UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
Information Statement pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
/X/ Definitive Information Statement
Caprius, 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of securities:
(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:
CAPRIUS, INC.
One Parker Plaza
Fort Lee, NJ 07024
NOTICE OF ACTION BY
WRITTEN CONSENT OF STOCKHOLDERS
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
To our Stockholders:
This Information Statement is furnished by the Board of Directors of
Caprius, Inc., a Delaware corporation (the "Company"), to holders of record of
our common stock, $.01 par value per share, at the close of business on February
14, 2005, pursuant to Rule 14c-2 promulgated under the Securities Exchange Act
of 1934, as amended. The purpose of this Information Statement is to inform our
stockholders of certain action that was taken by the written consent, dated as
of February 14, 2005, by the holders of a majority of our outstanding voting
stock. This Information Statement also shall be considered the notice required
under Section 228(e) of the Delaware General Corporation Law.
The action taken by the majority stockholders will not become effective
until at least 20 days after the initial mailing of this Information Statement
to the other stockholders.
If you would like to request additional copies of this Information
Statement, or if in the future you would like to receive multiple copies of
information or proxy statements, or annual reports, or, if you are currently
receiving multiple copies of these documents and would, in the future, like to
receive only a single copy, please instruct Beverly Tkaczenko by writing to the
Company at One Parker Plaza, Fort Lee, New Jersey 07024.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER
MEETING WILL BE HELD TO CONSIDER THE MATTER DESCRIBED HEREIN.
PROPOSALS BY SECURITY HOLDERS
No security holders entitled to vote have transmitted any proposals to be
acted upon by the Company.
By order of the Board of Directors:
/s/ Jonathan Joels
------------------------------
Jonathan Joels
CFO, Treasurer and Secretary
CAPRIUS, INC.
One Parker Plaza
Fort Lee, NJ 07024
INFORMATION STATEMENT
INTRODUCTORY STATEMENT
Caprius, Inc. is a Delaware corporation with our principal executive
offices located at One Parker Plaza, Fort Lee, NJ 07024. Our telephone number is
(201) 592-8838.
At the request of our Board of Directors, we are sending this Information
Statement to our stockholders to notify you about action that the holders of a
majority of our outstanding voting capital stock (the "Majority Holders") took
by written consent, on February 14, 2005, in lieu of a special meeting of the
stockholders. The action contemplated thereby will be effective and implemented
not less than twenty (20) calendar days after the initial mailing of this
Information Statement.
Copies of this Information Statement are being mailed on or before March
14, 2005 to the holders of record on February 14, 2005 of the outstanding shares
of our common stock and preferred stock.
GENERAL INFORMATION
In accordance with the Delaware General Corporation Law, the Majority
Holders authorized an amendment (the "Amendment") to our certificate of
incorporation to effect a reverse stock split (the "Reverse Split") of our
issued and outstanding shares of common stock at a ratio of one-for-twenty. The
Amendment will not change the number of our authorized shares of common stock
and preferred stock.
The reason for the Amendment and the Reverse Split is that on February 15,
2005, we completed a placement of 45,000 shares of Series C Preferred Stock at a
price of $100 per share and simultaneously issued 21,681 shares of Series C
Preferred Stock in conversion or exchange of principal and interest on
indebtedness in the aggregate amount of $2,168,100. At that time, we did not
have a sufficient number of authorized but unissued shares of common stock to
effect the placement and the conversions/exchanges with noteholders, so we
established the Series C Preferred Stock and issued an aggregate of 66,681
shares. In addition, the purchasers in the placement mandated that the common
stock be split on a post-placement basis based upon their belief that a smaller
number of outstanding shares may be beneficial for the trading in the common
stock. As mentioned herein, the Series C Preferred Stock automatically converts
into common stock upon the effectiveness of the Reverse Split. The Reverse Split
would reduce the number of outstanding shares of common stock to permit the
issuance of common stock upon conversion of the Series C Preferred Stock and to
have additional authorized but unissued shares for future issuances.
Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended, the Amendment and the resulting Reverse Split will not be effected
until a date at least 20 days after the date on which this Information Statement
has been mailed to the stockholders. We anticipate that the Amendment will be
2
effected on or about the close of business on April 4, 2005, and the Reverse
Split will be effected immediately thereafter.
We ask all brokers and other custodians, nominees and fiduciaries who are
holding our shares on behalf of beneficial owners to forward this Information
Statement to the beneficial owners. We will reimburse the record holders for
out-of-pocket expenses incurred in forwarding such material.
DESCRIPTION OF OUR CAPITAL STOCK
We are authorized to issue 50,000,000 shares of common stock and 1,000,000
shares of preferred stock, of which 27,000 shares have been designated as Series
B Convertible Redeemable Preferred Stock ("Series B") and 75,000 shares have
been designated as Series C Mandatory Convertible Preferred Stock ("Series C").
At the close of business on February 14, 2005, we had 20,446,562 shares of
common stock issued and outstanding, and 27,000 shares of Series B Preferred
Stock issued and outstanding. On February 15, 2005, we issued and thereafter
have outstanding 66,681 shares of Series C Preferred Stock.
Each share of our common stock entitles the holder to one vote on all
matters to be voted on by stockholders. There is no cumulative voting with
respect to the election of directors. The holders of shares of our common stock
are entitled to dividends when and as declared by the Board of Directors from
funds legally available and upon liquidation they are entitled to share pro rata
in any distribution to holders of common stock, subject to the prior right of
holders of our outstanding preferred stock. No dividends have ever been declared
by the Board of Directors on the common stock. Holders of our common stock have
no preemptive rights. There are no conversion rights or redemption or sinking
fund provisions with respect to our common stock.
Each share of Series B Preferred Stock is convertible into 429.553 shares
of common stock, subject to customary anti-dilution provisions, or an aggregate
of 1,159,793 shares of common stock. The Series B Preferred Stock is convertible
at the election of the holder for ten years from the date of purchase, August
18, 1997, and subject to mandatory conversion upon a change of control or the
expiration of the ten year period. Unless an action adversely affects the
rights, powers or privileges of the shares of the Series B Preferred Stock, the
holders of Series B Preferred Stock are not entitled to vote on any matter. The
Series B Preferred Stock has a liquidation preference of $100 per share, on a
pari passu basis with the shares of Series C Preferred Stock.
Each share of Series C Preferred Stock automatically converts into common
stock at a price of $.145 per share, subject to anti-dilution provisions, upon
the effectiveness of the Reverse Split. The holder does not have any right of
conversion. The holders of Series C Preferred Stock have the right to vote
together with the holders of common stock as a single class on any matter which
the holders of common stock are entitled to vote (including the election of
directors), as if the Series C Preferred Stock had been converted into common
stock. The Series C Preferred Stock has a liquidation preference of $100 per
share, on a pari passu basis with the shares of Series B Preferred Stock.
3
As determined by our Board of Directors, and without any action by
stockholders, we may issue the remaining authorized preferred stock in one or
more series having the rights, privileges, and limitations, including voting
rights, conversion rights, liquidation preferences, dividend rights and
redemption rights, as may, from time to time be determined by the Board at time
of issuance. The preferred stock may be issued in the future in connection with
acquisitions, financings or other matters, as the Board of Directors deems
appropriate. In the event that we determine to issue any shares of preferred
stock, a certificate of designation containing the rights, privileges and
limitations of this series of preferred stock will be filed with the Secretary
of State of the State of Delaware. The effect of this preferred stock
designation power is that our Board of Directors alone, subject to Federal
securities laws, applicable blue sky laws and Delaware law, may be able to
authorize the issuance of preferred stock which could have the effect of
delaying, deferring or preventing a change in control without further action by
our stockholders, and may adversely affect the voting and other rights of the
holders of our common stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 1, 2005, giving effect to the
conversion of the Series C Preferred Stock into common stock and the Reverse
Split, certain information with respect to the securities beneficially owned by:
(i) each person who is known by us to own beneficially more than five percent of
the outstanding common stock, (ii) each of our directors and executive officers,
and (iii) all directors and executive officers as a group:
Amount and nature of
Position with Company / beneficial Percentage
Name of beneficial owner of over 5% of ownership(1) of of
beneficial owner* the outstanding common stock common stock securities ***
--------------------------------- ---------------------------------- ----------------------- ---------------
Special Situations Private Holder of over five percent 1,344,826(2) 37.03%
Equity Fund, L.P.
153 E. 53rd Street
55th Floor
New York, NY 10022
--------------------------------- ---------------------------------- ----------------------- ---------------
Special Situations Fund III, L.P. Holder of over five percent 448,275(3) 13.09%
153 E. 53rd Street
55th Floor
New York, NY 10022
--------------------------------- ---------------------------------- ----------------------- ---------------
Shrikant Mehta Holder of over five percent 245,894(4) 7.33%
Combine International
354 Indusco Court
Troy, Michigan 48083
--------------------------------- ---------------------------------- ----------------------- ---------------
4
George Aaron Chairman of the Board; 260,887(5) 7.79%
Chief Executive Officer;
President
Jonathan Joels Director; Chief 255,226(6) 7.62%
Financial Officer;
Treasurer;
Secretary
Elliott Koppel VP Sales & Marketing 54,197(7) 1.62%
Sol Triebwasser, Ph.D. Director 5,545(8) **
Jeffrey L. Hymes, M.D. Director 1,250(9) **
All executive officers and 577,105(10) 17.24%
Directors as a group
(5 persons)
--------------
* Except otherwise indicated above, the address of the holder is c/o Caprius
Inc., One Parker Plaza, Fort Lee, NJ 07024.
** Less than one percent (1%)
*** Does not include the Series B Preferred Stock, as it is non-voting except
on matters directly related to such series.
(1) Includes voting and investment power, except where otherwise noted. The
number of shares beneficially owned includes shares each beneficial owner
and the group has the right to acquire within 60 days of March 1, 2005
pursuant to stock options, warrants and convertible securities.
(2) Includes 310,344 shares underlying warrants presently exercisable and
excludes 103,448 shares underlying warrants which are currently not
exercisable.
(3) Includes 103,448 shares underlying warrants presently exercisable and
excludes 34,482 shares underlying warrants which are currently not
exercisable.
(4) Includes (i) 10,000 shares underlying warrants presently exercisable and
(ii) 25,000 shares underlying options presently exercisable.
(5) Includes (i) 353 shares in retirement accounts, (ii) 9,075 shares
underlying warrants presently exercisable, (iii) 5 shares jointly owned
with his wife and (iv) 20,000 shares underlying options presently
exercisable.
(6) Includes (i) 48,000 shares as trustee for his children, (ii) 8,618 shares
underlying warrants presently exercisable, (iii) 875 shares underlying
warrants owned by his wife for which he disclaims beneficial ownership,
(iv) 20,000 shares underlying options presently exercisable and (v) 17,241
shares in a retirement account.
(7) Includes (i) 4,644 shares underlying warrants and (ii) 20,000 shares
underlying options presently exercisable.
5
(8) Includes 5,475 shares underlying options presently exercisable.
(9) Includes 1,250 shares underlying options presently exercisable and excludes
2,500 shares underlying options which are currently not exercisable.
(10) Includes (i) 22,337 shares underlying warrants and (ii) 66,725 shares
underlying options presently exercisable.
REASON FOR THE AMENDMENT AND THE REVERSE SPLIT
On February 15, 2005, we completed a private placement (the "Placement")
for a gross purchase price of $4.5 million to accredited investors consisting of
(i) 45,000 shares of Series C Preferred Stock, (ii) Series A Warrants to
purchase an aggregate of 9,310,344 shares of Common Stock at an exercise price
of $0.28 per share, exercisable for a period of five years, and (iii) Series B
Warrants to purchase an aggregate of 3,103,448 shares of common stock at an
exercise price of $0.145 per share, exercisable in nine months for a period of
five years from date of grant subject to termination upon a certain event.
In connection with the Placement, (i) the holders of $1.5 million aggregate
principal amount of 8% Senior Secured Convertible Promissory Notes issued by us
from April 2004 through June 2004 (the "April Notes") pursuant to an Amendment
and Conversion Agreement, amended and converted their April Notes, together with
accrued and unpaid interest thereon, into Series C Preferred Stock, (ii) the
holders of $500,000 aggregate principal amount of promissory notes issued by us
from January to March 2004 (the "January Notes") have, pursuant to an Exchange
Agreement, exchanged their notes for Series C Preferred Stock, and (iii) the
holders of loans to us in the aggregate principal amount of $145,923 (the
"Loans") have, pursuant to the Exchange Agreement, exchanged 50% of their Loans
for Series C Preferred Stock, with the remaining 50% of their Loans and all
accrued interest thereon paid in cash. We issued an aggregate of 21,681 shares
of Series C Preferred Stock upon these conversions and exchanges, valued at one
share of Series C Preferred Stock for each $100 of principal or interest
converted or exchanged. For additional information about the issuance of the
Series C Preferred Stock, reference is made to the Form 8-K for an event of
February 15, 2005 we filed with the Securities and Exchange Commission.
For information regarding the effect of the Reverse Split on our common
stock, see "Effect of Reverse Stock Split" below.
Since we had desired to issue common stock in the Placement but did not
have a sufficient number of shares to issue, we agreed with the placement agent
to structure the Placement for the creation and issuance of the Series C
Preferred Stock with the automatic conversion to common stock when there would
be a sufficient number of shares of common stock to effect the conversion. The
placement agent and the lead investors sought that the common stock be reverse
split in order to have a more orderly trading market. It was decided that having
the Reverse Split without changing the number of authorized shares of Common
Stock would accomplish the desired objectives.
6
EFFECT OF REVERSE STOCK SPLIT
On February 14, 2005, as a condition precedent to closing the Placement,
the Majority Holders approved the Amendment and the Reverse Split, subject to
notice to the balance of the stockholders pursuant to a Rule 14C information
statement. The Board of Directors believes that the Reverse Split is in the best
interest of the Company because it may increase the marketability and liquidity
of the common stock and allow us to have sufficient authorized but unissued
shares of common stock for future issuances, as well as accommodating the
Placement.
Our common stock is listed for trading on the OTC Bulletin Board under the
symbol CAPR.OB. On February 28, 2005, the reported closing price of the common
stock on the OTC Bulletin Board was $0.21 per share. Over the past 12 months,
the closing prices ranged from $0.05 to $0.25 per share. The trading symbol may
change by reason of the Reverse Split.
Our Board of Directors believes that the current per share price of the
common stock limits the effective marketability of the shares because of the
reluctance of many brokerage firms and institutional investors to recommend
lower-priced stocks to their clients or to hold them in their own portfolios.
Moreover, our common stock may be deemed "penny stock" under Rule 15(g)(9) of
the Exchange Act and be subject to the restrictions thereunder. Certain policies
and practices of the securities industry may tend to discourage individual
brokers within those firms from dealing in lower-priced stocks. Some of those
policies and practices involve time-consuming procedures that make the handling
of lower-priced stocks economically unattractive. The brokerage commission on a
sale of lower-priced stock may also represent a higher percentage of the sale
price than the brokerage commission on a higher-priced issue. Any reduction in
brokerage commissions resulting from the Reverse Split may be offset, however,
in whole or in part, by increased brokerage commission that may be required to
be paid by stockholders selling "odd lots" created by such Reverse Split.
No assurance can be given, however, that the market price of the common
stock post-Reverse Split will rise in proportion to the reduction in the number
of outstanding shares resulting from the Reverse Split. In fact, in most reverse
splits of other OTC Bulletin Board issuers, the multiple of the post-split
market price over the pre-split market price is less than the reverse split
multiple.
The shares of common stock to be issued pursuant to the Reverse Split will
be fully paid and non-assessable. All shares of common stock post-Reverse Split
will have the same par value, voting rights and other rights as the common
stock, pre-reverse stock split.
7
The following table sets forth the classification of the shares of our
common stock, both on a pre-Reverse Split and post-Reverse Split basis:
Post-Reverse Split
(and Post-Conversion
of Series C
Pre-Reverse Split(1) Preferred Stock)
Outstanding 20,446,562 3,321,673
Reserved for conversion 17,143,139 1,052,844
of options, Series B
Preferred Stock and
Warrants
Treasury stock 22,500 1,125
Authorized but unissued 12,387,799 45,624,358
-------------------------------------------------
TOTALS: 50,000,000 50,000,000
(1) Pre-Reverse Split figures do not include 13,913,792 shares, on a pre-split
basis, underlying warrants issued in the Placement to accredited investors
and Laidlaw & Co. (UK) Limited, as selected dealer.
Our authorized but unissued shares of common stock may be issued in
connection with acquisitions or subsequent financings. There can be no assurance
that we will be successful in making any such acquisitions or obtaining any such
financings. We do not currently have any plans for the issuance of the shares of
common stock for acquisitions or financings. Each of our stockholders may be
diluted to the extent that any of the authorized but unissued shares are
subsequently issued.
The Reverse Split will not alter any stockholder's percentage interest in
our equity. No fractional shares shall be issued upon conversion and the number
of shares of common stock to be issued shall be rounded down to the nearest
whole share, except a holder of 19 or fewer shares will receive one share on a
post-reverse split basis.
In addition, commencing with the effective date of the Reverse Split, all
outstanding options, warrants and convertible securities entitling the holders
thereof to purchase shares of the common stock will be adjusted to entitle such
holders to receive, upon exercise of their options, warrants or convertible
securities, as applicable, one-twentieth of a share for each share underlying
his options, warrants or convertible securities, while the exercise or
conversion price of his options, warrants and convertible securities will be
increased twenty fold. For example, the holder of options to purchase 2,000
shares of common stock at an exercise price of $0.15 per share will instead be
entitled to purchase 100 shares at a price of $3.00 per share.
Commencing at the close of business following the filing of the Amendment
with the Secretary of State of the State of Delaware, each stock certificate
representing shares of our common stock before such date will be deemed for all
corporate purposes without any action on the part of our stockholders to
evidence ownership of the decreased number of shares of our common stock
resulting from the Reverse Split. We shall issue a press release announcing the
8
effectiveness of the Reverse Split and any new trading symbol. As soon as
practicable after such date, you will be notified as to the effectiveness of the
Reverse Split and instructed as to how and when to surrender your certificates
representing shares of pre-Reverse Split shares in exchange for certificates
representing shares of post-Reverse Split shares. We intend to use our transfer
agent American Stock Transfer & Trust Company as our exchange agent in effecting
the exchange of certificates following the effectiveness of the Reverse Split.
We believe that the federal income tax consequences of the Reverse Split to
holders of common stock will be as follows:
(i) No income gain or loss will be recognized by a stockholder on the
surrender of the current shares or receipt of the certificate representing
post-Reverse Split shares.
(ii) The tax basis of the post-Reverse Split shares will equal the tax
basis of the pre-Reverse Split shares exchanged therefore.
(iii) The holding period of the post-Reverse Split shares will include the
holding period of the pre-Reverse Split shares if such pre-Reverse Split
shares were held as capital assets.
(iv) The conversion of the pre-Reverse Split shares into the post-Reverse
Split shares will produce no taxable income or gain or loss to us.
Our understanding of the tax consequences of the Reverse Split is 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.
THE ABOVE DISCUSSION IS A BRIEF SUMMARY OF THE EFFECTS OF FEDERAL INCOME
TAXATION UPON OUR STOCKHOLDERS AND THE COMPANY WITH RESPECT TO THE REVERSE
SPLIT. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND DOES NOT ADDRESS THE
FEDERAL INCOME TAX CONSEQUENCES TO TAXPAYERS WITH SPECIAL TAX STATUS. IN
ADDITION, THIS SUMMARY DOES NOT DISCUSS THE PROVISIONS OF THE INCOME TAX LAWS OF
ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH YOU MAY RESIDE, AND DOES NOT
DISCUSS ESTATE, GIFT OR OTHER TAX CONSEQUENCES OTHER THAN INCOME TAX
CONSEQUENCES. WE ADVISE EACH STOCKHOLDER TO CONSULT YOUR OWN TAX ADVISOR
REGARDING THE TAX CONSEQUENCES OF THE REVERSE SPLIT AND FOR REFERENCE TO
APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE.
NO DISSENTERS' RIGHTS
You do not have the right to dissent and obtain an appraisal of your shares
under Delaware law in connection with the Amendment described in this
Information Statement.
9
STOCKHOLDER PROPOSALS
Our Board of Directors has not yet determined the date on which the next
annual meeting of stockholders will be held. Any proposal by a stockholder
intended to be presented at the our next annual meeting of stockholders must be
received at our offices a reasonable amount of time prior to the date on which
the information or proxy statement for that meeting is mailed to stockholders in
order to be included in our information or proxy statement relating to that
meeting.
WHERE YOU CAN FIND MORE INFORMATION ABOUT THE COMPANY
We file our annual, quarterly and current reports, proxy statements and
other information with the SEC. You can read and copy any materials that we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can obtain information about the operation of the
SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web site that contains information we file electronically with the
SEC, which you can access over the Internet at http://www.sec.gov. Copies of
these materials may also be obtained by mail from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
You also can view such documents on our website www.caprius.com.
Fort Lee, New Jersey
March 14, 2005
By order of the Board of Directors:
/s/ Jonathan Joels
------------------------------
Jonathan Joels
CFO, Treasurer and Secretary
10