SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13E-3(A)
RULE 13E-3(A) TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
SPECTRUM LABORATORIES, INC.
(Name of Issuer)
Roy T. Eddleman
Thomas V. Girardi
Walter J. Lack
(Name of Persons Filing Statement)
COMMON STOCK,
(Title of Class of Securities)
847 624 30 1
(CUSIP Number of Class of Securities)
JOHN J. DRISCOLL, ESQ.
COWAN, LIEBOWITZ & LATMAN, P.C.
1133 AVENUE OF THE AMERICAS
NEW YORK, NY 10036-6799
TEL: (212) 790-9200
FAX: (212) 575-0671
(Name, address and telephone number of person authorized to receive notices for
Spectrum Laboratories, Inc. and on behalf of persons filing statement)
THIS STATEMENT IS FILED IN CONNECTION WITH (CHECK THE APPROPRIATE BOX):
a. [X] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C, or Rule
13E-3(A)(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the
Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
CHECK THE FOLLOWING BOX IF THE SOLICITING MATERIALS OR INFORMATION REFERRED TO
IN CHECKING BOX (a) ARE PRELIMINARY COPIES: [X]
CHECK THE FOLLOWING BOX IF THE FILING IS A FINAL AMENDMENT
REPORTING THE RESULTS OF THE TRANSACTION: [ ]
CALCULATION OF FILING FEE
AMOUNT OF
TRANSACTION VALUATION (1) FILING FEE (2)
$ 287,918 $ 36.48
(1) For purposes of calculating the filing fee only. The filing fee was
calculated based on the purchase price of $2.56 per share or pro rata portion
thereof, before giving effect to a 1-for-25,000 reverse stock split as described
herein, for all issued and outstanding shares of the Company's common stock
acquired pursuant to this transaction.
(2) The amount of the filing fee, calculated in accordance with Section
13 of the Securities Exchange Act of 1934, as amended, equals .0000809
multiplied by the aggregate value of cash to be paid by Spectrum Laboratories,
Inc. for the common stock.
[X] Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
Amount Previously Paid: $36.48
Form or Registration No.: 13_E3
Filing Party: Issuer
Date Filed: October 13, 2004
INTRODUCTION
This Schedule 13E-3(A) Transaction Statement is being filed by Spectrum
Laboratories, Inc., a Delaware corporation, ("Spectrum" or the "Company") and by
Roy T. Eddleman, Tomas V. Girardi and Walter J. Lack, each of whom is a director
of Spectrum and collectively own 98.4% of the Company's common stock and relates
to a 1-for-25,000 reverse stock split of Spectrum's outstanding common stock.
The purpose of the reverse stock split is to decrease the total number of
Spectrum's Common Stockholders from approximately 450 to 3. By reducing the
number of stockholders below 300, Spectrum will be eligible to file a Form 15
with the Securities and Exchange Commission ("SEC") and terminate its
registration and reporting obligations under the Securities Exchange Act of
1934, as amended, (the "Exchange Act"). The going private transaction as
described herein, will enable Spectrum to save money being spent because of its
status as a reporting company, which Spectrum believes provides a limited
benefit to a small company like Spectrum.
The reverse stock split will be effected on or about March ___, 2005. The
reverse stock split was unanimously approved by Spectrum's Board of Directors at
a meeting held on October 6, 2004. The holders of 98.4% of the Company's stock
on written consent have approved this transaction. No additional consent is
required from stockholders. The reverse stock split is being effected with the
specific intent to reduce the number of stockholders of Spectrum's common stock
to a level where Spectrum is no longer obligated to file reports under the
Exchange Act.
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ITEM 1. SUMMARY TERM SHEET
The information set forth under the caption "Summary Term Sheet" in the
Information Statement is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION
(a) Spectrum's full name and the address and telephone number for its
principal executive offices are:
Spectrum Laboratories, Inc.
18617 Broadwick
Rancho Dominquez, California 90220
(310) 885-4600
(b) The exact title of Spectrum's class of security that is the subject
of this filing is: common stock. As of February 7, 2005, the most recent
practicable date before the date of this filing, Spectrum had 5,312,468 shares
of common stock outstanding.
(c) Trading Market and Price. The Company's common stock is quoted on
the OTC Bulletin Board. The following table sets forth for the periods indicated
the high and the low prices of the Company's Common Stock each quarter during
the past two years and during 2004 prior to the initial public announcement of
the Reverse Stock Split on October 12, 2004.
High Low
Year ended December 25, 2004
First Quarter $ 4.00 $ 1.70
Second Quarter 2.50 2.25
Third Quarter 2.10 2.05
Fourth Quarter 2.34 2.22
Year ended December 27, 2003
First Quarter .55 .55
Second Quarter 2.95 .65
Third Quarter 2.25 2.15
Fourth Quarter 2.50 1.60
Year ended December 28, 2002
First Quarter 2.05 1.55
Second Quarter 1.25 1.25
Third Quarter 1.28 1.28
Fourth Quarter 1.50 .77
(d) Spectrum has not declared or paid cash dividends on its common
stock during the past two (2) years with respect to its common stock. There are
no restrictions either in Spectrum's charter or in any agreement to which
Spectrum is a party which prohibit Spectrum's ability to pay dividends.
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(e) Not applicable.
(f) During the last two (2) years, Spectrum has not purchased any
shares of its common stock.
On February 13, 2004, Walter J. Lack, a director and filing person,
purchased 7,595 shares of common stock on the open market at a price of $2.52
per share. No other filing person purchased or acquired shares in the past two
years.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS
1. Spectrum Laboratories
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(a) Spectrum is the subject company. Its full name and the
address and telephone number of its principal executive offices is:
Spectrum Laboratories, Inc.
18617 Broadwick
Rancho Dominquez, California 90220
(310) 885-4600
(b) Not applicable.
(c) Information concerning Spectrum's directors and executive
officers as set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" is as follows:
Name and Address Amount and Nature Percent
Of Beneficial Ownership (1) of Class
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Roy T. Eddleman 4,320,128 81.3
18617 Broadwick Street
Rancho Dominguez, CA 90220
Thomas V. Girardi, J.D 800,002 15.1
1126 Wilshire Blvd
Los Angeles, CA 90017
Jay Henis, Ph.D 17,000 (A) 0.3
501 Marford Drive
St. Louis, MO 63141
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Walter J. Lack, J.D 109,918 2.1
10100 Santa Monica Blvd
Los Angeles, CA 90067
Jack Whitescarver, Ph.D 17,000 (A) 0.3
4301 Massachusetts Ave., NW #6002
Washington, D.C. 20016
F. Jesus Martinez 265,524 (A) 4.8
18617 Broadwick Street
Rancho Dominquez, CA 90220
Brian A. Watts 80,000 (A) 1.5
18617 Broadwick Street
Rancho Dominquez, CA 90220
All directors and officers as a 5,609,672 (B) 98.6
Group (7 in number)
(1) All amounts are amounts of ownership of common stock of the Company
unless otherwise indicated.
(A) Entire amount consists of exercisable stock options
(B) Includes 379,624, exercisable stock options. Holders of these
options will not exercise them in connection with this transaction.
2. Roy T. Eddleman
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18617 Broadwick Street
Rancho Dominguez, CA 90220
Tel: 310-885-4600
CEO Spectrum Laboratories past 5 years;
No connection with criminal proceeding past 5 years;
Not a party to any administrative or judicial proceeding past
5 years
U.S. Citizen
3. Thomas V. Girardi
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1126 Wilshire Boulevard
Los Angeles, CA 90017
Tel: 310-552-3800
Practicing Attorney past 5 years
No connection with criminal proceeding past 5 years
Not a party to any administrative or judicial proceeding past
5 years
U.S. Citizen
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4. Walter J. Lack
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10100 Santa Monica Boulevard
Los Angeles, CA 90067
Tel: 213-429-5330
Practicing Attorney past 5 years.
No connection with criminal proceeding past 5 years
Not a party to any administrative or judicial proceeding past
5 years.
U.S. Citizen
ITEM 4. TERMS OF THE TRANSACTION
(a) The information set forth under the caption "Summary Term Sheet"
and "Special Factors" in the Information Statement is incorporated herein by
reference.
(b) To eliminate fractional share holdings, pre-split shares not
divisible by 25,000 will be eliminated by payment of a cash price of $2.56 per
share. As a result Messrs. Eddleman, Girardi and Lack who own, respectively,
20,128, 2 and 9,918 pre-split shares not divisible by 25,000 will receive
payment of $51,527.68, $5.12, and $25,390.08, respectively. Directors and
executive officers who have a total of 379,624 stock options have agreed not to
exercise their options and receive payment.
(c) The information set forth under the caption "Summary Term Sheet"
and "Special Factors" in the Information Statement is incorporated herein by
reference.
(d) Stockholders have no appraisal rights under Delaware law, and under
Spectrum's Certificate of Incorporation or Bylaws in connection with the reverse
stock split.
(e) Spectrum has not made any provision to grant unaffiliated security
holders access to Spectrum's corporate files and, other than the fairness
opinion described in Item 9 below, has not engaged, or made provision to obtain,
counsel or appraisal services for unaffiliated stockholders at its expense in
connection with the transaction described herein.
(f) Not applicable.
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ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
(a) Aside from payment of salary and royalty of the Company to Mr.
Eddleman, there were no transactions. For the year ending December 27, 2003, Mr.
Eddleman received a salary of $160,000 and royalty payments of $324,848 and for
the year ending December 25, 2004, Mr. Eddleman received a salary of $118,225
and royalty payments of $311,617. No other filing person received a payment from
the Company of any nature.
(b) The information set forth under the caption "Special Factors" in
the Information Statement is incorporated herein by reference.
(c) The information set forth under the caption "Special Factors" in
the Information Statement is incorporated herein by reference.
(d) The information set forth under the caption "Special Factors" in
the Information Statement is incorporated herein by reference.
(e) The information set forth under the caption "Special Factors" in
the Information Statement is incorporated herein by reference.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
(a) Not applicable.
(b) The fractional shares of new common stock acquired by Spectrum in
the reverse stock split will be considered a purchase and retirement of its own
stock. The purchase will be treated as a reduction of stockholders' equity.
Spectrum has no plans to re-sell or dispose of the fractional shares acquired in
this transaction.
(c) (1) Not applicable.
(2) Not applicable.
(3) Not applicable.
(4) Not applicable. There are no current plans or proposals to
change the present Board of Directors or management of Spectrum or change any
material term of any agreement with any executive officer. The information under
the caption "Special Factors" in the Information Statement is incorporated by
reference.
(5) Not applicable.
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(6) Market makers are not permitted to quote Spectrum's common
stock on the Over The Counter Bulletin Board ("OTCBB") if Spectrum is not
current in its filings with the SEC. Upon consummation of the reverse stock
split, Spectrum plans to file a Form 15 with the SEC to terminate its reporting
obligations under Section 15(d) of the Exchange Act. As a result, Spectrum's
common stock will be removed from quotation from the OTCBB.
(7) Upon consummation of the reverse stock split, Spectrum
plans to certify to the SEC that it has reduced its number of stockholders of
common stock to less than 300, and thereby terminate its registration under the
Exchange Act.
(8) Upon consummation of the reverse stock split, Spectrum
plans to file a Form 15 with the SEC to terminate its reporting obligations
under Section 15(d) of the Exchange Act.
(9) Not applicable.
(10) Not applicable.
(d) Not applicable.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS
(a) The information under the captions "Summary Term Sheets and
"Special Factors" Relating to the `Going Private Transaction'" is incorporated
herein by reference.
(b) The information under the captions "Summary Term Sheets and
"Special Factors" Relating to the `Going Private Transaction'" is incorporated
herein by reference.
(c) The information under the captions "Summary Term Sheets and
"Special Factors" Relating to the `Going Private Transaction'" is incorporated
herein by reference.
(d) The information under the caption "Federal Income Tax Consequences
of the `Reverse Stock Split'" in the Information Statement is incorporated
herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION
(a) The information under the caption "Fairness of the Reverse Stock
Split" in the Information Statement is incorporated herein by reference. The
Company and each of Messrs. Eddleman, Girardi and Lack have concluded that the
going private transaction and the consideration paid to minority share holders
are fair - both procedurally and substantively.
(b) The information under the caption "Fairness of the Reverse Stock
Split" in the Information Statement is incorporated herein by reference.
(c) The transaction described herein is not structured to require
approval of at least of majority of unaffiliated stockholders. The information
under the caption "Fairness of the Reverse Stock Split" in the Information
Statement is incorporated herein by reference.
(d) Spectrum has not and does not intend to have a majority of its
non-employee directors retain an unaffiliated representative to act solely on
behalf of unaffiliated security holders for purposes of negotiation of the terms
of the transaction described herein or preparing a report concerning the
fairness of the reverse stock split. The information under the caption "Fairness
of the Reverse Stock Split" in the Information Statement is incorporated herein
by reference.
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(e) The reverse stock split was unanimously approved by all the
directors of Spectrum, unanimously, including those who are not employees of
Spectrum.
(f) There have been no offers of the type described in paragraph (viii)
of Item Instruction 2 of Regulation M-A received by the Company during the past
two (2) years.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
(a) The members of the Board of Directors, including affiliates, has
received a fairness opinion from Seidman and Co., Inc. ("Seidman") an investment
banking firm, with respect to the fairness of the consideration offered in the
transaction described herein to security holders who will hold fractional shares
of the Company's common stock after the reverse stock split. Seidman spoke
directly only to the CEO and the CFO. The information under the caption
"Fairness of Reverse Stock Split" in the Information Statement is incorporated
herein by reference.
(b) The information under "Fairness of the Reverse Stock Split" is
incorporated herein by reference.
(1) The fairness opinion has been rendered by Seidman.
(2) Seidman is a nationally recognized investment banking firm
that is regularly engaged to render financial opinions in connection with
mergers and acquisitions, tax matters, corporate planning, and other purposes.
(3) Seidman was selected by Spectrum's Board of Directors. The
Board of Directors selected Seidman on the basis of (i) its experience in
valuing businesses and their securities, (ii) its experience in rendering
fairness opinions, and (iii) familiarity with Spectrum in that Seidman opined on
a merger with Invalid's Spectrum in 1998.
(4) There has been no material relationship during the past
two (2) years between Spectrum, its affiliates, directors or executive officers
and Seidman, its affiliates or unaffiliated representatives. Seidman received a
fee in the amount of $35,000 plus reimbursement of expenses in connection with
the issuance of its fairness opinion. There are no other current arrangements to
compensate Seidman, its affiliates or unaffiliated representatives for any
services rendered to Spectrum, its affiliates, directors or executive officers.
(5) The Board of Directors of Spectrum determined the amount
of consideration to be paid to fractional common stockholders in the reverse
stock split. Seidman was engaged to render an opinion as to whether the per
share price on which such consideration will be based was fair to the
stockholders who received fractional shares of the Company's common stock in the
reverse stock split from a financial viewpoint.
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(6) The information set forth under the caption "Fairness of
Reverse Stock Split" in the Information Statement is incorporated herein by
reference.
(c) The fairness opinion rendered by Seidman is attached as Appendix A
to the Information Statement. The opinion report is available for inspection and
copying by Spectrum stockholders (or a representative designated in writing)
during Spectrum's regular business hours at Spectrum's principal executive
offices by contacting the Company's Secretary.
(d) Seidman prepared a draft report for the Board to accompany its
opinion. Reference is made to "Fairness of the Reverse Stock Split" incorporated
herein by reference.
ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The information under the caption "Exchange of Certificates -
Payment" in the Information Statement is incorporated herein by reference.
(b) Not applicable.
(c) The information under the caption "Exchange of Certificates -
Payment" in the Information Statement is incorporated herein by reference.
(d) Not applicable.
ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) The information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" in the Information Statement is
incorporated herein by reference.
(b) Not applicable.
ITEM 12. THE SOLICITATION OR RECOMMENDATION
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Since each person or entity holds in excess of 25,000 shares of
Common Stock, the affiliates of Spectrum and its three (3) directors will remain
shareholders of Spectrum after the reverse stock split, except for fractional
shares of common stock resulting from the reverse stock split. The Directors of
Spectrum unanimously voted to approve the reverse stock split. The affiliates
owning 98.4% of the issued and outstanding shares by written consent approved
the transaction.
(e) Except for the vote to approve the reverse stock split by its
affiliates, directors and executive officers, Spectrum is not aware that any of
its affiliates, directors or executive officers has made a recommendation either
in support or opposed to the transaction described herein.
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ITEM 13. FINANCIAL STATEMENTS
(a) Spectrum's financial statement information, included in its Annual
Report on Form 10-KSB for the year ended December 27, 2003, filed with the SEC
on March 26, 2004, is incorporated herein by reference. Spectrum's financial
statement information, attached to its Quarterly Report on Form 10-QSB for the
quarterly period September 25, 2004, filed with the SEC on January 31, 2005, is
incorporated herein by reference. The ratio of earnings to fixed charges (i) for
the year ended December, 2002, was 2.2, (ii) for the year ended December, 2003,
was 1.5, (iii) for the nine months ended September 27, 2003, was 1.4, and (iv)
for the nine months ended September 25, 2004, was 3.0. The book value per share
of Spectrum's common stock was $1.87 at December 27, 2003, and $2.08 at
September 25, 2004. Information incorporated herein by reference to the
Company's Annual Report on Form 10-KSB and Quarterly Reports on Forms 10QSB has
been filed by the Company with the SEC as stated above. You may obtain copies of
these reports, statements or other information that the Company files from the
Public Reference Section of the SEC at 450 Fifth Street N.W.,Washington D.C.
20549 at prescribed rates. Copies of such materials may also be accessed through
the SEC's Internet site at www.sec.gov.
(b) Not applicable
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
(a) No persons have been retained to make solicitations or
recommendations in connection with the reverse stock split.
(b) Other than as set forth under Item 9 above, no officer, employee or
corporate assets has been or will be employed or used in connection with the
reverse stock split.
ITEM 15. ADDITIONAL INFORMATION
None.
ITEM 16. EXHIBITS
(a) Information Statement. Incorporated by reference to Spectrum's
Preliminary Schedule 14C Information Statement, filed with the SEC on October
12, 2004.
(b) Not applicable.
(c) Opinion of Seidman and Co., Inc. Incorporated by reference to
Appendix A of Spectrum's Preliminary Schedule 14C Information Statement.
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(d) Not applicable.
(e) Not applicable.
(f) None.
(g) None.
(h) Not applicable.
SIGNATURES
After due inquiry and to the best of our knowledge and belief, we certify that
the information set forth in this statement is true, complete and correct.
March 2, 2005
SPECTRUM LABORATORIES, INC.
By: /s/ Roy T. Eddleman
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Roy T. Eddleman, Chief Executive Officer
By: /s/ Brian A. Watts
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Brian A.Watts, Chief Financial Officer
/s/ Roy T. Eddleman
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Roy T. Eddleman
/s/ Thomas V. Girardi
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Thomas V. Girardi
/s/ Walter J. Lack
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Walter J. Lack
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