U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
April 27, 2006
Prime Resource, Inc.
----------------------------------------------
(Name of small business issuer as specified in its charter)
Utah 333-88480 04-3648721
---------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1245 East Brickyard Road, Suite 590, Salt Lake City, UT 84106
--------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 433-2000
Registrant's telephone number, including area code
________________________________None____________________________________
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).
1
Item 8.01 Other Events:
The registrant announces today the completion of a special shareholders
meeting commenced on April 27, 2006, which was held pursuant to notice and in
accordance with the company's bylaws and Utah statutory law.
The registrant reports the following material resolutions were adopted
by majority shareholder vote at this special meeting of shareholders:
1. The shareholders ratified a proposed plan to transfer all
existing assets, liability and business of Prime to a new separate,
private limited liability company owned by the current principal
shareholders in consideration for the redemption by Prime of 55% of the
principal shareholders issued and outstanding common shares;
2. As part of this transaction, the shareholders also approved
a plan whereby the restricted shares of Bioaccelerate, Inc. held by
Prime were to be distributed without consideration to Prime
shareholders of record, pro rata to their existing sharehold position,
except for the principal shareholders, defined as those holding 10% or
more of the issued and outstanding stock or any officer or director of
Prime. The company will implement the actual distribution of the
Bioaccelerate certificates to the shareholders commencing within the
next couple of weeks. There will be distributed 176,067 shares of
Bioaccelerate restricted stock to approximately 105 Prime shareholders;
3. Prime also approved the authorization to distribute all of
the future LightSpace shares which may be held by the company to all of
its common shareholders pro rata to their existing sharehold interest
when, and if, the LightSpace convertible debentures currently held by
the company are converted to common shares. It is anticipated that
there will be, upon conversion, approximately 465,000 LightSpace shares
distributed to 109 shareholders;
4. The current Board of Directors were also elected at the
special shareholder meeting for an additional term, but subject to a
modified time commitment to the management of the company as the
company will now have no present material assets or business;
5. The shareholders also ratified the appointment of Child,
VanWagoner & Bradshaw, PLLC as the independent auditors for the company
through the period ending December 31, 2006;
6. The Company will continue to actively pursue merger or
acquisition possibilities.
There were no other matters brought before the Board or voted upon at
the meeting.
The foregoing matters were adopted pursuant to a special shareholder
voting procedure whereby each of the above matters required an approval by the
disinterested public shareholders constituting all shareholders of record in the
company other than affiliated principal shareholders, as defined above.
Subsequent to the approval of each of the foregoing matters by the disinterested
shareholders, the principal shareholders then voted in favor of each item
approved by the disinterested shareholders thereby constituting an absolute
majority. The specific vote as to each of the foregoing matters can be obtained
by any shareholder interested by contacting the
2
company at the address indicated in this report and requesting a copy of the
minutes of the special shareholder meeting or the official results of election.
Prime does not believe that it is obligated to file any formal proxy
solicitation with the Securities & Exchange Commission incident to this special
shareholder meeting, as the company is a 15d reporting company and not subject
to the proxy solicitation rules of the SEC. However, a form of the proxy mailed
to all shareholders of record, prior to the meeting in accordance with Utah law,
is attached as an exhibit to this 8-K and filed of record by the company.
Exhibit
Number Description
Exhibit 1 Proxy Solicitation and Ballot mailed to all shareholders
of record for the meeting held on April 27, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRIME RESOURCE, INC.
Date: May 1, 2006 By: /s/ Terry Deru
Mr. Terry Deru
President
3
Exhibit 1
PROXY STATEMENT
Prime Resource, Inc.
2006 SPECIAL MEETING OF SHAREHOLDERS
April 27, 2006
1245 East Brickyard Road, Suite 590
Salt Lake City, Utah 84106
--------------------------------------------------------------------------------
General Information & Incorporation by Reference:
THIS PROXY STATEMENT IS BEING MAILED TO ALL PRIME SHAREHOLDERS OF
RECORD IN CONNECTION WITH THE SOLICITATION OF THEIR VOTE BY THE BOARD OF
DIRECTORS OF PRIME RESOURCE, INC. ("the Company" or "Prime") with regard to a
Special Meeting to be held on April 27, 2006 at 1:00 p.m. at 1245 East Brickyard
Road, Suite 590, Salt Lake City, Utah 84106, telephone number: (801) 433-2000,
fax (801) 433-2222. This Proxy Statement should be reviewed in connection with
the copy of the Prime Annual Report filed on SEC Form 10-KSB dated December 31,
2005 and any other materials described in this statement.
VARIOUS ITEMS OF IMPORTANT INFORMATION AND ACCOUNTING FOR PRIME RELATED
TO THIS PROXY STATEMENT ARE SET-OUT IN THE ENCLOSED ANNUAL REPORT AND OTHER
MATERIALS. SUCH DETAILED INFORMATION MAY BE RELEVANT IN REVIEWING THIS PROXY
STATEMENT AND BUT MAY NOT BE NOT REPEATED IN THIS DOCUMENT. ACCORDINGLY, EACH
SHAREHOLDER SHOULD REFER TO ALL OF THE ENCLOSED INFORMATION BEFORE COMPLETING
THEIR PROXY BALLOT.
Matters to be Voted Upon
The following constitutes a summary of the matters you will be
requested to vote upon at the Special Meeting. These matters are more fully
discussed in the text of this Proxy Statement and referenced materials:
1. Ratify the transfer of all existing assets, liabilities and business of Prime
to a new separate private Limited Liability Company to be owned by the current
principal shareholders of Prime in consideration for a redemption by Prime of
55% of their issued and outstanding shares; approve the spin-off of certain
restricted shares of Bioaccelerate Inc., a public company held by Prime, pro
rata to the public Prime Shareholders, but excluding the current principal
shareholders and employee grant shares; and approve the future spin off of
certain Light Space shares on a pro-rata basis to all Prime shareholders of
record after this vote if, and when the current note becomes converted to Light
Space shares and warrants;
2. Vote upon the re-election of the Board of Directors,
3. Ratification of the current independent auditors.
Proxies voted in accordance with the accompanying ballot form which are
properly executed and received by the Secretary to the Company prior to the
Special Meeting will be voted.
THIS PROXY IS SOLICITED AND PROPOSED BY THE CURRENT BOARD OF DIRECTORS
WHO REQUEST YOU TO VOTE IN FAVOR OF THE PROXY ITEMS.
Revocability of Proxy
A shareholder returning the enclosed proxy ballot has the power to
revoke it at any time before it is exercised and may do so by written notice to
the Secretary of the Company at the address set forth above, effective upon
receipt of such written notice, or by voting in person at the Special Meeting.
Attendance at the Special Meeting, in and of itself, will not constitute
revocation of a proxy. The Tender Offer will be deemed completed when received
by the Company and after the adoption of the Reorganization.
Solicitation and Voting Procedures
The record date for the determination of shareholders entitled to vote
at the Special Meeting is the close of business on April 4, 2006. There were
issued, outstanding and entitled to vote on such date approximately 2,955,490
shares of the 50,000,000 authorized common shares, no par. The Company has only
one class of shares, voting common stock, each of which is entitled to one vote.
The Company does not have cumulative voting. Accordingly, each shareholder must
vote all of his shares on each separate ballot proposal or nominee, or abstain
from voting on that item or person. The Company will bear all costs of this
proxy solicitation and the preparation of the related shareholder documents.
Common shares entitled to vote will be determined based upon the
official shareholder record of April 4, 2006. Actual votes cast will be
determined by the physical counting of votes in person or proxy by the Inspector
of Elections to be appointed prior to the meeting by the Board of Directors. Any
dispute as to votes or entitlement to vote will be decided by majority vote of
the Board of Directors. Abstentions and broker non-votes will not be counted for
either quorum or ballot purposes.
2
Special Voting Procedures
The Board of Directors has determined that because the principal or
affiliated shareholders, (defined for this Proxy as any officer, director or any
shareholder holding 10% or more of the issued shares), are interested parties as
to the reorganization proposals; that all proposals, other than director voting,
contained herein, must receive a majority vote of the remaining shareholders
other than the principal shareholders to be adopted. The Board has determined
that a majority vote of shareholders, other than the principal shareholders,
will require the vote of 129,046 shares by persons who are members of this
informal class, (hereinafter "public shareholders"). In the event any proposal
receives a majority vote in favor of such proposal by the public shareholders,
then the principal shareholders will vote for such proposal thereby insuring the
absolute numerical majority required by Utah law. If not approved by a majority
of the public shareholders, the principal shareholders will then vote against or
abstain, thereby insuring a defeat of such matter. It is believed there are
approximately 105 public shareholders. The principal shareholders are Mr. Terry
Deru, Mr. Scott Deru and Mr. Andrew Limpert, who collectively hold 91% of the
currently issued and outstanding shares.
There are no matters to be voted upon as described by this Proxy upon
which management will proceed absent majority shareholder approval of the Public
Shareholders as described herein, except election of directors who will be
elected by receiving an absolute majority.
Principal Shareholders
The Company knows of no person or group, except the following, which,
as of the date of this Proxy Statement beneficially owns and has the right to
vote more than 5% of the Company's Common Stock. For the purposes of this Proxy,
the following are sometimes referred to as the principal shareholders or the
management:
NAMES OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENT OF CLASS
1. Mr. Terry Deru, Director 984,000(1) 33%
2. Mr. Scott Deru, Director 999,500 34%
3. Mr. Andrew Limpert, Director 717,900 24%
--------------------------------------------------------------------------------
All Directors as a Group 2,701,400 91%
(1) Includes shares held by spouse and grantor trusts of which Mr.
Deru is trustee.
SUMMARY INFORMATION AS TO CURRENT DIRECTORS
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
NAME Director Since Compensation Percentage in
Number of Shares Current Event of
(Beneficial and Percentage of Redemption
Legal)(1) Issued and
Outstanding(2)
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
Mr. Terry Deru April 2002 $240,000 984,000 33% 36.43%
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
Mr. Scott Deru April 2002 $240,000 999,500 34% 36.99%
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
Mr. Andrew Limpert April 2002 $210,000 717,900 24% 26.58%
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
(1)Mr. Terry Deru beneficially owns most of his shares as part of the Terry Deru
Revocable Family Trust. This total also includes shares held by spouse, 10,000.
(2)At present there are no director or management stock options or stock rights
outstanding. Directors are not paid a salary as directors, nor do they receive
per diem compensation for attending meetings. Certain director compensation and
stock options are intended subsequent to the reorganization as subsequently
described.
The enclosed 10-KSB report contains additional biographical information on the
current directors, and other information about their relationship to Prime and
their compensation.
Executive Compensation
Certain additional required information concerning remuneration, other
compensation and ownership of securities by the current Directors and Officers
of Prime is set-out in the enclosed 10-KSB Report and incorporated by this
reference.
Management's Stock Rights and Options
As previously disclosed, there are no present stock rights, warrants,
or other stock options to the existing management or directors of Prime.
Audit Committee
To date, and through the date of closing of the share exchange and
reorganization, Prime has not had an independent audit committee because it is
not a reporting company pursuant to Section 12(g) of the Securities and Exchange
Act of 1934 (`34' Act) and because it believes the Electronic Bulletin Board
system through which it trades does not require, in the Company's opinion, the
implementation of a separate audit committee under the provisions of the
Sarbanes-Oxley Act. It is not anticipated that the new management of the Company
will immediately implement an audit committee format for the Company, but will
be subject to other accounting and audit controls imposed upon public reporting
companies by the `34 Act, as well as by the Sarbanes-Oxley Act.
4
It is further believed that should the Company wish to be listed on any
type of exchange, other than its current electronic bulletin board listing, that
it will most likely be required to implement an independent audit committee and
other compliance issues established by those exchanges, as well as by the
Sarbanes-Oxley Act. Any establishment of an independent audit committee or
equivalent action will result in notice being given to shareholders of this
change of procedure through a normal reporting process by the Company.
Corporate Performance Graph
Within this section, if the Company were required to file a proxy
statement under Section 14 of the `34 Act, it would typically be required to
provide comparative market data for its historical performance of its shares, as
well as comparison with various industry indexes. The company does not believe
it is subject to that required level of reporting as a Section 15(d) company or
that this proxy must comply with the requirements of Section 14 of the `34' Act.
More specifically, the Company has a very limited trading market on the
electronic bulletin board and further believes that because of such limited
trading and the unusual nature of the Company's present business as a public
entity that there would not be any type of meaningful comparative market data
available for similar companies or industries acting on the same level and size
of Prime as a public entity. Accordingly, reference is simply made to the
historical trading range of the Company's shares as set out in the enclosed and
incorporated 10-KSB report. The trading range for the Company's stock during the
last quarter of calendar year 2005 ranged from a low of $1.15 per share to a
high of $5.00 per share based upon actual transactions. Again, each investor is
cautioned that the trading market is extremely thin for this stock and that any
substantial trades in the stock could adversely impact upon this trading range.
Annual Shareholder Meetings
The most recent shareholder meeting for the company was held in June
2004, at which meeting a majority of the issued and standing shares voted in
favor of re-election of the foregoing current directors listed above and
ratified the appointment of the current auditors for the company. There were no
other matters or issues brought before the shareholder meeting or voted upon at
that time. There is not currently a date set for the next annual meeting.
I.
PLAN OF PARTIAL SHARE REDEMPTION AND EXCLUSIVE DIVIDEND FOR ASSETS
General Purpose of Plan
As you may be aware, the Board of Directors of Prime has for the past
couple of years been actively seeking some new business opportunity which it
would deem to be more compatible with the public company format, either through
an asset acquisition, merger, or some other type of reorganization. Management
is convinced that the current insurance products and related consulting and
planning services, while stable, no longer seem to be consistent with a growth
model for a small public company that would maximize shareholders long term
value. This in addition to the increased financial burden placed on small
companies for public reports has had an impact on this strategic shift by your
Board of Directors.
5
As a result, the Board of Directors has discussed and determined what
it believes to be a plan of action that is anticipated to enhance the potential
marketability of Prime shares. As you may be aware, Prime has been engaged in
various negotiations with other companies to do some type of share or asset
acquisition; but, to date, none of these pursuits has yielded a suitable
reorganization plan acceptable to the Board of Directors. One of the impediments
which the Board has recognized in negotiating and attempting to go forward with
various forms of reorganization is that the present assets and business of
Prime, insurance products and related insurance and plan consulting, are deemed
generally to be a liability to a going forward reorganization transaction that
likely may be in a different and distinct line of business. As a result, the
Board had considered and determined, subject to your review and approval as the
public shareholders, to allow the current principal owners of Prime to reacquire
as a private separate business entity all of the ongoing business assets and
liabilities of Prime; including its insurance products line, investment and
insurance consulting activities, subsidiaries and name in consideration for a
reduction in the principal shareholder's stock ownership of the company as
outlined below.
The company would also continue to have and hold approximately $30,000
in cash and additional cash equivalent assets of approximately $372,000
including convertible investment notes for recent funding activities to a
start-up public company known as LightSpace, Inc. as more fully discussed below.
Management believes, thought it cannot be warranted, that the company
restructured in the foregoing manner would constitute a more attractive public
company for acquiring assets or shares in a future potential reorganization as a
public entity and that the spin-off of the "old line of business" assets for a
reduction in the principal shareholder's position is not only fair and
reasonable, but would enhance the attractiveness of the company as a merger or
acquisition candidate.
Specific Terms of Proposed Exchange
Specifically, it is proposed that the current principal shareholders
consisting of Mr. Terry Deru, Mr. Scott Deru and Mr. Andrew Limpert, who
collectively hold between them 91% of the issued and outstanding shares would
allow a collective redemption of 55% of their shares, or 1,501,400 shares in
consideration for the spin-off of the present Prime business line, tangible and
intangible assets, as well as liabilities of Prime. This would constitute a
reduction in the principal shareholder's percentage of issued and outstanding
shares from 91% to 82% and an increase in the shares held by all other
shareholders, "public shareholders", from 9% to 18%. In addition, the Board
would propose to spin-off and distribute, without registration, to the public
shareholders of 185,600 shares of Bioaccelerate unregistered shares and all
future rights to LightSpace shares to all shareholders in the event of
conversion of the LightSpace notes, on a pro rata basis to all shareholders.
6
Prime currently holds 339,500 shares of Bioaccelerate and would propose
to spin-off 185,600 of those shares at a ratio of one (1) of share of
Bioaccelerate for each one (1) share of Prime held by the public shareholders
(non affiliate/non employee grant shareholder). As further consideration for the
proposed redemption transaction, none of the principal shareholders would
receive any distribution of the currently held Bioaccelerate shares. This
distribution constitutes an excess distribution to public shareholders over
their current pro rata distribution rights and is deemed additional
consideration to them. The Bioaccelerate shares are unregistered which means
that each shareholder receiving them would receive an unregistered security and
would need to hold such shares for a specific period of time before they could
be resold in a public transaction pursuant to SEC Rule 144. The Rule 144 aspects
of the current redemption proposal are more fully discussed below. These shares
do have piggy back registration rights in the event Bioaccelerate completes a
registration. There is no certainty that this will occur.
Description of Bioaccelerate and LightSpace Proposed Distribution
Prime has come to hold 339,500 restricted shares of Bioaccelerate
through a complex series of prior financing transactions to that company. The
Bioaccelerate shares currently held by Prime are restricted shares which have
not been registered. The Bioaccelerate has a limited public mark on the
Electronic Bulletin Board and currently trades in a range of $1.00 to $1.50 per
share. Trading is limited and any substantial sale of shares could adversely
impact this thinly traded market. Bioaccelerate is engaged in pharmaceutical
development and marketing. At present it does own partial rights to 80
pharmaceutical formulations in various stages of clinical review through its
subsidiaries. It currently has very limited revenues or income. As a result, it
must be considered a high risk development stage company. Because Bioaccelerate
is a publicly reporting company, more detailed information is available in its
periodic reports as filed with the Securities and Exchange Commission (SEC).
These reports can be viewed at www.sec.gov.edgar and by inserting in the
appropriate query box the name or symbol of the company, BACL.OB. The company
also has a website at www.bioaccelerate.com. Each shareholder analyzing and
consideration how to vote on the various matter in this Proxy Solicitation
should review and consider what value, if any, they would ascribe to the
spin-off of the Bioaccelerate Shares. Prime estimates that the distribution of
the Bioaccelerate shares to public shareholders constitutes approximately 54.7%
of such shares which is substantially in excess of the approximate 9%
distribution which the public would receive in the event of a current pro rata
distribution.
Prime believes it can spin-off the unregistered shares of Bioaccelerate
to its public shareholders without further registration or disclosures in the
absences of any consideration being paid for such shares. However, the shares
will remain as restricted shares after the distribution and most likely could
only be sold pursuant to SEC Rule 144 as explained below. In essential terms
Rule 144 would require a minimum one year holding period before any resale;
required there to be current public information on Bioaccelerate at the time of
sale; and impose volume limitations on the amount which can be sold.
7
LightSpace Rights
In the case of successful conversion and distribution of Light Space
notes at current conversion ratios, Prime would be entitled to approximately
465,000 shares and 697,500 warrants to be distributed pro rata to all current
shareholders of record pending approval by shareholders of this action at the
upcoming April 2006 meeting.
Valuation of Exchange
The company believes that the current valuation of the net Prime assets
and business being exchanged for shares would be approximately $1,080,000,
though no reliable secondary market for these types of business assets is known
to exist and that the foregoing constitutes merely an estimate by the current
management. The value of the shares being redeemed, based upon a current average
market valuation of $1.40 per share, would amount to approximately $2,101,960.
Hence, management believes that the exchange proposal to be fair and adequate,
though no independent review or fairness opinion is intended based upon economic
considerations. Further there has been no independent review or valuation of the
entities as ongoing concerns. Further, the existing shareholders, after the
share redemption, would receive a substantially larger collective share of the
distribution of the Bioaccelerate shares approximately 54.74%, compared to
approximate 9% currently. The future distributions, if any, of the LightSpace
shares may be similarly increased to public shareholders through a concentration
of ownership to the public as the principals decrease their percentage position
in Prime if the reorganization is approved.
Retained Assets and Liabilities v. Assigned Assets and Liabilities
If the share redemption for assets proposal, as generally described
above, is approved, Prime would assign to a new private entity known as Prime
Advisors, LLC all of the present business, assets, liabilities, subsidiaries and
name of Prime Resource, Inc. together with any liabilities associated with the
business and assets. These assets and subsidiaries are more particularly
described in the enclosed 10-KSB Report. Prime would be left with cash of
approximately $30,000, and LightSpace Notes convertible to common stock having a
current face value of $350,000. As noted above, the company had earlier entered
into some start-up funding to LightSpace which is engaged in a unique
computerized proprietary tile lighting system employed for special effects and
advertising. The company does not deem it necessary to further describe
LightSpace here as it presently only holds the following notes from LightSpace,
and LightSpace is currently engaged in a registration process, but is not yet a
public company, nor does it currently have a trading market. However, any
shareholder wishing a fuller description of the early stage LightSpace business
can obtain a business plan and description from Prime or online at
www.LIGHTSPACECORP.com. The filed registration materials for LightSpace to date
may also be found on the SEC Edgar website at www.sec.gov/edgar.
In summary, the present assets being assigned to Prime Advisors, LLC
are estimated to be worth approximately $1,189,000 and the liabilities assumed
are estimated to be $109,000 in exchange for shares redeemed totaling $2,101,960
based on current average market value. Also, as noted above, the Bioaccelerate
shares being spun out to public shareholders have a current approximate market
value of $241,000 (1.30 avg price). The future LightSpace shares have not been
valued, but have a loan basis of $350,000.
8
As more fully described below, the current management of Prime will
continue on a part-time basis as needed to manage Prime Resource, Inc. as an
inactive public company attempting to find merger or acquisition candidates.
Also, as more fully described below, the successor private entity will provide
office facilities back to Prime Resource Inc. on an as needed basis for nominal
consideration. Prime Resource, Inc. should have no debts or obligations
immediately after the assignment.
Continuation of Board
It is intended that that present management of the company be
maintained through election of the existing Board of Directors. Unlike the
special voting provisions, explained herein for all other proposals, Director
nominees will be elected by a majority vote of all shareholders actually voting
in person or by proxy.
Special Voting Procedures
Because there exists potential conflicts of interest and because no
independent fairness review of the proposed stock redemption for assets is being
obtained, management of Prime determined that none of the exchange proposals
would be adopted absent a majority vote of all public shareholders. The public
shareholders for this provision are defined as all shareholders other than the
three current controlling shareholders who are also the officers and directors
and who each hold in excess of 10% or more of the outstanding stock of Prime. No
public shareholder meets any of these criteria.
At the special meeting the votes of the Public shareholders will be
segregated and counted to see if a majority approves each of the redemption
proposals. If any redemption proposal is adopted by majority vote of the public
shareholders, then the principal shareholders will vote in favor of such
proposal to constitute an absolute majority under Utah law. If not, then the
controlling shareholders will vote against or abstain from voting on the
proposal thereby insuring it is not adopted.
Rule 144 Sale of Bioaccelerate Shares
As previously noted in this Proxy, the Bioaccelerate shares to be
distributed to the Prime public shareholders are what are called "restricted
securities". Within the context of this Proxy statement that means these shares
have never been registered with the Securities and Exchange Commission or any
other securities regulatory agency and as such are commonly known as
"unregistered" or "restricted" securities. While these shares have "piggyback"
registration rights there is no assurance that an effective registration will
ever be in place for these shares. As a practical matter, this means that your
ability to resale such securities into the open market is limited and primarily
governed by SEC Rule 144. In essential terms, Rule 144 provides a mechanism,
though it is not exclusive, for the resale of restricted securities into a
public market. While it is beyond the scope of this Proxy statement to explain
all of the detailed applications of Rule 144, we believe that you should
generally understand the following primary terms of such rule as it would relate
to your holding and resale of the Bioaccelerate shares:
9
1. You must generally hold such shares without transfer or assignment
for a period of not less than one year from the date of receipt from the
company. This generally includes a restriction against borrowing against such
shares during such holding period.
2. The shares can generally be traded after one year into an open
market transaction which is not prearranged in any manner.
3. It would be required that there be current public information
available about the company which is generally satisfied by the continued filing
of periodic reports on Form 10-KSB and 10-QSB for the company.
4. Certain volume limitations on the amount which you can sell in any
three month period may be imposed. Generally the amount sold cannot exceed
one-percent, during any three month period, of the outstanding class of
securities or the average weekly reported trading volume over the appropriate
preceding four week period, whichever is greater.
5. On certain large transactions exceeding 500 shares in number or
$10,000 in aggregate amount, the seller will be required to report on a Form 144
the sale to the SEC.
Tax Aspects
The surviving company, Prime, may incur some tax obligations incident
to pursuing this reorganization, though this is not anticipated based upon the
valuation of assets. Further, while it is not believed individual shareholders
would likely incur a taxable event from the distribution, no assurance or
warranty of this assumption can be made and each shareholder voting upon the
reorganization proposal should discuss and make a determination of tax
consequences, if any, through his, her or its own tax advisors. Prime has not
and will not render any tax opinion incident to these transactions.
Allocation of Management and Facilities after Redemption
It is proposed that your current management, if the Board is reelected,
will continue on as the directors and officers of Prime Resource, Inc. Since
Prime will no longer be an active company, management will only devote such of
their time and resources as necessary to maintain Prime Resource, Inc. as a
public company and to continue the search for suitable merger or acquisition
candidates. It is further proposed that upon the completion of this
reorganization, management would reduce their salaries as follows to reflect
their part-time status in an inactive entity:
10
--------------------- ---------------------------- --------------- ------------
Name Position Current Salary New Salary
--------------------- ---------------------------- --------------- ------------
--------------------- ---------------------------- --------------- ------------
Mr. Terry Deru President, CEO $240,000 0
--------------------- ---------------------------- --------------- ------------
--------------------- ---------------------------- --------------- ------------
Mr. Scott Deru Vice President of Marketing $240,000 0
--------------------- ---------------------------- --------------- ------------
--------------------- ---------------------------- --------------- ------------
Mr. Andrew Limpert CFO $210,000 $10,000
--------------------- ---------------------------- --------------- ------------
It is also proposed that Prime would enter into a sublease/management
contract with the new Prime Advisors LLC, which will receive the current
leasehold and all office equipment and accounts used by the current Prime. Prime
would then lease and use so much of the present office space and equipment
necessary to conduct its limited ongoing role for the nominal amount of $1.00
per year, until Prime generates revenues pursuant to a future merger or
acquisition, or terminates its business activities. Any shareholder wishing to
examine the proposed Lease/Management contract may obtain a copy from the Prime
management.
II
RE-ELECTION OF DIRECTORS
As previously noted, the company is urging you to re-elect the current
Board of Directors for the Company regardless of your vote on the other
proposals contained in this Proxy solicitation. It is also noted that the
election of directors will not follow the special election provisions and that
each shareholder will maintain his singular vote for each director with the
election of any director requiring a majority vote. As a result, it is believed
that all of the current directors will be re-elected based upon the support of
such candidates by the majority shareholders.
THE COMPANY URGES YOUR VOTE IN FAVOR OF THE CURRENT BOARD OF DIRECTORS.
IV
RATIFICATION OF AUDITORS
Auditors
The Board of Directs has appointed Child Van Wagoner & Bradshaw
(previously known as Child, Sullivan & Co.), of Layton, Utah as independent
certified public accountants for the Company to examine the financial statements
of the Company for the fiscal year ending December 31, 2005. The appointment of
Child, Van Wagoner & Bradshaw is subject to ratification of the shareholders and
a resolution for such ratification will be offered at the Special Meeting as is
contained in the enclosed proxy ballot. Child Van Wagoner & Bradshaw have been
acting as independent accountants for the Company for one year and, both by
virtue of its familiarity with the Company's affairs, its lower cost, and its
ability, is considered by the Board as best qualified to continue its
performance of these functions. The present Board of Directors recommends
adoption of the resolution retaining the foregoing accounting firm as
independent auditors for the Company.
11
Audit Fees
Aggregate estimated payable fees for professional services rendered by
Child, Sullivan & Co. who are now known as Child, Van Wagoner & Bradshaw, PLLC
("Auditors") in connection with its last audit of the company's consolidated
financial statement as of and for the year ended December 31, 2005 were
approximately $25,000.
THE PRESENT BOARD URGES YOUR VOTE IN FAVOROF THE RATIFICATION OF THE CURRENT
AUDITORS.
Risk Factors
The following constitutes management's appraisal of the most
significant risk factors inherent in voting on the various proposals contained
in this Proxy solicitation. You should feel free to discuss any of these risk
factors with management if you are so inclined prior to casting your ballot.
Further, no significance should be ascribed to the order in which the following
risk factors have been listed:
1. Should you Approve the Assets for Stock Redemption Exchange, the Company will
have no Ongoing Business.
In the event that you approve the redemption of the described portion
of the principal shareholder's stock for the transfer of the existing business
activities and assets of the company, the company will have no ongoing business
purpose and will be essentially a public shell corporation with part-time
management engaged in seeking out other alternative, but at present unknown,
business opportunity through acquisition or merger. During this interim period,
the company would not have any source of revenue and no assurance or warranty
can be given that it will be successful in its ultimate goal of achieving a
suitable acquisition or merger candidate. If it is not ultimately successful in
obtaining a merger or acquisition candidate, it would at some point exhaust its
retained capital resources and no longer be able to continue as a viable entity
unless subsequent financing could be secured.
2. Management will be Part-time.
Because of the reorganization that would result for the partial stock
redemption for assets, the present management of the company will no longer
devote their full time efforts to the management or operation of the company.
The only commitment of the present management is to supply management direction
and control to maintain the company as a reporting public company so far as
possible and to actively search out merger or acquisition candidates on an as
needed basis. In addition, management will continue to receive a part-time
compensation for these limited efforts as outlined in this Proxy solicitation
without there being any revenues to replace capital expended for maintaining the
company and paying such part-time salaries.
12
3. There are Certain Conflicts Inherent in the Proposed Assets for Stock
Redemption Transaction.
There are certain inherent conflicts of interest which arise out of the
proposed partial stock redemption for assets, many of which cannot be resolved
and must constitute an ongoing potential risk factor. While the management does
not purport to describe or list all of such potential conflicts, the most
apparent and significant would appear to be as follows:
A. There is a potential conflict to management of how to allocate time
and resources between their ongoing full time business efforts to manage the
spin-out private active business company with the commitment to maintain Prime
as a reporting public company and to engage in a continuing search for merger or
acquisition candidates. Current management will exercise a best faith efforts to
allocate such time and efforts as necessary to the continuing public company but
there shall always remain a potential inherent conflict between such demands
upon their time and efforts.
B. There is an inherent conflict of interest that may arise out of the
use of facilities as the ongoing public company will no longer have ownership or
entitlement to the leasehold estate or business equipment previously employed by
it, but has assigned such properties to the spin-off company subject to a
reserved right of use and sublease on a nominal basis until, and if, the company
has active revenues. This type of arrangement imposes some inherent potential
conflicts of interest as the public company will not have the position or
leverage to demand expanded or greater use of the facilities should that become
necessary. It may also find that the use of facilities on a good faith basis is
insufficient.
C. There remains an inherent conflict in the fact that present
management will substantially reduce their sharehold position in the company and
thereby will have a less vested economic interest in the outcome of the public
entity then presently exist with their majority sharehold position.
4. The Bioacclerate Shares have an Indeterminate Value.
As part of the transaction described in this Proxy statement, the
public shareholders will receive a spin-out of the Bioaccelerate shares of the
company on a ratio of one Bioaccelerate shares for each common share of Prime
held by the public shareholders. The principal shareholders and the employee
grant shareholders as described in this Proxy solicitation will not receive any
the Bioaccelerate shares. However, it should be noted by each potential
shareholder in voting this Proxy statement that the Bioaccelerate shares are
thinly traded and the company does not presently have any substantial revenue or
income source. Each prospective proxy voter should consider this as a potential
risk factor.
13
5. Indeterminate Value of LightSpace Notes and Conversion Rights.
It is also noted that one of the cash equivalents being left with Prime
are the LightSpace Notes. The Lighspace Notes were generated by earlier funding
activity by the Company to a startup business entity known as LightSpace with
the anticipation that Prime may participate in some form of reorganization with
LightSpace. However, it now appears that LightSpace will not exchange assets or
merge with the company; and, as a result, the Company continues to hold
LightSpace Notes to evidence the initial investment by Prime into LightSpace.
These notes are convertible under certain terms or conditions into LightSpace
shares, but each Proxy holder should be aware and understand that these are
secured notes (first position ) of a development company and as such there is no
absolute assurance or warranty that the company will be repaid or receive
anything of value for the notes. However, LightSpace management represents they
intend to continue with their plan for an underwritten public offering during
the first 6 months on 2006. Based on previously discussed note conversion
ratios, it is anticipated that for each 3 shares of Prime held at the record
date a shareholder would receive approximately one share of LightSpace common
shares and two warrants. Accordingly, this holding constitutes a risk factor as
described.
6. Uncertainty of Future Business Opportunity in Unknown Business Ventures.
There is no assurance or warranty that the company will be successful
in obtaining in the future a suitable merger or asset acquisition candidate and
such in and of itself constitutes a risk factor. Moreover, even if the company
is successful in obtaining a merger and acquisition candidate the type of
business and potential profitability of that business is unknown and will remain
unknown until such event occurs. Both of these unknown factors constitute a
degree of risk in approving the transactions proposed in this Proxy
solicitation.
7. The Assets of the Company Must be Considered Wasting Assets During the Search
Period.
During the period that the company is searching for a suitable
merger/acquisition candidate the limited retained capital of the company must be
considered as a wasting asset as it will be eroded and paid without any means to
replenish this capital source to maintain the company as a public company and
pay the reduced wages to part-time management. This factor constitutes a certain
degree of risk to the shareholders in the company.
8. There are Certain Costs and Liabilities of Remaining a Public Entity.
Each prospective investor should understand and recognize that there
are significant costs involved in maintaining a company as a public reporting
company, even without active business activities. These include, but are not
necessarily limited to, the cost and effort of maintaining audited financial
statements, preparing and filing periodic reports with the Securities and
Exchange Commission, the ongoing possibility of revision and audit by the SEC
and other related type factors. There are also enhanced risks of litigation as a
public company; and the risk that future regulations of the NASD, SEC or State
Securities Regulation may make it difficult or impossible to remain a publicly
trading company without assets or any business.
14
9. The Company has Recently Been Required by the SEC to Restate Certain
Financial Information.
The 10-KSB/A ending the period 12/31/2004 has been restated at the
request of the SEC to clarify certain accounting disclosure information,
management discussion analysis and various changes in the actual accounting data
and financial statements supplied by Prime. While the company does not believe
that such restatements were significant or materially affected the financial
results of the company, each prospective investor should be aware that such
restatements were made and that changes were required, as a result of such
restatements, to management's internal audit and control procedures. All of
these issues constitute a degree of risk factor to continuing as an investor in
this public company.
10. There may be a Significant Increase in the Values of Assets Exchanged for
the Redeemed Shares.
While no one can predict the future of economic activity with absolute
certainty, there remains a possibility that in the future the assets spun-off
may either substantially increase in value more than would presently be
anticipated or may start, for some presently undetermined reason, to generate
significant revenues and income over current revenues and income; which would,
in retrospect, make the asset exchange for stock redemption less favorable than
presently projected. There is no way to know or quantify this potential risk
factor, but each prospective proxy voter should be advised of this as a
potential risk factor.
11. There will be no Independent Fairness Hearing or Review of the Stock
Redemption for Assets.
The company has determined for economic reasons and costs associated
with obtaining an independent fairness opinion and review not to incur those
costs and expenses. As a result there remains a certain risk factor in this
offering, which is sometimes obviated or limited by obtaining an independent
fairness review and report. as to the fairness and equity of the proposed
exchange. As a result, each investor in considering this Proxy Solicitation will
have to make his own determination of whether the relative values of the
interest exchanged are fair and equitable in the circumstances and from the
information supplied.
12. No SEC Review of Proxy Statement.
Because Prime is not a full reporting company under Section 12(g) of
the Securities and Exchange Act of 1934, it is not required to submit for review
and comment this Proxy statement to be SEC or any securities regulatory agency.
As a result, there may be certain aspects or provisions of this Proxy statement
that would be revised or changed if such a review were mandated and this factor
should constitute a degree of risk factor to those voting upon the matters
solicited in this Proxy statement.
15
13. No Assurance of Public Market for Prime Stock.
For various of the reasons previously set-out in these risk factors,
there can be no absolute assurance or warranty that a future market will exist
for the new Prime shares as an ongoing public company.
14. Rule 144 Sales.
In the previous section describing the anticipated Rule 144 sales, each
prospective shareholder considering receiving the Bioaccelerate shares as part
of the proposed transaction should understand that Rule 144 will defer the
ability to sell and make it subject to certain circumstances and conditions and
market fluctuations which may be beyond present control and that this
constitutes a risk factor as to the marketability or price of such restricted
shares.
15. No Tax Analysis.
As previously mentioned, Prime is not providing any tax analysis or
opinion as to the probable tax consequences, if any, to shareholders or the
Company if the reorganization is accepted.
Potential Conflicts and Related Party Transactions
Historically, Prime has described any related party transactions as
well as potential conflicts as part of the disclosure requirements in its 10-KSB
Reports. There may exist other and presently undetermined potential conflicts
and related party transactions. The most significant of the anticipated
conflicts have been described in the Risk Factors outlined above.
Moreover, should there be determined, prior to the closing of the
presently proposed share exchange and reorganization, any other potential
conflict, or related party transaction, such conflict or transaction will be
disclosed and set out as a supplemental material to this proxy statement.
Dissenting Shareholder Rights
Prime has determined that the foregoing share exchange requires the
offering of dissenting shareholder rights under Utah law to all shareholders who
wish not to participate in the ongoing Prime Resource reorganization and its
related distributions. Essentially those shareholders who do not believe that
either of the alternative provides a fair and equitable investment option to the
shareholders for their prior sharehold interest may elect, under Utah law as
dissenting shareholders, to object to the valuation and redemption of their
shares. It should be noted by each prospective dissenting shareholder that the
election to be a dissenting shareholder will not constitute a vote against or in
any way invalidate the completion of the Share Exchange, but will provide such
dissenting shareholder with a potential alternative valuation option.
16
In essential terms, any dissenting shareholder under the Utah
Statutory Provisions will have the right to propose to the Company what they
deem to be a fair and adequate consideration for their shares, along with the
methodology at which they arrive at their alternative valuation, if not
satisfied with the Company's proposal. The Company would then attempt to
negotiate a resolution or may simply refuse to recognize the alternative
valuation. It should be noted to each prospective dissenting shareholder that
the company believes the present valuation is based upon current market
conditions. As a result, is not likely the Company would be willing to
voluntarily alter or mend its redemption payments for the shares.
If the Company and the shareholder are not able to agree upon the
stipulated valuation, then the shareholder shall have the right to proceed with
a court proceeding to attempt to force an alternative valuation for the shares
through a judicial process.
THE FOREGOING CONSTITUTES ONLY A GENERAL DESCRIPTION OF THE DISSENTING
SHAREHOLDER RIGHTS. EACH PROSPECTIVE DISSENTING SHAREHOLDER IS ENCOURAGED TO
REVIEW, WITH LEGAL COUNSEL OF THEIR OWN CHOICE, THE ATTACHED AND ENCLOSED
DISSENTING SHAREHOLDER RIGHTS PACKAGE AND BALLOT CONTAINS THE UTAH STATUTE
MATERIAL ON DISSENTING SHAREHOLDER RIGHTS AS EXTRACTED FROM THE UTAH CODE.
Any shareholder wishing to exercise dissenting shareholder rights
should fill out and complete the dissenting shareholder rights ballot and return
it promptly to the Company in the enclosed envelope so that they may be listed
as dissenting shareholder and the Company will then proceed in accordance with
applicable law to treat such claim in accordance with the statutory provisions.
Please note that if you vote in favor of the share exchange you are not entitled
to be a dissenting shareholder.
OTHER MATTERS
The Special Meeting is being called for the purposes set forth in the
notice thereof. The Board of Directors does not intend to present, and has not
been informed that any other person intends to present, any matters for action
at the Special Meeting other than those specifically referred to in the Notice
of Meeting and this Proxy Statement. If any other matters are properly brought
before the Annual Meeting, it is the intention of the proxy holders to vote on
such matters in accordance with their judgment to the extent they have been
given discretion.
STOCKHOLDER PROPOSALS
There were no stockholders proposals submitted for consideration at this
Special Meeting. Stockholder proposals intended to be considered at the next
Annual Meeting of Stockholders must be received by the Company no later than
December 31, 2006. Such proposals may be included in the next proxy statement if
they comply with certain rules and regulations promulgated by the Securities and
Exchange Commission.
17
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
Prime's directors, executive officers, and any persons holding more than 10% of
the common stock are required to report their ownership of the common stock and
any changes in that ownership to the Securities and Exchange Commission.
Specific due dates for these reports have been established, and we are required
to report in this proxy statement any failure to file by such dates during 2004.
To our knowledge, all of these filing requirements were satisfied by our
directors, officers and 10% percent holders. In making these statements, Prime
has relied upon the written representations of its directors, officers and its
10% percent holders and copies of the reports that they have filed with the
Commission.
OTHER INFORMATION
None
FINANCIAL REPORTS & OTHER IMPORTANT DOCUMENTS
The enclosed financial reports for the company's operations ending December
31, 2005, as attached to the 10-KSB are considered an integral part of this
Proxy Statement and are incorporated by this reference. See also, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
enclosed 10-KSB Report.
Dated: April 10 2006.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/ Terry Deru
------------------------------------
Terry Deru, Chairman of the Board