by the Company's board of directors at an exercise
price of $0.165 per share. One-third of the options granted vest on the first
anniversary, one-third of the options granted vest on the second anniversary and
one-third of the options granted vest on the third anniversary. The options
expire on March 28, 2014.
All options described above have been issued pursuant to the 2003
Incentive Plan described below.
2003 INCENTIVE PLAN
General
The 2003 Incentive Plan was approved at a special meeting of the Company's
stockholders on January 23, 2004. The Plan authorizes the Company to issue
100,000,000 shares of Common Stock for issuance upon exercise of options. It
also authorizes the issuance of stock appreciation rights, referred to herein as
SARs. The Plan authorizes the Company to grant
o incentive stock options to purchase shares of the Company's Common Stock,
o non-qualified stock options to purchase shares of Common Stock, and
o SARs and shares of restricted Common Stock.
The Plan may be amended, terminated or modified by the Company's board of
directors at any time, subject to stockholder approval as required by law, rule
or regulation. No such termination, modification or amendment may affect the
rights of an optionee under an outstanding option or the grantee of an award.
Objectives
The objective of the Plan is to provide incentives to the Company's
officers, other key employees, consultants, professionals and non-employee
directors to achieve financial results aimed at increasing stockholder value and
attracting talented individuals to CSI. Persons eligible to be granted incentive
stock options under the Plan will be those employees, consultants, professionals
and non-employee directors whose performance, in the judgment of a committee of
the Company's board of directors, can have a significant effect on the Company's
success.
Oversight
The board of directors, acting as a whole, or a committee thereof
appointed by the Company's board of directors, will administer the Plan by
making determinations regarding the persons to whom options should be granted
and the amount, terms, conditions and restrictions of the awards. The board of
directors or such committee also has the authority to interpret the provisions
of the Plan and to establish and amend rules for its administration subject to
the Plan's limitations.
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Types of grants
The Plan allows the Company to grant incentive stock options,
non-qualified stock options, shares of restricted stock, SARs in connections
with options and independent SARs. The Plan does not specify what portion of the
awards may be in the form of any of the foregoing. Incentive stock options
awarded to the Company's employees are qualified stock options under the
Internal Revenue Code.
Eligibility
Under the Plan, the Company may grant incentive stock options only to the
Company's officers and employees, and the Company may grant non-qualified
options to officers and employees, as well as the Company's directors,
independent contractors and agents.
Statutory Conditions on Stock Options
Exercise Price. To the extent that Options designated as incentive stock
options become exercisable by an optionee for the first time during any calendar
year for Common Stock having a fair market value greater than One Hundred
Thousand Dollars ($100,000), the portions of such options which exceed such
amount shall be treated as nonqualified stock options. Incentive stock options
granted to any person who owns, immediately after the grant, stock possessing
more than 10% of the combined voting power of all classes of the Company's
stock, or of any parent or subsidiary of the Company, must have an exercise
price at least equal to 110% of the fair market value of Common Stock on the
date of grant and the term of the option may not be longer than five years.
Expiration Date. Any option granted under the Plan will expire at the time
fixed by the board of directors or its committee, which cannot be more than ten
(10) years after the date it is granted or, in the case of any person who owns
more than 10% of the combined voting power of all classes of the Company's stock
or of any parent or subsidiary corporation, not more than five years after the
date of grant.
Exerciseability. The board of directors or its committee may also specify
when all or part of an option becomes exercisable, but in the absence by such
specification, the option will ordinarily be exercisable in whole or part at any
time during its term. However, the board of directors or its committee may
accelerate the exerciseability of any option at its discretion.
Assignability. Options granted under the Plan are not assignable, except
by the laws of descent and distribution or as may be otherwise provided by the
board of directors or its committee.
Payment Upon Exercise Of Options
Payment of the exercise price for any option may be in cash, by withheld
shares that, upon exercise, have a fair market value at the time the option is
exercised equal to the option price, plus applicable withholding tax, or in the
form of shares of the Company's Common Stock.
13
Stock Appreciation Rights
A Stock Appreciation Right is the right to benefit from appreciation in
the value of Common Stock. A SAR holder, on exercise of the SAR, is entitled to
receive from the Company in cash or Common Stock an amount equal to the excess
of: (a) the fair market value of Common Stock covered by the exercised portion
of the SAR, as of the date of such exercise, over (b) the fair market value of
Common Stock covered by the exercised portion of the SAR as of the date on which
the SAR was granted.
The board of directors or its committee may grant SARs in connection with
all or any part of an option granted under the Plan, either concurrently with
the grant of the option or at any time thereafter, and may also grant SARs
independently of options.
Tax Consequences
An employee or director will not recognize income on the awarding of
incentive stock options and nonstatutory options under the Plan.
An optionee will recognize ordinary income as the result of the exercise
of a nonstatutory stock option in the amount of the excess of the fair market
value of the stock on the day of exercise over the option exercise price.
An employee will not recognize income on the exercise of an incentive
stock option, unless the option exercise price is paid with stock acquired on
the exercise of an incentive stock option and the following holding period for
such stock has not been satisfied. The employee will recognize long-term capital
gain or loss on a sale of the shares acquired on exercise, provided the shares
acquired are not sold or otherwise disposed of before the earlier of:
(i) two years from the date of award of the option or
(ii) one year from the date of exercise.
If the shares are not held for the required period of time, the employee
will recognize ordinary income to the extent the fair market value of the stock
at the time the option is exercised exceeds the option price, but limited to the
gain recognized on sale. The balance of any such gain will be a short-term
capital gain. Exercise of an option with previously owned stock is not a taxable
disposition of such stock. An employee generally must include in alternative
minimum taxable income the amount by which the price such employee paid for an
incentive stock option is exceeded by the option's fair market value at the time
his or her rights to the stock are freely transferable or are not subject to a
substantial risk of forfeiture.
MEETINGS AND COMMITTEES OF DIRECTORS; CODE OF CONDUCT AND ETHICS
The Company's board of directors acted upon ___ matters by unanimous
written consent since _____ and has held ______ formal meetings. The board of
directors has no standing audit, nominating or compensation committee.
The board of directors adopted on January 30, 2004 a Code of Conduct and
Ethics for management and all employees. The Code of Conduct and Ethics is not
yet on our website, but a copy of such document may be obtained by written
request to the Secretary of the Company at 100 Eagle Rock Avenue, East Hanover,
New Jersey 07936.
14
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
executive officers and any person holding more than ten percent (10%) of the
Company's shares of Common Stock are required to report their ownership of the
Company's shares and any changes in ownership to the Commission. Specific due
dates for these reports have been established, and the Company is required to
report any failure to file by that date. All of the filing requirements were
satisfied by the Company's directors, executive officers and ten percent (10%)
holders during 2004 to date. In making these statements, the Company has relied
upon the written representations of directors and executive officers and its ten
percent (10%) holders, and copies of the reports that they filed with the
Commission.
15
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company currently has a line of credit with Trust Company Bank of New
Jersey pursuant to which the Company has borrowed $3,000,000 against eligible
accounts receivable. This line is collateralized by all of the Company's assets
and guaranteed by Scott Newman and Glenn Peipert.
As of March 31, 2004, Scott Newman and Glenn Peipert owed the company an
aggregate of approximately $204,000, including accrued interest. These loans
bear at 3% per annum and are due and payable by December 31, 2005.
Dr. Michael Mitchell, the former President, Chief Executive Officer and
sole director of LCS Group, Inc., had loaned an aggregate of $930,707 to us. Mr.
Alex Bruni, LCS Group, Inc.'s former Vice President and Secretary, had loaned
the Company an aggregate of $36,500. These loans were converted into shares of
the Company's Common Stock at the closing of the merger of LCS and CSI. Dr.
Mitchell and Mr. Bruni are each selling stockholders hereunder.
On March 22, 2002, the Company issued 500,000 shares of the Company's
Common Stock to two of the Company's former directors, which the Company valued
at $0.04 per share.
During the Company's fiscal year ended February 28, 2003, A&J Marketing,
Inc., a company owned by Mr. Bruni, acquired the Golfpromo.net and
PlayGolfNow.com domain names after the Company had lost the Company's right to
these names because the Company was unable to pay the fees needed to retain
these rights. A&J Marketing subsequently opened websites using these names and
is now operating these websites.
Other than those described above, the Company has no material transactions
which involved or are planned to involve a direct or indirect interest of a
director, executive officer, greater than 5% stockholder or any family of such
parties.
16
PURPOSE, RISKS AND PROCEDURES OF PROPOSALS
PURPOSE
The Company's board of directors approved the proposal authorizing the
Reverse Stock Split and the Reduction in the Authorized for the following
reasons:
o the board of directors believes a higher stock price may help generate
investor interest in the Company;
o the board of directors believes this action will attract additional
investment in the Company; and
o the board of directors believes this action is the next logical step in
the process of restructuring the Company to align the Company's
outstanding shares of capital stock with the Company's existing financial
condition and operations to provide an opportunity for potential
realization of stockholder value, which is currently subject to the
dilutative effects of the Company's capital structure.
POTENTIAL INCREASED INVESTOR INTEREST
On July ____, 2004, the Company's Common Stock closed at $____ per share.
In approving the proposal authorizing the Reverse Stock Split, the Company's
board of directors considered that the Company's Common Stock may not appeal to
brokerage firms that are reluctant to recommend lower priced securities to their
clients. Investors may also be dissuaded from purchasing lower priced stocks
because the brokerage commissions, as a percentage of the total transaction,
tend to be higher for such stocks. Moreover, the analysts at many brokerage
firms do not monitor the trading activity or otherwise provide coverage of lower
priced stocks. Also, the board of directors believes that most investment funds
are reluctant to invest in lower priced stocks.
THERE ARE RISKS ASSOCIATED WITH THE REVERSE STOCK SPLIT, INCLUDING THAT THE
REVERSE STOCK SPLIT MAY NOT RESULT IN AN INCREASE IN THE PER SHARE PRICE OF THE
COMPANY'S COMMON STOCK OR THAT ANY INCREASE IN THE PER SHARE PRICE OF THE COMMON
STOCK WILL NOT BE SUSTAINED.
The Company cannot predict whether the Reverse Stock Split will increase
the market price for the Common Stock. The history of similar stock split
combinations for companies in like circumstances is varied. There can be no
assurance that:
o the market price per share of the Common Stock after the Reverse Stock
Split will rise in proportion to the reduction in the number of shares of
the Company's Common Stock outstanding before the Reverse Stock Split; and
o the Reverse Stock Split will result in a per share price that will attract
brokers and investors who do not trade in lower priced stocks.
The market price of the Company's Common Stock will also be based on the
Company's performance and other factors, some of which are unrelated to the
number of shares outstanding. If the Reverse Stock Split is effected and the
market price of the Company's Common Stock declines, the percentage decline as
an absolute number and as a percentage of the Company's overall market
capitalization may be greater than would occur in the absence of the Reverse
Stock Split. Furthermore, the liquidity of the Common Stock could be adversely
affected by the reduced number of shares that would be outstanding after the
Reverse Stock Split.
17
DETERMINATION OF THE RATIO FOR THE REVERSE STOCK SPLIT
The ratio of the Reverse Stock Split will be determined by the Company's
board of directors, in its sole discretion. However, the ratio will not exceed a
ratio of one-for-fifty (1-50) or be less than a ratio of one-for-twenty (1-20).
In determining the Reverse Stock Split, the Company's board of directors will
consider numerous factors including the historical and projected performance of
the Company's Common Stock, prevailing market conditions and general economic
trends, and will place emphasis on the expected closing price of the Common
Stock in the period following the effectiveness of the Reverse Stock Split. The
Company's board of directors will also consider the impact of the Reverse Stock
Split ratio on investor interest. The purpose of selecting a range is to give
the Company's board of directors the flexibility to meet business needs as they
arise, to take advantage of favorable opportunities and to respond to a changing
corporate environment.
DETERMINATION OF THE AMOUNT OF THE REDUCTION IN AUTHORIZED
The amount of the Reduction in Authorized will be determined by the
Company's board of directors, in its sole discretion, but it will be reduced to
a number between thirty million (30,000,000) and seventy five million
(75,000,000). In determining the amount of the Reduction in Authorized the board
of directors will consider numerous factors including the historical and
projected performance of the Company's Common Stock, prevailing market
conditions and general economic trends, and will place emphasis on the Company's
current and expected growth and projected and potential acquisition plans and/or
financing plans in the period following the effectiveness of Reduction in
Authorized. The board of directors will also consider the impact of the
Reduction in Authorized on investor interest. The purpose of providing the
Company's board of directors with the discretion to determine the amount of the
Reduction in Authorized is to give the board of directors the flexibility to
meet business needs as they arise, to take advantage of favorable opportunities
and to respond to a changing corporate environment.
PRINCIPAL EFFECTS OF THE REVERSE STOCK SPLIT AND THE REDUCTION IN AUTHORIZED
t 6 0 If and when the board of directors decides to implement the Reverse
Stock Split and the Reduction in Authorized, the Company will amend Article
Fourth Section A of the Company's certificate of incorporation, relating to the
Company's authorized capital, in its entirety to state as follows:
FOURTH:
A. AUTHORIZED
The aggregate number of shares of all classes of capital stock with the
Corporation shall have authority to issue shall be _____________________________
(__________) shares, consisting of:
18
(1) Twenty Million (20,000,000) shares of preferred stock, par value $.001 per
share ("Preferred Stock"); and
(2) ____________________ (_________________) shares of common stock, par value
$.001 per share ("Common Stock").
Upon the effectiveness (the "Effective Date") of the certificate of amendment to
the certificate of incorporation containing this sentence, each [*] shares of
the Common Stock issued and outstanding as of the date and time immediately
preceding [date on which the certificate of amendment is filed], the effective
date of a reverse stock split (the "Split Effective Date"), shall be
automatically changed and reclassified, as of the Split Effective Date and
without further action, into one (1) fully paid and nonassessable share of
Common Stock. There shall be no fractional shares issued. A holder of record of
Common Stock on the Split Effective Date who would otherwise be entitled to a
fraction of a share shall have the number of new shares to which they are
entitled rounded to the nearest whole number of shares. The number of new shares
will be rounded up if the fractional share is equal to or greater than 0.5 and
rounded down if the fraction is less than 0.5. No stockholders will receive cash
in lieu of fractional shares.
The Reverse Stock Split will be effected simultaneously for all the
Company's Common Stock and the exchange ratio will be the same for all of the
issued Common Stock. The Reverse Stock Split will affect all of the stockholders
uniformly and will not affect any stockholder's percentage ownership interests
in the Company, except to the extent that the Reverse Stock Split results in any
of the stockholders owning a fractional share. All shares of issued Common Stock
will remain fully paid and nonassessable. The Reverse Stock Split will not
affect the Company's continuing to be subject to the periodic reporting
requirements of the Exchange Act.
The certificate of amendment filed with the Secretary of State of the
State of Delaware will include only those numbers determined by the board of
directors to be in the best interests of the Company and its stockholders. The
board of directors will not implement any subsequent amendments providing
additional splits.
Based on stock information as of the Record Date after completion of the
Reverse Stock Split and Reduction in Authorized, the Company will have
approximately between 15,322,594 and 38,306,485 shares of issued and outstanding
Common Stock and between 30,000,000 and 75,000,000 shares of authorized Common
Stock.
The shares of authorized, but unissued Common Stock will be available from
time to time for corporate purposes including raising additional capital,
acquisitions of companies or assets, for strategic transactions, and sales of
Common Stock or securities convertible into Common Stock. The Company does not
have any present intention, plan, arrangement or agreement, written or oral, to
issue shares of Common Stock for any purpose, except for the issuance of shares
of Common Stock upon (1) the exercise of outstanding options or warrants to
purchase Common Stock or (2) upon acquisitions of the stock or assets of other
companies. Although the Company does not have any present intention to issue
shares of Common Stock, except as noted above, the Company may in the future
raise funds through the issuance of Common Stock when conditions are favorable,
even if the Company does not have an immediate need for additional capital at
such time. The Company believes that the availability of the additional shares
will provide the Company with the flexibility to meet business needs as they
arise, to take advantage of favorable opportunities and to respond to a changing
corporate environment. If the Company issues additional shares, the ownership
interests of holders of the Company's Common Stock may be diluted.
19
PROCEDURE FOR EFFECTING THE REVERSE STOCK SPLIT AND EXCHANGE OF STOCK
CERTIFICATES
The Company will file the certificate of amendment to the Certificate of
Incorporation with the Secretary of State of the State of Delaware at such time
as the board of directors has determined the appropriate effective time for the
reverse stock split (the "SPLIT EFFECTIVE DATE"). The form of certificate of
amendment to the Certificate of Incorporation is attached as Appendix A to this
Information Statement and would be tailored to the specific Reverse Stock Split
ratio to be effected. The Reverse Stock Split will become effective on the Split
Effective Date. Beginning on the Split Effective Date, each certificate
representing old shares will be deemed for all corporate purposes to evidence
ownership of new shares.
As soon as practicable after the Split Effective Date, stockholders will
be notified that the Reverse Stock Split has been effected. The Reverse Stock
Split will take place on the Split Effective Date without any action on the part
of the holders of the Common Stock and without regard to current certificates
representing shares of Common Stock being physically surrendered for
certificates representing the number of shares of Common Stock each stockholder
is entitled to receive as a result of the Reverse Stock Split. New certificates
of Common Stock will not be issued.
Any old shares submitted for transfer, whether pursuant to a sale or other
disposition, or otherwise, will automatically be exchanged for new shares.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT
ANY CERTIFICATE(S) UNLESS REQUESTED TO DO SO.
FRACTIONAL SHARES
No fractional shares will be issued in connection with the Reverse Stock
Split. Stockholders who would otherwise be entitled to receive fractional shares
as a result of the Reverse Stock Split will have the number of new shares to
which they are entitled rounded to the nearest whole number of shares. The
number of new shares will be rounded up if the fractional share is equal to or
greater than 0.5 and rounded down if the fraction is less than 0.5. Stockholders
will not receive cash in lieu of fractional shares.
ACCOUNTING MATTERS
The Reverse Stock Split will not affect total stockholders' equity on the
Company's balance sheet. However, because the par value of the Company's Common
Stock will remain unchanged on the Split Effective Date, the components that
make up total stockholders' equity will change by offsetting amounts. Depending
on the size of the Reverse Stock Split the Company's board of directors decides
to implement, the stated capital component will be reduced to an amount between
one-twentieth (1/20) and one-fiftieth (1/50) of its present amount, and the
additional paid-in capital component will be increased with the amount by which
the stated capital is reduced. The per share net income or loss and net book
value of the Company's Common Stock will be increased because there will be
fewer shares of the Company's Common Stock outstanding. Prior periods' per share
amounts will be restated to reflect the Reverse Stock Split.
20
POTENTIAL ANTI-TAKEOVER EFFECT
Although the increased proportion of authorized shares of preferred stock
that may be issued could, under certain circumstances, have an anti-takeover
effect (for example, by permitting issuances that would dilute the stock
ownership of a person seeking to effect a change in the composition of the
Company's board of directors or contemplating a tender offer or other
transaction for the combination of the Company with another company), the
Reverse Stock Split proposal is not being proposed in response to any effort of
which the Company is aware of to accumulate shares of the Company's Common Stock
or to obtain control of the Company, nor is it part of a plan by management to
recommend a series of similar amendments to the board of directors and
stockholders. Other than the Reverse Stock Split and Reduction of Authorized
proposals, the board of directors does not currently contemplate recommending
the adoption of any other actions that could be construed to affect the ability
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain material federal income tax
consequences of the Reverse Stock Split and does not purport to be a complete
discussion of all of the possible federal income tax consequences of the Reverse
Stock Split and is included for general information only. Further, it does not
address any state, local or foreign income or other tax consequences. For
example, the state and local tax consequences of the Reverse Stock Split may
vary significantly as to each stockholder, depending upon the state in which
such stockholder resides. Also, it does not address the tax consequences to
holders that are subject to special tax rules, such as banks, insurance
companies, regulated investment companies, personal holding companies, foreign
entities, nonresident alien individuals, broker-dealers and tax-exempt entities.
The discussion is based on the provisions of the United States federal income
tax law as of the date hereof, which is subject to change retroactively as well
as prospectively. This summary also assumes that the old shares were, and the
new shares will be, held as a "capital asset," as defined in the Internal
Revenue Code of 1986, as amended (the "CODE") (generally, property held for
investment). The tax treatment of a stockholder may vary depending upon the
particular facts and circumstances of such stockholder. Each stockholder is
urged to consult with such stockholder's own tax advisor with respect to the tax
consequences of the Reverse Stock Split.
No gain or loss should be recognized by a stockholder upon such
stockholder's exchange of old shares for new shares pursuant to the Reverse
Stock Split. The aggregate tax basis of the new shares received in the Reverse
Stock Split (including any fraction of a new share deemed to have been received)
will be the same as the stockholder's aggregate tax basis in the old shares
exchanged therefor. The stockholder's holding period for the new shares will
include the period during which the stockholder held the old shares surrendered
in the Reverse Stock Split.
The Company's view regarding the tax consequence of the Reverse Stock
Split is not binding on the Internal Revenue Service or the courts. Accordingly,
each stockholder should consult with such stockholder's own tax advisor with
respect to all of the potential tax consequences to such stockholder of the
Reverse Stock Split.
21
DISSENTER'S RIGHTS
Under the DGCL, the Company's stockholders are not entitled to dissenter's
rights with respect to the Reverse Stock Split, and the Company will not
independently provide stockholders with any such right.
DESCRIPTION OF CAPITAL STOCK
The following description of the Company's Common Stock and preferred
stock is a summary and is qualified in its entirety by the provisions of the
Company's Certificate of Incorporation, as amended. The Company is currently
authorized to issue up to 1,000,000,000 shares of Common Stock. As of the Record
Date, there were 766,129,715 shares of Common Stock issued and outstanding. The
Company is authorized to issue up to 20,000,000 shares of preferred stock, par
value $.001. None are outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by the stockholders. The holders of Common
Stock are entitled to receive dividends ratably, when, as and if declared by the
board of directors, out of funds legally available. In the event of a
liquidation, dissolution or winding-up of the Company, the holders of Common
Stock are entitled to share equally and ratably in all assets remaining
available for distribution after payment of liabilities and after provision is
made for each class of stock, if any, having preference over the Common Stock.
The holders of shares of Common Stock, as such, have no conversion, preemptive,
or other subscription rights and there are no redemption provisions applicable
to the Common Stock. All of the outstanding shares of Common Stock are validly
issued, fully-paid and nonassessable.
PREFERRED STOCK
The shares of preferred stock may be issued in series, and shall have such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions providing for the issuance of such
stock adopted from time to time by the Company's board of directors. The
Company's board of directors is expressly vested with the authority to determine
and fix in the resolution or resolutions providing for the issuances of
preferred stock the voting powers, designations, preferences and rights, and the
qualifications, limitations or restrictions thereof, of each such series to the
full extent now or hereafter permitted by the laws of the State of Delaware.
TRANSFER AGENT
Olde Monmouth Stock Transfer Co., Inc., 200 Memorial Parkway, Atlantic
Highlands, New Jersey 07716, is the transfer agent for the Company's shares of
Common Stock.
22
MAILING COSTS
The Company is making the mailing and will bear the costs associated
therewith. There will be no solicitations made. The Company will reimburse
banks, brokerage firms, other custodians, nominees and fiduciaries for
reasonable expenses incurred in sending the Information Statement to beneficial
owners of the Company's Common Stock.
STOCKHOLDER PROPOSALS
The Board has not yet determined the date on which the next annual meeting
of stockholders of the Company will be held. Any proposal by a stockholder
intended to be presented at the Company's next annual meeting of stockholders
must be received at the offices of the Company a reasonable amount of time prior
to the date on which the information or proxy statement for that meeting are
mailed to stockholders in order to be included in the Company's information or
proxy statement relating to that meeting.
STOCKHOLDER COMMUNICATIONS WITH DIRECTORS
Stockholders who wish to communicate with the board of directors or with a
particular director may send a letter to the Company at 100 Eagle Rock Avenue,
East Hanover, New Jersey 07936. Any such communication should clearly specify it
is intended to be made to the entire board of directors or to one or more
particular director(s). Under this process, the recipient of the communication
will review such correspondence and will forward to the board of directors a
summary of all such correspondence and copies of all correspondence that, in the
opinion of the reviewer, deals with the functions of the board of directors, or
that the reviewer otherwise determines requires their attention. Directors may
at any time review a log of all correspondence received by the Company that is
addressed to the members of the board of directors and request copies of such
correspondence. Concerns relating to accounting, internal controls or auditing
matters are immediately brought to the attention of the board of directors.
23
WHERE YOU CAN FIND MORE INFORMATION
The Company is in compliance with the information and periodic reporting
requirements of the Exchange Act and, in accordance therewith, files periodic
reports, proxy and information statements and other information with the SEC.
Such periodic reports, proxy and information statements and other information
will be available for inspection and copying at the principal office of the SEC
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or
any part thereof may be obtained at prescribed rates from the SEC's Public
Reference Section at such addresses. Also, the SEC maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC, public reference facilities and Web site of the SEC
referred to above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the SEC (File No. 000-0934306) pursuant
to the Exchange Act are incorporated herein by reference:
o Annual Report on Form 10-KSB for the fiscal year ended December 31,
2003.
o Quarterly Report on Form 10-QSB for the period ended March 31, 2004.
o Definitive Proxy Statements on Schedule 14A filed with the SEC on
January 5, 2004.
o Current Reports on Form 8-K filed with the SEC on February 17, March
16, April 1, May 18, 27 and 28, June 29 and July 13, 2004.
We will provide without charge to each person to whom this Information
Statement is delivered, upon written or oral request of that person, a copy of
all documents incorporated by reference into the Information Statement, other
than exhibits to those documents (unless such exhibits are specifically
incorporated by reference into such documents). Written requests for such
documents should be directed to the Company at 100 Eagle Rock Avenue, East
Hanover, New Jersey 07936.
By Order of the Board of Directors,
/s/ Scott Newman
-------------------------
Scott Newman, President, Chief Executive Officer and Chairman
July __, 2004
24
APPENDIX A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CONVERSION SERVICES INTERNATIONAL, INC.
Pursuant to Delaware General Corporation Law Section 242, Conversion
Services International, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), does hereby certify:
That the board of directors, and stockholders of the Corporation holding a
majority in interest of the outstanding shares of common stock of the
Corporation, acting by written consent, approved the following amendments to the
Corporation's Certificate of Incorporation:
Article FOURTH Section A of the Corporation's Certificate of Incorporation is
hereby amended in its entirety to read as follows:
FOURTH:
A. AUTHORIZED The aggregate number of shares of all classes of capital stock
with the Corporation shall have authority to issue shall be
_____________________________ (__________) shares, consisting of:
(1) Twenty Million (20,000,000) shares of preferred stock, par value $.001 per
share ("Preferred Stock"); and
(2) ____________________ (_________________) shares of common stock, par value
$.001 per share ("Common Stock").
Upon the effectiveness (the "Effective Date") of the certificate of amendment to
the certificate of incorporation containing this sentence, each [*] shares of
the Common Stock issued and outstanding as of the date and time immediately
preceding [date on which the certificate of amendment is filed], the effective
date of a reverse stock split (the "Split Effective Date"), shall be
automatically changed and reclassified, as of the Split Effective Date and
without further action, into one (1) fully paid and nonassessable share of
Common Stock. There shall be no fractional shares issued. A holder of record of
Common Stock on the Split Effective Date who would otherwise be entitled to a
fraction of a share shall have the number of new shares to which they are
entitled rounded to the nearest whole number of shares. The number of new shares
will be rounded up if the fractional share is equal to or greater than 0.5 and
rounded down if the fraction is less than 0.5. No stockholders will receive cash
in lieu of fractional shares.
A-1
IN WITNESS WHEREOF, the undersigned, being the President of the Corporation, has
duly executed this Certificate of Amendment as of the ____ day of _____ 2004.
CONVERSION SERVICES INTERNATIONAL, INC.
By: /s/Scott Newman
--------------------------------------------------
Scott Newman
President, Chief Executive Officer and Chairman
A-2