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
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
NutraCea
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (check the appropriate box):
[X] None Required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
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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 amount on which
filing fee is calculated and state how it was determined):
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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 offering fee was
paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of the filing.
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
NUTRACEA
1261 Hawks' Flight Court
El Dorado Hills, CA 95762
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
The date on which this Information Statement was first
sent to the shareholders is
October 6, 2003
SUMMARY OF TERMS
NutraCea (formerly known as NutraStar Incorporated and referred to
herein as the "Company") intends to amend its Restated Articles of Incorporation
to declare a 10:1 reverse stock split and authorize 100,000,000 shares of Common
Stock and 20,000,000 shares of Preferred Stock. See "Amendment of Restated
Articles of Incorporation."
Adoption of the Amendment to the Company's Restated Articles of
Incorporation requires approval by a majority of the Company's outstanding
shares of voting common stock voting as a class and a majority of the
outstanding shares of voting common stock and Series A Preferred Stock voting
together as a class. Shareholders owning a majority of the shares eligible to
vote, who will not receive any additional benefit from this change, believe that
this action is in the best interests of the Company and its shareholders, and
they have consented in writing to the Amendment to the Company's Restated
Articles of Incorporation. This action by these shareholders is sufficient to
satisfy the shareholder vote necessary to approve the Amendment to the Restated
Articles of Incorporation without the approval of any other shareholder.
Therefore, you are not required to vote and your vote is not being sought.
GENERAL
This Information Statement is being furnished to the shareholders of
NutraCea, a California corporation, in connection with the approval by the
Company's shareholders of the adoption of an amendment to the Company's Restated
Articles of Incorporation (the "Amendment") by the written consent of the
holders of a majority in interest of the Company's Common Stock (the "Common
Stock") voting as a class, and by a majority in interest of the Common Stock and
the equivalent number of shares of Common Stock into which the outstanding
shares of Series A Preferred Stock are convertible as of the Record Data defined
below (the "Voting Interests") voting together as a class. The purpose of this
Amendment is to declare a 10:1 reverse stock split of the Common Stock and
authorize the Company to issue up to 100,000,000 shares of Common Stock and
20,000,000 shares of Preferred Stock (the "Recapitalization").
The Company's Board of Directors recommended and shareholders owning a
majority of the Common Stock and a majority of the Voting Interests on the
Record Date approved the Amendment to the Restated Articles of Incorporation to
effectuate the Recapitalization. The Amendment will become effective 20 days
after the mailing of this Information Statement and upon the filing of the
Amendment with the Secretary of State of California. The Company anticipates
that the filing of the Amendment will occur on or about October 27, 2003 (the
"Amendment Effective Date"). If the Recapitalization 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 Recapitalization.
The elimination of the need for a special meeting of shareholders to
approve the Amendment is authorized in Section 603 of the California General
Corporation Laws (the "California Law") which provides that the written consent
of the holders of the outstanding shares of voting 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
903 of the California Law, the affirmative vote of a majority of the outstanding
shares of Common Stock and a majority of the outstanding Voting Interests
entitled to vote thereon is required in order to amend the Company's Restated
Articles of Incorporation. In order to eliminate the costs and management time
involved in holding a special meeting and in order to approve the
Recapitalization 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 holders of a majority in interest of the
Common Stock and a majority of the outstanding Voting Interests of the Company.
The record date established by the Company for purposes of determining
the number of outstanding shares of Common Stock and outstanding Voting
Interests of the Company is September 22, 2003 (the "Record Date"). Patricia
McPeak, Edward Newton and Ron Willens, who beneficially own in the aggregate
15,528,714 shares of Common Stock of the Company and 300,000 shares of Series A
Preferred Stock convertible into 300,000 shares of Common Stock, together
representing approximately 52.6% of the outstanding Common Stock and 50.1% of
the outstanding Voting Interests of the Company entitled to vote on the
Amendment, gave their written consent to the approval of the adoption of the
Amendment described in this Information Statement on October 6, 2003.
Pursuant to Section 603 of the California Law, the Company is required
to provide prompt notice of the taking of the corporation 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 by letter filed
under a Current Report on Form 8-K of the effective date of the Amendment and
the Recapitalization. No additional action will be undertaken pursuant to such
written consents.
Purpose of this Information Statement. The Company is not requesting
your vote or proxy since shareholders owning a majority of the Company's
outstanding Common Stock and a majority of the outstanding Voting Interests have
approved the Amendment to the Restated Articles of Incorporation. The purpose of
this Information Statement is to inform the Company's shareholders of the above
action and the effects of such action. The entire cost of furnishing this
Information Statement will be borne by the Company. We will request brokerage
houses, nominees, custodians, fiduciaries and other like parties to forward this
Information Statement to the beneficial owners of the Company's Common Stock and
the beneficial owners of the Company's Series A Preferred Stock held of record
by them.
OUTSTANDING VOTING STOCK OF THE COMPANY
As of the Record Date, there were 29,507,888 shares of Common Stock and
2,094,707 shares of Series A Preferred Stock outstanding convertible into
2,094,707 shares of Common Stock outstanding. Consequently, the total number of
Voting Interests eligible to vote is 31,602,595. The Common Stock and Series A
Preferred Stock constitutes the sole outstanding classes of voting securities of
the Company. Each share of Common Stock entitles the holder thereof to one vote
on all matters submitted to shareholders. As of the Record Date, each share of
Series A Preferred Stock entitles the holder thereof to one vote on all matters
submitted to shareholders.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information as of
September 22, 2003, 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 and executive officer of the Company; and (iii) all directors and
executive officers 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 1261 Hawk's Flight
Court, El Dorado Hills, CA 95762
Common Stock Voting Interests
--------------------------------- -------------------------------
Percent Percent
Number of Shares of Number of Shares of
Name Position Beneficially Owned Class Beneficially Owned Class
---------------------------- ---------------------- -------------------- ------------ ------------------- -----------
Ron Willens 5% Shareholder 2,576,755 8.7% 2,576,755 8.1%
Patricia McPeak Chairman and CEO 12,760,344(1) 42.8% 12,760,344(1) 40.4%
Director
John Howell President and 500,000(2) 1.7% 500,000(2) 1.6%
Director
Edward Newton Vice President, 804,124(3) 2.7% 804,124(3) 2.5%
Secretary
James Kluber Chief Financial 500,000(4) 1.7% 500,000(4) 1.6%
Officer
All officers and directors as a group 14,564,468 46.8% 14,564,468 44.2%
* Less than 1%
-----------------
(1) Includes 8,358 shares issuable under stock options exercisable within 60
days of September 22, 2003 and 300,000 shares of Series A Preferred Stock
convertible into 300,000 shares of common stock. Dorothy Hanks, Ms.
McPeak's mother, owns 122,792 shares of Common Stock, of which Ms. McPeak
disclaims any beneficial ownership.
(2) Includes 500,000 shares issuable under stock options exercisable within 60
days of September 22, 2003.
(3) Includes 304,124 shares issuable under stock options exercisable within 60
days of September 22, 2003.
(4) Includes 500,000 shares issuable under stock option exercisable within 60
days of September 22, 2003.
3
AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
On September 15, 2003, our Board of Directors voted unanimously to
authorize and recommend that the Company's shareholders approve a proposal to
effect the Recapitalization. The Recapitalization will become effective twenty
(20) days after the mailing of this Information Statement upon filing of the
Amendment with the California Secretary of State, but the Board of Directors
reserves the right not to make such filing if it deems it appropriate not to do
so.
Reasons for the Recapitalization. We are presently limited to the
issuance of no more than 50,000,000 shares of Common Stock and 10,000,000 shares
of preferred stock. As of September 22, 2003 there were 29,507,888 shares of
Common Stock and 2,094,707 shares of preferred stock outstanding and our Common
Stock was trading on the Over-the-Counter Bulletin Board at prices below $1.00
per share. In addition, approximately 9,000,000 shares of Common Stock were
reserved for issuance under outstanding warrants and conversion rights leaving
only 11,000,000 shares of Common Stock available for issuance. As a result,
transactions in our Common Stock are expensive to execute, our Common Stock is
subject to manipulation by short selling and we are not able to issue additional
shares of Common Stock to raise funds necessary to continue operations or to
compensate our officers, directors or consultants for the services they provide.
The Recapitalization will make it easier to execute transactions in our Common
Stock by providing a higher market price. In addition, the Recapitalization will
increase the number of shares of Common Stock available to us to raise funds or
compensate providers of goods or services.
EFFECT OF RECAPITALIZATION
On the effective date of the Recapitalization, each share of our Common
Stock will be converted into and exchangeable for one tenth (.10) share of
Common Stock. Any fractional shares that would result will be rounded up to the
nearest whole share. As a result, no shareholder will be eliminated and the
total number of shares of Common Stock outstanding immediately following the
Recapitalization will be reduced from 29,507,888 to approximately 2,950,800 and
the total number of shares of Common Stock available for issuance will be
increased from approximately 11,000,000 to 90,000,000.
Each shareholder before the Recapitalization will own approximately the
same percentage of the outstanding Common Stock after the Recapitalization as
they owned before, subject to rounding differences. Each share of our Series A
Preferred Stock is presently convertible into one share of our Common Stock.
After the Recapitalization each share of Series A Preferred Stock will be
convertible into one tenth (.10) share of our Common Stock. Likewise, options to
purchase our Common Stock that may be purchased is reduced, and the purchase
price for each share is increased, by a factor of 10.
As of the Record Date, we had outstanding convertible debt in the
amount of $519,000. The convertible debt may be converted into 2,595,000 shares
of Common Stock and 2,595,000 warrants to purchase Common Stock for $.20 per
share. Neither the conversion ratio nor the number or exercise price of the
warrants will be adjusted as a result of the Recapitalization. If the
convertible debt is exchanged for shares of our Common Stock, the holders will
be entitled to receive approximately 45% of the outstanding shares of Common
Stock and be entitled to purchase shares representing an additional 19% of our
outstanding Common Stock for $519,000. The conversion of the convertible debt
after the Recapitalization will result in a change in control of the Company.
4
POTENTIAL ANTI-TAKEOVER EFFECT
OF CERTAIN PROVISIONS
Tender offers or other non-open market acquisitions of stock are
usually made at prices above the prevailing market price. In addition,
acquisitions of stock by persons attempting to acquire control through market
purchases may cause the market price of the stock to reach levels which are
higher than would otherwise be the case. Certain provisions of our Restated
Articles of Incorporation may discourage such purchases, particularly those of
less than all of the outstanding capital stock, and may thereby deprive
shareholders of an opportunity to sell their stock at a temporarily higher
price. These provisions may therefore decrease the likelihood that a tender
offer will be made, and, if made, will be successful. As a result, the
provisions may adversely affect those shareholders who would desire to
participate in a tender offer. These provisions may also serve to insulate
incumbent management from change and to discourage not only sudden or hostile
takeover attempts, but any attempts to acquire control which are not approved by
the board of directors, whether or not shareholders deem such transactions to be
in their best interests.
The following discussion summarizes the reasons for, and the operation
and effects of, certain provisions in our Restated Articles of Incorporation
which management has identified as potentially having an anti-takeover effect.
It is not intended to be a complete description of all potential anti-takeover
effects, and it is qualified in its entirety by reference to our Restated
Articles of Incorporation and bylaws.
Concentration of Stock Ownership. Approximately 42% of our Common Stock
is held by Ms. McPeak. In addition, the holders of our outstanding convertible
debt will be entitled to acquire up to 64% of our outstanding Common Stock as a
result of the Recapitalization. It will be difficult to gain control of the
Company without the consent of Ms. McPeak and/or the holders of our convertible
debt.
Authorized Shares of Common Stock. As amended, our Restated Articles of
Incorporation will authorize the issuance of up to 100,000,000 shares of Common
Stock, of which only approximately 2,950,800 will be outstanding and
approximately 5,340,000 reserved for issuance after the Recapitalization. The
remaining shares of our Common Stock could be issued without the prior approval
of the shareholders to friendly investors in the event of an attempted
acquisition that has not been approved by the Board of Directors or could be
reserved for issuance in connection with a shareholder rights plan or other
anti-takeover plan. The existence of a large number of authorized and unissued
shares of common stock may discourage any person from making an unsolicited
attempt to gain control of the Company.
Authorized Shares of Preferred Stock. As amended, our Restated Articles
of Incorporation will authorize the issuance of up to 20,000,000 shares of
serial preferred stock of which only 2,097,707 will be outstanding after the
Recapitalization. The remaining shares of our serial preferred stock could be
issued without prior approval of our shareholders. Shares of our serial
preferred stock with voting rights could be issued and would then represent an
additional class of stock required to approve any proposed acquisition. The
existence of a large number of authorized and unissued shares of preferred stock
may discourage any person from making an unsolicited attempt to gain control of
the Company.
5
DISSENTERS RIGHTS
Under California law, shareholders of our common stock are not entitled
to dissenter's rights of appraisal with respect to our proposed amendments to
the Restated Articles of Incorporation in connection with the Recapitalization.
FINANCIAL AND OTHER INFORMATION
For more detailed information on our corporation, including financial
statements, you may refer to our Form 10-KSB and other periodic filings made
with the SEC from time to time. Additional copies are available on the SEC's
EDGAR database at www.sec.gov or by calling our secretary (916) 933-7000.
By Order of the Board of Directors,
NUTRACEA
By:____________________________________
John Howell
President
6
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF RESTATED ARTICLES OF INCORPORATION
of
NUTRACEA
The undersigned, duly elected President and Secretary of NutraCea (the
"Company"), hereby certify as follows:
1. We are the President and the Secretary, respectively, of NutraCea, a
California corporation.
2. Article Three of the Restated Articles of Incorporation is hereby amended
to read in full as follows:
As of this date and as contemplated in ss.903(a)(2), Cal. Corp. Code, the
Corporation hereby reverse splits all previously issued Common Stock on the
basis of one-for-ten (1-for-10) shares.
The Corporation is hereafter authorized to issue two (2) classes of shares
of stock designated respectively "Common Stock" and "Preferred Stock". The
total number of shares of Common Stock that this Corporation is authorized
to issued is one hundred million (100,000,000) and the total number of
shares of Preferred Stock that this Corporation is authorized to issued is
twenty million (20,000,000).
The Preferred Stock may be divided into such number of series as the board
of directors may determine. The board of directors is authorized to
determine and alter the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series of Preferred Stock,
and to fix the number of shares of any series of Preferred Stock and the
designation of any such series of Preferred Stock. The board of directors,
within the limits and restrictions stated in any resolution or resolutions
of the board of directors originally fixing the number of shares
constituting any series, may increase or decrease (but not below the number
of shares of such series then outstanding) the number of shares of any
series subsequent to the issue of shares of that series.
3. The foregoing amendment of the Restated Articles of Incorporation has been
duly approved by the Board of Directors.
4. The foregoing amendment of the Restated Articles of Incorporation has been
duly approved by the required vote of shareholders in accordance with
Section 902, California Corporation Code. The total number of outstanding
common shares of the corporation is 29,507,888 and the total number of
outstanding Series A Preferred Stock of the corporation is 2,094,707. The
number of shares voting in favor of the amendment equaled or exceeded the
vote required. The percentage vote required was more than fifty percent
(50%) of the total outstanding shares voting as a single class and more
than fifty percent (50%) of the common stock voting separately.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Dated: October 27, 2003
------------------------------
John Howell, President
------------------------------
Edward Newton, Secretary