UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. 1 )
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Filed
by the Registrant x
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Filed
by a Party other than the Registrant o
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Check
the appropriate box:
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x Preliminary
Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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Entrx
Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
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x No
fee required.
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o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1) Title
of each class of securities to which transaction
applies:
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2) Aggregate
number of securities to which transaction applies:
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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):
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4) Proposed
maximum aggregate value of transaction:
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o Fee
paid previously with preliminary materials.
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o Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1) Amount
Previously Paid:
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2) Form,
Schedule or Registration Statement No.:
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ENTRX
CORPORATION
800
Nicollet Mall, Suite 2690
Minneapolis,
Minnesota 55402
____________________
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
to be
held on
, 2009
____________________
Notice is
hereby furnished to the shareholders of Entrx Corporation, a Delaware
corporation (“Entrx”), of record as of the close of business on
_________________, of the Special Meeting of shareholders thereof, to be held at
10:00 a.m. on , 2009 , at
the offices of Entrx, at 800 Nicollet Mall, Suite 2690, Minneapolis, Minnesota,
for the following purposes:
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1.
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To
consider and vote on a proposal to amend Entrx’s Restated and Amended
Certificate of Incorporation to effect a reverse 500 for 1 share
stock split, followed by a forward 1 for 500 share stock
split, of Entrx’s common stock, which, if effected, will result in a
reduction of the number of our shareholders from an estimated 4,700 to
between 900 and 1,000, and the number of our shareholders of record from
an estimated 1,480 to approximately 60, by cashing out fractional shares
after the reverse stock split. If the proposal is adopted, the
shareholdings of a person owning 500 shares or more of Entrx in any one
account will be unaffected; and the shares held by persons owning less
than 500 shares of Entrx in any one account will be bought out at
the price of $0.35 per share.
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2.
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To
transact such other business as may properly come before and is
incidental to the conduct of the
meeting.
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Only
shareholders of record as of the close of business on _____________, 2008, or
their legal representatives, are entitled to notice and to vote at the Special
Meeting or any adjournment thereof. Each shareholder is entitled to
one vote per share on all matters to be voted on at the Special
Meeting.
A Proxy,
Proxy Statement, the 2007 Annual Report on Form 10-KSB, and the Quarterly Report
on Form 10-Q for the quarter ended September 30, 2008, are enclosed
herewith. You are requested to complete and sign the Proxy, which is
being solicited by the Board of Directors and management of Entrx Corporation,
and to return it in the envelope provided. You can also vote by
telephone by calling 800-____-______ between the hours of ________ and 3:30 p.m.
CST, prior to _____________, 2009
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By
Order of the Board of Directors
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/s/ Peter L. Hauser
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Chief
Executive Officer and
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Chairman
of the Board
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_____________,
2009
TABLE OF
CONTENTS
VOTING
INFORMATION
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PROPOSAL
TO AMEND THE RESTATED AND AMENDED CERTIFICATE OF INCORPORATION OF ENTRX
CORPORATION TO EFFECT A REVERSE STOCK SPLIT FOLLOWED BY A FORWARD STOCK
SPLIT OF ENTRX'S COMMON STOCK
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Summary
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Negative
Aspects of the Reverse/Forward Stock Split
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Effect
on Shareholders
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Reasons
for the Reverse/Forward Stock Split
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Structure
of the Reverse/Forward Stock Split
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Background
and Purpose of the Reverse/Forward Stock Split
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Effect
of the Reverse/Forward Stock Split on Entrx
Shareholders
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Financial
Information
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Fairness
of the Reverse/Forward Stock Split
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14
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Effect
of the Reverse/Forward Stock Split on Entrx
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Stock
Certificates
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Certain
Federal Income Tax Consequences
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Federal
Income Tax Consequences to Shareholders Who Are Not Cashed Out by the
Reverse/Forward Stock Split
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Federal
Income Tax Consequences to Cashed-Out Shareholders
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Appraisal
Rights
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Reservation
of Rights
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Board
of Directors’ Recommendation
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OFFICERS
AND DIRECTORS
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COMMON
STOCK OWNERSHIP
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Share
Ownership of Officers and Directors
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Share
Ownership of Certain Beneficial Owners
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SHAREHOLDER
PROPOSALS
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ENTRX
CORPORATION
800
Nicollet Mall, Suite 2690
Minneapolis,
Minnesota 55402
PROXY
STATEMENT
SPECIAL
MEETING OF SHAREHOLDERS
This Proxy Statement is furnished to
the shareholders of Entrx Corporation (hereinafter referred to as “Entrx” or
“we”), in connection with the solicitation by the Board of Directors of Entrx of
proxies to be voted at the special meeting of Entrx shareholders (the
“Meeting”), to be held at 10:00 a.m. on , 2009 at
the offices of Entrx at 800 Nicollet Mall, Suite 2690, Minneapolis,
Minnesota. This Proxy Statement and the accompanying form of Proxy
(the “Proxy”) were first mailed on approximately _______________, 2009 to
the shareholders of record of Entrx as of the close of business on
____________, 2009 .
VOTING INFORMATION
Who
is entitled to vote?
The
holders of common stock of Entrx who are shareholders of record on
________________, 2009 , may vote at the Meeting. As of
________________, 2009 , there were 7,656,147 shares of Entrx's common
stock outstanding.
What
are you voting on?
At the
Meeting, you will be voting on a proposal to amend Entrx’s Restated and Amended
Certificate of Incorporation in order to effect a reverse stock split, followed
by a forward stock split, of Entrx’s common stock, which, if effected, will
result in a reduction of the number of our shareholders from an estimated 4,700
to between 900 and 1,000, and the number of our shareholders of record from an
estimated 1,480 to approximately 60, by cashing out fractional shares after the
reverse stock split. The purpose of these amendments is
to cash out all of our shareholders owning less than 500 shares of our common
stock at $0.35 per share. If you own more than 500 shares of
Entrx’s common stock in any account, your share ownership will not be
affected in that account.
We may
also vote on other matters incidental to the conduct of the
Meeting.
How
does the Board recommend you vote on the proposals?
The Board
recommends that you vote your shares FOR the proposed amendments to
Entrx’s Restated and Amended Certificate of Incorporation in order to effect a
reverse, followed by a forward, stock split of Entrx’s common
stock.
Who
will be soliciting your vote?
The Board
is soliciting your vote by mail through this Proxy
Statement. However, your vote may also be solicited in person or by
telephone by an officer of Entrx who will act without special
compensation. We have also engaged The Altman Group to solicit
proxies. For its services, we will pay The Altman Group a base fee of
approximately $8,000 plus estimated out-of-pocket expenses not to
exceed $2,000. We do not expect that The Altman Group will
solicit more than 150 shareholders. Other than the forgoing, no one
has been engaged to directly or indirectly make solicitations or recommendations
relating to the reverse, followed by a forward, stock
split. Brokers/dealers, nominees, fiduciaries and other custodians
will be requested to forward soliciting materials to beneficial owners of
Entrx’s common stock, and will be reimbursed for their expenses in connection
with that activity. The cost of all of this solicitation is being
paid for by Entrx.
How
can you vote?
If you hold your shares as a
shareholder of record, you can vote in person at the Meeting or you can vote by
mail. You are a “shareholder of record” if you hold a stock
certificate which has your name and the number of shares
you own on the face of the certificate. If you hold
your shares indirectly , through an intermediary such as a bank,
broker, trustee or other nominee, you are a beneficial owner of those
shares, and are normally referred to as a “street name
shareholder.” If you are a street name shareholder, you should
receive instructions from your bank, broker, trustee or other nominee
describing how to vote your shares.
How
do you vote?
By mail:
You can
vote by mail by following the instructions on the accompanying form of Proxy,
signing the Proxy, and mailing it to the address noted on the Proxy or by using
the accompanying envelope provided for that purpose. The persons
named as proxies on the Proxy will vote your shares in accordance with your
instructions. If you sign and submit your Proxy without giving
instructions, the proxies named on the Proxy will vote your shares as
recommended by the Board of Directors.
By telephone:
You can
vote by telephone by calling 800-____-_____ between the hours of ___________ and
3:30 p.m. CST, prior to ,
2009. You should have the accompanying proxy available when you
call so that you can be properly identified.
How
can you revoke your Proxy?
If you are a shareholder of record, you
can revoke your Proxy by:
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Submitting
a new Proxy received by us prior to the
meeting;
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If
you voted by telephone, by calling the same number you used to vote by
telephone until 3:30 p.m. CST, ,
2009;
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Giving
written notice prior to the meeting to Entrx's Secretary, at 800 Nicollet
Mall, Suite 2690, Minneapolis, Minnesota 55402, stating that you are
revoking your Proxy; or
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Attending
the Meeting and voting your shares in
person.
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Merely
attending the meeting without voting will not revoke your
Proxy.
If you
are a street name shareholder, you may revoke your Proxy only as instructed by
the bank, broker or other nominee holding your shares.
How
do you sign the Proxy?
Sign your
name exactly as it appears on the Proxy. If you are signing in a
representative capacity (for example, as a guardian, trustee, executor,
administrator, attorney or the officer or agent of a company), include your name
and title or capacity. If the shares are held in custody (for
example, under the Uniform Transfer to Minors Act), the custodian should sign
the Proxy, not the minor or other beneficiary.
If the
shares are held in joint ownership, both owners should sign the
Proxy. If, however, only one of the owners signs, that Proxy
(referred to as the “first Proxy”) will be counted, unless one or more of the
other owners signs a Proxy or casts a vote which is in conflict with the first
Proxy, in which case the vote of the majority of the owners in interest shall be
entitled to vote or give authority to vote all of the shares. If more
than one owner votes, but the vote is evenly split on an issue, the shares may
be voted proportionately; that is, one-half of the shares may be voted on one
side of the issue, and the other half on the other side.
What
does it mean if you receive more than one proxy or voting instruction
card?
It means
your shares are registered differently or are in more than one
account. Please provide voting instructions for each Proxy you
receive to ensure all your shares are voted.
What
constitutes a quorum?
A quorum
of shareholders is necessary to hold a valid meeting of
shareholders. A majority of the outstanding shares, present in person
or represented by proxy, constitutes a quorum for the
Meeting. Abstentions and broker non-votes (as described below) are
counted as present for establishing a quorum.
How
many votes are needed for approval of the proposal?
Approval
of the proposal to amend Entrx’s Restated and Amended Certificate of
Incorporation in order to effect a reverse, followed by a forward, stock split
of Entrx’s common stock, requires the affirmative vote of the holders of a
majority of the outstanding shares of Entrx’s common stock, or 3,828,074 or more
shares.
Prior
Vote on the Proposal.
At a
special meeting of the shareholders held on January 28, 2008, we presented and
conducted a vote upon a proposal substantially identical to the one being
presented in this Proxy Statement. The proposal did not
pass. The vote was 2,288,781 in favor and 800,106
against. Even though more shareholders voted in favor of the proposal
than voted against the proposal by a wide margin, we failed to get the required
affirmative vote of shareholders owning a majority of our outstanding
shares.
What
is a broker non-vote?
A broker
non-vote with respect to a proposal occurs when a broker submits a Proxy that
does not indicate a vote on that proposal because the broker did not receive
instructions from the beneficial owner on how to vote on that proposal and does
not have discretionary authority to vote in the absence of
instructions. A broker non-vote will be treated the same as a vote
against the proposal to effect a reverse, followed by a forward, split of
Entrx’s common stock.
How
can you attend the Meeting?
If you
are a shareholder of record on _____________, 2009, you can attend the
Meeting by presenting acceptable identification at the Meeting. If
you are a street name shareholder you may attend the Meeting by presenting
acceptable identification along with evidence of your beneficial ownership of
Entrx common stock.
PROPOSAL
PROPOSAL
TO AMEND THE RESTATED AND AMENDED CERTIFICATE OF INCORPORATION OF ENTRX
CORPORATION TO EFFECT A REVERSE STOCK SPLIT FOLLOWED BY A FORWARD STOCK SPLIT OF
ENTRX'S COMMON STOCK
Summary
Term
Sheet
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We
plan to cause a reverse stock split of our common stock on a 1 for 500
share basis, whereby each 500 shares of our common stock will be converted
into one share.
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The
reverse stock split will result in shareholders who own less than 500
shares of our common stock holding only a fractional share (less than one
share).
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We
will purchase the fractional shares of our shareholders who held less than
500 shares before the reverse stock split. If you have
several accounts which hold shares of Entrx common stock, you will be
cashed out of any account which holds less than 500 shares, unless you
consolidate those accounts into an account or accounts which hold more
than 500 shares prior to the effective date of the reverse and forward
stock split as set forth below.
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We
will not purchase any shares from our shareholders with respect to
accounts which hold 500 or more shares before the reverse stock
split.
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The
cash price for the fractional shares (the “Cash-Out Price”) will be based
upon a per share price of $0.35 prior to the reverse stock
split.
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Immediately
following the reverse stock split, and excluding those shareholders left
with only a fractional share who are cashed out , we will cause a
forward stock split of our common stock, whereby each share of our common
stock will be converted back into 500
shares.
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We
are effecting the reverse stock split in order to cash out shareholders
owning less than 500 shares of our common stock. We are
effecting the forward stock split so that we will not have any fractional
or odd-lot shares outstanding after the transaction, and so that the
number of shares held by the remaining shareholders will remain the same,
eliminating confusion. See “Summary – Special Factors” on page
6.
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Shareholders
have no appraisal rights with respect to the proposed reverse and forward
stock splits. See “Appraisal Rights” on page
18.
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If
the reverse and forward stock split is effected, we estimate that 360,000
shares will be cashed out for an aggregate cost to the Company of
approximately $126,000. In addition, preparation and printing
of the notice, proxy and proxy statement, including legal fees, and the
solicitation of proxies, will cost an estimated $44,000. This
will be paid for out of the Company’s cash, which was $1,116,560 at
September 30, 2008. See “Background and Purpose of the
Reverse/Forward Stock Split” beginning on page 10, and “Financial
Information” beginning on page
12.
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The
effective date of the reverse and forward stock split, if effected, will
be 6:01 p.m. (eastern standard time) _______________,
2009. See “Summary – Discussion” beginning on page
5.
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Only
shareholders who receive cash in the reverse stock split will experience
any income tax consequences. Generally, if all of your shares
are cashed out, you will experience a capital gain or loss, depending upon
your basis in the stock. If you still hold shares after the
reverse stock split, any payment you receive could be taxed at ordinary
income rates if it is considered essentially equivalent to a dividend or
not a substantially disproportionate redemption. See “Federal
Income Tax Consequences to Shareholders Who Are Not Cashed Out by the
Reverse/Forward Stock Split” on page 17, and “Federal Income Tax
Consequences to Cashed-Out Shareholders” beginning on page
17.
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We
proposed a substantially identical proposal at a special shareholders
meeting held on January 28, 2008. Although 2,288,781 shares
were voted in favor of the proposal, and only 800,106 were
voted against the proposal, the proposal did not pass, as we needed
3,808,074 shares, or a majority of the shares outstanding, to be voted in
favor of the proposal.
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None
of the shareholders, other than the management of Entrx, have expressed
either support for or opposition to the proposed reverse and forward stock
split, so passage is not
assured.
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The
interest and role of the affiliates of Entrx, including Peter L. Hauser,
the Chief Executive Officer, are not materially affected, whether or not
the reverse and forward stock split takes place. See “Effect of
the Reverse/Forward Stock Split on Entrx Shareholders – Affiliates” on
page 12, and “Common Stock Ownership” beginning on page
20.
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As
a result of the foregoing, if you owned less than 500 shares in any
account you will receive cash for those fractional shares, and if you
owned 500 shares or more in any account you will retain those
shares you owned prior to the implementation of the reverse stock
split.
Discussion
The Board
of Directors has authorized, and recommends for your approval a reverse
1-for-500 stock split followed immediately by a forward 500-for-1 stock split of
Entrx’s common stock;
The
proposed transaction is comprised of a reverse stock split (the "Reverse
Stock Split") pursuant to which each 500 shares of common stock
registered in the name of a shareholder at the effective time of the Reverse
Stock Split will be converted into one share of common stock ,
followed immediately by a forward stock split (the "Forward Stock Split")
pursuant to which each share of common stock outstanding upon
consummation of the Reverse Stock Split will be converted into 500 shares
of common stock . As permitted under Delaware law, shares of common
stock that would be converted into less than one share in the Reverse
Stock Split will instead be converted into the right to receive a cash
payment as described below (we often refer to the Reverse Stock
Split, the Forward Stock Split and these cash payments, collectively, as the
"Reverse/Forward Stock Split"). However, if a registered shareholder
holds 500 or more shares of common stock in an account at the
effective time of the Reverse Stock Split, any fractional share in such
account resulting from the Reverse Stock Split will not be cashed out and
the total number of shares held by such holder will not change as a result of
the Reverse/Forward Stock Split.
The Board
will have the discretion to determine whether to effect the Reverse/Forward
Stock Split, if approved by the shareholders, and reserves the right to abandon
such transaction even if approved by the shareholders (see "Reservation of
Rights” beginning on page 18). The decision of the Board to
abandon the transaction will depend primarily upon the market price of the
Company’s common stock at the time the termination is announced, such as if the
then market price materially exceeds the buy-out price of $0.35 per share, or
upon a materially adverse and unforeseen event which would limit the Company’s
financial ability to purchase the fractional shares. If
shareholders approve and the Board elects to implement the Reverse/Forward Stock
Split, the Reverse/Forward Stock Split will be consummated as to
shareholders of record as of 6:01 p.m. (eastern standard time) on
______________, 2009 , upon the filing of the necessary amendments to
Entrx's Restated Certificate of Incorporation with the Secretary of State of the
State of Delaware (the "Effective Date"). The form of proposed amendments to
Entrx's Restated Certificate of Incorporation necessary to effect the
Reverse/Forward Stock Split are attached to this Proxy Statement as
Appendix A.
Entrx
believes that the Reverse/Forward Stock Split will result in
significantly reduced shareholder record keeping and mailing expenses for Entrx
and provide holders of fewer than 500 shares with an efficient, cost-effective
way to cash-out their investments.
It is
currently estimated that following the Reverse/Forward Stock Split, Entrx will have between
900 and 1,000 common stock shareholders, approximately 60 of whom will be of
record. Section 12(g)(4) of the Securities Exchange Act of 1934
provides that the Company can terminate its registration under that Act upon the
filing of a certificate to the Securities and Exchange Commission that it has
less than 300 shareholders. Upon such termination, our obligations
under the Securities Exchange Act of 1934, including our obligations to file
publicly available periodic reports with the Securities and Exchange Commission
and to provide our shareholders with proxy statements prior to shareholder
meetings, would cease. While we would have the ability to
terminate our registration under the Securities Exchange Act, we have no present
intention to do so.
Special Factors
We are
effecting the reverse stock split in order to cash out shareholders owning less
than 500 shares of our common stock. This will allow shareholders
owning less than 500 shares to cash out without paying a commission, and will
hopefully leave the remaining shareholders with a sufficient financial interest
in Entrx to be attentive to their investment. We are effecting the
forward stock split so that we will not have any fractional or odd-lot shares
outstanding after the transaction, and so that the number of shares held by the
remaining shareholders will remain the same, eliminating
confusion. The Board considered a tender offer for shares held by
shareholders owning less than 500 shares, but rejected that alternative as being
too expensive and likely to be ineffective, as few shareholders owning small
amounts of shares would respond to such an offer. Consummation of the
proposed Reverse/Forward Stock Split will:
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Reduce
the number of shareholders of Entrx from 4,700 to approximately 900 to
1,000.
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Reduce
the number of outstanding shares of Entrx from 7,656,147 to approximately
7,300,000.
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Eliminate
shareholders owning less than 500
shares.
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Have
minimal effect on affiliates of Entrx, or on unaffiliated shareholders
owning 500 shares or more.
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The
Company believes that the proposed transaction is fair to the unaffiliated
shareholders of Entrx. Unaffiliated shareholders owning more than 500
shares in any account will not be adversely affected. Unaffiliated
shareholders owning less than 500 shares will be cashed out at a price in excess
of the current trailing three-year average market price without having to pay a
commission that would otherwise make a sale impractical. Neither the
Company nor any of its directors has retained an unaffiliated representative to
act solely on behalf of unaffiliated shareholders for the purpose of negotiating
the terms of the proposed transaction or preparing a report as to the fairness
of the proposed transaction.
The
proposed transaction is subject to the approval of shareholders owning a
majority of Entrx’s outstanding shares, including affiliated
shareholders. The Reverse/Forward Stock Split was approved by a
majority of members of the board of directors who are not employees of the
Company.
We have
not sought any report, opinion or appraisal from any third party in connection
with the Reverse/Forward Stock Split, nor have we made any provision to grant
unaffiliated holders of our common stock access to our corporate files, or to
obtain legal counsel or appraisal services at the expense of the
Company.
Negative
Aspects of the Reverse/Forward Stock Split
Shareholders
owning less than 500 shares should consider the following negative aspects of
the Reverse/Forward Stock Split:
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The
Cash-Out Price we pay for the fractional shares will be less than
Entrx’s book value, and may be less than the market price on the
Effective Date.
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You
will no longer be entitled to vote as a shareholder of
Entrx.
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You
will no longer be entitled to share in any assets, earnings or dividends
in Entrx.
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You
will no longer be entitled to the receipt of proxy statements or other
information material provided by Entrx to its
shareholders.
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Shareholders
owning 500 shares or more should consider the following negative aspects of the
Reverse/Forward Stock Split:
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While
we do not intend to do so, following the Reverse/Forward Stock
Split, we could terminate our registration under the Securities Exchange
Act of 1934, in which case we would no longer be required to provide you
with information regarding the Company through the filing of proxy
statements, periodic reports and other reports required to be filed with
the Securities and Exchange
Commission.
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Effect
on Shareholders
If
approved by shareholders at the Meeting and implemented by the Board, the
Reverse/Forward Stock Split will affect Entrx shareholders as
follows:
Shareholder
before completion of the Reverse/Forward Stock
Split
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Net
effect after completion of the Reverse/Forward Stock
Split
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Registered
shareholders holding 500 or more shares of common
stock .
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None.
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Registered
shareholders holding fewer than 500 shares of common
stock .
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Shares
will be converted into the right to receive cash (see "Fairness of the
Reverse/Forward Stock Split" at page 14 ).
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Shareholders
holding common stock in street name through a nominee (such as a
bank or broker).
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In
connection with the Reverse/Forward Stock Split Entrx
intends to treat shareholders holding common stock in street
name through a nominee (such as a bank or broker) in the same manner as
shareholders whose shares are registered in their names. Nominees will be
instructed to effect the Reverse/Forward Stock Split for their
beneficial holders. However, nominees may have different procedures and
shareholders holding shares in street name should contact their
nominees.
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There
is no difference between the effect that the Reverse/Forward Stock Split will
have on affiliates as compared to non-affiliates. See “Effect of the
Reverse/Forward Stock Split on Entrx Shareholders – Affiliates” on page
12.
Reasons
for the Reverse/Forward Stock Split
The Board
recommends that shareholders approve the Reverse/Forward Stock Split
transaction described herein for the following reasons. These, and other
reasons, are described in detail under "Background and Purpose of the
Reverse/Forward Stock Split" below.
Issue
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Solution
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Entrx
has a large number of shareholders. Specifically, of the
approximately 4,700 shareholders, approximately 3,800 own less than 500
shares and approximately 2,500 own less than 100
shares. Continuing to maintain accounts for these shareholders,
including costs associated with required shareholder mailings, will cost
Entrx approximately $20,000 per year.
|
|
The
Reverse/Forward Stock Split will reduce the number of shareholders
which own relatively few shares, resulting in a cost saving to
Entrx.
|
|
|
|
Issue
|
|
Solution
|
In
many cases it is relatively expensive for shareholders with fewer than 500
shares to sell their shares on the open market.
|
|
The
Reverse/Forward Stock Split cashes out shareholders with small
accounts without transaction costs such as brokerage fees. However, if
these shareholders do not want to cash out their holdings of common
stock , they may purchase additional shares on the open market to
increase the number of shares of common stock in their account to
at least 500 shares, or if applicable, consolidate/transfer their accounts
into an account with at least 500 shares of common
stock.
|
Since
we are effecting a 500-for-one Forward Stock Split immediately after the Reverse
Stock Split, outstanding certificates for shares of our common stock will
continue to reference the correct number of shares. There will be no
need to submit outstanding certificates representing 500 shares or more of our
common stock for new certificates.
The
Board considered a tender offer for shares held by shareholders owning less than
500 shares, but rejected that alternative as being too expensive and likely to
be ineffective, as few shareholders owning small amounts of shares would respond
to such an offer. We made a substantially identical proposal for a
Reverse/Forward Stock Split at a shareholders meeting on January 28,
2008. We failed to get enough shareholders to vote in favor of the
proposal to get the required affirmative vote of a majority of the outstanding
shares. We believe that this was because of a lack of understanding
of the proposal, the short time between the mailing of the proxy statement and
the date of the meeting, and general shareholder and broker/dealer
apathy. We are attempting to provide more notice, and to contact many
of our shareholders by telephone or in person, urging them to vote on the
proposal.
Structure
of the Reverse/Forward Stock Split
The Reverse/Forward Stock Split
includes both a reverse stock split and a forward stock split of the common
stock . If the Reverse/Forward Stock Split transaction is approved by
shareholders and implemented by the Board, the Reverse Stock Split is
expected to occur at 6:00 p.m. Delaware time on the Effective Date and the
Forward Stock Split is expected to occur at 6:01 p.m. Delaware time on
the Effective Date. Upon consummation of the Reverse Stock Split, each
registered shareholder on the Effective Date will receive one share of common
stock for each 500 shares of common stock held in his or her account
at that time. If a registered shareholder holds at least 500 shares of common
stock in his or her account, any fractional share in such account will not
be cashed out after the Reverse Stock Split and the total number of
shares held by such holder will not change as a result of the Reverse/Forward
Stock Split. Any registered shareholder who holds fewer than 500 shares of
common stock in his or her account at the time of the Reverse
Stock Split (also referred to as a "Cashed-Out Shareholder") will receive
a cash payment instead of fractional shares. This cash payment has been
determined as described below under "Fairness of the Reverse/Forward
Stock Split" at page 14 . Immediately following the Reverse
Stock Split, all shareholders who are not Cashed-Out Shareholders will
receive 500 shares of common stock for every one share of common
stock they held following the Reverse Stock Split. We intend for the
Reverse/Forward Stock Split to treat shareholders holding common
stock in street name through a nominee (such as a bank or broker) in the
same manner as shareholders whose shares are registered in their names, and
nominees will be instructed to effect the Reverse/Forward Stock Split for
their beneficial holders. Accordingly, we also refer to those street name
holders who receive a cash payment instead of fractional shares as "Cashed-Out
Shareholders." However, nominees may have different procedures, and shareholders
holding shares in street name should contact their nominees.
In
general, the Reverse/Forward Stock Split can be illustrated by the
following examples:
Hypothetical
Scenario
|
|
Result
|
Mr.
Anderson is a registered shareholder who holds 400 shares of common
stock in his account immediately prior to the Reverse/Forward
Stock Split.
|
|
Instead
of receiving a fractional share of common stock after the Reverse
Stock Split, Mr. Anderson's shares will be converted into the right
to receive cash. Applying the Cash-Out Price of $0.35 per share, Mr.
Anderson would receive $140 ($0.35 x 400 shares).
Note:
If Mr. Anderson wants to continue his investment in Entrx, he can, prior
to the Effective Date, buy at least 100 more shares and hold them in his
account with the 400 shares he already has, giving him 500 shares. Mr.
Anderson would have to act far enough in advance of the Reverse/Forward
Stock Split so that the purchase is completed and the additional
shares are credited in his account by the close of business (eastern
standard time) on the Effective Date.
|
|
|
|
Ms.
Smith has two separate record accounts. As of the Effective Date, she
holds 300 shares of common stock in one account and 400 shares of
common stock in the other. All of her shares are registered in her
name only.
|
|
As
described above, Ms. Smith will receive cash payments equal to the
Cash-Out Price of $0.35 per share for her common stock in each
record account instead of receiving fractional shares. Accordingly, Ms.
Smith would receive two checks totaling $245 (300 x $0.35 = $105; 400 x
$0.35 = $140; $105 + $140 = $245).
Note:
If Ms. Smith wants to continue her investment in Entrx, she can
consolidate or transfer her two record accounts prior to the Effective
Date into an account with at least 500 shares of common stock .
Alternatively, she can buy at least 200 more shares for the first account
and at least 100 more shares for the second account. She would have to act
far enough in advance of the Reverse/Forward Stock Split so that
the consolidation or the purchase is completed by the close of business
(eastern standard time) on the Effective Date.
|
|
|
|
Mr.
Johnson holds 500 shares of common stock as of the Effective
Date.
|
|
After
the Reverse/Forward Stock Split, Mr. Johnson will continue to hold
all 500 shares of common stock.
|
|
|
|
Hypothetical
Scenario
|
|
Result
|
Ms.
Jones holds 1,000 shares of common stock in a brokerage account as
of the Effective Date.
|
|
Entrx
intends for the Reverse/Forward Stock Split to treat shareholders
holding common stock in street name through a nominee (such as a
bank or broker) in the same manner as shareholders whose shares are
registered in their names. Nominees will be instructed to effect the
Reverse/Forward Stock Split for their beneficial holders. However,
nominees may have different procedures. Ms. Jones should contact her
nominees to ascertain the procedure being adopted by that
nominee.
|
Background
and Purpose of the Reverse/Forward Stock Split
Entrx has
a shareholder base of approximately 4,700 shareholders. This is a relatively
large number of shareholders for a company of our size. As of
________________________, 2009 , approximately 3,800 holders of our
common stock owned fewer than 500 shares. At that time, these 3,800
shareholders represented approximately 81% of the total number of holders of
common stock , but held in the aggregate approximately 360,000 shares, or
only five percent of the total number of outstanding shares of common
stock .
Entrx
expects to benefit from a cost saving as a result of the Reverse/Forward
Stock Split. The cost of administering each registered shareholder's
account is the same regardless of the number of shares held in that account.
Therefore, Entrx's costs to maintain such small accounts are disproportionately
high when compared to the total number of shares involved. In connection with an
annual shareholder meeting, each registered and street name shareholder would
cost Entrx approximately $5.00, or at least $20,000, for transfer agent and
other administrative fees as well as printing and postage costs to mail proxy
materials and the annual report. We expect that these costs will only
increase over time.
Moreover,
the Reverse/Forward Stock Split will provide shareholders with fewer than
500 shares of common stock with a cost-effective way to cash out their
investments, because Entrx will pay all transaction costs in connection with the
Reverse/Forward Stock Split. Otherwise, shareholders with small holdings
would likely incur brokerage fees which are disproportionately high relative to
the market value of their shares if they wanted to sell their stock. The
Reverse/Forward Stock Split will eliminate these problems for most
shareholders with small holdings.
In light
of these disproportionate costs, the Board believes that it is in the best
interests of Entrx and its shareholders to eliminate the administrative burden
and costs associated with such small accounts, and to provide our
less-than-500-share shareholders a way of disposing of their shares on an
economical basis.
The
estimated cost of effecting the Reverse/Forward Stock Split, including
the cost of soliciting proxies, legal fees and stock transfer fees, is
$44,000 (not counting the amount we will pay for fractional
shares). We estimate printing and mailing costs, including
the amount charged to us by our stock transfer agent, will be
approximately $20,000, that our legal fees will be approximately $12,000, that
our solicitation costs (primarily our agreement with The
Altman Group discussed on page 1 of this Proxy) will be approximately
$2,000, and that the administrative costs related to the redemption of
the shares held by Cashed-Out Shareholders will be approximately
$2,000. These costs will be paid out of Entrx’s existing
cash.
None of
our executive officers, directors or affiliates that own any shares of our
common stock own less than 500 shares, and none of them will accordingly be
cashed out.
If the
proposed Reverse/Forward Stock Split is not passed or implemented, Entrx may
in the future pursue alternative methods of reducing its shareholder base,
including odd-lot tender offers and programs to facilitate sales by shareholders
of odd-lot holdings. However, there can be no assurance that Entrx will decide
to pursue any such transaction.
Effect
of the Reverse/Forward Stock Split on Entrx Shareholders
Registered Shareholders with Fewer
Than 500 Shares of
Common Stock:
If we
complete the Reverse/Forward Stock Split and you are a Cashed-Out
Shareholder (i.e., a shareholder holding fewer than 500 shares of common
stock in any account immediately prior to the Reverse Stock
Split):
o
|
You
will not receive fractional shares of stock as a result of the Reverse
Stock Split in respect of your shares being cashed
out.
|
o
|
Instead
of receiving fractional shares, you will receive a cash payment in respect
of your affected shares. See "Fairness of the Reverse/Forward Stock
Split" at page 14.
|
o
|
After
the Reverse Stock Split, you will have no further interest in Entrx
with respect to your cashed-out shares. These shares will no longer
entitle you to the right to vote as a shareholder or share in Entrx's
assets, earnings, or profits or in any dividends paid after the Reverse
Stock Split. In other words, you will no longer hold your
cashed-out shares, you will have only the right to receive cash for these
shares. In addition, you will not be entitled to receive interest with
respect to the period of time between the Effective Date and the date you
receive your payment for the cashed-out
shares.
|
o
|
You
will not have to pay any service charges or brokerage commissions in
connection with the Reverse/Forward Stock
Split.
|
o
|
As
soon as practicable after the time we effect the Reverse/Forward
Stock Split, you will receive a payment for the cashed-out shares you
held immediately prior to the Reverse Stock Split in accordance with the
procedures described below.
|
If You
Hold Book-Entry Shares:
o
|
Most
of Entrx's registered shareholders hold their shares in book-entry form
under the Direct Registration System for securities. These shareholders do
not have stock certificates evidencing their ownership of common
stock . They are, however, provided with a statement reflecting the
number of shares registered in their
accounts.
|
o
|
If
you are a Cashed-Out Shareholder who holds registered shares in a
book-entry account, you do not need to take any action to receive your
cash payment. A check will be mailed to you at your registered address as
soon as practicable after the Effective Date. By signing and cashing this
check, you will warrant that you owned the shares for which you received a
cash payment.
|
If You
Hold Certificated Shares:
o
|
If
you are a Cashed-Out Shareholder with a stock certificate representing
your cashed-out shares, you will receive a transmittal letter as soon as
practicable after the Effective Date. The letter of transmittal will
contain instructions on how to surrender your certificate(s) to Entrx's
transfer agent, American Stock Transfer, for your cash payment. You will
not receive your cash payment until you surrender your outstanding
certificate(s) to American Stock Transfer, together with a completed and
executed copy of the letter of transmittal. Please do not send your
certificates until you receive your letter of transmittal. For further
information, see "Stock Certificates" on page
16.
|
o
|
All
amounts owed to you will be subject to applicable federal income tax and
state abandoned property laws.
|
o
|
You
will not receive any interest on cash payments owed to you as a result of
the Reverse/Forward Stock
Split.
|
NOTE: If
you want to continue to hold common stock after the Reverse/Forward
Stock Split, you may do so by taking either of the following actions far
enough in advance so that it is completed by the Effective Date:
(1)
purchase a sufficient number of shares of common stock on the open market
so that you hold at least 500 shares of common stock in your account
prior to the Reverse Stock Split; or
(2) if
applicable, consolidate your accounts so that you hold at least 500 shares of
common stock in one account prior to the Reverse Stock
Split.
Registered
Shareholders with 500 or More Shares of Common Stock:
If You
Hold Certificated Stock:
If you
are a registered shareholder with 500 or more shares of common stock as
of 6:00 p.m. Delaware time on the Effective Date, we will first reclassify your
shares into one-five hundredth (1/500) of the number of shares you held
immediately prior to the Reverse Stock Split. One minute after the
Reverse Stock Split, at 6:01 p.m. Delaware time, we will reclassify your
shares in the Forward Stock Split into 500 times the number of shares you
held after the Reverse Stock Split, which will result in the same number
of shares you held before the Reverse Stock Split. As a result, the
Reverse/Forward Stock Split will not affect the number of shares that you
hold if you hold 500 or more shares of common stock immediately prior to
the Reverse Stock Split. To illustrate, if we were to effect the
1-for-500 Reverse/500-for-1 Forward Stock Split and you held 1,000 shares
of common stock in your account immediately prior to the Reverse Stock
Split, your shares would be converted into two shares in the Reverse
Stock Split and then back to 1,000 shares in the Forward Stock
Split.
If You
Hold Shares in Street Name:
Entrx
intends for the Reverse/Forward Stock Split to treat shareholders holding
common stock in street name through a nominee (such as a bank or broker)
in the same manner as shareholders whose shares are registered in their names.
Nominees will be instructed to effect the Reverse/Forward Stock Split for
their beneficial holders. However, nominees may have different procedures and
shareholders holding common stock in street name should contact their
nominees.
Option
and Warranty Holders:
If you
hold options or warrants to purchase Entrx stock, the Reverse/Forward
Stock Split will not affect the number of shares of common stock you
may acquire under those options or warrants.
Affiliates:
There
is no difference in the effect that the Reverse/Forward Stock Split will have on
affiliates of Entrx as compared to non-affiliates, since we are not aware of any
affiliates of Entrx owning less than 500 shares of our common stock in any
account, those affiliates will likely be affected in a manner identical to
non-affiliates who own more than 500 shares. If the Reverse/Forward
Stock Split is effected, the change in the interest of the affiliated
shareholders of Entrx in Entrx’s net book value and net earnings will be
immaterial. For example, if the Reverse/Forward Stock Split is
effected, the estimated ownership of outstanding shares of Peter L. Hauser, who
owns the largest number of Entrx’s shares, would have increased from 12.6% to
13.2%. The estimated increase in his per share book value at
September 30, 2008 would have increased from $0.897 to $0.924, or from $687,179
to $718,159, in the aggregate. Mr. Hauser’s estimated share of net
income per share for the nine months ended September 30, 2008 would have
increased from $35,909 to $37,681. No other affiliate owns over 2% of
Entrx’s outstanding common stock. None of our officers or directors
own less than 500 shares; accordingly, none of them will receive any cash
pay-out.
Financial
Information
The
following summary financial information is derived from our audited consolidated
balance sheets at December 31, 2006 and December 31, 2007, and unaudited
consolidated balance sheet at September 30, 2008:
|
September
30, 2008 (unaudited)
|
December
31, 2007
|
December
31, 2006
|
|
|
|
|
Current
Assets
|
$
15,926,522
|
$
15,688,122
|
$
14,927,725
|
Noncurrent
Assets
|
26,021,760
|
30,010,494
|
36,739,490
|
Current
Liabilities
|
9,653,555
|
10,285,865
|
10,628,179
|
Noncurrent
Liabilities
|
25,425,756
|
29,132,470
|
35,067,762
|
The
total shareholders' equity as of September 30, 2008, was $6,868,971 and the book
value per share was $0.90.
The
following summary financial information is derived from our audited consolidated
income statements for the years ended December 31, 2006 and December 31, 2007,
and unaudited consolidated income statement for the nine-month period ended
September 30, 2008:
|
Nine-Month
Period Ended September 30, 2008
(unaudited)
|
2007
|
2006
|
|
|
|
|
Gross
Revenues
|
$ 20,495,888
|
$
22,358,764
|
$
19,517,250
|
Contract
Costs and Expenses
|
16,984,168
|
18,352,750
|
16,638,105
|
Gross
Margin
|
3,511,720
|
4,006,014
|
2,879,145
|
Net
Income
|
353,798
|
622,116
|
2,051,995
|
|
|
|
|
Net
Income Per Share of Common Stock (basic and diluted)
|
$0.05
|
$0.08
|
$0.26
|
Reference
is made to our Form 10KSB annual report for 2007 and our Form 10Q
quarterly report for the nine-month period ended September 30, 2008, filed with
the Securities and Exchange Commission, for a full presentation of our financial
statements, starting on pages 21 and one of those documents,
respectively.
The
impact of the Reverse/Forward Stock Split on the income statement for the year
ended December 31, 2007, assuming that the Reverse/Forward Stock Split occurred
on January 1, 2007, would be to decrease by 360,000 the weighted average number
of common shares, basic and diluted, to 7,361,065. There would be no
other changes to any income statement amounts.
The
impact of the Reverse/Forward Stock Split on the September 30, 2008 balance
sheet, of the Company, assuming that the Reverse/Forward Stock Split occurred on
September 30, 2008, would be to decrease by $126,000 (not including estimated
expenses of $44,000) the balances of cash and cash equivalents, total current
assets and total assets, to $990,560, $15,800,522 and $41,822,282,
respectively. Additional paid-in capital, total shareholders’
equity and total liabilities and shareholders’ equity would also be reduced by
$126,000, to $69,705,881, $6,742,971 and $41,822,282,
respectively. There would be no change to any other balance sheet
amounts.
The
impact of the Reverse/Forward Stock Split on the income statement for the nine
months ended September 30, 2008, assuming that the Reverse/Forward Stock Split
occurred on January 1, 2008, would be to decrease by 360,000 the weighted
average number of common shares, basic and diluted, to
7,292,205. There would be no other changes to any income statement
amounts.
Fairness
of the Reverse/Forward Stock Split
Cashed-Out
Shareholders
We
believe that the Reverse/Forward Stock Split is fair to all of our
shareholders who are being cashed out, and who are not considered affiliates of
Entrx by reason of positions of control. Based upon the Cash-Out
Price of $0.35, a shareholder owning 499 shares would receive $174.65, without
paying a commission. Most of the shareholders to be cashed out own
substantially less than 500 shares; many of them own only one
share. This is an opportunity for shareholders with small
holdings to obtain the value of the shares without payment of a commission,
which would, in many cases, equal or exceed the value of the
shares. If a shareholder does not want to be cashed out, for a
relatively small amount of money (less than $0.20 per share at the market
price as of the date of this Proxy Statement) he or she can acquire
additional shares to bring their holdings to 500 shares or greater.
We have
reported earnings of $622,000, or $0.08 per share, for 2007, and
$354,000, or $0.05 per share, for the first nine months of
2008. We had a lost of $0.01 per share in the third quarter
of 2008, but project that we will be profitable for
2008.
Our
historical net income (loss) since 2003 are as follows:
Year
|
Net Income (Loss)
|
Per Share
|
2007
|
$622,000
|
$0.08
|
2006
|
2,052,000
|
0.26
|
2005
|
(1,743,000)
|
(0.23)
|
2004
|
611,000
|
0.08
|
2003
|
(3,006,000)
|
(0.41)
|
Significant
swings in our profits and losses over the past approximately five years have
often been greatly influenced by events outside of normal day-to-day operations,
such as profit recorded upon the sale of our office and manufacturing
facilities in 2006. Nevertheless, our earnings history has been
erratic, and may be an unreliable criterion by which to measure the value of our
common stock.
The
Company has not paid any dividends during the past five years, and at this time
has no plan to do so. The Company’s ability to declare a dividend is
restricted only to the extent of its cash on hand and the board of directors’
determination of the best use of that cash.
Entrx
Corporation common stock is traded sporadically over the counter, and bid and
asked quotations, as well as transactions, are reported in the pink
sheets. The market price has apparently consistently recognized the
foregoing limitation, as the high bid for our common stock has not exceed $0.47
for at least the last few years. The high and low closing bid
quotations, as reported in the pink sheets for each quarter since October 1,
2006, are as follows:
|
High Bid
|
Low Bid
|
2006
|
|
|
4th
Quarter
|
$0.23
|
$0.11
|
2007
|
|
|
1st
Quarter
|
0.47
|
0.16
|
2nd
Quarter
|
0.34
|
0.17
|
3rd
Quarter
|
0.38
|
0.16
|
4th
Quarter
|
0.46
|
0.28
|
2008
|
|
|
1st
Quarter
|
0.42
|
0.25
|
2nd
Quarter
|
0.32
|
0.21
|
3rd
Quarter
|
0.30
|
0.21
|
In
establishing the Cash-Out Price of $0.35 per share, we have primarily taken into
consideration the historical market price of our common stock. When
Entrx presented a substantially identical proposal to the shareholders of Entrx
in January 2008, the price of its common stock had reached $0.35 per share on
only four days; two in August 2006 and two in September 2006, during the
previous two calendar years of 2006 and 2007. At that time the Board
of Directors felt that that the highest closing bid price of the previous two
years was more than fair to the cashed-out shareholders. In
resubmitting this proposal to shareholders, Entrx’s management and the Board of
Directors again reviewed the historical market price of Entrx’s common stock,
and observed for the past two years that the closing per-share bid price ranged
from $0.11 to $0.47. During the past two-year period, beginning
January 1, 2007, the closing bid price was over $0.35 per share on about 50
trading days, and under $0.20 per share on over 100 trading days during the same
period. The closing bid price has not exceeded $0.35 since January
2008, when there was a short term rise in that bid price. At the
close of business on December 22, 2008, the closing bid price of our common
stock was $0.12 per share. The 52-week price range of our common
stock, ending on September 30, 2008, was $0.21 to $0.46.
Entrx’s
management and Board of Directors also considered Entrx’s per share book value
of approximately $0.82 on December 31, 2007, and approximately $0.90 on
September 30, 2008. If Entrx were liquidated, it is unlikely that
this amount, or even a substantial portion, would be available for distribution
to shareholders. It is highly likely that liquidation would involve a
bankruptcy proceeding because of Entrx’s large potential asbestos-related
liability, the involvement of our insurers, and the need to have those
asbestos-related cases litigated, administered and funded.
Entrx’s
management believes that the value of Entrx as a going concern, as well as the
market price for its shares, is significantly and adversely affected by its
asbestos-related liabilities. Our estimated liability for currently
active and potential future asbestos-related injury cases as of September 30,
2008, is $30,750,000. This estimate is continually subject to review,
as asbestos-related cases are commenced and administered, and is subject to
uncertainty. While Entrx’s management continues to believe that it
has adequate insurance to cover current and future asbestos-related liabilities,
such coverage cannot be assured, and a potential buyer would likely materially
discount the price of Entrx as a going concern.
Based
upon the foregoing, the Board of Directors established $0.35 per share as the
cash-out price, and continues to believe that price to be a fair value for the
Entrx shares in payment to the cashed-out shareholders.
We
have not structured the vote on the Reverse/Forward Stock Split requiring a vote
of a majority of the shares held by unaffiliated shareholders (in this case,
shareholders who are not officers or directors of Entrx). The
interests of the affiliated and non-affiliated shareholders who are not being
cashed out under the Reverse/Forward Stock Split proposal are substantially
identical and, since the proposal requires the affirmative vote of shareholders
owning a majority of the outstanding shares, excluding the vote of affiliates
would make passage of the proposal extremely unlikely, particularly given the
historical lack of interest demonstrated by past shareholder voting
patterns.
We
continually seek ways to increase shareholder value. If any of our
attempts to do so prove successful, a cashed-out shareholder will not be able to
participate in that success unless he or she subsequently acquires shares of
Entrx. On the other hand, there is no assurance that we will be
successful in such attempts.
The
proposed Reverse/Forward Stock Split was approved by all three of the members of
the Board of Directors who are not employees of Entrx.
Neither
the Company nor any of its directors has retained an unaffiliated representative
to act solely on behalf of unaffiliated shareholders for the purpose of
negotiating the terms of the proposed transaction or preparing a report as to
the fairness of the proposed transaction.
Shareholders
Who Are Not Cashed-Out
Unaffiliated
shareholders owning 500 shares or more of our common stock are not adversely
affected financially. The Cash-Out Price is anti-dilutive in terms of
Entrx’s book value. There is no materially adverse financial
consequence to Entrx which would affect the value of our continuing
shareholders’ shares. Trading volume in our stock is unlikely to be
affected, as we believe that trading in blocks of less than 500 shares
represents only a small fraction of our trading volume.
While we
do not intend to apply for deregistration under the Securities Exchange Act of
1934, if we were to do so, we would not be obligated to provide our continuing
shareholders with information as mandated under the Securities Exchange
Act. See “Effect of the Reverse/Forward Stock Split on Entrx”
below.
The
ability of management or other shareholders owning more than 5% of our
outstanding common stock to exercise control by an increased percentage
ownership interest in Entrx will not be meaningfully enhanced. The
percentage ownership of our outstanding common stock by our executive officers,
directors and director nominees as a group will increase only from 15.9% to
16.6%. See “Common Stock Ownership” below.
Effect
of the Reverse/Forward Stock Split on Entrx
It is
currently estimated that following the Reverse/Forward Stock Split, Entrx
will have between 900 and 1,000 common stock shareholders, approximately 60 of
whom will be of record. Section 12(g)(4) of the Securities Exchange
Act of 1934 provides that the Company can terminate its registration under that
Act upon the filing of a certificate with the Securities and Exchange Commission
stating that it has less than 300 shareholders of record. Upon such
termination, our obligations under the Securities Exchange Act of 1934,
including our obligations to file publicly available periodic reports with the
Securities and Exchange Commission and to provide our shareholders with proxy
statements prior to shareholder meetings, would cease. We do not
intend to terminate our registration under the Securities Exchange Act in the
near future.
On
___________, 2009, there were 7,656,147 shares of common stock
issued and outstanding. The number of shares of authorized shares of
common stock will not change as a result of the Reverse/Forward Stock
Split. On the other hand, the total number of outstanding shares of
common stock will be reduced by the number of shares held by the
Cashed-Out Shareholders immediately prior to the Reverse Stock
Split.
The total
number of shares that will be cashed-out and the total cash to be paid by Entrx
is unknown at this time; we estimate, however, that 360,000 shares may be cashed
out, and that the cash payments that will be paid to Cashed-Out Shareholders,
including both registered and street name holders, will be approximately
$126,000 . The actual amounts will depend on the number of
Cashed-Out Shareholders on the Effective Date, which may vary from the number of
such shareholders on ___________, 2009. Payment for the shares
of Cashed-Out Shareholders will come out of our cash reserves. All
shares acquired will be held in treasury and eventually retired.
The par
value of the common stock will remain at $.10 per share after the
Reverse/Forward Stock Split.
Stock
Certificates
The
Reverse/Forward Stock Split will not affect any certificates representing
shares of common stock held by registered shareholders owning 500 or more
shares of common stock immediately prior to the Reverse Stock
Split. Old certificates held by any of these shareholders will continue to
evidence ownership of the same number of shares as is set forth on the face of
the certificate.
Any
Cashed-Out Shareholder with share certificates will receive a letter of
transmittal after the Reverse/Forward Stock Split is completed. These
shareholders must complete and sign the letter of transmittal and return it with
their stock certificate(s) to Entrx's transfer agent, American Stock Transfer,
before they can receive cash payment for those shares.
Certain
Federal Income Tax Consequences
We have
summarized below certain federal income tax consequences to Entrx and
shareholders resulting from the Reverse/Forward Stock Split. This summary
is based on U.S. federal income tax law existing as of the date of this Proxy
Statement, and such tax laws may change, even retroactively. This summary does
not discuss all aspects of federal income taxation which may be important to you
in light of your individual circumstances. Many shareholders (such as financial
institutions, insurance companies, broker-dealers, tax-exempt organizations, and
foreign persons) may be subject to special tax rules. Other shareholders may
also be subject to special tax rules, including but not limited to: shareholders
who received common stock as compensation for services or pursuant to the
exercise of an employee stock option, or shareholders who have held, or will
hold, stock as part of a straddle, hedging, or conversion transaction for
federal income tax purposes. In addition, this summary does not discuss any
state, local, foreign, or other tax considerations. This summary assumes that
you are a U.S. citizen and have held, and will hold, your shares as capital
assets under the Code. You should consult your tax advisor as to the particular
federal, state, local, foreign, and other tax consequences, in light of your
specific circumstances.
We
believe that the Reverse/Forward Stock Split will be treated as a tax-free
"recapitalization" for federal income tax purposes. Accordingly, the
Reverse/Forward Stock Split will not result in any material federal
income tax consequences to Entrx.
Federal
Income Tax Consequences to Shareholders Who Are Not Cashed Out by the
Reverse/Forward Stock Split
If you
(1) continue to hold common stock immediately after the Reverse/Forward
Stock Split, and (2) receive no cash as a result of the Reverse/Forward
Stock Split, you will not recognize any gain or loss in the
Reverse/Forward Stock Split and you will have the same adjusted tax basis
and holding period in your common stock as you had in such stock
immediately prior to the Reverse/Forward Stock Split.
Federal
Income Tax Consequences to Cashed-Out Shareholders
If you
receive cash as a result of the Reverse/Forward Stock Split, your tax
consequences will depend on whether, in addition to receiving cash, you or a
person or entity related to you continues to hold common stock
immediately after the Reverse/Forward Stock Split, as explained
below.
Shareholders
Who Exchange All of Their Common Stock for Cash as a Result of the
Reverse/Forward Stock Splits
If you
(1) receive cash in exchange for a fractional share as a result of the
Reverse/Forward Stock Split, (2) do not continue to hold any common
stock immediately after the Reverse/Forward Stock Split, and (3) are
not related to any person or entity which holds common stock immediately
after the Reverse/Forward Stock Split, you will recognize capital gain or
loss. The amount of capital gain or loss you recognize will equal the difference
between the cash you receive for your cashed-out stock and your aggregate
adjusted tax basis in such stock.
If you
are related to a person or entity who continues to hold common stock
immediately after the Reverse/Forward Stock Split, you will recognize
gain in the same manner as set forth in the previous paragraph, provided that
your receipt of cash either (1) is "not essentially equivalent to a dividend,"
or (2) is a "substantially disproportionate redemption of stock," as described
below.
o
|
"Not
Essentially Equivalent to a Dividend." You will satisfy the "not
essentially equivalent to a dividend" test if the reduction in your
proportionate interest in Entrx resulting from the Reverse/Forward
Stock Split is considered a "meaningful reduction" given your
particular facts and circumstances. The Internal Revenue Service has ruled
that a small reduction by a minority shareholder whose relative stock
interest is minimal and who exercises no control over the affairs of the
corporation will meet this test. In consultation with your own
tax advisor, you should determine whether that Internal Revenue Service
ruling would, or would not, apply given your particular facts and
circumstances.
|
o
|
"Substantially
Disproportionate Redemption of Stock." The receipt of cash in the
Reverse/Forward Stock Split will be a "substantially
disproportionate redemption of stock" for you if the percentage of the
outstanding shares of common stock owned by you immediately after
the Reverse/Forward Stock Split is less than 80% of the percentage
of shares of common stock owned by you immediately before the
Reverse/Forward Stock Split.
|
In
applying these tests, you will be treated as owning shares actually or
constructively owned by certain individuals and entities related to you. If the
taxable amount is not treated as capital gain under any of the tests, it will be
treated first as ordinary dividend income to the extent of your ratable share of
Entrx's undistributed earnings and profits, then as a tax-free return of capital
to the extent of your aggregate adjusted tax basis in your shares, and any
remaining gain will be treated as capital gain.
Shareholders
Who Both Receive Cash and Continue to Hold Common Stock Immediately After the
Reverse/Forward Stock Splits
If you
both receive cash as a result of the Reverse/Forward Stock Split and continue to
hold common stock immediately after the Reverse/Forward Stock
Split, you generally will recognize gain, but not loss, in an amount equal to
the lesser of (1) the excess of the sum of aggregate fair market value of your
shares of common stock plus the cash received over your adjusted tax
basis in the shares, or (2) the amount of cash received in the
Reverse/Forward Stock Split. In determining whether you continue to hold
common stock immediately after the Reverse/Forward Stock Split,
you will be treated as owning shares actually or constructively owned by certain
individuals and entities related to you. Your aggregate adjusted tax basis in
your shares of common stock held immediately after the Reverse/Forward
Stock Split will be equal to your aggregate adjusted tax basis in your
shares of common stock held immediately prior to the Reverse/Forward
Stock Split, increased by any gain recognized in the Reverse/Forward
Stock Split, and decreased by the amount of cash received in the
Reverse/Forward Stock Split.
Any gain
recognized in the Reverse/Forward Stock Split will be treated, for
federal income tax purposes, as capital gain, provided that your receipt of cash
either (1) is "not essentially equivalent to a dividend" with respect to you, or
(2) is a "substantially disproportionate redemption of stock" with respect to
you. (Each of the terms in quotation marks in the previous sentence is discussed
above under the heading "Shareholders who Exchange all of their common
stock for Cash as a Result of the Reverse/Forward Stock Split.") In
applying these tests, you may possibly take into account sales of shares of
common stock that occur substantially contemporaneously with the
Reverse/Forward Stock Split. If your gain is not treated as capital gain
under any of these tests, the gain will be treated as ordinary dividend income
to you to the extent of your ratable share of Entrx's undistributed earnings and
profits, then as a tax-free return of capital to the extent of your aggregate
adjusted tax basis in your shares, and any remaining gain will be treated as a
capital gain.
The
preceding summary was not intended or written to be used, and cannot be used,
for the purpose of avoiding any tax penalties. It is intended to
provide general information in support of the Board of Directors’ recommendation
to effect the Reverse/Forward Stock Split. You should consult
your tax advisor as to the particular federal, state, local, foreign, and other
tax consequences of the Reverse/Forward Stock Split, in light of your
specific circumstances.
Appraisal
Rights
Shareholders
do not have appraisal rights under Delaware state law or under Entrx's Restated
and Amended Certificate of Incorporation or By-laws in connection with the
Reverse/Forward Stock Split.
Reservation
of Rights
We
reserve the right to abandon the Reverse/Forward Stock Split without
further action by our shareholders at any time before the filing of the
necessary amendments to Entrx's Restated and Amended Certificate of
Incorporation with the Delaware Secretary of State, even if the Reverse/Forward
Stock Split has been authorized by our shareholders at the Special
Meeting, and by voting in favor of the Reverse/Forward Stock Split you
are expressly also authorizing us to determine not to proceed with the
Reverse/ Forward Stock Split if we should so decide.
Board
of Directors’ Recommendation
The
Board of Directors Recommends That You Vote for the Proposals to Amend the
Restated and Amended Certificate of Incorporation of Entrx Corporation to Effect
the Reverse/Forward Stock Split.
OFFICERS
AND DIRECTORS
Peter L.
Hauser . Peter L. Hauser is the Company’s Chief Executive
Officer, a director and the beneficial owner of 12.6% of the Company’s common
stock. Mr. Hauser’s business address is Entrx Corporation, 800
Nicollet Mall, Suite 2690, Minneapolis, Minnesota 55402, and his telephone
number is 612-333-0614. Mr. Hauser has been the president and chief
executive officer of Entrx Corporation since October 2004, and devotes
approximately one-third of his working time to such office. In July
2008, Mr. Hauser founded, and is the owner of, Standard Health, Inc., with
offices in St. Paul, Minnesota. Standard Health, Inc. engages in the
marketing of a proprietary software system called HealthAccountPro™, for health
care claim administration and accounting serving the consumer-driven health care
plans through third-party health care administrators, for unions and
self-directed corporate health care plans. Mr. Hauser was a founder,
and was the principal owner and chairman of the board of directors, of Health
Care Financial Solutions, Inc., from March 2003 until July
2008. Healthcare Financial Solutions, Inc., with its office located
in St. Paul, Minnesota, was engaged in the development and marketing of the
software system now being marketed by Standard Health, Inc. From 1967
until June 2003, Mr. Hauser was engaged in the securities brokerage
industry. During that period, from 1977 through April 2003, Mr.
Hauser was employed at Equity Securities Trading Co., Inc., a Minneapolis,
Minnesota-based securities brokerage firm (now known as The Oak Ridge Financial
Group, Inc.), where he acted as a vice president and a principal beginning in
1993. Mr. Hauser was an account executive at Feltl & Company, a
Minneapolis, Minnesota securities brokerage firm, from April 2003 until June
2003, at which time he retired from the securities industry. From
1993 until 2003, Mr. Hauser was a member of the board of directors of GelStat
Corp. (OTCBB: GSAC.OB), (formerly called “Developed Technology Resources,
Inc.”), which was previously engaged in various enterprises in the former Soviet
Union, including the distribution of airport security equipment and the
manufacture and distribution of dairy products and snack foods. By
2003, GelStat Corp. had disposed of all of its assets relating to its former
Soviet Union enterprises, and began engaging in the domestic production and
distribution of over-the-counter, non-prescription health care
products.
Brian D.
Niebur . Brian D. Niebur is the Company’s Chief Financial
Officer. Mr. Niebur’s business address is Entrx Corporation, 800
Nicollet Mall, Suite 2690, Minneapolis, Minnesota 55402, and his telephone
number is 612-333-0614. Mr. Niebur has been employed part time by
Entrx as its treasurer and chief financial officer since February
2002. Mr. Niebur has a Bachelor of Arts degree in accounting and is a
certified public accountant (inactive). Since July 2000, Mr. Niebur
has acted as a vice president and controller for Wyncrest Capital, Inc. located
at 800 Nicollet Mall Suite 2690 Minneapolis, Minnesota 55402, a privately held
venture capital firm. Mr. Niebur’s primary duties for Wyncrest
Capital, Inc. have been to act as chief financial officer and a director for
Spectre Gaming, Inc. (OTCBB: SGMG), in which Wyncrest Capital, Inc.
had made an equity investment, from January 2003 until November
2005. Spectre Gaming, Inc. was engaged in the business of developing
and marketing electronic gaming systems for the Native American gaming
market. Mr. Niebur’s duties for Wyncrest Capital, Inc. also included
acting from January 2005 until March 2007 as Chief Financial Officer and
Secretary of Ready Credit Corporation (Pink Sheets: RCTC), another corporation
in which Wyncrest Capital, Inc. has an investment, with offices in Minneapolis,
Minnesota, and from January 2005 until May 2008 as a member of the board of
directors of Ready Credit Corporation.
David R. Trueblood. David
R. Trueblood was elected as President of Entrx’s wholly owned subsidiary,
Metalclad Insulation Corporation, on February 1, 2007. Mr. Trueblood
has been employed by Metalclad Insulation Corporation since November 1993, in
various capacities. Immediately prior to his appointment as
President, Mr. Trueblood served as project manager, bidding upon, securing and
managing a number of Metalclad’s most important projects.
Joseph M.
Caldwell . Joseph M. Caldwell is a director of the
Company. Mr. Caldwell’s business address is US Internet, 12450
Wayzata Blvd., Suite 121, Minnetonka, Minnesota 55305, and his
952-253-3200. Mr. Caldwell founded US Internet Corporation in March
1995, and since that date has served on its board of
directors. From March 1995 to May 2000 Mr. Caldwell was the chief
executive officer of US Internet Corporation. In June 2005 he became the
Vice President of Marketing for US Internet Corporation, a position he currently
holds. US Internet Corporation is a privately held Internet service
provider, providing services in over 1,300 cities nationwide and over 110
cities internationally, with its principal office at 12450 Wayzata Blvd, #121,
Minnetonka, Minnesota, 55305. From April 2002 until June 2005, Mr.
Caldwell was the chief executive officer of Marix Technologies, Inc., and
beginning in May, 2000, a member of its board of directors. Marix
Technologies, Inc. was a privately held company based in Minneapolis, Minnesota
that developed and marketed software designs to facilitate and control offsite
access to software applications and information.
E. Thomas
Welch . E. Thomas Welch is a director of the
Company. Mr. Welch’s business address is BNC National Bank, 333 South
Seventh Street, Suite 150, Minneapolis, Minnesota 55402, and his telephone
number is 612-305-2201. Mr. Welch has been the president of BNC
National Bank at its Minneapolis, Minnesota office, since April
2005. BNC National Bank, with corporate offices in Phoenix, Arizona,
conducts banking business through 21 banks located in North Dakota, Minnesota
and Arizona. Mr. Welch was a Managing Director of the U. S. Trust
Company, located at 730 2nd Ave South, # 1400, Minneapolis, Minnesota
55402, from April 2001 until March 2005, where he was primarily responsible for
financial, risk management, compliance and fiduciary matters. U.S.
Trust Company was engaged nationally in the trust, asset management, investment
and banking business. From 1984 until April 2001, Mr. Welch was
employed by Resource Trust Company, in Minneapolis, Minnesota, where he acted as
the president from 1988 to April 2001, in charge of private banking, trust
investment and corporate matters. Resource Trust Company and its principal
affiliated companies were acquired by U.S. Trust Company in April
2001. Mr. Welch has a Bachelor’s degree in accounting and a J.D.
degree in law.
David E.
Cleveland . David E. Cleveland is a director of the
Company. Mr. Cleveland’s address is W3195 Soholt Road, Sarona, WI
54870 and his business telephone number is 612-333-0164. Mr.
Cleveland was chairman of the Board of Associated Bank of Minnesota, located at
1801 Riverside Avenue, Minneapolis, Minnesota 55454, from March 2001 until April
2004, and President of the Board of that bank from March 13, 2000 until January
2001. From March 1987 until March 2000, Mr. Cleveland was President
of the Riverside Bank, in Minneapolis, Minnesota. From April 1969
until March 1987, Mr. Cleveland served consecutively as President of State Bank
of Hudson, Hudson, Wisconsin, Riverside Community State Bank, Minneapolis, and
Resources Bank & Trust, Minneapolis. Mr. Cleveland has been
retired since April 2004.
None
of the above persons has been convicted in a criminal proceeding during the past
five years (excluding traffic violations or similar
misdemeanors). None of the above persons has been a party to any
judicial or administrative proceeding during the past five years that resulted
in a judgment, decree or final order enjoining any of them from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities
laws. Each of the above persons is a citizen of the United
States. Each officer and director of the Company has indicated that
he intends to vote his shares, including the shares for which he may hold a
proxy, in favor of the Reverse/Forward Stock Split, believing it to be in the
best interests of all of the shareholders, including the shareholders being
cashed out.
COMMON
STOCK OWNERSHIP
Share
Ownership of Officers and Directors
The
following table sets forth certain information as of ___________, 2009 ,
with respect to the shares of common stock beneficially owned by: (i) each
director; (ii) each executive officer; and (iii) all current executive officers
(regardless of salary and bonus level) and directors as a group. The table also
reflects the percentage of outstanding shares beneficially owned in each case,
and the pro forma percentage which would be owned as if the Reverse/Forward
Stock Split was effected on ___________, 2009 . The
address for each shareholder is 800 Nicollet Mall, Suite 2690, Minneapolis, MN
55402, except for Mr. Trueblood, whose address is 1818 Rossyln Avenue,
Fullerton, CA 92831. Unless otherwise indicated, the shareholders
listed in the table below have sole voting and investment powers with respect to
the shares indicated:
Name
of Beneficial Owner
|
|
Position
|
|
Number
of Common Shares Beneficially Owned
|
|
Percentage
of Outstanding
Shares(7)
|
|
Pro
Forma Percentage of Outstanding Shares
(7)(8)
|
Peter
L. Hauser
|
|
Chief Executive
Officer and Director
|
|
987,075
(1)
|
|
12.6
|
|
13.2
|
David
E. Cleveland
|
|
Director
|
|
10,000
|
|
*
|
|
*
|
Joseph
M. Caldwell
|
|
Director
|
|
130,000
(2)
|
|
1.7
|
|
1.8
|
E.
Thomas Welch
|
|
Director
|
|
65,000
(3)
|
|
*
|
|
*
|
Brian
D. Niebur
|
|
Chief
Financial Officer
|
|
80,000
(4)
|
|
1.0
|
|
1.1
|
David
R. Trueblood
|
|
President
of Metalclad Insulation Corporation, a wholly owned subsidiary of
Entrx
|
|
7,000
(5)
|
|
*
|
|
*
|
All
current executive officers and directors, as a group (6
persons)
|
|
|
|
1,279,075
(6)
|
|
15.9
|
|
16.6
|
____________
*
|
Less
than 1%
|
(1)
|
Includes
210,000 shares that Mr. Hauser may acquire upon the exercise of
outstanding stock options and warrants.
|
(2)
|
Includes
90,000 shares that Mr. Caldwell has the right to acquire upon the exercise
of outstanding stock options.
|
(3)
|
Includes
25,000 shares that Mr. Welch may acquire upon the exercise of outstanding
stock options.
|
(4)
|
Includes
70,000 shares which Mr. Niebur may acquire upon the exercise of
outstanding stock options.
|
(5)
|
Includes
7,000 shares which Mr. Trueblood may acquire upon the exercise of
outstanding stock options.
|
(6)
|
Assumes
that each shareholder listed exercised all options available to that
person which would vest as of ______________,
2009.
|
(7)
|
The
percentage of outstanding shares of common stock as shown in the table
above is calculated on 7,656,147 shares outstanding, as of
______________, 2009 , plus it assumes in each case that the
shareholder exercised all vested options available to that person as of
_____________, 2009.
|
(8)
|
Assumes
the Reverse/Forward Stock Split was effected as of
_________________, 2009 , and that the number of shares redeemed is
360,000, leaving an estimated 7,296,147 shares
outstanding.
|
Share
Ownership of Certain Beneficial Owners
The
following table sets forth the name, address, number of shares of Entrx's common
stock beneficially owned, and the percentage of the outstanding shares of common
stock such shares represent (both before and after the proposed Reverse/Forward
Stock Split), of each person or group of persons, known by Entrx to
beneficially own more than 5% of Entrx's outstanding common stock as of
________________, 2009. Unless otherwise indicated, the
shareholders listed in the table below have sole voting and investment powers
with respect to the shares indicated:
Name
and Address
of
Beneficial Owner
|
|
Number of Common Shares
Beneficially Owned
|
|
Before Reverse/Forward
Stock Split Percentage of Outstanding Shares (6)
|
|
After
Reverse/Forward Stock Split Percentage of Outstanding Shares (6)(7)
|
Peter
L. Hauser
16130
East Chollah Drive
Fountain
Hills, AZ 85268
|
|
987,075(1)
|
|
12.6
|
|
13.2
|
|
|
|
|
|
|
|
Wayne
W. Mills
5020
Blake Road
Edina,
MN 55436
|
|
445,000 (2)
|
|
5.8
|
|
6.1
|
|
|
|
|
|
|
|
Grant
S. Kesler
3739
Brighton Point Drive
Salt
Lake City, UT 84121
|
|
764,335(3)
|
|
9.2
|
|
9.7
|
|
|
|
|
|
|
|
Anthony
C. Dabbene
26921
Magnolia Court
Laguna
Hills, CA 92653
|
|
487,200(4)
|
|
6.0
|
|
6.3
|
|
|
|
|
|
|
|
George
W. Holbrook, Jr.
1157
S.W. 30th
Street
Suite
E
Box
1938
Palm
City, FL 34991
|
|
451,615(5)
|
|
5.9
|
|
6.2
|
|
|
|
|
|
|
|
James
R. McGoogan
1157
S.W. 30th
Street
Suite
E
Box
1938
Palm
City, FL 34991
|
|
387,740(5)
|
|
5.1
|
|
5.3
|
|
|
|
|
|
|
|
Bradley
Resources Company
1157
S.W. 30th
Street
Suite
E
Box
1938
Palm
City, FL 34991
|
|
376,255(5)
|
|
4.9
|
|
5.2
|
____________
(1)
|
Includes
10,000 shares which Mr. Hauser may purchase under currently exercisable
options at $0.55 per share, and 200,000 shares which Mr. Hauser may
purchase under currently exercisable options at $0.50 per
share.
|
(2)
|
As
reported on a Form 13D/A on February 14, 2008, Mr. Mills owns
225,000 shares held in his Individual Retirement
Account, and 50,000 shares which Mr. Mills may purchase under a currently
exercisable options at prices ranging from $0.50 to
$2.50 per share.
|
(3)
|
Includes
620,000 shares which Mr. Kesler may purchase under currently exercisable
options at prices ranging from $2.00 to $3.00 per
share.
|
(4)
|
Includes
450,000 shares which Mr. Dabbene may purchase under currently exercisable
options at prices ranging from $2.00 to $3.00 per
share.
|
( 5)
|
As
reported in a Form 13-G on January 7, 2005, Messrs.
Holbrook and McGoogan own 75,360 and 11,485 shares, respectively, of our
common stock and are both partners of Bradley Resources Company with
shared voting and dispositive power with respect to the 476,255 shares
owned by Bradley Resources Company. Included in the shares owned by Mr.
Holbrook is a warrant to purchase 50,000 shares. Bradley
Resources Company, Mr. Holbrook and Mr. McGoogan may be considered to be a
“group” as defined under Rule 13d-5 of the Securities Exchange Act of
1934, with the power to vote and dispose of an aggregate of 463,100 shares
of our common stock, or 6.0% of our common stock.
|
(6)
|
The
percentage of outstanding shares of common stock shown in the table above
is calculated based upon 7,656,147 shares outstanding as of the close of
business ______________, 2009 , plus it assumes in each case that
the shareholder exercised all options available to that person that would
vest within 60 days thereafter.
|
(7)
|
Assumes
the Reverse/Forward Stock Split was effected as of ______________,
2009 , and that the number of shares redeemed is 360,000, leaving an
estimated 7,296,147 shares
outstanding.
|
SHAREHOLDER
PROPOSALS
Proposals
that shareholders may wish to present at the annual meeting of Entrx's
shareholders in 2009 must be received by Entrx in writing at 800 Nicollet Mall,
Suite 2690, Minneapolis, Minnesota, 55402, prior to February 28, 2009, in
order to be included in the proxy statement and form of proxy relating to that
meeting.
Entrx's latest Annual Report on Form
10-KSB for the year ended December 31, 2007, without the exhibits listed in the
Form 10-KSB, and Entrx’s latest filed Quarterly Report on Form 10-Q for the
nine -month period ended September 30, 2008, both of which have
been filed with the Securities and Exchange Commission, have been furnished to
each shareholder of record as of __________________, 2009 , and have been furnished to nominees
of street -name shareholders in sufficient quantities to be provided to
all beneficial shareholders on , 2009 . If,
however, you as a record or beneficial shareholder on the record date did not
receive a copy of the Annual Report on Form 10-KSB or the Quarterly Report on
Form 10-Q, you may request in writing that a copy of each be mailed to you,
making a representation (in the case of a street name shareholder) that you were
a beneficial owner of Entrx's shares on the record date. Upon such
request, the Form 10-KSB Annual Report and Form 10-Q Quarterly Report will be
mailed to you without charge. If you would like a copy of any of the
exhibits listed in the Form 10-KSB Annual Report, we will mail you a copy upon
request and upon the payment of $5.00 per document, and $0.25 per
page. All requests should be made in writing and addressed to Brian
Niebur, Chief Financial Officer, Entrx Corporation, 800 Nicollet Mall,
Suite 2690, Minneapolis, Minnesota 55402.
A
form of Proxy is enclosed for your use. Please date, sign and return
the Proxy at your earliest convenience. Prompt return of your Proxy
will be appreciated.