x |
Preliminary
Proxy Statement
|
o |
Confidential,
for Use of the Commission Only (as permitted by Rule
14A-6(e)(2))
|
o |
Definitive
Proxy Statement
|
o |
Definitive
Additional Materials
|
o |
Soliciting
Material Pursuant to §240.14a-11(c) or
§240.14a-12
|
o |
$125
per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item
22(a)(2) of Schedule 14A.
|
o |
$500
per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|
o |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
|
o |
Fee
paid previously with preliminary
materials.
|
o |
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:
|
By
order of the Board of Directors
Michael
A. Tancredi
Secretary
|
·
|
The
holder of our senior debt will convert all of the senior debt (other
than
principal and interest on senior debt representing a $1,000,000 loan
that
was made in October 2007) into (i) a note in the principal amount
of
$10,000,000 plus interest accrued subsequent to June 30, 2007, to
the date
of the restructuring plan, which is estimated at $1,250,000 (the
principal
and interest aggregating approximately $11,250,000 shall be referred
to as
the "Senior Debt"), based on a July 31, 2008 effective date which
may be
extended by the Corporation to August 31, 2008 (the "Effective Date")
and
(ii) 70% of our common stock after giving effect to the proposed
one-for-11.11 reverse split. The Senior Debt will bear interest at
12.5%
annually and will be amortized over its 6¾ year life.
|
·
|
The
holders of our subordinated notes are converting all but $1,750,000
principal amount of their debt, including accrued interest, into
14% of
our common stock. The remaining debt will be repaid based upon a
25 year
amortization schedule and will mature 7½ years from the Effective Date.
Such debt will bear interest at 10% annually payable quarterly in
arrears.
|
·
|
The
holders of our convertible debentures will be offered the right to
convert
their debentures into a subordinated note in the principal amount
equal to
their proportionate share (based on the principal amount of debentures)
of
$100,000 and their proportionate shares of 1% of our common stock.
These
notes will have the same 25 year amortization schedule and the same
maturity date of 7½ years from the Effective Date as the notes received by
the subordinated note holders. The $100,000 notes will bear interest
at
10% annually payable quarterly in arrears.
|
·
|
Certain
other creditors have agreed to accept substantial discounts on their
outstanding claims.
|
· |
At
March 31, 2008, the principal and interest on our senior debt was
$25,375,000, all of which matures on September 1,
2008.
|
· |
At
March 31, 2008, the principal and interest on our subordinated debt
was
approximately $13,275,000, and we are in default under the notes
relating
to our subordinated debt.
|
· |
At
March 31, 2008, the principal and interest on our convertible debt
was
approximately $685,000 and we are in default under our convertible
notes.
|
· |
At
March 31, 2008, we had a working capital deficiency of approximately
$35,104,000 and a negative stockholders’ equity of approximately
$31,148,000.
|
· |
We
sustained a net loss of $2,744,000 for 2007, as compared with a net
income
of $2,182,000, for 2006, and we used cash of $1,854,000 in our continuing
operations in 2007 as compared with 2006 when we generated a cash
flow
from continuing operations of $4,210,000. Our losses are continuing
and we
reported a net loss for the first quarter of
2008.
|
· |
The
restructuring plan will eliminate principal of and interest on
approximately $25,235,000 of debt and will provide for amortization
of the
remaining debt on terms that we believe we will be able to
meet.
|
· |
If
the restructuring plan is not approved and effected, we will not
be able
to pay our senior debt when it matures on September 1, 2008, and
we cannot
assure you that our senior lender would be willing to grant us any
additional extensions.
|
· |
We
believe that the restructuring plan provides reasonable payment terms
and
that, with a restructured debt, we will be in a position to operate
without the constant threat of bankruptcy resulting from the terms
of our
senior debt and our defaults on our subordinated debt. During the
past
years, even in years when we operated profitably, the threat of bankruptcy
affected our ability both to generate new business and to attract
senior
level personnel.
|
· |
If
we do not get an extension on the senior debt, it is likely that
we will
seek protection under the Bankruptcy Code, in which event it is very
likely that your equity, as a stockholder, will be completely eliminated,
and you will lose your entire investment in our common
stock.
|
· |
Even
if we do get an extension on the senior debt, because we are in default
under our subordinated debt, if the restructuring plan is not adopted,
it
is possible that holders of the subordinated debt may seek to commence
a
bankruptcy proceeding against us.
|
· |
The
election of six directors to serve until the next annual meeting
of
stockholders and until their successors are elected and
qualified;
|
· |
The
approval of a proposal to approve one-for-11.11 reverse split of
our
common stock;
|
· |
The
approval of the restructuring plan;
|
· |
The
approval of the selection of BDO Seidman, LLP as our independent
registered public accounting firm for the year ending December 31,
2008;
and
|
· |
The
transaction of such other and further business as may properly come
before
the meeting.
|
Name
|
Age
|
Principal
Occupation or Employment
|
Director
Since
|
|||
William
V. Carney1,3
|
71
|
Chairman
of the board
|
1970
|
|||
Marco
M. Elser1,2,3
|
49
|
Chief
executive officer of Advicorp, PLC, an investment advisory
firm
|
2000
|
|||
Warren
H. Esanu1,2,3
|
65
|
Senior
counsel to KatskyKorins LLP, attorneys at law
|
1997
|
|||
Herbert
H. Feldman1,2,3
|
74
|
President,
Alpha Risk Management, Inc.
|
1989
|
|||
Edward
B. Kornfeld
|
64
|
Chief
executive officer and chief financial officer
|
--
|
|||
Michael
A. Tancredi
|
78
|
Senior
vice president, secretary and treasurer
|
1970
|
1 |
Member
of the executive committee.
|
2 |
Member
of the audit committee.
|
3 |
Member
of the compensation committee.
|
·
|
Has
reviewed and discussed the unaudited financial statements for the
three months ended March 31, 2008 and the audited financial statements
for
the year ended December 31, 2007 with
management.
|
·
|
Has
discussed with the independent auditors the matters required to be
discussed by the Statement on Auditing Standards No. 61, as
amended.
|
·
|
Has
received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No.
1, and
has discussed with the independent accountants the independence of
the
independent accountants.
|
·
|
Recommended,
based on the review and discussion set forth above, to the board
of
directors that the unaudited financial statements be included in our
Quarterly Report on Form 10-Q for the three months ended March 31,
2008,
and that the audited financial statements be included in our annual
report
on Form 10-K for the year ended December 31,
2007.
|
·
|
Was
an officer or employee during 2007, except that Mr. Carney was engaged
as
a consultant during a portion of
2007.
|
·
|
Was
an officer during the three years prior to 2007, except that Mr.
Carney
was an officer until March 2006.
|
·
|
Had
any relationship with us that is required to be disclosed as a related
party transaction except as set forth under “Approval of the Restructuring
Plan - Interests of Related Parties in the Restructuring Plan” and
“Related Party Transactions.”
|
Board
of directors
|
6
|
|||
Audit
committee
|
4
|
|||
Compensation
committee
|
3
|
Name
|
Fees
Paid in Cash
|
Option
Award1
|
Total
|
|||||||
Herbert
H. Feldman
|
$
|
42,075
|
--
|
$
|
42,075
|
|||||
Marco
M. Elser
|
42,075
|
--
|
42,075
|
|||||||
William
V. Carney
|
54,5252
|
--
|
54,525
|
|||||||
Warren
H. Esanu
|
42,075
|
--
|
42,075
|
1 |
Each
director received an automatic grant of an option to purchase 5,000
shares
of common stock on May 1, 2008. The exercise price was $0.03 per
share,
and the fair value of the options is
immaterial.
|
2 |
Represents
directors fees of $42,075 and consulting fees of $12,450 paid to
Mr.
Carney during 2007.
|
Name
|
Shares
subject
to
Options
|
|||
Marco
M. Elser
|
40,000
|
|||
Warren
H. Esanu
|
50,000
|
|||
Herbert
H. Feldman
|
50,000
|
|||
William
V. Carney
|
15,000
|
2006
|
2007
|
2008
|
|||||||||||||||||
High
|
Low
|
High
|
Low
|
High
|
Low
|
||||||||||||||
First
quarter
|
$
|
0.17
|
$
|
0.09
|
$
|
0.18
|
$
|
0.11
|
$
|
0.10
|
$
|
0.05
|
|||||||
Second
quarter
|
0.15
|
0.09
|
0.18
|
0.11
|
-
|
-
|
|||||||||||||
Third
quarter
|
0.15
|
0.10
|
0.16
|
0.11
|
-
|
-
|
|||||||||||||
Fourth
quarter
|
0.18
|
0.11
|
0.13
|
0.06
|
-
|
-
|
· |
Cheyne
would convert all of the senior debt (other than the principal and
interest on the New Note) including accrued interest, for (i) an
amended
note in the principal amount $10,000,000 plus an amount equal to
the
accrued interest to the date of the restructuring plan, which is
estimated
at $1,250,000, based on a June 30, 2008 effective date, resulting
in an
amended note in the principal amount of $11,250,000, and (ii) 70%
of our
common stock.
|
· |
The
amended note will provide for payments of interest of $351,563 on
September 30, 2008 and December 31, 2008 and thereafter at 12½% per annum
on the outstanding principal amount, payable quarterly in arrears,
and
payments of principal in twelve quarterly installments each in the
amount
of $250,000, with the first payment of principal becoming due on
December
31, 2008, followed by 13 quarterly installments of principal each
in the
amount of $500,000, with a final payment of $1,750,000 becoming due
on
March 31, 2015. If the accrued interest to the closing date is other
than
$1,250,000, the final payment will be adjusted accordingly. The note
will
continue to be secured by a first priority security interest in all
of our
and our subsidiaries’ assets. Conforming and related changes to the
amended note, the Loan Agreement, the New Note and related documentation
which are reasonably satisfactory to Cheyne in furtherance of the
restructuring, will be made as appropriate.
|
· |
Cheyne
will extend the maturity of the New Note for two years, with a maturity
date of September 1, 2010. Principal and interest payments shall
be
payable on the on the first day of each calendar month commencing
on
August 1, 2008 in the amount equal to the amount by which the excess
of
our average cash balance of exceeds $250,000, exclusive of the proceeds
of
the note, for the three full business weeks ending immediately prior
to
the payment date. Interest accrues and is payable on the outstanding
principal balance of the note at an amount equal to the six-month
rate of
LIBOR
plus 10%. At March 17, 2008, our interest rate on this note was 14.74%per
annum.
|
· |
Principal
and accrued interest on all of the senior debt will be accelerated
and
become immediately due and payable on notice from the holder in the
event
of a failure to make any required payment, a change of control, sale
of a
division, or sale of material portion of our assets without the consent
of
the senior debt holder in addition to the events constituting events
of
default under the old Note and the Loan Agreement as of the date
of this
Proxy. All or part of the senior debt may be prepaid at anytime without
payment of any penalty or premium.
|
· |
We
granted Cheyne the right, until the debt restructuring is completed,
to
designate two directors each of whom will be an independent director,
as
defined by the Nasdaq. Cheyne has not exercised this right for this
meeting. Thereafter, as the 70% stockholder, Cheyne will have the
right to
elect all of our directors.
|
· |
We
are required to obtain key person life insurance of $1,000,000 each
on the
lives of each of Edward Kornfeld and John Terrill, with the proceeds
payable to Cheyne, as additional security for payment of our notes
to
Cheyne.
|
· |
We
will have entered into agreements with creditors as described
below.
|
· |
We
shall have reserved 6% of our outstanding common stock for issuance
to our
officers and key employees which will be issued to such officers
and key
employees on the Effective Date.
|
Name
|
Position
|
Shares
|
||
Edward
B. Kornfeld
|
Chief
executive officer and chief financial officer
|
250,000
|
||
John
Terrill
|
United
Kingdom managing director
|
90,000
|
||
Ralph
De Pascale
|
Vice
president operations, sales and marketing
|
77,500
|
||
Monica
Greer
|
Director
of Mexico plant operations and Telmex and South America
sales/marketing
|
62,500
|
||
Al
Squillante
|
Director
of engineering
|
45,000
|
||
Richard
Schwarz
|
General
manager signal processing division
|
45,000
|
||
Michael
Tancredi
|
Senior
vice president, secretary and treasurer
|
22,000
|
||
Leslie
Brand
|
Corporate
Controller
|
11,277
|
||
Total
|
603,277
|
·
|
The
role of the officers and key managers in bringing us to a point where
we
are able to effect a restructuring of our
debt.
|
·
|
The
responsibility of the officers and key management employees relating
to
our continued development of our
business.
|
·
|
To
recognize the fact that, during the past several years, we have not
granted options or other equity-based incentives to our officers
and key
management employees and have granted only modest raises to these
individuals.
|
·
|
The
decision by the committee to seek to reward as many managers as possible
with equity compensation.
|
Group
|
Number
of shares
|
Percentage
|
|||||
Cheyne
|
7,038,236
|
70.00
|
%
|
||||
Common
stockholders
|
904,916
|
9.00
|
%
|
||||
Holders
of the subordinated notes
|
1,407,647
|
14.00
|
%
|
||||
Reserved
for holders of the convertible debentures
|
100,546
|
1.00
|
%
|
||||
Reserved
for management
|
603,277
|
6.00
|
%
|
||||
Total
|
10,054,622
|
100.00
|
%
|
Group
|
Number
of shares
|
Percentage
|
|||||
Cheyne
|
7,038,236
|
67.61
|
%
|
||||
Common
stockholders
|
904,916
|
8.69
|
%
|
||||
Holders
of the subordinated notes
|
1,407,647
|
13.52
|
%
|
||||
Reserved
for holders of convertible debentures
|
100,546
|
0.97
|
%
|
||||
Reserved
for management
|
603,277
|
5.79
|
%
|
||||
Outstanding
options
|
155,000
|
1.49
|
%
|
||||
Advicorp
|
201,072
|
1.93
|
%
|
||||
Total
|
10,410,694
|
100.00
|
%
|
•
|
The
right of Cheyne to demand payment of our obligations under the terms
of
the senior debt and the loan and security agreement if an extension
is not
granted, and the likelihood that such a demand would result in our
seeking
protection under the Bankruptcy
Code.
|
•
|
The
significant reduction in business from British Telecommunications,
which
resulted in our sustaining a loss from continuing operations of $2,223,000
for the year ended December 31, 2007, as compared with income from
continuing operations of $2,511,000 for the year ended December 31,
2006.
Losses are continuing and we reported a net loss from continuing
operation
of $537,000 for the first quarter of
2008.
|
•
|
The
desire of the board to rationalize our debt position in a manner
which
would result in a significant reduction in the amount of our senior
and
subordinated debt and annual payments which are consistent with our
anticipated ability to pay.
|
•
|
The
board’s belief that, assuming our business continues to operate at or
about its present level, we could service the reduced amount of debt
from
our operations.
|
Three
Months Ended March 31,
|
Year
Ended
December
31,
|
|||||||||||||||
2008
|
2007
|
2007
|
2006
|
2005
|
||||||||||||
Sales
|
$
|
6,545
|
$
|
8,202
|
$
|
27,820
|
$
|
32,818
|
$
|
27,819
|
||||||
Gross
profit
|
1,837
|
2,620
|
8,060
|
10,834
|
10,422
|
|||||||||||
Operating
(loss) income from continuing operations
|
71
|
666
|
(81
|
)
|
3,814
|
3,066
|
||||||||||
Interest
expense, net of interest income and other income
|
583
|
441
|
2,066
|
1,185
|
1,051
|
|||||||||||
(Loss)
income from continuing operations
|
(537
|
)
|
199
|
(2,223
|
)
|
2,511
|
1,855
|
|||||||||
(Loss)
from discontinued operations (net of zero tax)
|
-
|
(34
|
)
|
(521
|
)
|
(329
|
)
|
(1,045
|
)
|
|||||||
Net
(loss) income
|
(537
|
)
|
165
|
(2,744
|
)
|
2,182
|
810
|
|||||||||
Net
comprehensive (loss) income
|
(621
|
)
|
92
|
(2,704
|
)
|
2,361
|
410
|
|||||||||
(Loss)
income per share (basic):
|
||||||||||||||||
Continuing
operations
|
$
|
(0.05
|
)
|
$
|
0.02
|
$
|
(0.22
|
)
|
$
|
0.25
|
$
|
0.18
|
||||
Discontinued
operations
|
-
|
-
|
(0.05
|
)
|
(0.03
|
)
|
(0.10
|
)
|
||||||||
Total
|
$
|
(0.05
|
)
|
$
|
0.02
|
$
|
(0.27
|
)
|
$
|
0.22
|
$
|
0.08
|
||||
Weighted
average shares of common stock outstanding
|
10,054
|
10,054
|
10,054
|
10,054
|
10,054
|
|||||||||||
(Loss)
income per share (diluted):
|
||||||||||||||||
Continuing
operations
|
$
|
(0.05
|
)
|
$
|
0.02
|
$
|
(0.22
|
)
|
$
|
0.25
|
$
|
0.18
|
||||
Discontinued
operations
|
-
|
-
|
(0.05
|
)
|
(0.03
|
)
|
(0.10
|
)
|
||||||||
Total
|
$
|
(0.05
|
)
|
$
|
0.02
|
$
|
(0.27
|
)
|
$
|
0.22
|
$
|
0.08
|
||||
Weighted
average shares of common stock outstanding
|
10,054
|
10,111
|
10,054
|
10,103
|
10,093
|
March
31,
|
December
31,
|
||||||||||||
2008
|
2007
|
2006
|
2005
|
||||||||||
Working
capital (deficiency)
|
$
|
(35,104
|
)
|
$
|
(34,513
|
)
|
$
|
(31,646
|
)
|
$
|
(33,777
|
)
|
|
Total
assets
|
18,038
|
16,899
|
17,784
|
14,661
|
|||||||||
Total
current liabilities
|
48,482
|
46,719
|
44,836
|
44,019
|
|||||||||
Long-term
deferred compensation
|
704
|
707
|
771
|
827
|
|||||||||
Stockholders’
(deficit)
|
(31,148
|
)
|
(30,527
|
)
|
(27,823
|
)
|
(30,185
|
)
|
• |
The
estimated the one-for-11.11 stock
split;
|
• |
Trouble debt restructuring under
SFAS 15 to
effect:
|
Ø |
Cheyne
exchange of $13,373,000 principal amount of senior debt for 70%
of our
common stock after giving effect to the reverse split. The
remaining $10,000,000, plus interest to the closing date on such
$10,000,000 principal amount, which is estimated at $1,250,000,
will be
paid in quarterly installments through March 15, 2015 with the
interest to
maturity;
|
Ø |
An
extension of the maturity date to September 1, 2010 of the $1,000,000
note
to Cheyne with interest accrued to maturity. Principal and interest
payments shall be in the amount equal to the amount by which
the excess of
our average cash balance of exceeds $250,000, exclusive of the
proceeds of
the note, for the three full business weeks ending immediately
prior to
the payment date as such the interest accrued is based on anticipate
cash
flow;
|
Ø |
The
exchange of our subordinated notes including interest of $13,275,000
for
14% of our common stock and new notes in the total principal
amount of
$1,750,000. The notes to bear interest at 10% per annum payable
quarterly
in arrears, amortized based on a 25-year amortization schedule
with a
maturity of seven and one-half years and to accrue interest to
maturity;
|
Ø |
The
acceptance by the holders of our convertible debentures to exchange
all of
the debentures including interest of $685,000 for 1% of our common
stock
and unsecured subordinated notes in the principal amount of $100,000.
The
notes to bear interest at 10% per annum payable quarterly in
arrears,
amortized based on a 25-year amortization schedule with a maturity
of
seven and one-half years and to accrue interest to
maturity;
|
Ø |
The
settlements with various creditors for a reduction of liabilities
in the
sum of $796,000;
|
Ø |
To
reflect fees on the restructuring to be paid to Avicorp of $200,000,
with
the equity to be issued to Avicorp having no significant value;
and
|
Ø |
To
reflect the value of the compensation on the common stock issued
to
management.
|
PORTA
SYSTEMS CORP
|
|||||||||||||
Unaudited
Pro Forma Consolidated Balance Sheet
|
|||||||||||||
As
of March 31, 2008
|
|||||||||||||
(Dollars
in thousands except share and per share data)
|
|||||||||||||
Balance
|
Pro
|
||||||||||||
Sheet
|
Forma
|
||||||||||||
March
31, 2008
|
Adjustments
|
Notes
|
Pro
Forma
|
||||||||||
Current
assets
|
|||||||||||||
Cash
|
$
|
315
|
$
|
(53
|
)
|
A
|
$
|
262
|
|||||
Accounts
receivable
|
5,462
|
-
|
5,462
|
||||||||||
Inventory
|
7,098
|
-
|
7,098
|
||||||||||
Other
|
503
|
-
|
503
|
||||||||||
Total
current assets
|
13,378
|
(53
|
)
|
13,325
|
|||||||||
Net
fixed assets
|
1,645
|
-
|
1,645
|
||||||||||
Goodwill
|
2,961
|
-
|
2,961
|
||||||||||
Other
assets
|
54
|
-
|
54
|
||||||||||
Total
assets
|
$
|
18,038
|
$
|
(53
|
)
|
$
|
17,985
|
||||||
Current
liabilities
|
|||||||||||||
Senior
debt
|
$
|
24,373
|
$
|
(21,890
|
)
|
B
|
$
|
2,483
|
|||||
Subordinated
notes
|
6,144
|
(6,049
|
)
|
C
|
95
|
||||||||
6%
convertible subordinated debentures
|
385
|
(380
|
)
|
D
|
5
|
||||||||
Accrued
interest
|
8,436
|
(8,433
|
)
|
I
|
3
|
||||||||
Accounts
payable
|
6,289
|
(690
|
)
|
G
|
5,599
|
||||||||
Accrued
expenses and other
|
2,855
|
(63
|
)
|
A,
K
|
2,792
|
||||||||
Total
current liabilities
|
|
48,482
|
|
(37,505
|
)
|
|
10,977
|
||||||
Long
term liabilities
|
|||||||||||||
Senior
debt
|
-
|
16,539
|
B
|
16,539
|
|||||||||
Subordinated
notes
|
-
|
2,911
|
C
|
2,911
|
|||||||||
6%
convertible subordinated debentures
|
-
|
167
|
D
|
167
|
|||||||||
Deferred
compensation
|
704
|
-
|
|
704
|
|||||||||
Other
long term liabilities
|
-
|
104
|
K
|
104
|
|||||||||
Total
liabilities
|
|
49,186
|
|
(17,784
|
)
|
|
31,402
|
||||||
Stockholders'
deficit:
|
|||||||||||||
Preferred
stock, no par value: authorized
|
|||||||||||||
1,000,000
shares, none issued
|
-
|
-
|
-
|
||||||||||
Common
stock, par value $.01; authorized
|
|||||||||||||
20,000,000
shares, issued 10,084,577
|
|||||||||||||
shares
actual, pro forma is 10,054,622
|
101
|
-
|
E
|
101
|
|||||||||
Additional
paid-in capital
|
76,125
|
457
|
J
|
76,582
|
|||||||||
Accumulated
deficit
|
(100,994
|
)
|
17,274
|
A,
B,C,D,G, I, J, K,O,P
|
(83,720
|
)
|
|||||||
Accumulated
other comprehensive losses:
|
-
|
||||||||||||
Foreign
currency translation adjustment
|
(4,442
|
)
|
-
|
(4,442
|
)
|
||||||||
(29,210
|
)
|
17,731
|
(11,479
|
)
|
|||||||||
Treasury
stock, at cost, 30,940 shares,
|
(1,938
|
)
|
-
|
F
|
(1,938
|
)
|
|||||||
as
Proforma adjusted 2,785
|
|||||||||||||
Total
stockholders' deficit
|
(31,148
|
)
|
17,731
|
(13,417
|
)
|
||||||||
Total
liabilities and stockholders' deficit
|
$
|
18,038
|
$
|
(53
|
)
|
$
|
17,985
|
PORTA
SYSTEMS CORP
|
|||||||||||||
Unaudited
Pro Forma Condensed Consolidated Statement of
Operations
|
|||||||||||||
For
the three months ended March 31, 2008
|
|||||||||||||
(Dollars
in thousands, except per share data)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three
months ended
|
|
Pro
Forma
|
|
|
|
|
|
||||
|
|
March
31, 2008
|
|
Adjustments
|
|
Notes
|
|
Pro
Forma
|
|||||
Sales
|
$
|
6,545
|
$
|
-
|
$
|
6,545
|
|||||||
Gross
profit
|
1,837
|
-
|
1,837
|
||||||||||
Operating
expenses
|
1,766
|
-
|
1,766
|
||||||||||
Operating
income
|
71
|
-
|
71
|
||||||||||
Interest
expense, net of interest income
|
(591
|
)
|
589
|
L
|
(2
|
)
|
|||||||
Other
|
8
|
-
|
8
|
||||||||||
(Loss)
Income from continuing operations before income taxes
|
(512
|
)
|
589
|
77
|
|||||||||
|
|||||||||||||
Income
tax expense
|
(25
|
)
|
-
|
M
|
(25
|
)
|
|||||||
Net
Income/(loss)
|
$
|
(537
|
)
|
$
|
589
|
$
|
52
|
||||||
Basic
income/(loss) per common share:
|
|||||||||||||
Continuing
operations
|
$
|
(0.05
|
)
|
$
|
0.01
|
||||||||
Weighted
average shares outstanding
|
10,054
|
F
|
10,055
|
||||||||||
Diluted
income/ (loss)per common share:
|
|||||||||||||
Continuing
operations
|
$
|
(0.22
|
)
|
$
|
0.01
|
||||||||
Weighted
average shares outstanding
|
10,054
|
10,392
|
PORTA
SYSTEMS CORP
|
|||||||||||||
Unaudited
Pro Forma Condensed Consolidated Statement of
Operations
|
|||||||||||||
For
the Year ended December 31, 2007
|
|||||||||||||
(Dollars
in thousands, except per share data)
|
|||||||||||||
December
31, 2007
|
Pro
Forma Adjustments
|
Notes
|
Pro
Forma
|
||||||||||
Sales
|
$
|
27,820
|
$
|
-
|
$
|
27,820
|
|||||||
Gross
profit
|
8,060
|
-
|
8,060
|
||||||||||
Operating
expenses
|
8,141
|
48
|
N
|
8,189
|
|||||||||
Operating
loss
|
(81
|
)
|
(48
|
)
|
(129
|
)
|
|||||||
Interest
expense, net of interest income
|
(2,120
|
)
|
2,086
|
L
|
(34
|
)
|
|||||||
Other
|
54
|
-
|
54
|
||||||||||
Loss
from continuing operations before income taxes
|
(2,147
|
)
|
2,038
|
(109
|
)
|
||||||||
|
|||||||||||||
Income
tax expense
|
(76
|
)
|
-
|
M
|
(76
|
)
|
|||||||
Loss
from continuing operations
|
$
|
(2,223
|
)
|
$
|
2,038
|
$
|
(185
|
)
|
|||||
Basic
income/(loss) per common share:
|
|||||||||||||
Continuing
operations
|
$
|
(0.22
|
)
|
$
|
(0.02
|
)
|
|||||||
Weighted
average shares outstanding
|
10,054
|
F
|
10,055
|
||||||||||
Diluted
income/ (loss)per common share:
|
|||||||||||||
Continuing
operations
|
$
|
(0.22
|
)
|
$
|
(0.02
|
)
|
|||||||
Weighted
average shares outstanding
|
10,054
|
10,392
|
Issuance
of 7,038,236 to holder of senior debt
|
70
|
%
|
7,038,236
|
||||
Common
stockholders
|
9
|
%
|
904,916
|
||||
Issuance
of 1,407,647 to holders of subordinated debt
|
14
|
%
|
1,407,647
|
||||
Issuance
of 100,546 to holders of convertible debentures
|
1
|
%
|
100,546
|
||||
Issuance
of 603,277 to management
|
6 |
%
|
603,277 | ||||
10,054,622 |
Net
reduction of subordinated debt
|
$
|
10,300
|
||
Net
reduction of senior debt
|
6,330
|
|||
Forgiveness
by various creditors
|
800
|
|||
Net
reduction of convertible subordinated debentures
|
500
|
|||
Fair
value of stock issued to debt holders
|
(400
|
)
|
||
Fees
to Advicop
|
(200
|
)
|
||
Fair
value of stock issued to management
|
(30
|
)
|
||
Extraordinary
gain on troubled debt restructure
|
$
|
17,300
|
Fees
|
|||||||
Fee
Category
|
2007
|
2006
|
|||||
Audit
fees
|
$
|
288,000
|
$
|
239,400
|
|||
Audit-related
fees
|
14,100
|
12,500
|
|||||
Tax
fees
|
32,000
|
30,000
|
|||||
Other
fees
|
42,000
|
--
|
|||||
Total
Fees
|
$
|
376,100
|
$
|
281,900
|
•
|
each
director and nominee for director;
|
•
|
each
officer named in the summary compensation
table;
|
•
|
each
person owning of record or known by us, based on information provided
to
us by the persons named below, to own beneficially at least 5% of
our
common stock; and
|
•
|
all
directors and executive officers as a
group.
|
Name
|
Shares
of Common
Stock
Beneficially Owned
|
Percentage
of Outstanding
Common
Stock
|
|||||
William
V. Carney
|
138,022
|
1.4
|
%
|
||||
Michael
A. Tancredi
|
39,238
|
*
|
|||||
Warren
H. Esanu
|
52,000
|
*
|
|||||
Herbert
H. Feldman
|
111,631
|
1.1
|
%
|
||||
Marco
M. Elser
|
356,376
|
3.5
|
%
|
||||
Edward
B. Kornfeld
|
26,317
|
*
|
|||||
All
directors and executive officers as a group (6
individuals)
|
723,584
|
7.2
|
%
|
* |
Less
than 1%.
|
Name
|
Shares
|
|||
William
V. Carney
|
15,000
|
|||
Michael
A. Tancredi
|
--
|
|||
Warren
H. Esanu
|
50,000
|
|||
Herbert
H. Feldman
|
50,000
|
|||
Marco
M. Elser
|
40,000
|
|||
Edward
B. Kornfeld
|
--
|
|||
All
officers and directors as a group
|
155,000
|
Name
of Executive Officer
|
Position
|
|
Edward
B. Kornfeld
|
Chief
executive officer and chief financial officer
|
|
Michael
A. Tancredi
|
Senior
vice president, secretary and
treasurer
|
Name
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan Compensation
|
All
Other Compensation
|
Total
|
|||||||||||||||||
Edward
B. Kornfeld,
chief
executive
officer
and chief financial officer
|
2007
2006
2005
|
$
|
271,250
256,250
237,000
|
$
|
--
60,000
50,000
|
$
|
--
--
--
|
$
|
--
--
--
|
$
|
--
--
--
|
$
|
6,939
6,865
6,714
|
$
|
278,189
323,115
293,714
|
Performance
Level
|
Funding
Level
|
|
Meet
target
|
No
funding
|
|
At
least 1%, but less than 10% above target
|
$5,000
|
|
At
least 10%, but less than 15% above target
|
$7,500
|
|
At
least 15%, but less than 20% above target
|
$12,500
|
|
20%
or more above target
|
$20,000
to $30,000
|
By
Order of the Board of Directors
Edward
B. Kornfeld
Chief
Executive Officer
|
FOR o | AGAINST o | ABSTAIN o |
FOR o | AGAINST o | ABSTAIN o |
FOR o | AGAINST o | ABSTAIN o |
(Signature(s))
Please
sign exactly as name(s) appear
hereon.
When signing as attorney,
executor,
administrator, trustee or
guardian,
please give full title as such.
Please
date, sign and mail this proxy in
the
enclosed envelope, which requires no
postage
if mailed in the United States.
|