SEC Info - Surge Components Inc - ‘PRES14A’ for 6/29/01

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Surge Components Inc – ‘PRES14A’ for 6/29/01

On: Wednesday, 5/23/01, at 5:15pm ET · For: 6/29/01 · Accession #: 1125282-1-500608 · File #: 1-14188

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/23/01  Surge Components Inc              PRES14A     6/29/01    1:38K                                    Bowne & C… Smartedgar/FA

Preliminary Proxy Solicitation Material — Special Meeting — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRES14A     Preliminary Proxy Solicitation Material -- Special    16     61K 
                          Meeting

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Procedure for Voting by Proxy
1	1st Page - Filing Submission
4	Procedure for Voting by Proxy

PRES14A 1st Page of 16 TOC ↑Top Previous Next ↓Bottom Just 1st
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12

Surge Components, Inc.
(Name of Registrant as Specified in its Charter)

Not Applicable
(Name of Person(s) Filing Proxy Statement, If Other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
(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:

PRES14A 2nd Page of 16 TOC 1st Previous Next ↓Bottom Just 2nd
NOTICE
of a
SPECIAL MEETING
of the
SHAREHOLDERS
of
SURGE COMPONENTS, INC.

JUNE 29, 2001, 10:00 A.M.

To the Shareholders of Surge Components, Inc.:

NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of
Shareholders of Surge Components, Inc. (the "Company") will be held at the
Company's offices located at 95 East Jefryn Boulevard, Deer Park, New York
11729, on Friday, June 29, 2001, commencing at 10:00 a.m., local time, and at
any postponement or adjournment thereof, for the following purposes:

(1) To approve the issuance and delivery of 1,808,542 shares of Common
Stock, plus up to an additional 407,185 shares of Common Stock in
payment of accrued interest, pursuant to the automatic conversion of
the outstanding convertible promissory notes of the Company aggregating
$7 million in principal amount that were issued in the Company's
December 1999 to March 2000 private placement; and

(2) To transact such other business as may properly come before the
Meeting.

Description of the scheduled matter is made in the Proxy Statement of
the Board of Directors of the Company which accompanies this Notice. Each
shareholder's attention is directed to such description.

Only shareholders of record on the books of the Company at the close of
business on May 21, 2001, will be entitled to vote at the Meeting. Each
shareholder is requested to sign, date and return the enclosed proxy at the
shareholder's earliest convenience.

A list of shareholders entitled to vote at the Meeting will be
available for examination by any shareholder, for any purpose germane to the
Meeting, at the Company's offices located at 95 East Jefryn Boulevard, Deer
Park, New York 11729, during ordinary business hours for the ten days preceding
the date of the Meeting. Such list shall also be available for examination
during the Meeting.

By Order of the Board of Directors,

Steven J. Lubman, Secretary
June 5, 2001
Deer Park, New York

PRES14A 3rd Page of 16 TOC 1st Previous Next ↓Bottom Just 3rd
SURGE COMPONENTS, INC.
95 East Jefryn Boulevard
Deer Park, New York 11729

PROXY STATEMENT

SPECIAL MEETING OF SHAREHOLDERS
June 29, 2001

A Special Meeting of Shareholders of Surge Components, Inc., a New York
corporation, will be held on Friday, June 29, 2001 at our company offices
located at 95 East Jefryn Boulevard, Deer Park, New York 11729, commencing at
10:00 a.m., local time, and any adjournments and postponements thereof, for the
purposes set forth in the accompanying Notice of Special Meeting of
Shareholders. The enclosed proxy is solicited by and on behalf of our board of
directors for use at the special meeting, and at any adjournments and
postponements of the special meeting. The approximate date on which this proxy
statement and the enclosed proxy are being first mailed to our shareholders is
June 5, 2001.

If the proxy in the accompanying form is duly executed and returned,
the shares represented by such proxy will be voted as specified, subject to any
applicable voting or irrevocable proxy agreements. Any person executing a proxy
may revoke it prior to its use. You are directed to the section entitled
"Procedure for Voting by Proxy" for further information concerning a
shareholder's ability to vote by proxy and to revoke a proxy once given.

Throughout the proxy statement, the terms "we," "us," "our" and "our
company" refers to Surge Components, Inc. and, unless the context indicates
otherwise, our subsidiaries on a consolidated basis.

Record Date

We have established May 21, 2001 as the record date for the special
meeting. Only holders of record of our voting securities at the close of
business on such date will be eligible to vote at the special meeting. A list of
shareholders entitled to vote at the special meeting will be available to
examination by any shareholder, for any purpose relating to the special meeting,
at our executive offices during ordinary business hours for the ten days prior
to the special meeting. Such list also will be available for examination during
the special meeting.

Proposal to be Considered at the Special Meeting

You will be asked to consider and vote at the special meeting on the
sole proposal listed in the accompanying notice of the special meeting and
described in this proxy statement.

PRES14A 4th Page of 16 TOC 1st Previous Next ↓Bottom Just 4th
We do not expect that any other matter will be brought before the
special meeting. If, however, other matters are properly presented, the
individuals named on your proxy card will vote on these other matters in
accordance with their judgment and to the extent permitted by applicable law.

Vote Required to Approve the Proposal

Holders of our common stock are entitled to one vote per share on the
proposal scheduled for vote at the special meeting. Holders of our Voting
Redeemable Convertible Series B Preferred Stock are entitled to 5.4 votes per
share on the proposal. Holders of our outstanding Non-Voting Redeemable
Convertible Series C Preferred Stock will not be entitled to vote on any matter.

We had issued and outstanding 6,598,247 shares of our common stock and
182,139.797 shares of series B preferred stock as of the record date. The
holders of the outstanding series B preferred stock are entitled to an aggregate
of 983,553 votes. Accordingly, there are 7,581,840 votes eligible to be cast at
the special meeting.

Approval of the sole matter scheduled for vote at the special meeting
requires the affirmative vote of a majority of the votes actually cast on such
matter.

Abstentions and "broker non-votes" will not be included in the vote
totals for the purposes of determining whether the proposal has received the
requisite number of votes cast. Broker non-votes are where brokers are
prohibited under applicable law and/or the rules of the National Association of
Securities Dealers, Inc. or a stock exchange from exercising discretionary
authority for beneficial owners who have not returned a proxy. Therefore,
abstentions and broker non-votes will have no effect on the vote on the sole
proposal scheduled for vote at the special meeting. Abstentions and broker
non-votes, however, will be counted in the determination of whether a quorum
exists for the purposes of transacting business at the special meeting.

Quorum

We must have a quorum in order to carry on business at the special
meeting. Under our bylaws, as amended through the record date, we must have
present, in person or by proxy, holders of at least one-third of the entire
number of votes entitled to be cast in order for a quorum to exist. Accordingly,
we must have holders owning of record at least 2,527,280 of the votes entitled
to be cast in order for any business to be conducted at the special meeting.
Abstentions and broker non-votes will count for quorum purposes.

Procedure for Voting by Proxy

A form of proxy is enclosed for your use. To vote without attending the
special meeting in person, you should complete, sign, date and return the proxy
card in the accompanying envelope, which is postage-paid if mailed in the United
States.

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If you properly fill in your proxy in the accompanying form and send it
to us in time to be voted, your shares will be voted as you have directed on the
proxy. If you sign the proxy, but do not make specific choices, the individuals
named on your proxy will vote your shares FOR approval of the sole proposal
scheduled for vote at the special meeting.

You can still vote in person at the special meeting, even if you have
completed and returned a proxy. You may revoke your proxy at any time before it
is voted by:

o submitting a new proxy with a later date;
o by voting in person at the special meeting; or
o by filing with our corporate secretary a written revocation of the
proxy.

Attendance at the special meeting will not of itself constitute
revocation of a proxy. You must note your appearance with the inspector(s) of
election, tell the inspector(s) that you previously granted a proxy with respect
to the special meeting, which you are revoking and request a ballot in order to
personally vote at the special meeting.

If you hold shares through a broker, you should contact your broker to
determine the procedures through which you can vote your shares in person.

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Our common stock and series B preferred stock are the only classes of
our voting securities presently outstanding.

The following table sets forth information with respect to the
beneficial ownership of shares of our common stock and series B preferred stock
as of the date of this proxy statement by:

o each person known by us to beneficially own 5% or more of the
outstanding shares of such classes of stock, based on filings
with the Securities and Exchange Commission and certain other
information,
o each of our executive officers and directors, and
o all of our executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the
SEC and includes voting and investment power. In addition, under SEC rules, a
person is deemed to be the beneficial owner of securities which may be acquired
by such person upon the exercise of options and warrants or the conversion of
convertible securities within 60 days from the date on which beneficial
ownership is to be determined. Accordingly, the shares of our common stock
issuable upon conversion of our outstanding series B and C preferred stock and
upon exercise of the outstanding warrants we issued pursuant to our investment
banking agreement with Equilink Capital Partners, LLC are not deemed
beneficially owned by the holders of the series B and C preferred stock and
Equilink warrants since the series B and C preferred stock are only convertible
upon shareholder approval of the issuance of their respective conversion shares
and
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the Equilink warrants are only exercisable upon shareholder approval of the
issuance of their underlying shares.

Except as otherwise indicated in the notes to the following table,

o we believe that all shares are beneficially owned, and investment
and voting power is held by, the persons named as owners, and
o the address for each beneficial owner listed in the table, except
where otherwise noted, is c/o Surge Components, Inc., 95 East
Jefryn Boulevard, Deer Park, New York 11729.

[Enlarge/Download Table]

Amount and Percentage of Amount and Percentage of
Nature of Common Stock Nature of Series Series B Preferred
Name and address of Common Stock Beneficially B Preferred Stock Stock Beneficially
Beneficial Owner Beneficially Owned Owned Beneficially Owned Owned
---------------- ------------------ ------------ ------------------ -------------

Adam J. Epstein 745,568 (1) 10.2% 37,276 20.5%
Steven J. Lubman 455,000 (2) 6.7 0 0
Ira Levy 454,216 (3) 6.7 0 0
David Siegel 105,737 (4) 1.6 0 0
Mark Siegel 76,998 (5) 1.2 0 0
James A. Miller 6,541 (6) * 0 0
David Bird (7) 0 (8) 0 64,387 35.4
Michael Patchen (7) 0 (8) 0 64,387 35.4
Thomas C. Taulli (9) 0 (10) 0 12,225 6.7
All directors and executive
officers as a group
(6 persons) 1,844,060 (11) 23.4% 37,276 20.5%

----------
* Less than 1%.
(1) Represents 745,568 shares of our common stock issuable upon exercise of
options granted to Mr. Epstein, which shares are exercisable within the
next 60 days. Does not include (a) 754,432 shares of our common stock
issuable upon exercise of options granted to Mr. Epstein, which shares
are not exercisable within the next 60 days, nor (b) 372,768 shares of
our common stock issuable upon conversion of series B preferred stock
held by Mr. Epstein which shares are only convertible upon shareholder
approval of the authorization of the issuance of the shares to permit
such conversion.
(2) Includes 200,000 shares of our common stock issuable upon exercise of
options granted to Mr. Lubman, which shares are exercisable within the
next 60 days. Also includes shares of our common stock held by Mr.
Lubman which are subject to certain voting and transfer restrictions
pursuant to a stock purchase agreement between Mr. Lubman and Mr. Levy.
Does not include (a) 1,000,000 shares of Superus common stock issuable
upon exercise of a Superus option granted to Mr. Lubman nor (b)
1,000,000 shares of our common stock issuable upon exercise of an
option granted to Mr. Lubman, which shares only are exercisable upon
(i) shareholder approval of the grant of this option and authorization
of the issuance of such shares upon exercise of this option and (ii)
Mr. Lubman's termination of his Superus option referred to in clause
(a) above.

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(3) Includes 200,000 shares of our common stock issuable upon exercise of
options granted to Mr. Levy, which shares are exercisable within the
next 60 days. Also includes shares of our common stock held by Mr. Levy
which are subject to certain voting and transfer restrictions pursuant
to a stock purchase agreement between Mr. Levy and Mr. Lubman. Does not
include (a) an aggregate of 1,225,000 shares of Superus common stock
issuable upon exercise of Superus options granted to Mr. Levy nor (b)
an aggregate of 1,225,000 shares of our common stock issuable upon
exercise of options granted to Mr. Levy, which shares only are
exercisable upon (i) shareholder approval of the grant of these options
and authorization of the issuance of such shares upon exercise of these
options and (ii) Mr. Levy's termination of his Superus options referred
to in clause (a) above.
(4) Includes (a) 55,000 shares of our common stock issuable upon exercise
of options granted to Mr. D. Siegel, which shares are exercisable
within the next 60 days, and (b) 50,737 shares of our common stock
held in a trust in which Mr. D. Siegel acts as trustee. Does not
include (a) 400,000 shares of Superus common stock issuable upon
exercise of a Superus option granted to Mr. D. Siegel nor (b) 400,000
shares of our common stock issuable upon exercise of an option granted
to Mr. D. Siegel, which shares only are exercisable upon (i)
shareholder approval of the grant of this option and authorization of
the issuance of such shares upon exercise of this option and (ii) Mr.
D. Siegel's termination of his Superus options referred to in clause
(a) above.
(5) Includes 55,000 shares of our common stock issuable upon exercise of
options granted to Mr. M. Siegel, which shares are exercisable within
the next 60 days. Does not include (a) 225,000 shares of Superus
common stock issuable upon exercise of a Superus option granted to Mr.
M. Siegel nor (b) 225,000 shares of our common stock issuable upon
exercise of an option granted Mr. M. Siegel, which shares only are
exercisable upon (i) shareholder approval of the grant of this option
and authorization of the issuance of such shares upon exercise of this
option and (ii) Mr. M. Siegel's termination of his Superus option
referred to in clause (a) above.
(6) Includes 3,000 shares of Surge common stock issuable upon exercise of
our Class A Redeemable Common Stock Purchase Warrants held for the
benefit of Mr. Miller in a profit sharing plan. Does not include (a)
8,007 shares of our common stock issuable in connection with the
conversion of a convertible promissory note which Mr. Miller purchased
in our December 1999 through March 2000 private placement of notes,
which issuance shall occur upon shareholder approval of proposal number
1, (b) 25,000 shares of our common stock issuable upon exercise of an
option granted to Mr. Miller, which shares are not exercisable within
the next 60 days, nor (c) 1,000 shares of our common stock issuable to
Mr. Miller's spouse upon conversion of our series C preferred stock
held by her, which shares only are convertible upon shareholder
approval of the authorization of the issuance of the shares to permit
such conversion.
(7) The business and mailing address for Messrs. Bird and Patchen is c/o
MailEncrypt, Inc., 12121 Wilshire Boulevard - Suite 208, Los Angeles,
California 90025.
(8) Does not include 643,872 shares of our common stock issuable upon
conversion of series B preferred stock held by this individual, which
conversion only shall occur upon shareholder approval of the conversion
of the series B preferred stock.
(9) The only address for Mr. Taulli known to us is c/o MailEncrypt, Inc.,
12121 Wilshire Boulevard - Suite 208, Los Angeles, California 90025.

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(10) Does not include 122,251 shares of our common stock issuable upon
conversion of series B preferred stock held by Mr. Taulli, which
conversion only shall occur upon shareholder approval of the conversion
of the series B preferred stock.
(11) Includes (a) an aggregate of 1,255,568 shares of our common stock
issuable upon exercise of options granted to our executive officers and
directors, which shares are exercisable within the next 60 days, (b)
the 3,000 shares of our common stock issuable upon exercise of our
class B warrants held in a profit sharing plan for Mr. Miller's benefit
and (c) the 50,737 shares of our common stock held in a trust for which
Mr. D. Siegel acts as a trustee; all as discussed in notes (1) through
(6) above.

PROPOSAL NUMBER 1
APPROVAL OF THE ISSUANCE AND DELIVERY OF 2,215,727 SHARES OF OUR
COMMON STOCK PURSUANT TO THE AUTOMATIC CONVERSION OF
OUTSTANDING CONVERTIBLE PROMISSORY NOTES

Introduction

Under this proposal, we are asking you to approve the issuance and
delivery of 1,808,542 shares of our common stock, plus up to an additional
407,185 shares in payment of accrued interest, pursuant to the automatic
conversion of our outstanding convertible promissory notes aggregating $7
million in principal amount which we issued in our December 1999 to March 2000
private placement of such notes.

Background

From December 1999 through March 2000, we conducted a private placement
of 12% Convertible Promissory Notes. This private placement was made pursuant to
Regulation D promulgated under the Securities Act. We sold an aggregate of $7
million in principal amount of these notes in the private placement.

By their terms, the 12% notes were due on December 31, 2000, unless
earlier converted. The 12% notes were originally convertible in one of the two
following alternative ways:

o If our acquisition of the assets of Global DataTel, Inc.,
which we refer to as the "Global acquisition" in this proxy
statement, was approved and completed, the principal amount of
the 12% notes would automatically convert into shares of the
class B common stock of Superus at a conversion price of one
share for every $3.00 of outstanding principal so converted; or

o If the Global acquisition was not completed, the principal
amount of the 12% notes would automatically convert into shares
of our common stock at a conversion price of one share for every
$2.50 of outstanding principal so converted.

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The Global acquisition was not completed. Accordingly, the conversion
rate for the principal amount of the 12% notes was set at $2.50 per share.

A provision of the 12% notes required the automatic conversion of the
12% notes upon shareholder approval of the issuance of the conversion shares. We
obtained shareholder approval of the issuance of the conversion shares at a
meeting of our shareholders held on September 26, 2000, as adjourned to and
concluded on October 17, 2000. However, the shareholder approval that was
obtained was conditioned upon shareholder approval of the Global acquisition and
a $3.00 conversion price.

We included the provision in the 12% notes requiring shareholder
approval in order to comply with Nasdaq Marketplace Rules. We are required to
comply with these rules in order for our common stock and class B warrants to
remain listed on Nasdaq. These rules require shareholder approval if, in
connection with a transaction other than a public offering, a Nasdaq-listed
company issues, at a price less than the greater of book or market value, common
stock or securities convertible into or exercisable for common stock which
equals 20% or more of the company's outstanding common stock or 20% or more of
the company's outstanding voting power before the issuance.

The number of shares that are issuable in connection with the
conversion of the principal amount of the 12% notes represents approximately
57.6% of our outstanding common stock as of the commencement of the 12% note
private placement, assuming a $2.50 conversion price.

Following the September/October 2000 shareholder approval, our board of
directors authorized the conversion of the 12% notes. We also consulted with
Nasdaq regarding our compliance with the 20% issuance rule. On February 1, 2001,
Nasdaq advised us that, in order to comply with Nasdaq's strict interpretation
of its rules, we must limit the delivery of conversion shares to no greater than
19.9% of the total number of shares of our common stock issued and outstanding
at the time of the commencement of the 12% note private placement and seek
additional shareholder approval prior to the delivery of the remaining
conversion shares. Accordingly, we delivered to the noteholders an aggregate of
991,462 shares of our common stock. We delivered such shares in partial
satisfaction of our delivery obligation in connection with the conversion of the
principal amount of the 12% notes, limited by our desire to avoid a violation of
the Nasdaq rules. These aggregate 991,462 shares represents $2,478,655 of
converted 12% note principal.

You are now being asked to approve the issuance and delivery of the
remaining 1,808,542 shares of the total of 2,800,004 shares of our common stock
issuable in connection with the conversion of the original aggregate principal
amount of the 12% notes, together with 407,185 additional shares of our common
stock in payment of accrued interest on the 12% notes. The accrued interest was
calculated at the rate of one share of common stock for every $1.875 of interest
so converted. The interest conversion rate was based on the fair market value of
our common stock on December 29, 2000, the last trading day before the stated
due date of the 12% notes.

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The conversion shares were to be subject to lock up provisions which
required that the shares not be sold prior to September 26, 2001. We have waived
such lock-up provisions to the extent of permitting the holders of the 991,462
conversion shares issued to date to commence disposing their conversion shares,
if they so desire, on March 15, 2001, instead of on September 26, 2001. The
holders were permitted to dispose of 30% of the conversion shares previously
delivered to each of them starting on March 15, 2001, with an additional 30%
becoming transferable commencing on each of April 15, and May 15, 2001. The
remaining 10% will become transferable starting on June 15, 2001. Such transfers
may be done on a cumulative basis. Until such time as a registration statement
concerning these shares is effective, sales only can be made pursuant to an
applicable exemption from registration, such as Rule 144 promulgated under the
Securities Act. We also have authorized the release from the lock-up provisions
of all of the noteholders' remaining conversion shares, on the later to occur of
shareholder approval of the issuance of such remaining conversion shares or
August 15, 2001.

A portion of the gross proceeds of the 12% note private placement was
used as our source of funds loaned to Global DataTel, Inc. and MailEncrypt.
Global was loaned approximately $4.5 million and $875,000 was loaned to
MailEncrypt.com from the proceeds of the private placement. The remaining gross
proceeds from the private placement were either paid to registered brokers and
dealers as fees or used to pay for other offering expenses, including legal and
administrative expenses.

As a result of the private placement, we expanded our shareholder base.
In addition to the approximately 130 purchasers of the 12% notes, we were
introduced to several brokers, dealers and others involved in the investment
banking community.

We were able to fund the operations of MailEncrypt to date with the
proceeds of the 12% note private placement. We completed the private placement
the month after we initially contracted to acquire MailEncrypt. The size of the
private placement was increased in order to allocate a portion of the proceeds
to MailEncrypt.

We always have endeavored to comply with the rules and regulations of
Nasdaq and the SEC. On April 4, 2001, Nasdaq confirmed to us that, because we
have not issued any shares in excess of 20% of the number of shares of our
common stock that was outstanding on the date on which we commenced the 12% note
private placement and because we terminated the Global acquisition, Nasdaq
"determined not to take action to delist [us] based on the issuance of the
Notes." In the event that we had proceeded with the full delivery the conversion
shares without Nasdaq confirmation of compliance with Nasdaq's marketplace rules
or in contradiction of Nasdaq's advice to us, our securities would, in all
likelihood, have been delisted from Nasdaq. Such a delisting could have had a
material adverse effect on us and the market value of our securities.

Our compliance with Nasdaq's advice concerns their shareholder approval
requirements only. Such compliance has no bearing on the automatic conversion of
the notes which has already occurred, nor with our compliance with any state or
federal laws.

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We are not in technical compliance with the terms of the 12% notes.
This has been caused by the fact that the 12% notes automatically converted
prior to maturity on December 31, 2000 and we have not yet delivered all of the
common stock issuable upon such conversion. In the event that our shareholders
do not approve this proposal number 1, we will have to decide whether to seek a
hardship exception from Nasdaq once again or deliver the remaining conversion
shares to the noteholders and risk having our securities delisted by Nasdaq. We
will default in our obligations to the holders of the 12% notes if we do not
deliver the remaining conversion shares. The noteholders could demand cash
payment of approximately $4,521,000 in aggregate principal amount and $763,000
of accrued interest on the 12% notes, if we continue to fail to deliver the
remaining conversion shares. Such a cash demand could result in a qualified
audit opinion for fiscal 2001; adversely affect our ability to obtain third
party debt or equity financing, if we were to seek such financing; infringe on
our ability to continue to fund new lines of business, if any; cause significant
employee layoffs; and/or trigger a collapse in the market value of our
publicly-traded securities. We further believe that paying the aggregate
$5,284,000 in cash also is not a viable option, as we have neither the available
cash nor the prospect of a readily available source of financing for an
obligation of this magnitude. We would therefore be required to sell a
significant portion of our assets, which could have a material adverse effect on
us.

Effect of Conversion on Number of Shares of Our Common Stock Outstanding

The conversion of the 12% notes will result in the issuance of an
aggregate of 2,215,727 shares of our common stock. Such shares comprise
1,808,542 shares representing the conversion of principal on the 12% notes and
407,185 shares representing the accrued and unpaid principal due on the 12%
notes. The aggregate 2,215,727 shares represent approximately 33.6% of our
outstanding common stock as of the date of this proxy statement. Such shares
will represent 25.1% of our outstanding common stock following their issuance,
assuming no other changes in the number of shares of our common stock between
the date of this proxy statement and the issuance of such 2,215,727 shares. The
issuance of such shares will have a dilutive effect on our presently outstanding
common stock and could cause a significant adverse effect on the market price of
our common stock. However, the conversion will also result in the removal of
approximately $5,284,000 of current liabilities from our balance sheet and a
corresponding increase in our shareholders' equity.

Interest of Certain Persons in the Proposal

James A. Miller, one of our directors, purchased a 12% note in the
principal amount of $25,000. We have issued and delivered to Mr. Miller 3,541
shares of our common stock in partial satisfaction of our delivery obligation in
connection with the automatic conversion of the 12% notes. We will need to issue
to Mr. Miller an additional 8,007 shares of our common stock to fully satisfy
our delivery obligation. The issuance of such 8,007 shares will result in Mr.
Miller's beneficial ownership of our common stock increasing to 14,548 shares,
which would be less than 1% of the then outstanding common stock.

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Board of Directors Recommendation

Our board of directors recommends that our shareholders vote FOR
approval of the issuance of an aggregate of 2,215,727 shares of our common stock
to permit the delivery of such shares of common stock in order for us to satisfy
our delivery obligation in connection with the automatic conversion of our
outstanding 12% convertible promissory notes.

OTHER MATTERS

Our board of directors is not aware of any business to be presented at
the special meeting, other than the matter set forth in the notice of special
meeting and described in this proxy statement. If any other business does
lawfully come before the special meeting, it is the intention of the persons
named in the enclosed proxy to vote on such other business in accordance with
their judgment.

INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to "incorporate by reference" in this proxy statement
certain information we have filed with the SEC, which means that:

o incorporated information is considered part of this proxy
statement, and

o we can disclose important information to you by referring you to
that information.

We incorporate by reference in this proxy statement the following
information:

o our audited consolidated financial statements, and accompanying
notes, as set forth on pages F-1 through F-27 of our Annual
Report on Form 10-KSB for the fiscal year ended November 30,
2000, filed with the SEC on March 15, 2001 (page F-1 follows page
60 of the Form 10-KSB);

o our unaudited consolidated financial statements, and accompanying
notes, as set forth on pages 3 through 8 of our Quarterly Report
on Form 10-QSB for the quarter ended February 28, 2001, filed
with the SEC on April 19, 2001;

o our management's discussion and analysis comprising item 6 of our
Annual Report on Form 10-KSB for the fiscal year ended November 30,
2000, as set forth on pages 35 to 43 of the Form 10-KSB;

o our management's discussion and analysis comprising item 2 of Part
I of our Quarterly Report on Form 10-QSB for the quarter ended
February 28, 2001, as set forth on pages 9 through 16 of the Form
10-QSB; and

o our discussion of our change of auditors comprising item 8 of our
Annual Report on Form 10-KSB for the fiscal year ended November 30,
2000, as set forth on pages 35 to 43 of the Form 10-KSB.

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Copies of our Annual Report on Form 10-KSB for the fiscal year ended
November 30, 2000 and our Quarterly Report on Form 10-QSB for the quarter ended
February 28, 2001 accompany this proxy statement.

AVAILABILITY OF AUDITOR AT THE SPECIAL MEETING

Richard A. Eisner & Company, LLP acted as our principal independent
accountants and audited our consolidated financial statements for our fiscal
year ended November 30, 2000. We have retained this firm to audit our
consolidated financial statements for our fiscal year ending November 30, 2001.
We expect that representatives of Richard A. Eisner & Company, LLP will be
present at the special meeting. The representatives will have the opportunity to
make a statement, if they so desire, and will be available to respond to
appropriate questions.

EXPENSES OF SOLICITATION

We will pay the cost of soliciting proxies for the special meeting. In
addition to soliciting by mail, our directors, officers and other employees may
solicit proxies in person, or by telephone, facsimile transmission or other
means of electronic communication. We will also pay brokers, nominees,
fiduciaries and other custodians their reasonable fees and expenses for sending
proxy materials to beneficial owners and obtaining their voting instructions.

SHAREHOLDER PROPOSALS

Shareholder Proposals for Inclusion in the Proxy Statement for the 2001 Annual
Meeting of Shareholders

To be considered for inclusion in our proxy statement for the 2001
Annual Meeting of Shareholders, shareholder proposals must be received at our
principal's executive offices no later than the close of business on June 30,
2001. Proposals should be addressed to Steven J. Lubman, Secretary, Surge
Components, Inc., 95 East Jefryn Boulevard, Deer Park, New York 11729.

Other Shareholder Proposals for Presentation at the 2001 Annual Meeting

For any proposal that is not submitted for inclusion in our proxy
statement for the 2001 annual meeting of shareholders, but is instead sought to
be presented directly at the 2001 annual meeting, SEC rules will permit
management to vote proxies in its discretion if we:

o receive notice of the proposal before the close of business
on June 30, 2001 and advise shareholders in the 2001 proxy
statement about the nature of the matter and how management
intends to vote on such matter, or

o do not receive notice of the proposal prior to the close of
business on June 30, 2001.

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Notices of intention to present proposals at the 2001 annual meeting
should be addressed to Steven J. Lubman, Secretary, Surge Components, Inc., 95
East Jefryn Boulevard, Deer Park, New York 11729.

AVAILABILITY OF OUR FORM 10-KSB

We will provide without charge to any of our shareholders a copy of our
Annual Report on Form 10-KSB, upon written request delivered to Steven J.
Lubman, Secretary, at our offices at 95 East Jefryn Boulevard, Deer Park, New
York 11729.

By order of the board of directors,

Steven J. Lubman, Secretary
Deer Park, New York
June 5, 2001

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SURGE COMPONENTS, INC.

The undersigned hereby appoints Ira Levy and Steven J. Lubman, or either of
them, attorneys and proxies with full power of substitution in each of them, in
the name and stead of the undersigned, to vote as proxy all the shares of the
undersigned in SURGE COMPONENTS, INC., a New York corporation (the "Company"),
at the Company's Special Meeting of Shareholders scheduled to be held on June
29, 2001, and any adjournments or postponements thereof, as follows:

This proxy is being solicited on behalf of the Board of Directors of the
Company. The board recommends a vote FOR each of the following proposals.

1. Approval of the issuance and delivery of 1,808,542 shares of the
Company's common stock, plus up to an additional 407,185 shares of the
Company's common stock in payment of accrued interest, pursuant to the
automatic conversion of the Company's outstanding convertible
promissory notes aggregating $7 million in principal amount.

/ / FOR / / AGAINST / / ABSTAIN

2. Upon such other business as may properly come before the meeting or
any adjournment thereof.

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THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY THE PROXIES, OR EITHER OF THEM,
AS SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE SPECIAL MEETING. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE
VOTED FOR PROPOSAL NUMBER 1 AS SET FORTH ON THE REVERSE HEREOF. RECEIPT OF THE
NOTICE OF THE SPECIAL MEETING AND THE COMPANY'S PROXY STATEMENT, DATED JUNE 5,
2001, IS HEREBY ACKNOWLEDGED.

Dated: _____________, 2001

------------------------------------ [L.S.]

(Note: Please sign exactly as your name appears
hereon. Executors, administrators, trustees,
etc. should so indicate when signing, giving
full title as such. If signer is a corporation,
execute in full corporate name by authorized
officer. If shares are held in the name of two
or more persons, all should sign.)

PLEASE MARK, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘PRES14A’ Filing	Date	First	Last	Other Filings

	11/30/01	13		10KSB, 8-K, NT 10-K
	9/26/01	10
	8/15/01	10
	6/30/01	13
For Period End:	6/29/01	2	15
	6/15/01	10
	6/5/01	2	16
Filed on:	5/23/01
	5/21/01	2	3
	5/15/01	10
	4/19/01	12		10QSB
	4/4/01	10
	3/15/01	10	12	10KSB
	2/28/01	12	13	10QSB, NT 10-Q
	2/1/01	9
	12/31/00	8	11
	12/29/00	9
	11/30/00	12	13	NT 10-K
	10/17/00	9		8-K, NT 10-Q
	9/26/00	9		8-K
				List all Filings

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Filing Submission 0001125282-01-500608 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Surge Components Inc – ‘PRES14A’ for 6/29/01

On: Wednesday, 5/23/01, at 5:15pm ET · For: 6/29/01 · Accession #: 1125282-1-500608 · File #: 1-14188

Preliminary Proxy Solicitation Material — Special Meeting — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Preliminary Proxy Solicitation Material — Special Meeting — Schedule 14A
Filing Table of Contents