SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
[X] Preliminary Information Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
Augment Systems, Inc.
(Name of Registrant As Specified in 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:
(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 (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:
AUGMENT SYSTEMS, INC.
1900 Corporate Boulevard, Suite 305W
Boca Raton, Florida 33431
PRELIMINARY INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
General
This Information Statement is being furnished to the shareholders of
Augment Systems, Inc., a Delaware corporation (the "Company"), in connection
with the proposed adoption of an amendment to the Company's Certificate of
Incorporation (the "Amendment") by the written consent of the holders of a
majority in interest of the Company's voting capital stock ("Voting Capital
Stock") consisting of the Company's outstanding Common Stock ("Common Stock").
The purpose of filing the Amendment is to:
o change the name of the Company from "Augment Systems, Inc." to
"AUG Corp." ("Name Change") and
o effect a 1 for 100 reverse stock split of the Company's
outstanding Common Stock (the "Reverse Stock Split").
The Company's Board of Directors and majority shareholders on September
24, 2001, approved and recommended that the Certificate of Incorporation be
amended in order to effectuate the Name Change and Reverse Stock Split. The
proposed Amendment will become effective upon the filing of the Amendment with
the Secretary of State of the State of Delaware. The Company anticipates that
the filing of the Amendment will occur on or about October 10, 2001 (the
"Effective Date"). If the proposed Amendment were not adopted by written
consent, it would have been required to be considered by the Company's
shareholders at a special shareholders' meeting convened for the specific
purpose of approving the Amendment.
The elimination of the need for a special meeting of shareholders to
approve the Amendment is authorized by Section 228 of the Delaware Corporation
Laws (the "Delaware Law") which provides that the written consent of the holders
of outstanding shares of voting capital stock, having not less than the minimum
number of votes which would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted, may
be substituted for such a special meeting. Pursuant to Section 242 of the
Delaware Law, a majority of the outstanding shares of voting capital stock
("Voting Capital Stock") entitled to vote thereon is required in order to amend
the Company's Certificate of Incorporation. In order to eliminate the costs and
management time involved in holding a special meeting and in order to effect the
Amendment as early as possible in order to accomplish the purposes of the
Company as hereafter described, the Board of Directors of the Company voted to
utilize the written consent of the holder of a majority in interest of the
Voting Capital Stock of the Company.
Capital Research LLC and EAI Partners, Inc., who beneficially own in
the aggregate 84,329,997shares of Common Stock of the Company, representing
approximately 65% of the outstanding Voting Capital Stock of the Company
entitled to vote on the Amendment, gave their written consent to the adoption of
the Amendment described in this Information Statement on September 24, 2001. The
written consent became effective on September 24, 2001, the date on which their
written consent was filed with the Secretary of the Company. The date on which
this Information Statement was first sent to the shareholders is on or about
October 10, 2001. The record date established by the Company for purposes of
determining the number of outstanding shares of Voting Capital Stock of the
Company is September 24, 2001 (the "Record Date").
Pursuant to Section 228 of the Delaware Law, the Company is required to
provide prompt notice of the taking of the corporate action without a meeting to
shareholders who have not consented in writing to such action. Inasmuch as the
Company will have provided to its shareholders of record this Information
Statement, the Company will notify its shareholders at the time of distribution
of its next Quarterly Report on Form 10-QSB of the effective date of the
Amendment. No additional action will be undertaken pursuant to such written
consents, and no dissenters' rights under the Delaware Law are afforded to the
Company's shareholders as a result of the adoption of the Amendment.
OUTSTANDING VOTING STOCK OF THE COMPANY
As of the Record Date, there were 130,097,638 shares of Common Stock
outstanding. The Common Stock constitutes the sole outstanding class of voting
securities of the Company. Each share of Common Stock entitles the holder
thereof to one vote on all matters submitted to shareholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information as of
September 24, 2001, with respect to (i) each person known to the Company to be
the beneficial owner of more than 5% of the Company's Common Stock; (ii) each
director of the Company; (iii) each person intending to file a written consent
to the adoption of the Amendment described herein; and (iv) all directors,
executive officers and designated shareholders of the Company as a group. This
information as to beneficial ownership was furnished to the Company by or on
behalf of the persons named. Unless otherwise indicated, the business address of
each person listed is 1900 Corporate Boulevard, Suite 305W, Boca Raton, Florida
33431. Prior to the Reverse Stock Split, there are 130,097,638 shares of Common
Stock outstanding. After giving effect to the reverse stock split there will be
130,097,638 shares of Common Stock outstanding. The information below excludes
shares of Common Stock issued to Lancer Offshore, Inc. For information regarding
securities issued to Lancer Offshore please review the Form 8-K current report
filed by the Company on October 1, 2001.
Shares Percent Shares Percent
Beneficially of Class Beneficially of Class
Owned Prior Owned Prior Owned Owned
to Reverse to Reverse After Reverse After Reverse
Name Stock Split Stock Split Stock Spilt Stock Split
---- ----------- ----------- ----------- -----------
Laurence S. Isaacson 0 -- 0 --
Kathryn Cowen 0 -- 0 --
Capital Research LLC 67,085,386 52% 670,854 52%
EAI Partners, Inc. 17,244,591 13% 172,446 13%
All executive officers and
directors as a group
(2 persons) 0 -- 0 --
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AMENDMENT TO CERTIFICATE OF INCORPORATION
On September 24, 2001, our Board of Directors voted unanimously to
authorize and recommend that our shareholders approve a proposal to effect the
Name Change and Reverse Stock Split. Pursuant to the Reverse Stock Split, each
100 of the outstanding shares of our Common Stock on the date of the Reverse
Stock Split (the "Old Shares") will be automatically converted into one share of
our Common Stock (the "New Shares"). The Reverse Stock Split will not alter the
number of shares of our Common Stock we are authorized to issue, but will simply
reduce the number of shares of our Common Stock issued and outstanding. In
addition, the Certificate of Amendment will reflect the Company's Name Change to
AUG Corp. The Reverse Stock Split and Name Change will become effective upon
filing of the Amendment to our Certificate of Incorporation with the Delaware
Secretary of State, but our Board of Directors reserves the right not to make
such filing if it deems it appropriate not to do so.
Purpose and Effect of Proposed Reverse Stock Split
The Board believes the Reverse Stock Split is desirable because it will
assist us by helping to raise the trading price of our Common Stock. Our Board
believes that the higher share price which should result from the Reverse Stock
Split will help generate interest in us among investors and thereby assist us in
raising capital to fund our operations.
The effect of the Reverse Stock Split upon the market price for our
Common Stock cannot be predicted. There can be no assurance that the market
price per New Share of our Common Stock after the Reverse Stock Split will rise
in proportion to the reduction in the number of Old Shares of our Common Stock
outstanding resulting from the Reverse Stock Split. The market price of our
Common Stock may also be based on our performance and other factors, some of
which may be unrelated to the number of shares outstanding.
The Reverse Stock Split will effect all of our shareholders uniformly
and will not affect any shareholder's percentage ownership interests in us or
proportionate voting power, except to the extent that the Reverse Stock Split
results in any of our shareholders owning a fractional share. In lieu of issuing
fractional shares, we will issue any shareholder who otherwise would have been
entitled to receive a fractional share as a result of the Reverse Stock Split
one share of our Common Stock. The Reverse Stock Split may result in certain of
our shareholders owning "odd lots" (i.e. a number of shares of our common stock
not divisible by 100). Shareholders owning "odd lots" may experience difficulty
selling their shares in the open market.
The Reverse Stock Split will have the following effects upon the number
of shares of our Common Stock outstanding:
Upon the effectiveness of the Reverse Stock Split, the number of shares
owned by each holder of Common Stock will be reduced by the ratio of 100 to 1
share of Common Stock he or she owned immediately prior to the Reverse Stock
Split. The per share loss and net book value of our Common Stock will be
increased because there will be fewer shares of our Common Stock outstanding.
The principal effect of the Reverse Stock Split will be that (i) the
number of shares of Common Stock issued and outstanding will be reduced from
130,097,638 shares to approximately 1,300,976 shares and (ii) all outstanding
options entitling the holders thereof to purchase shares of Common Stock will
enable such holders to purchase, upon exercise of their options, 1/100 of the
number of shares of Common Stock which such holders would have been able to
purchase upon exercise of their options immediately preceding the Reverse Stock
Split at the same aggregate price required to be paid therefor upon exercise
thereof immediately preceding the Reverse Stock Split.
Pursuant to the Reverse Stock Split, the par value of the Common Stock
will remain $.0001 per share. As a result, on the effective date of the Reverse
Stock Split, the stated capital on our balance sheet attributable to the Common
Stock will be reduced to 1/100 of its present amount, and the additional paid-in
capital account shall be credited with the amount by which the stated capital is
reduced.
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Manner of Effecting the Reverse Stock Split and Exchange Stock Certificates
The Reverse Stock Split will be effected by the filing of the
Certificate of Amendment with the Secretary of the State of Delaware. The
Reverse Stock Split will become effective on the date of filing the Certificate
of Amendment unless we specify otherwise (the "Effective Date"). As soon as
practicable after the Effective Date, we will send a letter of transmittal to
each holder of record of Old Shares outstanding on the Effective Date. The
letter of transmittal will contain instructions for the surrender of
certificates representing the Old Shares. Upon proper completion and execution
of the letter of transmittal and return thereof, together with certificates
representing the Old Shares, a shareholder will be entitled to receive a
certificate representing the number of the New Shares into which his Old Shares
have been reclassified as a result of the Reverse Stock Split. Shareholders
should not submit any certificates until requested to do so. No new certificate
will be issued to a shareholder until such shareholder has surrendered his
outstanding certificates together with the properly completed and executed
letter of transmittal. Until so surrendered, each outstanding certificate
representing the Old Shares will be deemed for all corporate purposes after the
Effective Date to evidence ownership of the New Shares in the appropriately
reduced number.
Purpose of the Proposed Name Change
The Board believes that the new name, AUG Corp., will reflect our
change in business. Our Board believes that the new name will promote public
recognition and more accurately reflect our intended business focus.
No Dissenter's Rights
Under the Delaware Law, our dissenting shareholders are not entitled to
appraisal rights with respect to our proposed Amendment, and we will not
independently provide our shareholders with any such right.
Certain Federal Income Tax Consequences
We believe that the federal income tax consequences of the Reverse
Stock Split to holders of Old Shares and holders of New Shares will be as
follows:
1. Except as set forth in (5) below, no gain or loss will be recognized
by a shareholder on the surrender of the Old Shares or receipt of a certificate
representing New Shares.
2. Except as set forth in (5) below, the aggregate tax basis of the New
Shares will equal the aggregate tax basis of the Old Shares exchanged therefor.
3. Except as set forth in (5) below, the holding period of the New
Shares will include the holding period of the Old Shares if such Old Shares were
held as capital assets.
4. The conversion of the Old Shares into the New Shares will produce no
gain or loss to us.
5. The federal income tax consequences of the receipt of an additional
share in lieu of a fractional interest is not clear but may result in tax
liabilities which should not be material in amount in view of the low value of
the fractional interest.
Our beliefs regarding, the tax consequence of the Reverse Split are not
binding upon the Internal Revenue Service or the courts, and there can be no
assurance that the Internal Revenue Service or the courts will accept the
positions expressed above.
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This summary does not purport to be complete and does not address the
tax consequences to holders that are subject to special tax rules, such as bank,
insurance companies, regulated investment companies, personal holding companies,
foreign entities, nonresident foreign individuals, broker-dealers and tax exempt
entities.
The state and local tax consequences of the Reverse Stock Split may
vary significantly as to each shareholder, depending upon the state in which he
or she resides.
The foregoing summary is included for general information only.
Accordingly, shareholders are urged to consult their own tax advisors with
respect to the Federal, State and local tax consequences of the Reverse Stock
Split.
BY ORDER OF THE BOARD OF DIRECTORS
Date: October 9, 2001 /s/ Laurence S. Isaacson
-------------------------------------
Laurence S. Isaacson, President
Augment Systems, Inc.
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CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
AUGMENT SYSTEMS, INC.
Pursuant to Chapter 242 of the Delaware Statutes, the undersigned
President of AUGMENT SYSTEMS, INC., a corporation organized and existing under
and by virtue of the Delaware Corporation Laws (the "Corporation"), does hereby
certify:
That pursuant to Written Consents of the Board of Directors and a
Majority of the Shareholders of said Corporation dated September 24, 2001, the
Board of Directors and Shareholders holding a majority in interests of the
outstanding shares of the Corporation approved the amendment to the
Corporation's Certificate of Incorporation as follows:
FIRST: Article I of the Certificate of Incorporation of this
Corporation is amended in its entirety to read as follows:
"ARTICLE I"
NAME
----
The name of the Corporation shall be "AUG Corp."
SECOND: Article IV of the Certificate of Incorporation of this
Corporation is amended to read in its entirety as follows:
"ARTICLE IV"
STOCK
-----
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be (i) one hundred
forty-eight million (148,000,000) shares of common stock, par value $.0001 per
share, and (ii) two million (2,000,000) shares of Preferred Stock having a par
value of $.01 per share.
Classes and series of the Preferred Stock may be created and issued
from time to time, with such designations, preferences, conversion rights,
cumulative, relative, participating, optional, voting or other rights, including
voting rights, qualifications, limitations or restrictions thereof as shall be
stated and expressed in the resolution or resolutions providing for the creation
and issuance of such classes of Common Stock as adopted by the Board of
Directors."
THIRD: In addition, on the date of filing of these Certificate of
Amendment with the Secretary of State of the State of Delaware, every one
hundred (100) issued and outstanding shares of the Corporation's previously
authorized common stock, par value $.0001 per share (the "Old
Common Stock") shall thereby and thereupon be reclassified and converted into
one (1) validly issued, fully paid and nonassessable share of Common Stock (the
"New Common Stock"). Each certificate that theretofore represented shares of Old
Common Stock shall thereafter represent the number of shares of New Common Stock
into which the shares of Old Common Stock represented by such certificate were
reclassified and converted hereby; provided, however, that each person holding
of record a stock certificate or certificates that represented shares of Old
Common Stock shall receive, upon surrender of stock certificate or certificates,
a new certificate or certificates evidencing and representing the number of
shares of New Common Stock to which such person is entitled, except that no
fractional shares resulting from the combination shall be issued, any such
fractional share to be converted to the right of the holder thereof to receive
one share of New Common Stock;
This amendment to the Certificate of Incorporation of the Corporation
does not adversely affect the rights or preferences of the holders of
outstanding shares of any class or series and does not result in the percentage
of authorized shares that remain unissued after the combination exceeding the
percentage of authorized shares that were unissued before the combination; and
FOURTH: The foregoing amendments were adopted by a Written Consent of
the Board of Directors and a Majority of the Shareholders of the Corporation
dated September 24, 2001, pursuant to Sections 242 and 228 of the Delaware
Corporation Laws. The number of votes cast for the amendments to the
Corporation's Certificate of Incorporation was sufficient for approval.
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IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Certificate of Amendment as of ___________,
2001.
AUGMENT SYSTEMS, INC.
By: /s/ Laurence S. Isaacson
-------------------------------
Laurence S. Isaacson
President
STATE OF )
------------------
)SS:
COUNTY OF )
------------------
The foregoing instrument was acknowledged before me this ____ day of
________, 2001, by ___________________ as President of AUGMENT SYSTEMS, INC., on
behalf of the corporation. She is personally known to me or has produced as
identification and did/did not take an oath.
Notary Public:
sign________________________________
print________________________________
State of _________ at Large (Seal)
My Commission Expires:
_________________, 2001
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