SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14 (C)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Rule 14c-5 (d) (21)
[ ] Definitive Information Statement
NATIONAL HEALTHCARE TECHNOLOGY, INC.
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(Name of Registrant as Specified In Its Charter)
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NATIONAL HEALTHCARE TECHNOLOGY, INC
5440 WEST SAHARA BLVD.
SUITE 206
LAS VEGAS, NV 89146
Information Statement
INTRODUCTION
We are furnishing this information statement in connection with a special
meeting of the shareholders of National Healthcare Technology, Inc. The meeting
will be held at 10:00 am on July 7, 2004 at 5440 West Sahara Blvd., Suite 206,
Las Vegas, NV 89146.
We are sending this information to our shareholders on or about June 26,
2004. Our Board of Directors has fixed the close of business on June 15, 2004 as
the record date for the determination of NHT shareholders entitled to notice of,
and to vote, at the meeting.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
MATTERS TO BE CONSIDERED AT THE MEETING
At the meeting, and at any adjournment or postponement of the meeting, we
will ask our Shareholders:
1. To ratify and approve an amendment to our Articles of Incorporation
to increase the number of authorized common shares from 25,000,000
to 100,000,000 and the number of preferred shares from 500,000 to
10,000,000.
2. To effect a reverse split of our common stock on a 1 for 100 basis,
as described in more detail below.
3. To transact any other business that may properly come before the
meeting.
VOTES REQUIRED AND QUORUM
Approval of the matters brought before the meeting requires the
affirmative vote of the holders of a majority of the shares entitled to vote on
such matters. As of June 15, 2004, there were 7,855,500 shares of our Common
Stock outstanding. Holders of our Common Stock are entitled to one vote per
share. As of June 15, 2004, there are 100,000 shares of Preferred Stock
outstanding. These Preferred Shares are convertible at the rate of one share of
Preferred Stock for 10 shares of Common Stock. Accordingly, the proposals will
pass if holders of at least 3,927,751 shares of Common Stock cast their vote in
favor and if holders of at least 50,001 shares of Preferred Stock cast their
vote in favor.
A quorum of the common and preferred shareholders is necessary to take
action at the meeting. A quorum is present if shareholders holding shares which
represent a majority of the outstanding votes are present at the meeting.
Accordingly, common shareholders entitled to a total of at least 3,927,751 votes
will need to be present in order to hold a valid meeting and preferred
shareholders entitled to a total of at least 50,001 votes will need to be
present in order to hold a valid meeting.
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BOARD RECOMMENDATIONS - INSIDERS' INTENT TO VOTE IN FAVOR
Our Board of Directors has determined that approval of the reverse split
and increase in authorized capital is in the best interest of our shareholders.
Accordingly, the Board has unanimously approved the proposals and recommends
that the common and preferred shareholders who choose to attend the meeting vote
in favor of these matters as well.
Certain officers, directors and affiliates of the Company who beneficially
own an aggregate of approximately 56% of the outstanding common votes and 100%
of the outstanding preferred votes have indicated that they intend to vote in
favor of each of the proposals discussed herein.
AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL 1)
PROPOSED AMENDMENT
On June 1, 2004, the Board of Directors adopted a resolution to amend
Article IV of the Company's Articles of Incorporation to authorize the increase
in the number of authorized shares of Common Stock from 25,000,000 shares to
100,000,000 shares and the increase in the number of Preferred Shares from
500,000 to 10,000,000. Par value for both classes of stock will remain at $.001
for the common stock and $.01 for the preferred stock.
As of the Record Date, the Company has 7,855,500 shares of Common Stock
outstanding and 100,000 shares of Preferred Stock outstanding. Five million
shares of Common Stock are available for issuance under the 1998 Stock Option
Plan, none of which are covered by outstanding options.
The Board believes that the number of authorized shares of Common Stock
remaining available was not sufficient to enable the Company to respond to
potential business opportunities and pursue important objectives that may
present themselves. Accordingly, the Board believes it is in the Company's best
interest to increase the number of authorized shares of Common Stock and
Preferred Stock as described above. The Board also believes that the
availability of such shares will provide the Company with the flexibility to
issue Common Stock and Preferred Stock for proper corporate purposes that may be
identified by the Board from time to time, such as stock dividends (including
stock splits in the form of stock dividends), financings, acquisitions, or
strategic business relationships. Further, the Board believes the availability
of additional shares of Common Stock and Preferred Stock will enable the Company
to attract and retain talented employees through the grant of stock options and
other stock-based incentives. An important part of the Company's business
strategy is to develop various technologies, including through the acquisition
of assets and businesses deemed synergistic with the Company's operations. The
issuance of additional shares of Common Stock and Preferred Stock may have a
dilutive effect on earnings per share and a person who does not purchase
additional shares will not be able to maintain his or her pro rata interest, on
a stockholder's percentage voting power.
The authorized shares of Common Stock and Preferred Stock in excess of
those issued will be available for issuance at such times and for such corporate
purposes as the Board may deem advisable without further action by the Company's
shareholders, except as may be required by applicable laws or the rules of any
stock exchange or national securities association trading system on which the
securities may be listed or traded. Upon issuance, such shares will have the
same rights as the outstanding shares of Common Stock. Holders of Common Stock
do not have preemptive rights. The Board does not intend to issue any Common
Stock except on terms which the Board deems to be in the best interest of the
Company and its then-existing shareholders.
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The Board does not recommend this proposed amendment with the intent to
use the ability to issue additional Common Stock and Preferred Stock to
discourage tender offers or takeover attempts. However, the availability of
authorized Common Stock and Preferred Stock for issuance could render more
difficult or discourage a merger, tender offer, proxy contest or other attempt
to obtain control of the Company. The amendment is not in response to any effort
on the part of any party to accumulate material amounts of Common Stock or to
acquire control of the Company by means of merger, tender offer, proxy contest
or otherwise, or to change the Company's management. In addition, the proposal
is not part of any plan by management to recommend a series of similar
amendments to the Board and the shareholders.
The text of subparagraph 4.1 of Article IV of the Articles of
Incorporation, as it is proposed to be amended pursuant to this proposal, is as
follows:
"4.1 Authorized Capital. The aggregate number of
shares of all classes which the corporation shall have
authority to issue is 100,000,000 shares of which 100,000,000
shall be Common Shares, $.001 par value per share and
10,000,000 shall be Preferred Shares, $.01 par value per
share, and the designations, preferences, limitations and
relative rights of the shares of each class are as follows:"
Upon ratification and approval of this proposal by the shareholders of the
Company, both common and preferred, this proposal will immediately be put into
effect.
THE REVERSE SPLIT
(PROPOSAL 2)
INTRODUCTION
On June 1, 2004, our Board of Directors approved a proposal to effect a
reverse split of our Common Stock, subject to the approval of our shareholders.
The reverse split, if approved, would combine our outstanding Common Stock on 1
for 100 basis. In other words, once the reverse split takes place, every 100
shares of Common Stock that you hold will be combined into 1 share. Your
percentage ownership in the Company and relative voting power will remain
essentially unchanged.
REASONS FOR THE REVERSE SPLIT
We expect that we will have to raise additional equity capital in the near
future in order to finance the development and growth of our business. We cannot
promise that any offering of our securities will take place or will be
successful, but we believe that reducing the number of outstanding shares and
increasing the number of authorized and unissued shares will make our capital
structure more attractive to potential investors and provide us with greater
flexibility in structuring financings and pursuing other corporate development
opportunities.
Further, we believe that our current low stock price negatively affects
the marketability of our existing shares and our ability to raise additional
capital. Although we cannot guarantee it, we assume that the reverse split will
increase the market price of our stock in a direct inverse proportion to the
reverse split ratio. In other words, with a reverse split ratio of 1 to 100 the
assumption is that the market price of our stock should increase by 100 times
following the reverse split. Based upon our stock's closing bid price of $.03 on
June 15, 2004, then, if every 100 shares of Common Stock were combined into one
share, the initial adjusted market value would be expected to increase to
approximately $3.00 per share.
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Finally, we are hopeful that the reverse split and the resulting
anticipated increased price level will encourage interest in our Common Stock
and possibly promote greater liquidity for our shareholders. Again, however, we
cannot guarantee that this will be the case or, indeed, that any of the
foregoing hoped-for effects will result from the reverse split.
CERTAIN EFFECTS OF THE REVERSE SPLIT
The following table illustrates the principal effects of the reverse split
on our Common and Preferred Stock based on the number of shares authorized,
issued and outstanding as of June 15, 2004.
Prior to the After the After Approval
Number of Shares Reverse Split Reverse Split of Add't Stock
--------------------------------------------------------------------------------
Authorized Common Stock 25,000,000 25,000,000* 100,000,000
Issued and Outstanding
Common Stock 7,855,500 78,555 78,555
Common Stock Available
for Issuance 17,144,500 24,921,445 99,921,445
Series A Preferred Stock
Outstanding** 100,000 100,000 100,000
* Before giving effect to the proposed increase in authorized capital from
25,0000 shares to 100,000,000 shares.
** Before conversion of preferred shares for ten shares of common stock
(post-split)
Shares of Common Stock issued pursuant to the reverse split will be fully
paid and nonassessable. The relative voting and other rights of holders of the
Common Stock will not be altered by the reverse split, and each share of Common
Stock will continue to entitle its owner to one vote.
As a result of the reverse split, the number of shares of Common Stock
presently outstanding will be consolidated. Accordingly, we will have the
ability to issue more shares of Common Stock than is presently the case and
without additional shareholder approval. Doing so may have a dilutive effect on
the equity and voting power of our existing shareholders.
No fractional shares will be issued in connection with the reverse split.
Instead, fractional shares will be rounded up and one whole share will be
issued. We expect that most shareholders will receive one additional share of
Common Stock, but we do not anticipate that this will materially affect any
shareholder's proportional interest. We do not anticipate that the reverse split
will result in any material reduction in the number of holders of Common Stock.
The reverse split may result in some shareholders owning "odd-lots" of
less than 100 shares of Common Stock. Brokerage commissions and other costs of
transactions in odd-lots are generally somewhat higher than the costs of
transactions in round lots of even multiples of 100 shares.
The reverse split will not affect the Company's stockholders' equity as
reflected on our financial statements, except to change the number of issued and
outstanding shares of Common Stock.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Following is a summary of the material anticipated federal income tax
consequences of the proposed reverse split. This summary is based upon existing
law which is subject to change by legislation, administrative action and
judicial decision, and is necessarily general. In addition, this summary does
not address any consequence of the reverse split under any state, local or
foreign tax laws. Accordingly, this summary is not intended as tax advice to any
person or entity, and we advise you to consult with your own tax advisor for
more detailed information relating to your individual tax circumstances.
We understand that the reverse split will be a "recapitalization" under
applicable federal tax laws and regulations. As a result of such tax treatment,
no gain or loss should be recognized by the Company or our shareholders as a
result of the reverse split or the exchange of pre-reverse split shares for
post-reverse split shares. A shareholder's aggregate tax basis in his or her
post-reverse split shares should be the same as his or her aggregate tax basis
in the pre-reverse split shares. In addition, the holding period of the
post-reverse split shares received by such shareholder should include the period
during which the pre-reverse split shares were held, provided that all such
shares were held as capital assets in the hands of the shareholder at the time
of the exchange.
EFFECTIVE DATE OF THE REVERSE SPLIT
If the proposal is approved by the shareholders, the reverse split will
become effective immediately, pending proper notification to the regulators and
the securities markets. Upon proper regulatory notification, all of our
outstanding Common Stock will be converted into new Common Stock in accordance
with the reverse split ratio described above. After the reverse split is
effective, certificates representing shares of pre-reverse split Common Stock
will be deemed to represent only the right to receive the appropriate number of
shares of post-reverse split Common Stock.
EXCHANGE OF CERTIFICATES
You are not being asked to exchange your certificates at this time,
however, you are entitled to do so after the reverse split takes place if you
wish by contacting our transfer agent. Otherwise, certificates representing
pre-reverse split shares will changed for certificates reflecting post-split
shares at the first time they are presented to the transfer agent for transfer.
RIGHT TO ABANDON REVERSE SPLIT
Although we do not anticipate doing so, we may abandon the proposed
reverse split at any time prior to its effectiveness if our Board of Directors
deems it advisable to do so. Any decision as to the appropriateness of the
reverse split will be made by solely our Board of Directors and will depend upon
numerous factors including the future trading price of our stock, the growth and
development of our business and our financial condition and results of
operations.
VOTE REQUIRED
We are required to obtain the affirmative vote of at least a majority of
the shares that are present or represented at the meeting in order to effect the
reverse split. Certain officers, directors and affiliates of the Company who
beneficially own an aggregate of approximately 56% of the outstanding common
votes and 100% of the preferred vote have indicated that they intend to vote
their shares in favor of the reverse split.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information with respect to beneficial
ownership of our stock as of May 31, 2004 by:
- persons known by us to be the beneficial owners of more than five
percent of our issued and outstanding Common or Preferred Stock;
- each of our executive officers and directors; and
- all of our officers and directors as a group.
NAME AND ADDRESS NUMBER OF PERCENT OF
OF BENEFICIAL OWNER SHARES OWNED (1) OWNERSHIP
------------------- ---------------- ----------
Phoenix Consulting Services, Inc. 2,130,000 27.11
10850 Wilshire Boulevard Suite 1170
Los Angeles, CA 90024
Charles Smith (Director) (2) 2,280,000 29.02
20700 Ventura Blvd. Suite 227
Woodland Hills, CA 91364
Dr. Sadegh Salmassi (Director)(2) 2,280,000 29.02
20700 Ventura Blvd. Ste. 227
Woodland Hills CA 91364
Steven Onoue (Director)(2) 2,280,000 29.02
20700 Ventura Blvd. Ste. 227
Woodland Hills CA 91364
Estate of Ivan C. Tiholiz 1,950,000 24.82
14860 Roscoe Boulevard Suite 307
Van Nuys, CA 91402
Crown Partners, Inc. (2) 2,280,000 29.02
20700 Ventura Blvd. Ste. 227
Woodland Hills, CA 91364
All officers and directors as a group 2,280,000 29.02
(3 persons)
(1) Pre-split
(2) Includes 2,280,000 shares owned by Crown Partners, Inc., a company in
which Messrs. Smith, Onoue and Salmassi are officers and directors. In
addition, Crown Partners, Inc. owns 100,000 of the preferred shares
currently issued and outstanding. The shares of preferred stock are
convertible into 1,000,000 shares of common stock at the request of Crown
Partners, Inc.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION OF EXECUTIVE OFFICERS
The Company has not paid any of its executive officers any salaries over
the last two years.
To date, we have not granted any options or other long-term compensation
to any of our executive officers or directors.
COMPENSATION OF DIRECTORS
We reimburse our directors for out-of-pocket expenses for attending Board
meetings.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTION
Crown Partners, Inc., a major shareholder and sole shareholder of
preferred stock, has advanced funds to pay the Company's expenses over the past
several years. The Company is obligated to pay these funds back. In the past,
Crown has accepted shares of the Company's common and preferred stock to satisfy
these obligations. There is presently no agreement in place that requires Crown
to accept stock in lieu of repayment.
BOARD MEETINGS AND COMMITTEES
From time to time, the members of the Board acted by unanimous written
consent. The Board did not hold any meetings during the fiscal year ended
December 31, 2003. The Company currently has no audit, compensation or
nominating committees.
BOARD OF DIRECTORS COMPENSATION
Directors are not compensated for attending Board meetings. Reasonable
out-of-pocket expenses incurred in connection with their attendance at Board
meetings are reimbursed by the Company.
COMPLIANCE WITH SECTION 16(A) OF
THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 furbished to the Company
pursuant to Rule 16a-3(e) and Statements from directors and executive officers
that no report on Form 5 is due, no reporting person failed to file reports
required under Section 16(a) of the Exchange Act, with respect to the Company's
securities.
OTHER MATTERS
The Board is not aware that any matter other than those described in this
Information Statement is to be presented for the vote of the shareholders.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER TO THE SECRETARY OF THE COMPANY, AT 5440
WEST SAHARA BLVD., SUITE 206, LAS VEGAS, NEVADA 89146, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB WILL BE PROVIDED WITHOUT CHARGE.
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By Order of the Board of Directors
/s/ Charles Smith
----------------------------------
Charles Smith,
Chairman of the Board and
Chief Executive Officer
June 16, 2004
Las Vegas, Nevada
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