DEF 14C 1 prism_def14c-042406.txt 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 PRISM SOFTWARE CORPORATION -------------------------------------------------------------------------------- (Name of Registrant As Specified In Charter) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11. 1) Title of each class of securities to which transaction applies: -------------------------------------------------------------------------------- 2) Aggregate number of securities to which transaction applies: -------------------------------------------------------------------------------- 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (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: -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: -------------------------------------------------------------------------------- 2) Form, Schedule or Registration Statement No.: -------------------------------------------------------------------------------- 3) Filing Party: -------------------------------------------------------------------------------- 4) Date Filed: -------------------------------------------------------------------------------- ================================================================================ NOTE: Where any item, other than Item 4, calls for information with respect to any matter to be acted upon at the meeting or, if no meeting is being held, by written authorization or consent, such item need be answered only with respect to proposals to be made by the registrant. Registrants and acquirees that meet the definition of "small business issuer" under Rule 12b-2 of the Exchange Act shall refer to the disclosure items in Regulation S-B and not Regulation S-K . If there is no comparable disclosure item in Regulation S-B, small business issuers need not provide the information requested. Small business issuers shall provide the financial information in Item 310 of Regulation S-B in lieu of any financial statements required by Item 1 of Rule 14c-101. ================================================================================ [PRISM SOFTWARE CORPORATION LOGO] PRISM SOFTWARE CORPORATION NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 31, 2006 April 21, 2006 TO OUR STOCKHOLDERS: The 2006 annual meeting of stockholders of Prism Software Corporation will be held at the Company's offices at 15500-C Rockfield Blvd., Irvine, California on Wednesday, May 31, 2006, beginning at 2:45 p.m. local time. At the meeting, the stockholders of the company will act on the following: (1) To elect three directors for a one-year term. (2) Any other matters that properly come before the meeting. All holders of record of shares of Prism's common and preferred stock at the close of business on April 15, 2006 are entitled to vote at the meeting or any postponements or adjournments of the meeting. By order of the Board of Directors, /s/ Conrad von Bibra -------------------- Conrad von Bibra SECRETARY 1 INFORMATION STATEMENT WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. ----------------------- This Information Statement contains information related to the annual meeting of stockholders of Prism Software Corporation to be held on Wednesday, May 31, 2006, beginning at 2:45 p.m., at the company offices. Proxies are NOT being solicited by the Company. The approximate date on which this Information Statement is first sent to security holders is April 28, 2006. VOTING INFORMATION With respect to the election of directors, the persons receiving a plurality of the votes cast by the shares entitled to vote for the position being filled shall be elected. On any other item that should come before the meeting, the matter shall be decided by a majority of the votes cast by the shares entitled to vote at the meeting. The By-Laws of the Company require for a quorum the presence of a majority at the meeting in person or by proxy of the holders of shares of capital stock of the Company entitled to vote. Since the current members of the Board of Directors own, in the aggregate, more than 50% of the outstanding shares, a quorum is available without the Company incurring the expense of soliciting proxies. All holders of record of Prism's common and preferred stock at the close of business on April 15, 2006 are entitled to vote at the meeting. ELECTION OF DIRECTORS The affirmative vote of a plurality of the votes cast at the meeting is required for the election of the directors. Members of the Board of Directors holding more than 50% of the outstanding shares have announced their intention to vote for the three nominees identified in this Information Statement. Accordingly, the three will be re-elected to the Board of Directors. The Board met five times in 2005 and all three directors nominated below attended each meeting, except for one meeting that Carl von Bibra was unable to attend. NOMINEES Three directors are to be elected at the Annual Meeting, each to hold office until the next annual meeting and until his successor is elected and qualified. The following table sets forth certain information furnished to the Company regarding the persons who are nominees for election as directors of the Company. Name Age Position ---- --- -------- Carl S. von Bibra 44 Chairman and Director David Ayres 51 President and Director Conrad von Bibra 76 Secretary and Director 2 Carl S. von Bibra has served the Company as a director and Chairman since October 31, 2003. From March 1993 through May 1994, Mr. von Bibra was a board member of ADcom Information Services, Inc. and, since December 1992, has been corporate secretary of OCI Communication, Inc. Mr. von Bibra received his engineering degree from Stanford University. Carl von Bibra is the son of Conrad von Bibra and is a private investor. David Ayres joined the Company in May 2002. He has over fifteen years of experience in the printer industry, and over twenty years in senior management positions. Prior to joining the Company he was CEO of an industry-leading supplier to the OEM printer market. He was also Senior Product Group Manager for Canon in their Canon Computers Systems division. He has served as President of the Company since January 23, 2004 and as a director since February 13, 2004. Conrad von Bibra was born and raised in Los Angeles, graduating from Stanford University with a degree in chemical engineering. From 1962 to 1984, he served as President of Exeter Oil Company Ltd., a drilling and production company whose stock was listed on the American Stock Exchange in 1981. He is now a private investor. He is the father of Carl S. von Bibra. He became a director and Secretary of the Company on October 31, 2003. OFFICERS The following table sets forth information about the officers of the Company: Name Age Position ---- --- -------- Carl S. von Bibra 44 Chairman and Director David Ayres 51 President and Director Conrad von Bibra 76 Secretary and Director Michael Cheever 37 Treasurer (For biographical information about Carl von Bibra, David Ayres and Conrad von Bibra, see "Nominees", above) Michael Cheever joined the Company in October 1993 and has been an officer since October 31, 2003. He has over fifteen years of accounting experience and formerly worked for the accounting firm of Deloitte & Touche LLP. DIRECTORS' COMPENSATION The members of the Board of Directors do not receive any cash compensation for their service as directors, but are eligible for reimbursement of their expenses incurred in connection with attendance at Board meetings in accordance with Company policy. COMMITTEES The Company does not have a standing audit, nominating or compensation committee. These functions are fulfilled by the Board of Directors. The Company believes that, because of the small size of the Board, all of these functions can be efficiently performed at the Board of Directors level. All directors participate in the consideration of director nominees. 3 COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Section 16(a) of the Exchange Act requires that directors and officers of the Company and persons who beneficially own more than 10% of the Common Stock file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of the Common Stock of the Company. Directors, officers and greater than 10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. During 2005, the Company received no copies of any Section 16(a) forms. Based on representations from certain reporting persons, the Company believes that no such forms were required to be filed by its officers, directors and 10% beneficial owners during 2005. COMMUNICATIONS WITH DIRECTORS Stockholders may communicate in writing with any of the Company's directors by sending such written communication to Michael Cheever, Treasurer, at the Company's principal executive offices, 15500-C Rockfield Blvd., Irvine, California 92618. Copies of written communications received at such address will be provided to the relevant director or directors. POLICY ON DIRECTOR ATTENDANCE AT ANNUAL MEETINGS All Board members are encouraged to attend Prism's annual meetings of stockholders. All directors attended the annual meeting of stockholders held in 2005. CODE OF ETHICS The Company adopted a Code of Ethics for its officers and other personnel during 2004. EXECUTIVE COMPENSATION. SUMMARY COMPENSATION TABLE The following table sets forth certain compensation awarded or paid by the Company to its executive officers during the fiscal years ended December 31, 2005, December 31, 2004 and December 31, 2003. No other executive officer's total annual salary and bonus for services to the Company exceeded $100,000. LONG-TERM COMPENSATION ----------------------------------- Annual Compensation Awards Payouts --------------------------------- ------------------------ --------- Other All Annual Other Compen- Stock Securities Compen- Name and Fiscal Salary Bonus sation Awards Underlying sation Principal Position Year ($) ($) ($) ($) Options (#) ($) ------------------------- -------- ------------ --------- --------- --------- ------------- --------- David Ayres 2005 $150,000 $0 $0 $0 0 $0 President 2004 $139,063 $0 $0 $0 0 $0 2003 $137,551 $0 $0 $0 500,000 $0 Michael Cheever 2005 $66,000 $0 $0 $0 0 $0 Treasurer 2004 $63,250 $0 $0 $0 0 $0 2003 $66,054 $0 $0 $0 100,000 $0
4 OPTION EXERCISES AND FISCAL YEAR-END VALUES Shown below is information with respect to the number of shares of the Company's Common Stock acquired upon the exercise of options during the fiscal year ended December 31, 2005, the value realized therefor, the number of unexercised options at December 31, 2005 and the value of unexercised in-the-money options at December 31, 2005 for the Company's executive officers in the Summary Compensation Table above. The Company's executive officers did not hold any stock appreciation rights ("SARs") during the fiscal year ended December 31, 2005. NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY SHARES OPTIONS AT FISCAL OPTIONS AT FISCAL ACQUIRED ON VALUE YEAR-END (#) YEAR-END ($) NAME EXERCISE (#) REALIZED EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE -------------------- ------------ -------- --------------------------- --------------------------- David Ayres 0 $0 500,000 / 0 $0 / $0 Michael Cheever 0 $0 225,000 / 0 $0 / $0
EMPLOYMENT AGREEMENTS There are currently no employment agreements between the Company and any of its directors, officers or significant employees. STOCK OPTION PLANS 1993 STOCK OPTION PLAN The Company's 1993 Stock Option Plan provides for the issuance of options to employees, directors, officers, and advisors of the Company to acquire up to 630,000 shares of the Company's common stock. Options issued under this plan are generally granted at estimated market value, vest at varying rates and expire within ten years from the date of grant or within 90 days after termination of employment. As of December 31, 2005, options for 50,000 shares of Common Stock were reserved for issuance upon exercise of outstanding options. Except as to options previously granted and outstanding under it, the 1993 Stock Option Plan terminated on February 1, 2003. The Company did not grant any options to its executive officers under its 1993 Stock Option Plan during the fiscal year ended December 31, 2005 or during the fiscal year ended December 31, 2004. 2000 NONSTATUTORY STOCK OPTION PLAN The Company's 2000 Nonstatutory Stock Option Plan provides for the issuance of options to employees, directors, officers and advisors of the Company to acquire up to 3,000,000 shares of common stock. Options issued under this plan are generally exercisable at 85% of the market value on the date of grant, vest over three years and expire within ten years from the date of grant or within 90 days after termination of employment. As of December 31, 2005, none of the options available for grant under the 2000 Nonstatutory Stock Option Plan had been exercised, 1,470,000 shares of Common Stock were reserved for issuance upon exercise of outstanding options and 1,530,000 shares of Common Stock remained available for grant thereunder. Except as to options previously granted and outstanding under it, the 2000 Nonstatutory Stock Option Plan will terminate on May 4, 2010. The Company did not grant any options to its executive officers under its 2000 Nonstatutory Stock Option Plan during the fiscal year ended December 31, 2005 or during the fiscal year ended December 31, 2004. 5 E. TED DANIELS OPTIONS In December 2004, as part of the Company's settlement with E. Ted Daniels, its previous President, the Company granted Mr. Daniels non-qualified options to purchase 1,400,000 shares of the Company's Common Stock. The settlement agreement also had a provision for issuing options for additional shares of Common Stock equal to 4% of new shares of Common Stock issued through December 15, 2005 (with certain limitations), but this time period elapsed with no additional options required to be issued under this provision. As of December 31, 2005, none of these options available for grant had been exercised, 1,400,000 shares of Common Stock were reserved for issuance upon exercise of such outstanding options, and the exercise price was $0.01 per share. These options will terminate on December 15, 2008. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth information regarding the beneficial ownership of the Common Stock of the Company as of March 23, 2006, by (i) each person known by the Company to beneficially own 5% or more of the outstanding Common Stock of the Company; (ii) each of the Company's directors; (iii) each of the Company's Executive Officers; and (iv) all directors and Executive Officers of the Company as a group. The percentage column of common stock beneficially owned shows the percent each person would own if he exercised all of his conversion or option privileges and all of the others did not. COMMON PERCENTAGE OF STOCK TOTAL NUMBER OF SHARES OF OUTSTANDING PERCENTAGE EQUIVALENTS SHARES COMMON STOCK NAME AND ADDRESS COMMON OF SHARES OF OPTIONS BENEFICIALLY BENEFICIALLY OF BENEFICIAL OWNER STOCK OUTSTANDING OR NOTES OWNED (1) OWNED (1) ----------------------------------------------------------------------------------------------------------------------- David Ayres c/o Prism Software Corporation 15500-C Rockfield Blvd. Irvine, CA 92618 615,000 * 500,000 1,115,000 1% Carl S. von Bibra 1637 Spruce Street South Pasadena, CA 91030 33,607,500 24% 33,607,500 67,215,000 38% The Conrad von Bibra Revocable Trust 1415 Milan Ave. South Pasadena, CA 91030 60,880,856 43% 60,880,856 121,761,712 60% Michael Cheever c/o Prism Software Corporation 15500-C Rockfield Blvd. Irvine, CA 92618 20,000 * 225,000 245,000 * All Directors and Executive Officers of the Company as a Group (4 persons) 95,123,356 67% 95,213,356 190,336,712 80%
* Less than 0.5% 6 (1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of Common Stock subject to securities currently convertible or convertible within 60 days after March 23, 2006, are deemed to be outstanding in calculating the percentage ownership of a person or group but are not deemed to be outstanding as to any other person or group. Unless noted otherwise, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. Currently there are 300,000,000 shares of Common Stock authorized, of which 141,591,534 shares are issued and outstanding. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. CERTAIN NOTES For the fiscal years ended December 31, 2004 and December 31, 2005, the Company borrowed approximately $1,950,000 and $1,100,000, respectively, from the Conrad von Bibra Revocable Trust ("Conrad von Bibra"). All such debt is subject to the terms of a March 2003 Security Agreement and a December 2004 Long-Term Loan Agreement. Such debt is due on March 1, 2007, bears simple interest at the rate of 5% per annum and is secured by the Company's assets. In addition, all other debt borrowed from Conrad von Bibra and Carl von Bibra prior to the fiscal year ended December 31, 2003 is subject to the terms of a March 2003 Loan Agreement, the March 2003 Security Agreement and the December 2004 Long-Term Loan Agreement The December 2004 Long-Term Loan Agreement includes a provision to reduce the annual interest rate on all debt owed to Conrad and Carl von Bibra from 8% to 5% retroactive to March 2003. This resulted in a gain to the Company of approximately $385,000 for the fiscal year ended December 31, 2004. During the fiscal year ended December 31, 2004, the Company made principal payments of approximately $35,000 to Conrad von Bibra and approximately $95,000 to Carl von Bibra. In connection with such payments, Conrad von Bibra forgave approximately $11,000 of accrued interest owed by the Company, and Carl von Bibra forgave approximately $30,000 of additional principal and approximately $128,000 of accrued interest owed by the Company. No commissions were paid in connection with any of these transactions. Conrad von Bibra and Carl von Bibra are affiliates of the Company by virtue of their beneficial ownership of more than 5% of the Company's outstanding Common Stock. The Company believes that such transactions were exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof or Regulation D promulgated thereunder, as a transaction by an issuer not involving a public offering. PRINCIPAL ACCOUNTANT FEES AND SERVICES For the fiscal years ended December 31 2004 and December 31, 2005, the Company incurred audit fees with its principal accountant, Cacciamatta Accountancy Corporation, of approximately $60,000 and approximately $64,000, respectively. The Company incurred no other fees with its principal accountant in either of the two fiscal years referenced. A representative of Cacciamatta Accountancy Corporation has been invited to attend the meeting, with an opportunity to make a statement if he or she desires to do so and to respond to appropriate questions. The Company has no audit committee. The Board of Directors' policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval would generally be provided for up to one year and any pre-approval would be detailed as to the particular service or category of services, and would be subject to a specific budget. The independent auditors and management are required to periodically report to the Board of Directors regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The Board of Directors may also pre-approve particular services on a case-by-case basis. 7