================================================================================UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
| Filed by the Registrant | [X] |
| Filed by a party other than the Registrant | [ ] |
| Check the appropriate box: | |
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| [ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| [ ] | Definitive Proxy Statement |
| [ ] | Definitive Additional Materials |
| [ ] | Soliciting Material under § 240.14a-12 |
| CirTran Corporation | |
| (Name of Registrant as Specified in its Charter) | |
| n/a | |
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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| 4) | Date Filed: | ||
CIRTRAN CORPORATION
4125 South 6000 West
West Valley City, Utah 84128
(801) 963-5112
December [__], 2014
Dear Fellow Stockholder:
You are cordially invited to attend a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for UseSpecial Meeting of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material PursuantStockholders to Section 240.14a-11(c) or 240.14a-12
CirTran Corporation
...............................................................................
(Name of Registrant as Specified in Charter)
...............................................................................
(Name of Person(s) Filing Proxy Statement If Other Than The Registrant)
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Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
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[ ] 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
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1) Amount Previously Paid:
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================================================================================
CirTran Corporation2014, at 10:00 a.m., MST, at 4125 South 6000 West, West Valley City, Utah 84128
(801) 963-5112
April 29, 2008
Dear Fellow Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders
to be held at the offices of our affiliate, Global Marketing Alliance, LLC, 3135
South 1300 East, Salt Lake City, Utah on June 18, 2008 at 11:00 a.m., Mountain
Daylight Time.Utah. The business to be conducted at the AnnualSpecial Meeting is explained in the accompanying Notice of AnnualSpecial Meeting of ShareholdersStockholders and Proxy Statement. At the AnnualSpecial Meeting, we will also discuss our results for the past year.
Whether or not
We urge you attend the Annual Meeting, itto review and consider each proposal carefully. We believe adoption of each proposal is important that your
shares be represented and voted at the Annual Meeting. Please complete, sign,
and date your proxy card today and return it in the envelope provided. If you
decide to attend the Annual Meeting and you are a registered shareholder, you
will be able to vote in person, even if you have previously submitted your
proxy.best interests of our stockholders. Thank you for your continued support.
Sincerely,
Iehab Hawatmeh,
Chief Executive Officer and
Chairman of the Board of Directors
Salt Lake
| Sincerely, | |
| CirTran Corporation | |
| Iehab Hawatmeh | |
| Chief Executive Officer and | |
| Chairman of the Board of Directors |
TABLE OF CONTENTS
| i |
CIRTRAN CORPORATION
4125 South 6000 West
West Valley City, Utah April 29, 2008
2
(801) 963-5112
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [WEEKDAY], DECEMBER [__], 2014
The Special Meeting of Stockholders (the “Special Meeting”) of CirTran Corporation (the “Company”) will be held on [weekday], December [__], 2014, at 10:00 a.m., MST, at 4125 South 6000 West, West Valley City, Utah 84128
(801) 963-5112
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 2008
------------------------
The 2008 Annual Meeting of Shareholders (the "Meeting") of CirTran Corporation
(the "Company") will be held at the offices of our affiliate, Global Marketing
Alliance, LLC, 3135 South 1300 East, Salt Lake City, Utah on Wednesday, June 18,
2008 at 11:00 a.m., Mountain Daylight Time.Utah. The purposes of the Special Meeting are to:
o Elect two directors
| (1) | consider and act upon a proposed amendment to | |
| (2) | consider and act upon a proposed amendment to the Company’s articles of incorporation to authorize a class of 5,000,000 shares of preferred stock and to authorize the Board to fix the number of shares and rights, preferences, and limitations of each series; | |
| (3) | consider and act upon a proposal to recess the Special Meeting on one or more occasions, if necessary or appropriate, to solicit additional proxies; and | |
| (4) | transact such other business as may properly come before the Special Meeting or at any postponement or recess thereof. |
Only Company for the year ending December 31, 2008;
and
o Transact such other business as may properly come before the
meeting or at any postponement or adjournment thereof.
Only CirTran shareholdersstockholders of record at the close of business on April 21, 2008,November [__], 2014, have the right to receive notice of, and to vote at, the Special Meeting and any adjournmentrecess thereof.
The items of business including the nominees for director, are more fully described in the Proxy Statement accompanying this Notice of Special Meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON DECEMBER [__], 2014:
The Proxy Statement, the Company’s Annual Meeting.
Report on Form 10-K for the year ended December 31, 2013, and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, for stockholders are included with this Proxy Statement.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors,
Iehab Hawatmeh,
Chief Executive Officer and
Chairman of the Board of Directors
| By Order of the Board of Directors, | |
| Iehab Hawatmeh, Chief Executive Officer | |
| and Chairman of the Board of Directors |
Salt Lake City, Utah
April 29, 2008
3
CirTran Corporation
ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT 1
QUESTIONS AND ANSWERS ABOUT THE MEETING 5
PROPOSAL #1: ELECTION OF DIRECTORS 8
PROPOSAL #2: APPROVAL OF THE 2006 STOCK PLAN 9
PROPOSAL #3: APPROVAL OF THE 2008 STOCK PLAN 12
PROPOSAL #4: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM AND AUDITOR 13
- -- Policy on Pre-Approval of Audit and Permissible Non-Audit Services 13
- -- Independence 13
- -- Financial Statements and Reports 13
PRINCIPAL ACCOUNTANT FEES AND SERVICES 14
CORPORATE GOVERNANCE 14
- -- Director Independence 14
- -- Shareholder Communications with Directors 14
- -- Committees of the Board of Directors 14
- -- Code of Ethics 15
EXECUTIVE OFFICERS 15
- -- Indemnification of Officers and Directors 15
EXECUTIVE COMPENSATION 16
- -- Compensation Discussion and Analysis 16
- -- Compensation Objectives 16
- -- Base Salary 17
- -- Performance bonus and commissions 17
- -- Stock options and awards 17
- -- Employee benefits 17
- -- Other de minimis benefits 17
SUMMARY COMPENSATION TABLE 18
- -- Narrative Disclosure to Summary Compensation Table 19
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS 20
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 21
DIRECTOR COMPENSATION 22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 23
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT 23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 24
OTHER MATTERS 28
ANNUAL REPORT 28
FURTHER INFORMATION 28
4
CirTran Corporation
November [__], 2014
CIRTRAN CORPORATION
4125 South 6000 West
West Valley City, Utah 84128
(801) 963-5112
-------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 2008
-------------------------
This Proxy Statement and the enclosedaccompanying proxy card are being furnished in connection with the solicitation of proxies by the Board of Directors (the "Board"“Board”) of CirTran Corporation (the "Company," "CirTran," "we," "us"“Company”) from the holders of shares of common stock of the Company to be voted at the 2008 Annuala Special Meeting of ShareholdersStockholders (the "Meeting"“Meeting”) to be held on [weekday], December [__], 2014, at 11:10:00 a.m. Mountain
Daylight Time, MST, at the offices of the Company's affiliate, Global Marketing
Alliance, LLC, 31354125 South 1300 East, Salt Lake6000 West, West Valley City, Utah (the "Meeting").Utah. Distribution of this Proxy Statement and the accompanying proxy card is scheduled to begin on or about April 29, 2008.
November [__], 2014.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER [__], 2014:
This Proxy Statement, the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, are available for viewing, printing, and downloading at [http://____________________.com] using the information provided on the form of notice provided. Copies of the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, as filed with the Securities and Exchange Commission (“SEC”), will be furnished without charge to any stockholder upon written request to CirTran Corporation, 4125 South 6000 West, West Valley City, Utah 84128, ATTN: Investor Relations. This proxy statement and the Company’s 2010 Annual Report on Form 10-K and quarterly report on Form 10-Q for the quarter ended September 30, 2014, for the fiscal year ended December 31, 2010, are also available on the SEC’s website at www.sec.gov.
The enclosed proxy is solicited by the Board.
Board of Directors.
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
Why did I receive this Proxy Statement?
We have
The Company has sent you the Notice of AnnualSpecial Meeting of Shareholders,Stockholders, this Proxy Statement, and the enclosedaccompanying proxy or voting instruction card because the CirTran Board of Directors is soliciting your proxy to vote at CirTran's Annuala Special Meeting on June 18, 2008.December [__], 2014. This Proxy Statement contains information about the matters to be voted on at the Special Meeting.
Who is entitled to vote?
The Board has designated April 21, 2008November [__], 2014, as the record date for the Meeting.Special Meeting (the “Record Date”). You may vote if you owned common stock as of the close of business on April 21, 2008.the Record Date. On April 21, 2008,the Record Date, there were 1,163,490,2664,498,891,910 shares of ourthe Company’s common stock that were outstanding and entitled to vote at the Special Meeting.
How many votes do I have?
Each share of common stock that you own at the close of trading on April 21, 2008the Record Date entitles you to one vote.
What am I voting on?
You will be voting on proposals to:
o Elect two directors to serve for one year each, until the next
Meeting of Shareholders or until a successor is elected and shall
qualify;
o Approve the 2006 Stock Plan of the Company that was adopted by the
Board in January 2007;
o Approve the 2008 Stock Plan of the Company that was adopted by the
Board in January 2008;
o Ratify the Audit Committee's selection of Hansen Barnett &
Maxwell, P.C. as the Company's independent registered public
accountant for fiscal year 2008; and
o Consider and act upon such other business as may properly come
before the meeting or at any postponement or adjournment thereof.
5
| · | amend the Company’s articles of incorporation to recapitalize the Company, by reverse-splitting the outstanding common stock 1,000-to-one and reducing the authorized common stock to 100,000,000 shares, par value $0.001 (the “Recapitalization”); | |
| · | amend the Company’s articles of incorporation to authorize a class of 5,000,000 shares of preferred stock and to authorize the Board to fix the number of shares and rights, preferences, and limitations of each series; | |
| · | recess the Special Meeting on one or more occasions for the purpose of soliciting additional Proxies, if necessary or appropriate; and | |
| · | consider and act upon such other business as may properly come before the Special Meeting or at any postponement or recess thereof. |
How do I vote?
You can vote in the following ways:
o By Mail: If you are a holder of record, you canmay vote by marking,
datingmail. You do this by completing and signing your proxy card, using the prepaid and returning itaddressed envelope included with this Proxy Statement. If you mark your voting instructions on the proxy card, your shares will be voted:
| · | as you instruct; and | |
| · | at the discretion of Mr. Hawatmeh, if a proposal properly comes up for a vote at the Special Meeting that is not on the proxy card. |
For your voting instructions to be effective, your proxy card must be received no later than the close of business on [proxy receipt date].
You may vote by mailInternet. If you have Internet access, you may submit your proxy by following the instructions provided in the enclosed postage-paid, addressed envelope.notice, or if you requested printed proxy materials, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card. On the Internet voting site, you can confirm that your instructions have been properly recorded. If you holdvote on the Internet, you can also request electronic delivery of future proxy materials. If you vote on the Internet, please note that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, for which you will be responsible.
You may vote by telephone. You can also vote by telephone by following the instructions provided on the Internet voting site, or if you requested printed proxy materials, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card. Easy-to-follow voice prompts allow you to vote your shares in street name, please complete and mailconfirm that your instructions have been properly recorded.
You may vote at the voting instruction
card that you will receive from your broker or bank.
o At the Meeting:SpecialMeeting. If you are planning to attend the Special Meeting and wish to vote your shares in person, wethe Company will give you a ballot at the meeting.Special Meeting. If your shares are held in a street name, you need to bring an account statement or letter from your broker, bank, or other nominee, indicating that you are the beneficial owner of the shares on April 21, 2008, the record date for voting.Record Date. Even if you plan to be present at the meeting, we encourageSpecial Meeting, the Company encourages you to complete and mail the enclosed card in advance of the meetingSpecial Meeting to vote your shares by proxy.
What if I return my proxy or voting instruction card but do not mark it to show how I am voting?
Your shares will be voted according to the instructions you have indicated on your proxy or voting instruction card. You can specify whether your
shares should be voted for all, some, or none of the nominees for director. You
can also specify whether you approve, disapprove, or abstain from the other proposals. If no direction is indicated, your shares will be votedFOR an amendment to the Company’s articles of incorporation to effect the Recapitalization, FOR an amendment to the electionCompany’s articles of bothincorporation to authorize a class of preferred stock; andFOR the proposal to recess the Special Meeting on one or more occasions for the purpose of soliciting additional Proxies, if necessary;provided that, no proxy that is specifically marked “AGAINST” the proposal to amend the Company’s articles of incorporation to recapitalize the Company will be voted in favor of the nominees for director, FOR approval ofrecess proposal, unless it is specifically marked “FOR” the 2006 Stock
Plan, FOR approval of the 2008 Stock Plan, and FOR the ratification of the
selection of Hansen Barnett & Maxwell, P.C. as our independent public
accountant.
recess proposal.
May I revoke my proxy or change my vote after I return my proxy card or voting instruction card?
You may revoke your proxy or change your vote at any time before it is exercised in one of three ways:
o Notify our Corporate Secretary in writing before the Meeting that
you are revoking your proxy;
o Submit another proxy card (or voting instruction card if you hold
your shares in street name) with a later date; or
o Vote in person at the Meeting on June 18, 2008.
| · | notify our Corporate Secretary in writing before the Special Meeting that you are revoking your proxy; | |
| · | submit another proxy card (or voting instruction card if you hold your shares in street name) with a later date; or | |
| · | vote in person at the Special Meeting on December [__], 2014. |
What does it mean if I receive more than one proxy or voting instruction card?
It means that you have multiple accounts at the transfer agent and/or with banks and stockbrokers. Please vote all of your shares by returning all proxy and voting instruction cards you receive.
What constitutes a quorum?
A quorum must be present to properly convene the Special Meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares that are entitled to vote at the Special Meeting constitutes a quorum. You will be considered part of the quorum if you return a signed and dated proxy or voting instruction card or if you attend the Special Meeting. Abstentions and broker non-votesnonvotes will be counted as shares present at the meetingSpecial Meeting for purposes of determining whether a quorum exists, but not as shares cast for any proposal. Because abstentions and broker non-votesnonvotes are not treated as shares cast, they would have no impact on any of the proposals.
What vote is required in order to approve each proposal?
The required vote is as follows:
Election of Directors: The election of the nominees for director
requires the affirmative vote of a plurality of the shares cast at the
Meeting. This means that the nominees receiving the greatest number of
votes in favor of their election will be elected, even if they receive
less than a majority of such votes. If you do not want to vote your
shares for a particular nominee, you may so indicate in the space
provided on the proxy card or on the voting instruction card. In the
unanticipated event that any of the nominees is unable or declines to
6
serve, the proxy holder will have the discretion to vote the proxy for
another person, as shall be designated by the Board to replace the
nominee, or, in lieu thereof, the Board may reduce the number of
directors. Although abstentions are counted as shares present and
entitled to be voted, abstentions will have no effect on the election
of directors. Broker non-votes, if any, will not have any effect on the
result of the vote.
Approval of the 2006 Stock Plan and the 2008 Stock Plan:
The proposals for the approval of the 2006 Stock Planamendment to the Company’s articles of incorporation to effect the Recapitalization and the 2008 Stock Plan
requiresto authorize a class of preferred stock require the affirmative vote of the holders of at least a majority of the Company’s outstanding shares presentof common stock. Stockholders may vote in favor or represented by proxy at the Meetingagainst each proposal, or they may abstain. Abstentions and entitled to vote. In
determining whether these proposals received the requisite number of
affirmative votes, abstentions will have the same effect as votes
against the proposals. Broker non-votes, if any, will not have any
effect on the result of the vote.
Ratification of the Selection of Independent Registered Public
Accountant: Ratification of the selection of Hansen Barnett & Maxwell,
P.C. as our independent registered public accountant requires the
affirmative vote of a majority of the shares cast at the Meeting. If
the shareholders do not ratify the appointment of Hansen Barnett &
Maxwell, P.C., the Audit Committee of the Board may, but is not
required to, reconsider such appointment. In determining whether this
proposal received the requisite number of affirmative votes,
abstentionsbroker nonvotes will be counted for purposes of determining the presence or absence of a quorum. Abstentions are deemed to be “votes cast” and will have the same effect as a vote against thethis proposal. Broker non-votes, if any, willnonvotes are not deemed to be votes cast and, therefore, have anyno effect on the result of the vote.
vote respecting this proposal.
What is the Board'sBoard’s recommendation?
The Board'sBoard’s recommendations are set forth together with a description of the proposals in this Proxy Statement. In summary, the Board recommends that you vote:
FOR election of the two directors named in this Proxy Statement to
serve until the Annual Meeting of Shareholders in 2009 and until their
successors are duly elected and qualified;
FOR approval of the 2006 Stock Plan;
FOR approval of the 2008 Stock Plan; and
FOR the appointment of Hansen Barnett & Maxwell, P.C. as the
Independent Registered Public Accounting Firm and Auditor of the
Company and the authorization of the Board to fix the remuneration of
the Independent Registered Public Accounting Firm and Auditor.
| · | FOR the approval of the amendment to the Company’s articles of incorporation to effect the Recapitalization; | |
| · | FOR the approval of a proposed amendment to the Company’s articles of incorporation to authorize a class of 5,000,000 shares of preferred stock and to authorize the Board to fix the number of shares and rights, preferences, and limitations of each series; and | |
| · | FOR the proposal to recess the Special Meeting on one or more occasions for the purpose of soliciting additional Proxies, if necessary or appropriate. |
How will voting on any other business be conducted?
We do
The Company does not know of any business or proposals to be considered at the Special Meeting other than those that are described in this Proxy Statement. If any other business is proposed and we decidethe Company decides to allow it to be presented at the Special Meeting, the proxies that we receivethe Company receives from our shareholdersits stockholders give the proxy holders the authority to vote on that matter according to their best judgment.
Who will count the votes?
Representatives of the Company will tabulate the votes that are received prior to the Special Meeting, and will act as the inspectors of election, and will tabulate the votes, if any, that are cast in person at the Special Meeting.
Who pays to prepare, mail, and solicit the proxies?
We
The Company will pay all of the costs of soliciting these proxies. WeThe Company will ask banks, brokers, and other nominees and fiduciaries to forward the proxy materials to the beneficial owners of ourits common stock and to obtain the authority of executed proxies. WeThe Company will reimburse them for their reasonable expenses. In addition to the use of the mail, proxies may be solicited by ourthe Company’s officers, directors, and other employees by telephone or by personal solicitation. WeThe Company will not pay additional compensation to these individuals in connection with their solicitation of proxies.
7
How do I submit a shareholder proposal for next year's Annual Meeting?
Any shareholder who intends to present a proposal at the 2009 Annual
Meeting of Shareholders must deliver such proposal to the Corporate Secretary,
c/o CirTran Corporation, 4125 South 6000 West, West Valley City, Utah 84128, not
later than November 15, 2008, if the proposal is submitted for inclusion in our
proxy materials for that meeting pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934.
What do I need for admission to the Meeting?
You may attend the Special Meetingonly if you are a shareholderstockholder of record or a beneficial owner as of April 21, 2008, the record date,Record Date, or you hold a valid proxy for the Special Meeting. You should be prepared to present photo identification for admittance. If you are a shareholderstockholder of record, your name will be verified against the list of shareholdersstockholders of record prior to your being admitted to the Meeting. If you hold your shares in street name, you should provide proof of beneficial ownership on the record date, such as a brokerage account statement showing that you owned CirTran common stock as of the record date, a copy of the voting instruction card provided by your broker, bank, or other nominee, or other similar evidence of ownership as of the record date. If you do not provide photo identification or comply with the other procedures outlined above upon request, you will not be admitted to the Special Meeting.
Who
Whom should I call if I have questions?
If you have questions about the proposals or the Special Meeting, you may call David Harmon, Chief Financial Officer,Iehab Hawatmeh at (801) 963-5112. You may also send an e-mail to investors@cirtran.com.
iehab@cirtran.com.
| 4 |
PROPOSED AMENDMENT TO THE ARTICLES OF DIRECTORS
Our Bylaws provide that the shareholders or the Board shall determine
the number of directors from time to time, but that there shall be no less than
three directors. INCORPORATION
TO RECAPITALIZE THE COMPANY BY REVERSE-SPLITTING ITS OUTSTANDING COMMON STOCK 1,000-TO-ONE AND REDUCING ITS AUTHORIZED COMMON STOCK TO
100,000,000 SHARES, PAR VALUE $0.001
The Board has setdetermined that it is in the numberCompany’s best interest to amend its articles of directors at three. The Board
currently consists of three members: Iehab J. Hawatmeh, Fadi Nora,incorporation to recapitalize the Company by reverse-splitting its outstanding common stock 1,000-to-one and Donald L.
Buehner. Tworeducing its authorized common stock to 100,000,000 shares, par value $0.001 (the “Recapitalization”). As discussed below, if the Company’s stockholders as of the current directors are nominees for re-election atRecord Date approve the Meeting.
Followingamendment, the preparationBoard will file an amendment to the articles of incorporation, substantially in the form set forth in Appendix 1 to this Proxy Statement, but prior to its
filing, Mr. Buehner announced that he would retire from our Boardwith the Nevada Secretary of Directors
followingState, at which time the Annual Meeting. amendment will take effect.
General
As such,of the two remaining directors, Messrs.
Hawatmeh and Nora, are presented for shareholder vote. Additionally, Messrs.
Hawatmeh and Nora have begun a search for an additional director, and anticipate
that a new member of our Board of Directors will be appointed,Record Date, pursuant to our
Bylaws, as soon as a qualified candidate is identified and agreesthe Company’s articles of incorporation (as amended to serve.
Each director who is elected at the Meeting will hold office until the
Company's Annual Meeting in 2009, until a successor is elected and qualified, or
until the director resigns, is removed, or becomes disqualified. The Board has
no reason to believe that any of the nominees for director will be unwilling or
unable to serve, if elected. If due to unforeseen circumstances a nominee should
become unavailable for election, the Board may either reduce the number of
directors or may substitute another person for that nominee, in which event your
shares will be voted for that other person.
The following information is furnished with respect to the Board's
nominees for election as directors ofdate), the Company includinghad the nominee's
position with the Company, tenure as director and age as of April 15, 2008.
Stock ownership information is shown under the heading "Security Ownership of
Certain Beneficial Owners and Management" and is based upon information
furnished by the respective individuals.
Name and Position with the Company Director
Place of Residence and Principal Occupation Age Since
- --------------------------------------------------------------------------------
Iehab Hawatmeh............ President, Chief Executive 41 2000
West Valley, Utah Officer, Director
Fadi Nora................. Director, Businessman 47 2007
Mission Viejo, California
8
Set forth below is information regarding each of the above named
individuals, including a description of his positions and offices with the
Company, a description of his principal occupation and business experience
during at least the last five years and directorships presently held by him in
other companies. Biographical information regarding Mr. Buehner can be found
below on page 15.
Director Nominees
The nomineesauthority to the Board in 2008 are Iehab J. Hawatmeh and Fadi Nora.
Each of these nominees currently serves as a member of our Board. The following
information is furnished with respect to these nominees:
Iehab J. Hawatmeh founded our predecessor company in 1993 and has been
our Chairman, President and CEO since July 2000. Mr. Hawatmeh oversees all daily
operation including technical, operational and sales functions for the Company.
Prior to his involvement with the Company, Mr. Hawatmeh was the Processing
Engineering Manager for Tandy Corporation overseeing that company's contract
manufacturing printed circuit board assembly division. In addition, he was
responsible for developing and implementing Tandy's facility Quality Control and
Processing Plan model. Mr. Hawatmeh received a Master's of Business
Administration from University of Phoenix and a Bachelor's of Science in
Electrical and Computer Engineering from Brigham Young University.
Fadi Nora is a self-employed investment consultant. He was formerly a
director of ANAHOP, Inc., a private financing company, and was a consultant for
several projects and investment opportunities, including CirTran Corporation,
NFE records, Focus Media Group, and other projects. He has been a member of our
Board since February 2007. Prior to his affiliation with ANAHOP, Mr. Nora worked
with Prudential Insurance services and its affiliated securities brokerage firm
Pru-Bach, as District Sales Manager. Mr. Nora received a B.S. in Business
Administration from St. Joseph University, Beirut, Lebanon, in 1982, and an MBA
- - Masters of Management from the Azusa Pacific University School of Business in
1997. He also received a degree in financial planning from the University of
California at Los Angeles.
We will vote your shares as you specify in your proxy card. If you
sign, date, and return your proxy card but do not specify how you want your
shares voted, we will vote them FOR the election of each of the director
nominees who are listed above.
RECOMMENDATION - The Board recommends a vote FOR each director nominee.
PROPOSAL #2
APPROVAL OF THE 2006 STOCK PLAN
In January 2007, the Board adopted the Cirtran Corporation 2006 Stock
Plan (the "2006 Stock Plan"), which provides for the reservation of 50,000,000issue 4,500,000,000 shares of common stock, of which 4,498,891,910 shares were issued and outstanding. As of the Record Date, there were warrants and similar rights exercisable or convertible to 25,000 shares of common stock. This figure does not include common stock issuable upon conversion of the outstanding debenture.
As described in the Company’s periodic filings, one of its main sources of funding historically has been through the sales of convertible debt and equity instruments, including convertible debentures and notes. The large number of authorized and outstanding shares is cumbersome for the Company and its stockholders in a trading and securities markets not accustomed to dealing in billions or hundreds of millions of shares, particularly when their price is expressed in several decimal places, so that the aggregate value of a large number of shares is quite small. For example, the stock has recently been quoted at $0.0002 bid, $0.0003 asked, so the aggregate bid for grants to employees, consultants1,000,000 shares would be $200 and advisorsthe aggregate asked would be $300. Selling 10,000,000 shares at the bid would generate gross proceeds of $2,000. Expression of quotations in four decimal places also results in relatively large spreads between the bid and asked quotations. For example, in the above quotations the asked is 50% larger than the bid. No smaller spread is numerically possible without using a five-decimal-place number. In addition, stockholders encounter difficulties in effecting transactions in their securities because of the Company. In 2007, our shareholders approveddeposit requirements of clearing agencies, which require that broker-dealers make substantial cash deposits to clear transactions executed in the Corporation’s securities. This limits stockholder liquidity. Some broker-dealers are unable to express quotations or effect transactions in five decimal places. The Board believes that the low market price for the Company’s common stock expressed in four decimal places adversely affects securities broker-dealer and potential interest and may tend to depress the market price.
The Board believes that the reverse split may result in higher price quotations for the Company’s common stock, although there can be no assurance that this will be the case. Accordingly, the reverse split may reduce the value of a 1.2 for 1 forwardstockholder’s shares. The Board believes, however, that the reverse split, as an integral component of the Recapitalization, is critical to enabling the Company to continue to have a presence in the securities trading market and to be able to obtain required cash and reduce indebtedness.
The Reverse Split
The Recapitalization includes a 1,000-to-one reverse split of the Company'sCompany’s outstanding common stock;stock. As a result of this action caused an adjustment toreverse split, the aggregate number of4,498,891,910 shares authorized for issuance under the 2006 Stock Plan
from 50,000,000 to 60,000,000 shares. The 2006 Stock Planissued and the 2008 Stock
Plan contain substantially identical terms and conditions.
The Company has adopted five stock option plans since 2002. As of
December 31, 2007, no options remained outstanding from the three plans adopted
through 2004.
2006 and 2008 Stock Plan Descriptions
The 2006 Stock Plan was adopted by the Board in January 2007. Both the
2006 and 2008 Stock Plans provide for grants to employees, officers, directors
and consultants of both non-qualified (or non-statutory) stock options ("NSO")
and "incentive stock options" ("ISO") within the meaning of Section 422 of the
9
Internal Revenue Code of 1986, as amended (the "Code"). The plans also provide
for the grant of certain stock purchase rights, which are subject to a purchase
agreement between the Company and the recipient. The purpose of each plan is to
enable the Company to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to such
persons, and to promote the success of our business.
The Board determines the persons to whom options are granted, the
option price, the number of shares to be covered by each option, the period of
each option, the times at which options may be exercised and whether the option
is an incentive or non-statutory option. The exercise price may not be less than
the fair market value of the Company's common stock on the date of grant. The
term of stock options will be determined by the Committee, but may not exceed
ten years from the date of grant, provided that the term of an ISO granted to a
ten percent holder may not exceed five years from the date of grant. No employee
may be granted options or stock purchase rights under the either plan for more
than an aggregate of 6,000,000 shares in any given fiscal year. We do not
receive any monetary consideration upon the granting of options. Options are
exercisable in accordance with the terms of an option agreement entered into at
the time of grant.
The Board may also award our shares of common stock under the plans as
stock purchase rights. The Board determines the persons to receive awards, the
number of shares to be awarded and the time of the award. Shares received
pursuant to a stock purchase right are subject to the terms, conditions and
restrictions determined by the Board at the time the award is made, as evidenced
by a restricted stock purchase agreement.
During 2007, the Company granted awards to purchase 56,800,000 shares
of common stock under the 2006 Stock Plan. Option awards are generally granted
with an exercise price equal to the market price of the Company's stock at the
date of grant, most granted in the past have vested immediately, and most have
had four-year contractual terms. The Board has granted awards for 22,960,000
shares of common stock under the 2008 Stock Plan as of the dateRecord Date will be reverse-split into 4,498,891 shares. The Company will not issue fractional shares. Instead, fractional shares will be round to the nearest whole share.
Convertible Debentures and Warrants
Consolidated Debenture
As of September 30, 2014, the Company had an outstanding Consolidated Debenture (as defined below) issued to YA Global Investments, L.P., formerly known as Cornell Capital Partners, L.P. (“YA Global”), with an aggregate outstanding balance of $2,390,528, including accrued interest of $748,291, which was then in default.
The terms of the Company’s outstanding Consolidated Debenture are governed by a February 22, 2013, Ratification Agreement with YA Global. Under this Proxy
Statement.
The plans are administered byRatification Agreement, the Board, which designates from timeCompany ratified the obligations under three existing convertible debentures dated May 26, 2005, December 30, 2005, and August 23, 2006, and agreed to timeamend, restate, and consolidate the individualsobligations evidenced thereby into a single “Consolidated Debenture.”
Under the Ratification Agreement and Consolidated Debenture payment schedule, the Company was required to whom awards are made under the plans,make monthly payments, to be applied first to accrued interest and then to principal, in the amount of any
such award and the price and other terms and conditions of any such award. Each
of the plans is to continue$100,000 per month, commencing in effect until the date which is ten years from the
dateApril 2013. The amount of its adoption by the Board, subject to earlier termination by the Board.
The Board may suspend or terminate a plan at any time; provided that no such
amendment, alteration, suspension, discontinuation or termination mayrequired monthly cash payment would be made
without shareholder approval if such shareholder approval is necessary to comply
with any tax, securities or regulatory law or requirement; provided, further,
that the Board may not reduce the exercise price of outstanding options and
stock appreciation rights by amending the terms of such options and stock
appreciation rights or by canceling such stock option in exchange for cash or
the grant of a new award without first obtaining approval from the Company's
shareholders. The Board has the authority to interpret the plans, determine the
terms and conditions of incentive awards and make all other determinations
necessary and/or advisable for the administration of the plans.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting the Company's common stock, an equitable substitution or
proportionate adjustment will be made in (i) the aggregate number of shares of
common stock reserved for issuance under the plans and the maximum number of
shares of common stock that may be granted to any participant in any calendar
year, (ii) the kind, number and exercise (grant) price of shares of common stock
subject to outstanding stock options and stock appreciation rights, and (iii)
the kind, number and purchase price of shares of common stock subject to
outstanding awards to maintain the same estimated fair value of the award before
and after such event. In connection with any event described in this paragraph,
the Board may provide for the cancellation of any outstanding awards and payment
in cash or other property therefor.
Unless otherwise provided in an incentive award agreement, if, within
twenty-four (24) months following a "change in control," a participant's
employment or service with the Company or any of its affiliates or any successor
is terminated by the Company other than for "cause," then (i) all outstanding
time-based vesting of incentive awards granted to the participant will vest in
full, and if applicable, become fully and immediately exercisable and (ii) all
outstanding performance-based vesting awards granted to the participant will
immediately vest as if target performance has been achieved and, if applicable,
become fully and immediately exercisable.
Section 162(m) of the Code generally provides that publicly held
companies may not deduct compensation paid to certain top executive officers to
the extent such compensation exceeds $1 million per officer in any year.
However, pursuant to regulations issued by the Treasury Department, certain
limited exceptions to Section 162(m) apply with respect to "performance-based
compensation."
10
Federal Income Tax Consequences of Stock Options
The following discussion is for general information only and is based
on the Federal income tax laws now in effect, which are subject to change,
possibly retroactively. This summary does not discuss all aspects of Federal
income taxation which may be important to individual participants. Moreover,
this summary does not address specific state, local or foreign tax consequences.
This summary assumes that the common stock acquired under the plans will be held
as a "capital asset" (generally, property held for investment) under the Code.
Nonqualified Stock Options
A participant will generally not be subject to Federal income taxation
upon the grant of an NSO. Rather, at the time of exercise of an NSO, the
participant will recognize ordinary income for Federal income tax purposesreduced in an amount equal to the excessamount credited to the lender against the obligation as a result of the fair market value of the shares purchased over
the option price. The Company will generally be entitled to a tax deduction at
such time and in the same amount that the participant recognizes ordinary
income.
If shares of common stock acquired upon exercise of an NSO (or upon
untimely exercise of an ISO) are later sold or exchanged, then the difference
between the sales price and the fair market value of the common stock on the
date that ordinary income was recognized with respect thereto will generally be
taxable as capital gain or loss.
Incentive Stock Options
A participant will generally not be subject to Federal income taxation
upon the grant of an ISO or upon its timely exercise. Exercise of an ISO will be
timely if made during its term and if the participant remains an employee of the
Company or of any parent or subsidiary of the Company at all times during the
period beginning on the date of grant of the ISO and ending on the date three
months before the date of exercise (or one year before the date of exercise in
the case of a disabled employee). Exercise of an ISO will also be timely if made
by the legal representative of a participant who dies (i) while in the employ of
the Company or of any parent or subsidiary of the Company or (ii) within three
months after termination of employment (or one year in the case of a disabled
employee). The tax consequences of an untimely exercise of an ISO will be
determined in accordance with the rules applicable to NSOs.
If shares of common stock acquired pursuant to a timely exercised ISO
are later disposed of, the participant will, except as noted below with respect
to a "disqualifying disposition," recognize a capital gain or loss equal to the
difference between the amount realized upon such sale and the option price.
Under these circumstances, the Company will not be entitled to any deduction for
Federal income tax purposes in connection with either thelender’s exercise of the ISO orright to convert the sale ofoutstanding balance due under the debentures into common stock, byas provided in the participant.
If, however, a participant disposes of shares of common stock acquired
pursuant tooriginal convertible debentures as well as in the exercise of an ISO prior toConsolidated Debenture. Any amount credited against the expiration of two years from the
date of grant of the ISO or within one year from the date the common stock is
transferred to the participant upon exercise (a "disqualifying disposition"),
generally (i) the participant will realize ordinary income at the time of the
disposition in an amount equal to the excess, if any, of the fair market value
of the common stock at the time of exercise (or, if less, the amount realized on
such disqualifying disposition) over the option exercise price, and (ii) any
additional gain recognized by the participant will be subject to tax as capital
gain. In such case, the Company may claim a deduction for Federal income tax
purposes at the time of such disqualifying disposition for the amount taxable to
the participant as ordinary income.
The amount by which the fair market value of the common stock on the
exercise date of an ISO exceeds the option price will be an item of adjustment
for purposes of the "alternative minimum tax" imposed by Code Section 55.
11
Capital Gain or Loss
Net capital gain (i.e., generally, capital gaindebenture obligation in excess of capital
losses) recognized by$100,000 per month would be credited against the amounts due in the next succeeding month, with the entire unpaid balance of principal and interest due on January 31, 2014.
During 2013, a participant upontotal of $1,284,412 was credited against required payments due YA Global for the saleconversion of sharesindebtedness to common stock. Since 2009, the Company has had insufficient funds to pay cash to YA Global and has had to rely exclusively on the conversion of the obligation to common stock. However, no further conversions can be effected because the Company has insufficient authorized but unissued common stock. Based on the prevailing market price for its common stock, held
for more than twelvewhich has ranged from a high bid of $0.0006 to a low bid of $0.0002 during the past six months, will generally be subject to tax at a rate not to
exceed 15%. Net capital gain recognized from the sale of shares of common stock
held for twelve months or less will be subject to tax at ordinary income rates.
Approvalterms of the 2006 Stock Plan requiresConsolidated Debenture would require a conversion price of $0.001 per share, which is lower than the affirmative vote of the
holders of a majority of the shares of common stock present in person or
represented by proxy and entitled to vote at the Meeting. For purposes of the
vote on the 2006 Stock Plan, abstentions will have the same effect as votes
against the proposal. Broker non-votes, if any, will not have any effect on the
result of the vote. Unless instructed to the contrary in the proxy, the shares
represented by proxies will be voted FOR the proposal to approve the 2006 Stock
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE 2006 STOCK PLAN
PROPOSAL #3
APPROVAL OF THE 2008 STOCK PLAN
In January 2008, the Board adopted the Cirtran Corporation 2008 Stock
Plan (the "2008 Stock Plan"), which provides for the reservation of 60,000,000
shares of common stock ofper-share par value, so the Company for grantswould be obligated to employees, consultants and
advisors of the Company. The 2006 Stock Plan and the 2008 Stock Plan contain
substantially identical terms and conditions. Please refer to the description of
the two plans beginning on page 9 of this Proxy Statement.
New Plan Benefits
Certain awards have been made under the 2008 Stock Plan as summarized
in the following table:
Number of Dollar Number of
Shares Value of Shares of
Dollar Value Subject to Restricted Restricted
Name and of Options Options Stock Stock
Position ($) (1) (#) ($) (#)
- --------------------------------------------------------------------------------
Iehab J. Hawatmeh,
President and Chief
Executive Officer - - - -
- --------------------------------------------------------------------------------
Shaher Hawatmeh,
Chief Operating
Officer - - - -
- --------------------------------------------------------------------------------
David L. Harmon,
Chief Financial
Officer 27,987 3,000,000 - -
- --------------------------------------------------------------------------------
(1) The amounts in this column reflect the dollar amount recognized
for financial statement reporting purposes, excluding the effect
of estimated forfeitures, for the fiscal year ending December 31,
2008 in accordance with SFAS No. 123(R). Assumptions used in the
calculation of these amounts will be included in footnotes to the
Company's audited financial statements for the year ending
December 31, 2008, to be included in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission
next year.
Approval of the 2008 Stock Plan requires the affirmative vote of the
holders of a majority of theissue shares of common stock present in person or
represented by proxy and entitled to vote at the Meeting. For purposes of the
vote on the 2008 Stock Plan, abstentions will have the same effect as votes
against the proposal. Broker non-votes, if any, will not have any effect on the
result of the vote. Unless instructed to the contrary in the proxy, the shares
represented by proxies will be voted FOR the proposal to approve the 2008 Stock
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE 2008 STOCK PLAN
12
PROPOSAL #4 - RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND AUDITOR
The Board has appointed and recommended the accounting firm of Hansen
Barnett & Maxwell, P.C. as the Independent Registered Public Accounting Firm and
Auditor of the Company and its subsidiaries for the fiscal year ending December
31, 2008.
Hansen Barnett & Maxwell, P.C. audited the Company's financial
statements for the fiscal years ended December 31, 2007 and 2006.
A representative of Hansen Barnett & Maxwell, P.C., is expected to be
present at the Meeting and to have an opportunity to make a statement if they
desire to do so. The Hansen Barnett & Maxwell, P.C. representative is also
expected to be available to respond to appropriate questions at the Meeting.
If the shareholders fail to ratify the appointment of Hansen Barnett &
Maxwell, P.C., the Board may reconsider its appointment.
RECOMMENDATION - THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF HANSEN BARNETT & MAXWELL, P.C. AS CIRTRAN'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND AUDITOR FOR 2008.
Policy on Pre-Approval of Audit and Permissible Non-Audit Services
The Board pre-approves any engagement of Hansen Barnett & Maxwell, P.C.
and has the ultimate authority and responsibility to select, evaluate and where
appropriate, replace the independent registered public accountants and nominate
an independent registered public accounting firm for shareholder approval. While
ratification of the selection of the independent registered public accounting
firm by the shareholders is not required and is not binding upon the Board or
the Company, in the event of a negative vote on such ratification, the Board
might choose to reconsider its selection.
Prior to the performance of any services, the Board approves all audit
and non-audit services to be provided by the Company's independent registered
public accountant and the fees to be paid therefor. Although the Sarbanes-Oxley
Act of 2002 permits the audit committee of the Board to pre-approve some types
or categories of services to be provided by the independent registered public
accountants, as the Company does not currently have an audit committee, it is
the current practice of the Board to specifically approve all services provided
by the independent registered public accountants in advance, rather than to
pre-approve any type of service. In connection with this practice, the Board has
considered whether the provision of non-audit services is compatible with
maintaining Hansen Barnett & Maxwell, P.C.'s independence.
Independence
Hansen Barnett & Maxwell, P.C. has advised us that it has no direct or
indirect financial interest in the Company or in any of its subsidiaries and
that it has had, during the last three years, no connection with the Company or
any of its subsidiaries, other than as independent auditors or in connection
with certain other activities, as described below.
Financial Statements and Reports
The financial statements of the Company for the year ended December 31,
2007, and the report of the independent auditors will be presented at the
Meeting and is included with this Proxy Statement.
13
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees for Fiscal 2006 and 2007
The aggregate fees billed to the Company by Hansen Barnett & Maxwell,
P.C., the Company's Independent Registered Public Accounting Firm and Auditor,
for the fiscal years ended December 31, 2006 and 2007 are as follows:
2007 2006
--------- ---------
Audit Fees (1)................................. $ 105,123 $ 107,539
Audit-Related Fees............................. -- --
Tax Fees (2)................................... $ 10,322 $ 5,535
All Other Fees................................. -- --
- ---------------------------
(1) Audit Fees consist of the audit of our annual financial statements
included in the Company's Annual Report on Form 10-K for its 2006
and 2007 fiscal years and Annual Report to Shareholders, review of
interim financial statements and services that are normally
provided by the independent auditors in connection with statutory
and regulatory filings or engagements for those fiscal years.
(2) Tax Fees consist of fees for tax consultation and tax compliance
services.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of Hansen Barnett &
Maxwell, P.C., and has concluded that the provision of such services is
compatible with maintaining the independence of the Company's auditors.
Representatives of Hansen Barnett & Maxwell, P.C. will be present at
the Meeting, will be available to respond to questions and may make a statement
if they so desire.
CORPORATE GOVERNANCE
The Board is elected by and is accountable to the shareholders of the
Company. The Board establishes policy and provides strategic direction,
oversight, and control of the Company. The Board met five times during 2007. All
directors attended at least 75% of the meetings.
Director Independence$0.001 par value. As of the date of this Proxy Statement, the Company'sentire approximately $2.4 million debenture is past due and in default, which would require the issuance of 2.4 billion shares of the Company’s current common stock. The Company has only 81,016 authorized but unissued shares. The Consolidated Debenture provides that the holder cannot convert indebtedness to common stock if, as a result of such conversion, the holder would own more than 9.99% of the Company’s outstanding common stock. Sales of common stock that would reduce the holder’s ownership would enable the holder to convert additional amounts due under the Consolidated Debenture.
The obligation under the Company’s Consolidated Debentures is traded onsecured by liens and security interests in all of the OTC Bulletin Board (the "Bulletin Board"). The Bulletin Board does
not impose standards relating to director independence, or provide definitionsCompany’s assets, so the continuation of independence. The Company presently has no fully independent directors.
Shareholder Communications with Directors
If the Company receives correspondence from a shareholderis dependent of meeting this obligation. If YA Global were to exercise its collection remedies and execute on its collateral, it could take all of the Company’s assets and leave nothing for other creditors or shareholders.
Management believes that is
addressedthe proposed amendment would benefit the Company by providing greater flexibility to the Board we forward it to every director orhonor conversion notices by YA Global and exercise notices from warrant holders, to issue additional equity securities to raise additional capital, to pursue strategic investment partners, to facilitate possible future acquisitions, and to provide stock-related employee benefits. As noted above, the individual
director to whom it is addressed. Shareholders who wish to communicate with the
directors may do so by sending their correspondence to the director or directors
at the Company's headquarters at 4125 South 6000 West, West Valley City, Utah
84128.
Directors are encouraged by the Company to attend the Meeting if their
schedules permit.
CommitteesCompany’s primary sources of the Board of Directors
At this time, the Company does not have separately-designated Audit,
Compensation, Governance or Nominating Committees. The Company's full Board acts
in these capacities. The Board has determined that the Company does not have at
present an audit committee financial expert as defined under Securities and
Exchange Commission rules.
14
As of the date of this report, therefinancing have been no changes to the
procedures by which security holders may recommend nominees to our Boardprivate sales of Directors.
Code of Ethicscommon stock or other equity or debt securities convertible into common stock. The Company expectsrequires additional capital to fund its pending legal disputes with Plavboy Enterprises, Inc., to support its energy drink beverage distribution activities, and to identify and pursue other business opportunities of which it may become aware. To facilitate these transactions, management believes that all of its directors, officers and employees
will maintain a high level of integrity in their dealings with and on behalfrecapitalization of the Company and will actprovide additional shares that may be issued in accordance with the best interestsCompany’s contractual commitments or on such terms as the Board may deem appropriate.
Warrants
In addition to the shares issuable on the conversion of the Company. TheConsolidated Debenture, as of September 30, 2014, the Company has
adopted a Code of Business Conducthad the following issued and Ethics ("Code of Ethics") which provides
principles of conduct and ethicsoutstanding warrants exercisable for the Company's directors, officersnumber of shares of common stock at the weighted-average exercise price indicated below. The table also reflects the number of shares issuable and employees. This Code of Ethics complies with the requirementsweighted-average exercise price of the Sarbanes-Oxley Act of 2002. This Code of Ethics is available on the Company's
website at www.cirtran.com under "Investor Relations--Corporate Governance" and
is also available in print to any stockholder who requests a copy by writing to
our corporate secretary at 4125 South 6000 West, West Valley City, Utah 84128.
EXECUTIVE OFFICERS
The following table sets forth the names, ages, and positions of the
executive officers of CirTran and its operating subsidiaries (hereinafter the
"Named Executive Officers") at December 31, 2007, and as of the date of this
Proxy Statement were as follows:
Name Age Positions
- --------------------------------------------------------------------------------
Iehab J. Hawatmeh 41 President, Chief Executive Officer,
and Chairman of the Board of Directors
Company
Shaher Hawatmeh 42 Chief Operating Officer since June 2004
David L. Harmon 51 Chief Financial Officer since November
2007; Secretary since January 2008
Biographical information for our directors is included in the
discussion beginning on page 9 concerning the nominees for director. The
following information is provided regarding our other Named Executive Officers,
as well as Donald L. Buehner, who is currently serving as a member of our Board
of Directors, but who has announced his intention to retire from the Board
following the Annual Meeting of Shareholders.
Shaher Hawatmeh, Chief Operating Officer, joined our predecessor
company in 1993 as its Controller shortlywarrants, after its founding. He has served in
his present capacity since June 2004. Mr. Hawatmeh directly oversees all daily
manufacturing production, customer service, budgeting and forecasting for the
Company. Following the Company's acquisition of Pro Cable Manufacturing in 1996,
Mr. Hawatmeh directly managed the entire Company, supervising all operations for
approximately two years and overseeing the integration of this new division into
the Company. Prior to joining CirTran, Mr. Hawatmeh worked for the Utah State
Tax Commission. Mr. Hawatmeh earned a Master's of Business Administration with
an emphasis in Finance from the University of Phoenix and a Bachelor's of
Science in Business Administration and a Minor in Accounting. Shaher Hawatmeh is
the brother of our President, CEO and Chairman, Iehab Hawatmeh.
David L. Harmon became our Chief Financial Officer in November 2007.
Prior to joining CirTran, Mr. Harmon served as SEC manager for Investools Inc.
From 1990 to 2006, he held controller, treasurer and CFO positions with UCN,
Inc., Traco Manufacturing, Inc., and Gentner Communications Corporation. He also
spent nine years with two C.P.A. firms in the Salt Lake City area. Mr. Harmon
earned a B.S. degree in Accounting from the University of Utah.
Donald L. Buehner has been an entrepreneur and a leader of several
businesses since the 1960s, particularly in the lighting industry. He started
Traco Ltd., a Canadian manufacturer of appliance materials for recreational
vehicles, and until recently served as chairman of LiteTouch, Inc., a
manufacturer and distributor of residential and commercial lighting control
systems. He is also currently the owner of DB Finance, a finance company that
discounts commercial paper, provides factoring services, and acquires and leases
commercial properties. As noted above, Mr. Buehner is presently serving as a
member of the Company's Board of Directors. He has indicated that he intends to
retire from the Board of Directors following the Annual Meeting of Shareholders.
Indemnification of Officers and Directors
Our Bylaws provide, among other things, that our officers or directors
are not personally liable to us or to our stockholders for damages for breach of
fiduciary duty as an officer or director, except for damages for breach of such
duty resulting from (a) acts or omissions which involve intentional misconduct,
fraud, or a knowing violation of law, or (b) the unlawful payment of dividends.
15
Our Bylaws also authorize us to indemnify our officers and directors under
certain circumstances. We anticipate we will enter into indemnification
agreements with each of our executive officers and directors pursuant to which
we will agree to indemnify each such person for all expenses and liabilities
incurred by such person in connection with any civil or criminal action brought
against such person by reason of their being an officer or director of the
Company. In order to be entitled to such indemnification, such person must have
acted in good faith and in a manner reasonably believed to be in or not opposedgiving effect to the best interests of the Company and, with respect to criminal actions, such
person must have had no reasonable cause to believe that his conduct was
unlawful.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
We are required to provide information regarding the compensation
program in place for our Chief Executive Officer, Chief Financial Officer, and
the three other most highly-compensated executive officers. We have also
voluntarily elected to include information concerning additional executive
officers. In this Proxy Statement, we refer to our CEO, CFO, and the other
highly-compensated executive officers named herein as our "Named Executive
Officers." This section includes information regarding, among other things, the
overall objectives of our compensation program and each element of compensation
that we provide to these and other executives of the Company. This section
should be read in conjunction with the detailed tables and narrative
descriptions contained in this Proxy Statement.
proposed 1,000-to-one reverse stock split:
| Now, Before Reverse Split | After Reverse Split | |||||||||||||||
| Number | Weighted-Average Exercise Price | Number | Weighted-Average Exercise Price | |||||||||||||
| YA Global warrants | 25,000,000 | $ | 5,041.28 | 25,000 | $ | 0.20 | ||||||||||
As of the date of this Proxy Statement, the Company didhad essentially no additional shares to issue under its authorized capital limits. The proposed Recapitalization is intended, in part, to permit the Company to satisfy any conversion notices that may be presented.
The proposed Recapitalization would increase the number of shares available for issuance on the conversion of the consolidated convertible debenture and the exercise of warrants because the reverse split would reduce the number of issued and outstanding shares to 4,498,891 shares, while reducing the authorized common stock to 100,000,000 shares of common stock. Accordingly, the Company would have approximately 95.5 million shares available for future issuance.
The formula for calculating the shares to be issued in connection with conversions of these securities varies, based on the market price of its common stock. Therefore, if the Recapitalization is effected, there effectively is no limitation on the number of shares of common stock that may be issued in connection with conversion. As such, holders of the Company’s common stock will experience substantial dilution of their interests to the extent that the debenture is converted and shares of the Company’s common stock are issued.
The Board recognizes, of course, that the trading price for the Company’s securities following a reverse-stock-split may not mathematically reflect the calculated results of the reverse-stock-split, so that a 1,000-to-one reverse-stock-split of a corporation’s stock may not result in a 1,000-fold increase in the trading price for the common stock. Frequently, stocks do not trade at their pre-reverse-split equivalent trading price following a reverse split. Therefore, the reverse split could result in significant reduction in the value of the stock owned by stockholders.
Purpose of the Recapitalization
The Company requires additional financing, and it intends to continue to seek financing through private placements of equity and convertible debt securities. However, as detailed above, the Company does not have a
compensation committee;sufficient shares to enable it to pursue private placements or capital-raising transactions.
In addition to better positioning the Company's Board was responsibleCompany for determiningfuture capitalization, management believes that the Company's compensation policies.
Compensation Objectives
The Company's compensation program encompasses several factors to
determine the compensationRecapitalization may make other corporate opportunities, including potential mergers with or acquisitions of the Named Executive Officers. The following are
the main objectivesbusinesses or other related avenues of the compensation program for the Named Executive
Officers:
o Retain qualified officers
o Provide overall corporate direction for the officers and also to
provide direction that is specificstrategic growth, more available to the officers' respective
areas of authority. The level of compensation amongst the officer
group, in relation to one another, is also considered in order to
maintain a high level of satisfaction within the leadership group.
We consider the relationship that the officers maintain to be one
of the most important elements of the leadership group.
o Provide a performance incentive
o Reward the officers in the following areas:
o Achievement of specific goals, budgets, and objectives;
o Professional education and development;
o Creativity, innovative ideas, and analysis of new programs and
projects;
o New program implementation;
o Results-oriented determination and organization;
o Positive and supportive direction for company personnel; and
o Community involvement.Company. As of the date of this Proxy Statement, there were four principal
elements of Named Executive Officer compensation. The Board determines the portion of compensation allocatedCompany had no plans for acquisitions or other business combinations, although the Company continues to each element for each individual Named
Executive Officer. The discussions of compensation practices and policies are of
historical practices and policies. Our Board is expectedbe open to continue these
policies and practices, but will reevaluate the practices and policies as it
considers advisable.
16
The primary elements of the compensation program include:
o Base salary;
o Performance bonus and commissions;
o Stock options and stock awards
o Employee benefits in the form of:
o Health and dental insurance;
o Life insurance;
o Paid parking and auto reimbursement; and
o Other de minimis benefits.
Base salary
Base salary is intended to provide competitive compensation for job
performance and to attract and retain qualified individuals. The base salary
level is determined by considering several factors inherent in the market place
such as: the size of the company; the prevailing salary levelspotential opportunities for the particular office or position; prevailing salary levels in a given geographic
locale; and the qualifications and experience of the officer.
Performance bonus and commissions
Bonuses are in large part based on company performance. An earnings
before interest, taxes, depreciation, and amortization ("EBITDA") formula and
sales growth are the determining factors used to calculate the performance bonus
for the Chief Executive Officer and Chief Operating Officer. These two officers
are also paid a commission based on a percentage that sales revenue increases as
compared to the prior year. In addition, the Chief Executive Officer and Chief
Operating Officer are eligible to receive a bonus equal to a certain percentage
of, respectively, the value of an acquisition, and the amount of investment
proceeds, that the Company achieves during the preceding year attributable
solely to their specific efforts. The Chief Financial Officer receives a
performance bonus based on performance, as determined by the Board, in addition
to any bonus required under an employment contract. Policy decisions to waive or
modify performance goals have not been a significant factor to date.
Stock options and stock awards
Stock ownership is provided to enable Named Executive Officers and
directors to participate in the success of the Company. The direct or potential
ownership of stock will also provide the incentive to expand the involvement of
the Named Executive Officer to include, and therefore be mindful of, the
perspective of stockholders of the Company.
Employee benefits
Several of the employee benefits for the Named Executive Officers are
selected to provide security for the Named Executive Officers. Most notably,
insurance coverage for health, life, and liability are intended to provide a
level of protection to that will enable the Named Executive Officers to function
without having the distraction of having to manage undue risk. The health
insurance also provides access to preventative medical care which will help the
officers function at a high energy level, manage job related stress, and
contribute to the overall well being, all of which contribute to an enhanced job
performance.
Other de minimis benefits
Other de minimis employee benefits such as cell phones, parking, and
auto usage reimbursements are directly related to job functions but contain a
personal use element which is considered to be a goodwill gesture that
contributes to enhanced job performance.
As discussed above, the Board determines the portion of compensation
allocated to each element for each individual Named Executive Officer. As a
general rule, salary is competitively based, while giving consideration to
employee retention, qualifications, performance, and general market conditions.
Typically, stock options are based on the current market value of the option and
how that will contribute to the overall compensation of the Named Executive
Officer. Consideration is also given to the fact that the option has the
potential for an appreciated future value. As such, the future value may be the
most significant factor of the option, but it is also more difficult to quantify
as a benefit to the Named Executive Officer.
17
Accordingly, in determining the compensation program for the Company,
as well as setting the compensation for each Named Executive Officer, the Board
attempts o attract the interest of the Named Executive Officer within in the
constraints of a compensation package that is fair and equitable to all parties
involved.
The following table summarizes all compensation paid to the Named
Executive Officers in each of the last two fiscal years.
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred
Plan Compen- All Other
Stock Option Compen- sation Compen-
Name and Principal Salary Bonus Awards Awards sation Earnings sation Total
Position Year $ $ $ $ (2) $ $ $ (3) $
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
- ----------------------------------------------------------------------------------------------------------------------------------
Iehab J. Hawatmeh,
President and Chief 2006 225,000 57,807 - - - - - 282,807
Executive Officer 2007 295,000 11,338 - 103,531 - - 20,603 430,472
Shaher Hawatmeh,
Chief Operating 2006 150,000 7,790 - - - - - 157,790
Officer 2007 210,000 2,268 - 82,825 - - 20,603 315,696
David L. Harmon,
Chief Financial
Officer (1) 2007 13,462 2,083 - - - - - 15,545
Richard Ferrone,
Chief Financial 2006 73,845 21,000 - - - - - 94,845
Officer (1) 2007 113,462 21,000 - 30,364 - - - 164,826
Trevor Saliba,
Chief Marketing 2006 120,000 18,755 - - - - - 138,755
Officer (1) 2007 87,358 5,057 - 40,285 - - 329,462 462,162
Charles Ho,
President, 2006 - 407,397 - - - - - 407,397
CirTran-Asia (1) 2007 - 289,346 - - - - - 289,346
(1) Mr. Harmon's employment commenced on November 26, 2007. Mr.
Ferrone's employment commenced on May 10, 2006, and terminated on
October 22, 2007. Mr. Saliba's employment terminated on June 14,
2007. Mr. Ho's employment commenced on June 15, 2004, and
terminated at the three-year conclusion of his employment contract
on June 15, 2007. Mr. Ho has continued working with the Company as
an independent consultant.
(2) The amounts in this column reflect the dollar amount recognized
for financial statement reporting purposes, excluding the effect
of estimated forfeitures, for the fiscal years ended December 31,
2006 and 2007, in accordance with SFAS No. 123(R). Assumptions
used in the calculation of these amounts are included in Note 18
to the Company's audited financial statements for the years ended
December 31, 2006 and 2007, included in the Company's Annual
Report on Form 10-KSB filed with the Securities and Exchange
Commission on April 15, 2008. Amounts for Iehab J. Hawatmeh and
Shaher Hawatmeh each include amounts related to two separate
grants of options, one at the beginning and one at the end of
2007. The former grant was intended to relate to services to be
rendered during 2007, and the latter was intended to relate to
services to be rendered during 2008.
18
(3) Amounts for Mr. Iehab Hawatmeh and Shaher Hawatmeh include $9,000
each for car allowance, and $11,603 each for payments of medical
insurance premiums. The amount for Mr. Saliba includes $101,462 in
commissions, and $228,000 in severance payments. Amounts paid to
other officers for 2007, and all amounts for 2006, were less than
$10,000.
Narrative Disclosure to Summary Compensation Table
Employment Agreements
On July 1, 2004, we entered into an employment agreement with our
President and CEO, Iehab Hawatmeh, with an effective date of June 26, 2004 for a
term of five years, automatic renewal on a year-to-year basis, base salary of
$225,000, bonus of 5% of earnings before interest, taxes, depreciation, and
amortization, payable quarterly, as well as any other bonus approved by the
Board, and health insurance coverage, cell phone, car allowance, life insurance,
and director and officer liability insurance. Mr. Hawatmeh's employment could be
terminated for cause, or upon death or disability; a severance penalty applied
in the event of termination without cause, in an amount equal to five full years
of the then-current annual base compensation, half upon termination and half one
year later, together with a continuation of insurance benefits for a period of
five years. On January 1, 2007, an amendment to the employment agreement became
effective. The amended agreement is for a term of five years and renews
automatically on a year-to year basis, provides for base salary of $295,000,
plus a quarterly bonus of 5% of earnings before interest, taxes, depreciation,
and amortization, as well as an annual bonus payable as soon as practicable
after completion of the audit of the Company's annual financial statements equal
to 0.5% of gross sales for the most recent fiscal prior year which exceed 120%
of gross sales for the previous fiscal year, plus an additional bonus of 1% of
the net purchase price of any acquisitions that are generated by the executive,
and any other bonus approved by the Board. The amended agreement also provides
for a grant of options to purchase 5,000,000 shares of the Company's common
stock in accordance with the terms of the Company's Stock Option Plan, with
terms and an exercise price at the fair market value of the Company's common
stock on the date of grant. The amended agreement provides for benefits
including health insurance coverage, car allowance, and life insurance.
On July 1, 2004, we also entered into an employment agreement, dated
effective June 26, 2004, with Shaher Hawatmeh, to act as Chief Operating
Officer. Mr. Hawatmeh is the brother of our President and CEO, Iehab Hawatmeh.
The original agreement was for a term of three years, renewing automatically on
a year-to-year basis, base salary of $150,000, plus a bonus of 1% of our
earnings before interest, taxes, depreciation, and amortization, payable
quarterly, as well as any other bonus approved by the Board, and provided for
health insurance coverage, cell phone, life insurance, and D&O insurance.
Employment could be terminated for cause, or upon death or disability. In the
event of termination without cause, a severance payment in an amount equal to
one years' salary was to be paid. The agreement also contained prohibitions
against competition for a period of one year from the date of termination and
prohibitions against solicitation of our employees or customers, or inducing
anyone to cease doing business with us for a period of two years after
termination. On January 1, 2007, an amendment to the employment agreement became
effective, providing for a term of five years, automatic renewal on a year-to
year basis, base salary of $210,000, a quarterly bonus of 2.5% of earnings
before interest, taxes, depreciation, and amortization, an annual bonus of 0.1%
of gross sales which exceed 120% of gross sales for the previous year, and a
bonus of 5% of all gross investments made into the Company that are directly
generated and arranged by Mr. Hawatmeh. The amended agreement also provides for
a grant of options to purchase 4,000,000 shares of the Company's common stock in
accordance with the terms of the Company's Stock Option Plan, with terms and an
exercise price at the fair market value of the Company's common stock on the
date of grant. The amended agreement also provides for health insurance
coverage, car allowance and life insurance.
On November 26, 2007, we entered into an agreement with David L. Harmon
pursuant to which we agreed to pay him a base salary of $175,000. Mr. Harmon is
also entitled to receive a bonus of $25,000 per year, payable in four equal
installments. Under the agreement, Mr. Harmon will also be granted options to
purchase 3,000,000 shares of the Company's common stock each year, and will be
given benefits including health insurance coverage and life insurance. In the
event of termination without cause, a severance payment equal to one years'
salary is payable. Amounts in the table reflect compensation paid to Mr. Harmon
since the date his employment commenced.
19
On June 14, 2007, we entered into a severance agreement with Mr. Trevor
Saliba, our former Chief Marketing Officer, whereby he was to receive 4,000,000
shares of common stock in the Company, twelve month's salary and health
insurance benefits, and an assigned five percent portion of our residual
interest in the profits and losses of our partially-owned subsidiary, After Bev
Group Inc. In addition, we agreed to settle other various amounts, including
those relating to de minimis employee benefits, previously owing to and from Mr.
Saliba. See note (3) to the Summary Compensation Table, above.
On June 15, 2004, our subsidiary, CirTran-Asia, entered into an
employment agreement with Charles Ho to act as President of CirTran-Asia for a
term of three years, which term ended on June 15, 2007. The parties did not
renew the agreement, and Mr. Ho continues working for us as an independent
consultant on a project-by-project basis. The agreement also included options to
purchase common stock of the Company for each additional product that Mr. Ho
procured pursuant to the agreement between CirTran - Asia, Inc. and Michael
Casey Enterprises, LTD., as provided for in the acquisition agreement. Under the
employment agreement, CirTran - Asia, Inc. did not provide benefits to Mr. Ho,
and his employment could be terminated for cause, or upon death or disability.
When the agreement expired, Mr. Ho was obligated not compete with us for a
period of one year from the date of termination. Mr. Ho also agreed not to
solicit our employees or customers, or attempt to induce anyone to cease doing
business with us for a period of two years after the termination.
Equity Compensation Plans
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth information about securities that may be
issued under the Company's equity compensation plans as of the date of this Proxy Statement.
NumberStatement, the Company’s articles of Securities
Remaining
Number of available for
securitiesincorporation (as amended to future issuance
be issued Weighted- under equity
upon average exercise compensation
exercise of price of plans
outstanding outstanding (excluding
options, options, securities
warrants warrants reflected in
and rights and rights column (a))
(a) (b) (c)
----------------------------------------------------------
Equity compensation
plans approved by
shareholders None None None
Equity compensation
plans not approved
by shareholders 56,160,000 $0.014 40,240,000
Total 56,160,000 $0.014 40,240,000
20
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table summarizes information regarding options and other
equity awards exercised and the awards owned by the Named Executive Officers
that vested during fiscal year 2007.
Option Awards Stock Awards
------------------------------------------------------------------- -----------------------------------------
Equity
Incentive
Market Equity Plan
Number Value Incentive Awards:
Equity of of Plan Market or
Incentive Shares Shares Awards: Payout
Plan or or Number of Value of
Awards: Units Units Unearned Unearned
Number of Number of Number of of of Shares, Shares,
Securities Securities Securities Stock Stock Units, or Units, or
Underlying Underlying Underlying That That Other Other
Unexercised Unexercised Unexercised Have Have Rights Rights
Options Options Unearned Option Option Not Not That Have That Have
(#) (#) Options Exercise Expiration Vested Vested Not Vested Not Vested
Name Exercisable Unexercisable (#) Price ($) Date (#) ($) (#) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
- ------------------------------------------------------------------------------------------------------------------------------------
Iehab J. Hawatmeh, 6,000,000 - - $0.013 01-18-12 - - - -
President and Chief 6,000,000 - - $0.012 11-21-12 - - - -
Executive Officer
Shaher Hawatmeh, 4,800,000 - - $0.013 01-18-12 - - - -
Chief Operating 4,800,000 - - $0.012 11-21-12 - - - -
Officer
David L. Harmon, - - - - - - - - -
Chief Financial
Officer
Richard Ferrone, - - - - - - - - -
Chief Financial
Officer
Trevor Saliba, - - - - - - - - -
Chief Marketing
Officer
Charles Ho, - - - - - - - - -
President,
CirTran-Asia
21
DIRECTOR COMPENSATION
The table below summarizes the compensation paid by the Companydate), authorized it to Directors for the fiscal year ended December 31, 2007.
Change in
Pension Value
and
Nonqualified
Fees Deferred
Earned or Non-Equity Compensation
Paid in Stock Option Incentive Earnings All Other
Cash Awards Awards Plan ($) Compensation Total
Name ($) ($) ($) (3) Compensation ($) (4) ($)
(a) (b) (c) (d) ($) (e) (f) (g) (h)
- ----------------------------------------------------------------------------------------------------------------------
Iehab Hawatmeh (1) - - - - - - -
Trevor Saliba (1) - - - - - - -
Fadi Nora (2) 15,000 - 41,413 - - 800,750 857,163
Donald L. Buehner (2) 5,000 - 21,170 - - 136,664 162,834
- ----------------
(1) Iehab Hawatmeh, and Trevor Saliba through June 14, 2007, also
served as executive officers of the Company during 2007. They
received compensation for their services as executive officers,
set forth above in the Summary Compensation Table. They did not
receive any additional compensation for their services as
directors of the Company.
(2) Mr. Nora was appointedissue up to the Board on February 1, 2007. Mr.
Buehner was appointed to the Board on October 1, 2007. As noted
above, Mr. Buehner has announced his intention to retire from the
Board of Directors following the the Annual Meeting of
Shareholders.
(3) The amounts in this column reflect the dollar amount recognized
for financial statement reporting purposes, excluding the effect
of estimated forfeitures, for the fiscal year ended December 31,
2007, in accordance with SFAS No. 123(R). Assumptions used in the
calculation of these amounts are included in Note 18 to the
Company's audited financial statements for the year ended December
31, 2007, included in the Company's Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission on April 15,
2008
(4) Mr. Buehner - Prior to becoming a Director later in 2007, Mr.
Buehner purchased our Salt Lake City facility in a sale/leaseback
transaction. The amount in column (g) comprises monthly rent
payments on the building of $17,083 per month over a period of
eight months.
Mr. Nora - Amounts in column (g) paid to Mr. Nora comprise the
following: $10,000 in consulting fees; $345,750 in fees earned in
connection with the sale to other investors of portions of the
Company's membership interest in After Bev Group, LLC; and
$445,000 representing Mr. Nora's share of the proceeds from the
sale of portions of the Company's membership interest in AfterBev,
part of which the Company had previously assigned to Mr. Nora.
22
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the ownership of
the Company's common stock by each person who, to the knowledge of the Company,
is the beneficial owner of more than 5% of the outstanding4,500,000,000 shares of common stock, of which 4,498,891,910 shares, or whoalmost 100%, of its authorized shares, are outstanding. If the reverse split and change in the authorized capital is (i) each person who is currentlyapproved, the Company would have 4,498,891 shares, or 4.5%, of its authorized common stock outstanding and 25,000 shares, or less than 1%, of its authorized shares reserved for issuance on the exercise of warrants and similar rights, plus an indeterminate number issuable on conversion of the Consolidated Debenture. The Company anticipates that it may use the additional shares available to it for a director, (ii) each Named
Executive Officer, (iii) all current directors and Named Executive Officers as a
group asvariety of April 29, 2008.
Amount and
naturepurposes, including conversions of beneficial Percent
(1) Titlethe Consolidated Debenture.
As noted above, the issuances of class (2) Name of beneficial owner ownership of class
- --------------------------------------------------------------------------------
Common Stock Iehab J. Hawatmeh (1) 145,060,960 12.3%
Shaher Hawatmeh (2) 9,600,000 0.8%
David L. Harmon (3) 3,000,000 0.3%
Fadi Nora (4) 78,719,360 6.7%
Donald L. Buehner (5) 4,725,000 0.4%
All Officers and Directors 241,105,320 20.2%
as a Group
(5 persons)
- -------------------
(1) Includes optionsshares under the Consolidated Debenture are tied to purchase up to 12,000,000 shares that can be
exercised anytime at exercise prices ranging between $0.012 to
$0.013 per share.
(2) Options to purchase up to 9,600,000 shares that can be exercised
anytime at exercise prices ranging between $0.012 to $0.013 per
share.
(3) An option to purchase up to 3,000,000 shares that can be exercised
anytime at an exercisevariable conversion prices. Accordingly, if the market price of $0.014 per share.
(4) Includes 2,599,500 shares beneficially owned by Mr. Nora's spouse.
Also includes options to purchase up to 4,800,000 shares that can
be exercised anytime at exercise prices ranging between $0.012 to
$0.013 per share.
(5) Includes an option to purchase up to 2,400,000 shares that can be
exercised anytime at an exercise price of $0.012 per share.
The persons named in the table have sole or shared voting and
dispositive power with respect to all shares beneficially owned, subject to
community property laws where applicable. Beneficial ownership is determined
according to the rules of the Securities and Exchange Commission, and generally
means that person has beneficial ownership of a security if he or she possesses
sole or shared voting or investment power over that security. Each director,
officer, or 5% or more shareholder, as the case may be, has furnished us
information with respect to beneficial ownership. Except as otherwise indicated,
we believe that the beneficial owners of theCompany’s common stock listed above, based onrises, the information each of them has given to us, have sole or shared investment and
voting power with respect to their shares, except where community property laws
may apply.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires CirTran's
officers, directors, and persons who beneficially own more than 10% of the
23
Company's common stock to file reports of ownership and changes in ownership
with the SEC. Officers, directors, and greater-than-ten-percent shareholders are
also required by the SEC to furnish us with copies of all Section 16(a) forms
that they file.
Based solely upon a review of these forms that were furnished to the
Company, and based on representations made by certain persons who were subject
to this obligation that such filings were not required to be made, the Company
believes that all reports that were required to be filed by these individuals
and persons under Section 16(a) were filed on time in fiscal year 2007, except
for: Iehab J. Hawatmeh who filed late three Forms 4; Fadi Nora who filed late
one Form 3 and two Forms 4; and Donald L. Buehner who filed late one Form 3 and
two Forms 4. In addition, Iehab J. Hawatmeh, Shaher Hawatmeh, and Trevor Saliba
failed to file reports of transactions occuring in prior periods. However, these
individuals subsequently reported all transactions related to the late and any
missing forms under Section 16(a) on a Form 5, filed during 2008.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Play Beverages, LLC
During 2006, Playboy Enterprises International, Inc. ("Playboy")
entered into a licensing agreement with Play Beverages, LLC ("PlayBev"), then an
unrelated Delaware limited liability company, whereby PlayBev agreed to
internationally market and distribute a new energy drink carrying the Playboy
name and related "Rabbit Head" logo symbol. In May 2007, PlayBev entered into an
exclusive agreement with us to arrange for the manufacture, marketing and
distribution of the energy drinks, other Playboy-licensed beverages, and related
merchandise through various distribution channels throughout the world.
In an effort to finance the initial development and marketing of the
new drink, we and other investors formed After Bev Group LLC ("AfterBev"), a
California limited liability company and partially-owned, consolidated
subsidiary of the Company. We contributed our expertise in exchange for an
initial 84 percent membership interest in AfterBev. The other initial AfterBev
members contributed $500,000 in exchange for the remaining 16 percent. We
borrowed an additional $250,000 from an individual, and AfterBev contributed the
total $750,000 to PlayBev in exchange for a 51 percent interest in PlayBev's
cash distributions. We recorded this $750,000 amount as an investment in
PlayBev. PlayBev then remitted these funds to Playboy as part of a guaranteed
royalty prepayment. Along with the membership interest granted to us, PlayBev
agreed to appoint Iehab J. Hawatmeh, our president, and Fadi Nora, one of our
directors, to two of PlayBev's three executive management positions. In
addition, during 2007, Mr. Hawatmeh and Mr. Nora personally purchased membership
interests from other PlayBev members which aggregated 11.1 percent. Despite the
combined 62.1 percent interest owned by Mr. Hawatmeh, Mr. Nora, and the Company,
and the resultant ability to partially influence PlayBev, the operating
agreement for PlayBev requires that various major operating and organizational
decisions be agreed to by members owning at least 75 percent of the membership
interests. The other members of PlayBev are not affiliated with us. Accordingly,
while PlayBev is a related party, we cannot unilaterally control significant
operating decisions of PlayBev, and have not accounted for PlayBev's operations
as if it was a consolidated subsidiary.
PlayBev has no operations; therefore, under the terms of the exclusive
manufacturing and distribution agreement we were appointed the master
manufacturer and distributor of the beverages and other products that PlayBev
licensed from Playboy. In so doing, we assumed all the risk of collecting
amounts owed from customers, and contracting with vendors for manufacturing and
marketing activities. We also agreed to pay PlayBev a royalty equal to our gross
profits from collected beverage sales, less 20 percent of our related cost of
goods sold, and 6 percent of our collected gross sales. During 2007, we incurred
$93,104 in royalty expenses due to PlayBev at December 31, 2007.
We also agreed to provide services to PlayBev for initial development,
marketing, and promotion of the new beverage. These services are to be billed to
PlayBev and recorded as an account receivable from PlayBev. We agreed to carry
up to a maximum of $1,000,000 as a receivable due from PlayBev in connection
with these billed services, to be repaid by PlayBev out of the royalties due
PlayBev from our distribution sales as described in the preceding paragraph.
Amounts billed to PlayBev for marketing and development services amounted to
$1,532,071 during 2007, and were included in revenues for our marketing and
media segment. After netting this amount due from PlayBev with amounts due to
PlayBev for royalties, the amount owed to us was $1,438,967 at December 31,
2007.
24
On March 19, 2008, we agreed to increase the receivable maximum under
our agreement with PlayBev from $1,000,000 to $3,000,000, and to begin charging
interest at a rate of 7 percent per annum.
After Bev Group, LLC
Following AfterBev's organization in May 2007, we entered into
consulting agreements with Mr. Nora and an unrelated individual who had loaned
us $250,000 when we invested in PlayBev. The agreements provided that we assign
to each of Mr. Nora and the other individual approximately one-third of the
Company's share in future AfterBev cash distributions, in exchange for their
assistance in the initial AfterBev organization and planning, along with their
continued assistance in subsequent beverage development and distribution
activities. The agreements also provided that if and when we sold a portion of
our membership interest in AfterBev, these individuals would each be owed their
proportional assigned share distributions in the proceeds of such sales. The
actual payment of the distributions depended on the use of the sale proceeds. If
we were to use the proceeds to help finance beverage development and marketing
activities, the payment of distributions was to be deferred, pending collections
from customers once beverage product sales eventually commenced. Otherwise, the
proportional assigned share distributions were due to the two individuals.
Throughout 2007, as energy drink development and marketing activities
progressed, we raised additional funds by selling portions of our membership
interest in AfterBev to other investors, some of whom were our stockholders or
other affiliates. In some cases, we sold a portion of our membership interest,
including voting rights. In other cases, we sold merely a portion of our share
of future AfterBev profits and losses. By December 31, 2007, we had raised a
total of $3,663,000 from such sales; we also owed one investor $75,000 for
returning a portion of an interest. We retained a 14 percent interest in
AfterBev's profits and losses, but also retained 52 percent of all voting rights
in AfterBev. We recorded the receipt of these net funds as $1,015,710 in
increases to our existing minority interest in AfterBev, and $2,572,290 in
amounts owing as distributable proceeds payable to Mr. Nora and the other
individual to whom we had assigned interests of our original share of AfterBev.
Of this amount, Mr. Nora was owed $1,192,290, of which $445,000 was paid,
leaving $747,290 owing at December 31, 2007.
Global Marketing Alliance
We entered into an agreement with Global Marketing Alliance ("GMA"), a
Utah limited liability company and certain of its affiliates, and hired GMA's
owner as the Vice President of our subsidiary, CirTran Online Corp. ("CTO").
Under the terms of the agreement, we outsource to GMA the online marketing and
sales activities associated with our CTO products. In return, we provide
bookkeeping and management consulting services to GMA, and pay GMA a fee equal
to five percent of CTO's net sales. In addition, GMA assigned to us all of its
web-hosting and training contracts effective as of January 1, 2007, along with
the revenue earned thereon, and we also assumed the related contractual
performance obligations.
Other transactions involving Officers, Directors, and Stockholders
Don L. Buehner was appointed to our Board of Directors as of October 1,
2007. For services to be rendered in 2008, we granted Mr. Buehner an option
during 2007 to purchase 2,400,000 shares of our common stock. Prior to his
appointment as a director, Mr. Buehner bought the building housing our principal
executive offices in Salt Lake City in a sale/leaseback transaction. The term of
the lease is for 10 years, with an option to extend the lease for up to three
additional five-year terms. We pay Mr. Buehner a monthly lease payment of
$17,083, which is subject to annual adjustments in relation to the Consumer
Price Index. Lease payments during 2007 to Mr. Buehner totaled $136,664. We
believe that the amount charged and payable to Mr. Buehner under the lease is
reasonable and in line with local market conditions. As discussed above, Mr.
Buehner has announced his intention to resign from our Board of Directors
following the Annual Meeting of Shareholders.
In February 2007, we appointed Fadi Nora to our Board of Directors.
Prior to his appointment with us, Mr. Nora was also an investor in the Company
(see the discussion below related to ANAHOP). For services rendered in 2007 and
to be rendered in 2008, we granted Mr. Nora options during 2007 to purchase a
total of 4,800,000 shares of common stock. In addition, Mr. Nora is entitled to
a quarterly bonus equal to 0.5 percent of any gross sales earned by us directly
through his efforts. Mr. Nora also is entitled to a bonus equal to five percent
of the amount of any investment proceeds received by us that are directly
generated and arranged by him if the following conditions are satisfied: (i) his
sole involvement in the process of obtaining the investment proceeds is our
introduction to the potential investor, but that he does not participate in the
recommendation, structuring, negotiation, documentation, or selling of the
investment, (ii) neither we nor the investor are otherwise obligated to pay any
25
commissions, finders fees, or similar compensation to any agent, broker, dealer,
underwriter, or finder in connection with the investment, and (iii) the Board in
its sole discretion determines that the investment qualifies for this bonus, and
that the bonus may be paid with respect to the investment. During 2007, Mr. Nora
received $345,750 in compensation associated with sales of portions of our
interest in AfterBev.
In May 2007, we issued a 10 percent promissory note to a family member
of Iehab J. Hawatmeh in exchange for $300,000. The note is due on demand after
one year. During 2007, along with interest we repaid principal of $61,109.
During 2007, Mr. Hawatmeh advanced us $30,000; this obligation was
repaid prior to the end of the year. During 2006, Mr. Hawatmeh advanced us a net
$110,837, all of which had been repaid by the end of 2006. At the end of 2005,
Mr. Hawatmeh had advanced us $95,806, all of which was repaid in January 2006.
Transactions involving ANAHOP, Inc.
In May 2006, we closed a private placement of shares of the Company's
common stock and warrants (the "May Private Offering"). Pursuant to a securities
purchase agreement we issued 14,285,715 shares of common stock (the "May
Shares") to ANAHOP, Inc. ("ANAHOP"), a California company partially owned by
Fadi Nora. The consideration paid for the May Shares was $1,000,000. In addition
to the Shares, the Company issued warrants (the "Warrants") to designees of
ANAHOP to purchase up to an additional 36,000,000 shares of common stock. Of
this amount, Mr. Nora was designated to receive Warrants to purchase 10,000,000
shares of common stock.
In June 2006, the Company closed a second private placementnumber of shares of its common stock issuable will correspondingly decrease. Management believes that in light of market conditions and the Company’s potential to develop and market its products, authorized capital of 100,000,000 shares of its common stock will enable the Company to meet its obligations, although there can be no guarantee that this will be the case. As discussed above, the Consolidated Debenture includes conversion limitations, or caps, such that YA Global is limited from converting the entire outstanding amount into shares of the Company’s common stock. As such, it is unlikely that the Company would be required to meet conversion obligations of the Consolidated Debenture at one time. Conversions of the Consolidated Debenture will likely have a depressive effect on prices for the Company’s common stock in any trading market that may then exist.
If the amendment to the Company’s articles of incorporation is approved by its stockholders, the Company will have approximately 95.5 additional shares to issue to meet its obligations as listed above. However, because the Consolidated Debenture is held by a third party, it is not possible for management to allocate these additional shares or determine in advance how the Company will issue the shares or reserve them. Moreover, because the Consolidated Debenture has a variable conversion price, management is unable to determine how many shares may be issued in connection with the Consolidated Debenture, other than the warrants (the "June Private Offering"). Pursuantas listed above. If the amendment to the Company’s articles of incorporation is approved, management intends to reserve out of the increased authorized capital a securitiestotal of 25,000 shares in connection with currently outstanding warrants. Management will continue to report the Company’s issuances of shares in connection with the Consolidated Debenture above in its periodic reports filed with the SEC.
There is a risk of significant downward pressure on the price of the common stock as YA Global converts its Consolidated Debenture into shares of the Company’s common stock and sells material amounts of common stock, which could encourage short sales. This could place significant downward pressure on the price of the Company’s common stock. Generally, “short selling” means selling a security, contract, or commodity not owned by the seller. The seller is committed to eventually purchase agreement (the "Agreement")the financial instrument previously sold. Short sales are used to capitalize on an expected decline in the security’s price. As YA Global converts the Company’s Consolidated Debenture, the Company issues shares to it, which it then may choose to sell into the market pursuant to Rule 144 or other exemptions from the registration requirements. Such sales have a tendency to depress the price of a stock, which could increase the potential for short sales.
The Company’s issuances of shares in connection with conversions of the Consolidated Debenture may result in substantial dilution to the interests of other holders of common stock.
Because the conversion prices of the Consolidated Debenture are based on the market price of the Company’s common stock, there is effectively no limit on the number of shares that may be issued. As such, the Company’s stockholders are subject to the risk of substantial dilution to their interests as a result of the Company’s issuance of shares in connection with conversions of the Consolidated Debenture.
If the Company’s stockholders do not approve the amendment, due to changes in the market price of the common stock affecting conversion ratios of conversions of the Consolidated Debenture, the Company may be precluded from issuing shares of its common stock as required, and the Company may remain in default of the Consolidated Debenture, which could continue to adversely affect the Company’s operations and financial condition. Moreover, even if the Company were to negotiate additional merger or acquisition transactions on terms acceptable to the Company, it would not be able to complete such transactions without an increase in authorized capital.
Potential Anti-Takeover Effect
Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board or contemplating a tender offer or other transaction for the combination of the Company with another entity), the increase in the Company’s shares of common stock is not being proposed as part of a plan of additional stock issuances. Nevertheless, management could use the additional shares that will be available following the Recapitalization to resist or frustrate a third-party transaction.
If the Recapitalization is approved at the Special Meeting, generally, no stockholder approval would be necessary for the issuance of all or any portion of the additional shares of common stock unless required by law or any rules or regulations to which the Company agreedis subject.
Depending upon the consideration per share received by the Company for any subsequent issuance of common stock, such issuance could have a dilutive effect on those stockholders who paid a higher consideration per share for their stock. Also, future issuances of common stock will increase the number of outstanding shares, thereby decreasing the percentage ownership in the Company (for voting, distributions, and all other purposes) represented by existing shares of common stock. The availability for issuance of the additional shares of common stock may be viewed as having the effect of discouraging an unsolicited attempt by another person or entity to acquire control of the Company. Although the Board has no present intention of doing so, the Company’s authorized but unissued common stock could be issued in one or more transactions that would make a takeover of the Company more difficult or costly, and therefore less likely. Holders of common stock do not have any preemptive rights to acquire any additional securities issued by the Company.
Consent Required for Approval
Under Nevada law and the Company’s articles of incorporation, as amended to date, the proposal to amend the Company’s articles of incorporation to reverse split the outstanding common stock 1,000-to-one and reduce the authorized common stock to 100,000,000 shares, par value $0.001, must be approved by the holders of at least a majority of the Company’s outstanding shares of common stock.
The proposal to effectuate the Recapitalization is a “nondiscretionary” item, meaning that brokerage firms cannot vote shares in their discretion on your behalf if you have not given the broker instructions to vote your shares held in “street” name. Abstentions will be counted as votes against this Proposal 1. Broker nonvotes will count in determining a quorum for purposes of conducting the Special Meeting, but will not count for or against Proposal 1.
Procedure for Effecting Recapitalization
If the stockholders approve the Recapitalization, the Company will file an amendment to articles of incorporation with the Nevada Secretary of State as quickly as practicable, which will become effective at filing.
No Appraisal or Dissenters’ Rights
Under Nevada corporate law, the Company’s stockholders are not entitled to appraisal or dissenters’ rights respecting the Recapitalization, and the Company will not independently provide stockholders with any such right.
RECOMMENDATION: The Board recommends a vote “FOR” the proposal to recapitalize the Company by reverse-splitting the Company’s outstanding common stock 1,000-to-one and reducing the Company’s authorized common stock to 100,000,000 shares, par value $0.001.
| 9 |
PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION
TO AUTHORIZE A CLASS OF 5,000,000 SHARES OF PREFERRED STOCK
The Company proposes to amend its articles of incorporation to authorize a class of 5,000,000 shares of preferred stock. Under the proposed amendment, the Board will be authorized, without shareholder action, to issue up to 28,571,4285,000,000 shares of preferred stock in one or more series and to fix the number of shares and rights, preferences, and limitations of each series. Among the specific matters that may be determined by the Board are the dividend rate, the redemption price, if any, conversion rights, if any, the amount payable in the event of any voluntary liquidation or dissolution of the Company, and voting rights, if any. The provisions of the proposed amended articles relating to the preferred stock allow the Board to issue preferred stock with multiple votes per share and dividend rights, which would have priority over any dividends paid to the holders of common stock. The issuance of preferred stock with these rights may make the removal of management difficult, even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in certain transactions such as mergers or tender offers if these transactions are not favored by management.
The Board approved the authorization of preferred stock to provide the Company with securities other than common stock (the "June Shares")that the Company may issue to ANAHOP. The total
considerationobtain financing for its future operations. Preferred stock may have different and preferential voting, dividend, liquidation, or other rights to attract investment. Preferred stock may be paidissued in transactions that do not involve a general public offering for cash and may contain the June Shares will be $2,000,000 ifproperties of an equity and a debt instrument. Any or all tranchesrights of the sale close.
Pursuant topreferred stock may be greater than the Agreement, ANAHOP agreed to pay $500,000 (the "First
Tranche Payment"). Upon the receiptrights of the First Tranche Payment, the Company
agreed to issue a certificate or certificates to the Purchaser representing
7,142,857 of the June Shares.
The remaining $1,500,000 is to be paid by the ANAHOP as follows:
(i) No later than thirty calendar days following the date on which any
class of the Company's capital stock is first listed for trading on either the
Nasdaq Small Cap Market, the Nasdaq Capital Market, the American Stock Exchange,
or the New York Stock Exchange, ANAHOP agreed to pay an additional $500,000 to
the Company; and
(ii) No later than sixty calendar days following the date on which any
class of the Company's capital stock is first listed for trading on either the
Nasdaq Small Cap Market, the Nasdaq Capital Market, the American Stock Exchange,
or the New York Stock Exchange, ANAHOP agreed to pay an additional $1,000,000 to
the Company. (The payments of $500,000 and $1,000,000 are referred to
collectively as the "Second Tranche Payment.")
Upon receipt by the Company of the Second Tranche Payment, the Company
agreed to issue a certificate or certificates to ANAHOP representing the
remaining 21,428,571 June Shares.
Additionally, once the Company has received the Second Tranche Payment,
the Company agreed to issue warrants to designees of ANAHOP to purchase up to an
additional 63,000,000 shares.
On April 11, 2008, Mr. Nora disassociated himself from the other
principals of ANAHOP, and as part of the asset settlement, relinquished
ownership of 12,857,144 shares of CirTran Corporation common stock, and allthe issuance of preferred stock with voting or conversion rights may also dilute and adversely affect the voting power of the warrants previously assignedholders of common stock. In addition, preferred stock may be issued as a means of preventing a hostile takeover. The Board has no plans to him.
Transactions involving Abacas Ventures, Inc.
Two trusts,issue, and does not contemplate issuing, any preferred stock in the Saliba Living Trustforeseeable future.
RECOMMENDATION: The Board recommends a vote “FOR” the proposal to amend the Company’s articles of incorporation to authorize a class of 5,000,000 shares of preferred stock and to authorize the Saliba Private Annuity
Trust (collectively,Board to fix the "Saliba Trusts")number of shares and rights, preferences, and limitations of each series.
RECESS OF THE SPECIAL MEETING TO SOLICIT ADDITIONAL PROXIES.
The Board unanimously executed a written consent dated November [__], were investors in Circuit Technology,
our predecessor entity. The trustees of2014, authorizing and recommending that the trustsCompany’s stockholders approve a proposal to recess the Special Meeting on one or more occasions, if necessary or appropriate, to solicit additional Proxies if there are Tom and Betty Saliba, and
Tom Saliba, respectively. (Tom Saliba is the nephew of the grandfather of Trevor
Saliba, one of our former directors.) In July 2000, we merged with Circuit
26
Technology. Through that merger, the Saliba Trusts became our shareholders. The
Saliba Trusts were also two of the shareholders of an entity named Abacas
Ventures, Inc. ("Abacas"). Atinsufficient votes at the time of the 2000 merger, we were in defaultSpecial Meeting to approve the proposal to amend the Company’s articles of incorporation to recapitalize the Company.
RECOMMENDATION: The Board recommends a vote “FOR” the proposal to recess the Special Meeting on several of our obligations, including an obligationone or more occasions, if necessary or appropriate, to Imperial Bank. The Saliba
Trusts, through Abacas, purchased the bank's claim against us to protect their
investment. Subsequently, Abacas continued to settle our debts in order to
improve their position, and to take advantage of certain discounts that our
creditors offered in order to settle creditor claims. On two occasions, the
Abacas shareholders agreed to convert outstanding debt owed by us to Abacas into
shares of our common stock (discussed below). Abacas continued to work with us
to settle claims by creditors, and to provide us with funding.
In 2002, we entered into an agreement with Abacas under which we issued
an aggregate of 19,987,853 shares of common stock to four of Abacas's
shareholders in exchange for cancellation by Abacas of $1,499,090 in senior debt
owed by us to our the creditors. The shares were issued with an exchange price
of $0.075 per share, for an aggregate amount of $1,500,000. We also entered into
another agreement with Abacas in which we issued an aggregate of 30,000,000
shares of common stock to four of Abacas's shareholders in exchange for
cancellation by Abacas of an aggregate amount of $1,500,000 in senior debt owed
to our creditors. The shares were issued with an exchange price of $0.05 per
share, for an aggregate amount of $1,500,000.
During 2002, we also entered into a bridge loan agreement with Abacas.
This agreement allowed us to request funds from Abacas to finance the build-up
of inventory relating to specific sales. The loan charged interest of 24 percent
and was payable on demand. There were no required monthly payments. During the
years ended December 31, 2004 and 2003, we received draws of $3,128,281 and
$350,000, respectively, and made cash payments of $3,025,149 and $875,000,
respectively.
During 2004, Abacas completed negotiations with several of our vendors
whereby Abacas purchased various past-due amounts for goods and services, as
well as notes payable. The total of these obligations was $1,263,713.
The total principal amount owed to Abacas pursuant to the note payable
and the bridge loan was $1,530,587 and $163,742 as of December 31, 2004 and
2003, respectively. The total accrued interest owed to Abacas in relation to
these agreements was $430,828 and $230,484 as of December 31, 2004 and 2003,
respectively, and was included in accrued liabilitiessolicit additional Proxies if there are insufficient votes at the time.
In 2005, the shareholders of Abacas agreed to cancel $2,050,000 of
principal and accrued interest in return for our issuing 51,250,000 shares of
our restricted common stock to Abacas shareholders. Subsequently we have
borrowed no further amounts or issued any more shares of common stock.
As of December 31, 2001, Iehab J. Hawatmeh had loaned us a total of
$1,390,125. The loans were demand loans, bore interest at 10 percent per annum
and were unsecured. Effective January 14, 2002, we entered into four
substantially identical agreements with existing shareholders pursuant to which
we issued an aggregate of 43,321,186 shares of restricted common stock at a
price of $0.075 per share for $500,000 in cash and the cancellation of
$2,749,090 principal amount of our debt. Two of these agreements were with the
Saliba Trusts. The Saliba Trusts are also principals of Abacas Ventures, Inc.,
which entity purchased our line of credit in May 2000 (see above). Pursuant to
the Saliba agreements, the Saliba Trusts were issued a total of 26,654,520
shares of common stock in exchange for $500,000 cash and the cancellation of
$1,499,090 of debt. We used the $500,000 cash from the saletime of the shares for
working capital. As a resultSpecial Meeting to approve the proposal to amend the Company’s articles of this transaction,incorporation to recapitalize the percentage of our common
stock owned by the Saliba Trusts increased from approximately 7 percent to
approximately 18 percent. Mr. Trevor Saliba, one of our former directors and
officers, is a passive beneficiary of the Saliba Private Annuity Trust. Pursuant
to the other two agreements made in January 2002, we issued an aggregate of
16,666,666 shares of restricted common stock at a price of $0.075 per share in
exchange for the cancellation of $1,250,000 of notes payable by two
shareholders, Mr. Hawatmeh, and Rajai Hawatmeh, his cousin. Of these shares,
15,333,333 were issued to Iehab J. Hawatmeh in exchange for the cancellation of
$1,150,000 in debt.
27
| 10 |
Stockholder Proposals
As of the date of this Proxy Statement, the Board does not intend to present, and has not been informed that any other person intends to present, any matter for action at the Special Meeting, other than as set forth herein and in the Notice of Meeting. If any other matter properly comes before the meeting,Special Meeting, it is intended that the holders of proxies will act in accordance with their best judgment on these matters. The proposal must be in accordance with the provisions of Rule 14a-8 promulgated by the SEC under the Securities Exchange Act of 1934.
Solicitation of Proxies
The accompanying proxy is solicited on behalf of the Board. In addition to the solicitation of proxies by mail, certain of the Company’s officers and employees, of
the Company, without extra compensation, may solicit proxies personally or by telephone and, if deemed necessary, third partythird-party solicitation agents may be engaged by the Company to solicit proxies by means of telephone, facsimile, or telegram, although no such third party has been engaged by the Company, as of the date hereof.
Shareholders
Stockholders who currently receive multiple copies of the proxy
statementProxy Statement (and related documents) at their address and would like to request "householding"“house holding” of their communications should contact their broker or, if a shareholderstockholder is a registered holder of shares of common stock, he or she should submit a written request to the Company'sCompany’s transfer agent for its common stock, Interwest Stock Transfer, 1981 East 4800 South, Suite # 100, Salt Lake City, Utah 84117. ShareholdersStockholders who are now "householding"“house holding” their communications, but who wish to receive separate proxy statements (and related documents) in the future may also notify the transfer agent. WeThe Company will promptly deliver, upon written or oral request, a separate copy of the proxy statementProxy Statement (and related documents) at a shared address to which a single copy was delivered.
ANNUAL REPORT
We
The Company will mail a copyprovide, without charge, on the written request of any beneficial owner of shares of its common stock entitled to vote at the Special Meeting, copies of the Company'sCopies of the Company’s Annual Report on Form 10-KSB10-K for the fiscal year ended December 31, 2007,2010, as filed with the SEC, to each
shareholder of record at April 21, 2008. The report on Form 10-KSB is not deemed
a part of the proxy soliciting material for the Meeting. The contents and
sending of this Proxy Statement have been approved by the Board.
FURTHER INFORMATION
Additional copies of the Company's Annual Report on Form 10-KSB for the
year ended December 31, 2007 (including financial statements and financial
statement schedules) that has been filed with the Securities and Exchange Commission may(“SEC”), will be obtainedfurnished without charge by writingto any stockholder upon written request to CirTran Attention:
Investor Relations,Corporation, 4125 South 6000 West, West Valley City, Utah 84128. The
reports84128, ATTN: Investor Relations. This proxy statement and other filingsthe Company’s 2010 Annual Report on Form 10-K for the fiscal year ended December 31, 2010, are also available on the SEC’s website at www.sec.gov.
Please return the enclosed proxy card as soon as possible. Unless a quorum consisting of a majority of the outstanding shares entitled to vote is represented at the Special Meeting, no business can be transacted. Therefore, please be sure to date and sign your proxy card exactly as your name appears on your stock certificate and return it in the enclosed postage prepaid return envelope. Please act promptly to ensure that you will be represented at this important meeting.
| By Order of the Board of Directors: | |
| Iehab Hawatmeh | |
| Chief Executive Officer and | |
| Chairman of the Board of Directors | |
| Date: November ___, 2014 |
| 11 |
APPENDIX 1
SECOND AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
CIRTRAN CORPORATION
This Second Amendment to the Articles of Incorporation of CirTran including this Proxy Statement, alsoCorporation (hereinafter referred to as the “Corporation”), have been duly adopted in accordance with Section 78.390 of the Nevada Revised Statutes.
1.Name. The name of the Company is CirTran Corporation.
2.Amendment. The text of the Articles of Incorporation is to be amended by striking Article IV, as amended to date, in its entirety, and inserting a new Article IV reading as follows:
ARTICLE IV
CAPITALIZATION
The Corporation shall have the authority to issue 105,000,000 shares, of which 100,000,000 shares shall be common stock, par value $0.001 per share (“Common Stock”), and 5,000,000 shares shall be preferred stock, par value $0.001 per share (“Preferred Stock”). Shares of any class of stock may be issued, without stockholder action, in one or more series, as may from time to time be determined by the board of directors. The board of directors is hereby expressly granted authority, without stockholder action, and within the limits set forth in the Nevada Revised Statutes, to:
(a) designate, in whole or in part, the voting powers, preferences, limitations, restrictions, and relative rights of any class of shares before the issuance of any shares of that class;
(b) create one or more series within a class of shares, fix the number of shares of each such series, and designate, in whole or part, the voting powers, preferences, limitations, restrictions, and relative rights of the series, all before the issuance of any shares of that series; or
(c) alter or revoke the preferences, limitations, and relative rights granted to or imposed upon any wholly unissued class of shares or any wholly unissued series of any class of shares.
The allocation between the classes or among the series of each class of unlimited voting rights and the right to receive the Corporation’s net assets upon dissolution shall be as designated by the board of directors. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein or in the Corporation’s bylaws, or in any amendment hereto or thereto, shall be vested in the Common Stock. Accordingly, unless and until otherwise designated by the board of directors, and subject to any superior rights as so designated, the Common Stock shall have unlimited voting rights and be entitled to receive the Corporation’s net assets upon dissolution.
Effective as of __________ _____, 2014, (the “Effective Time”), each block of 1,000 issued and outstanding shares of Common Stock shall thereupon be combined into one share of validly issued, fully paid, and nonassessable Common Stock. Each stock certificate that prior to the Effective Time represented shares of Common Stock shall, following the Effective Time, represent the number of shares of Common Stock into which the shares represented by such certificate shall be combined. The Corporation shall not issue fractional shares or scrip as the result of the combination of shares, but shall issue to each record holder of Common Stock that number of shares obtained fromby rounding fractional shares otherwise issuable pursuant to the SEC's on-line database, located at www.sec.gov.foregoing combination to the next higher number of whole shares.
The foregoing Second Amendment to the Articles of Incorporation was adopted by resolution of the Corporation’s board of directors on _________ _____, 2014, and by the holders of a majority of the Corporation’s issued and outstanding common stock on ____________ _____, 2014, pursuant to the Nevada Revised Statutes. The Corporation has only Common Stock issued and outstanding. The number of shares of Common Stock issued and outstanding and entitled to vote on ___________ ____, 2014, the record date for consideration of the foregoing amendment, was ______ for, ______ against, with ______ abstaining. By Orderexecuting this Second Amendment to the Articles of Incorporation, the president and the secretary do hereby certify that on ___________ _____, 2014, the foregoing amendment was authorized and approved pursuant to Section 78.390 of the Nevada Revised Statutes. Each of the undersigned affirms and acknowledges, under penalties of perjury, that the foregoing instrument is his act and deed and that the facts stated herein are true.
DATED this _____ day of _______________, 2014.
CIRTRAN CORPORATION
| By: | By: | |||
| Iehab Hawatmeh, President | [Name of Secretary], Secretary |
| STATE OF | ) | ||
| : | ss. | ||
| COUNTY OF | ) | ||
On this _____ day of ____________________, 2014, personally appeared before me, the undersigned, a notary public, Iehab Hawatmeh and [Name of Secretary], who being first duly sworn, declared they are the president and secretary, respectively, of CirTran Corporation acknowledged that they signed the foregoing Second Amendment to the Articles of Incorporation, and verified that the statements contained therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
| NOTARY PUBLIC |
| A-2 |
CIRTRAN CORPORATION
Special Meeting of Stockholders
December [__], 2014
PROXY
This Proxy is solicited on behalf of the Board of Directors Iehab Hawatmeh,
Chief Executive Officer and
Chairman offor use at the Board of Directors
Date: April 29, 2008
28
CIRTRAN CORPORATION
PROXY
SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION
FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 18, 2008
Special Meeting on December [__], 2014
The undersigned shareholder of CirTran Corporation (the "Company") hereby appoints Iehab Hawatmeh, Chairman of the Board of Directors, or, failing him, Fadi Nora, Director, or instead of any of the foregoing, ___________________, as
proxy of the undersigned with full power of substitution, to attend, votethe attorney and otherwise act for and on behalfproxy of the undersigned, atto attend the above-noted AnnualSpecial Meeting of Shareholdersstockholders of CirTran Corporation, to be held December [__], 2014, beginning at 10:00 a.m. MDT, at its corporate offices located at 4125 South 6000 West, West Valley City, Utah 84128, and at any recess thereof, and to vote the Company and any adjournment thereof (the
"Meeting") to the same extent and with the same powers as ifstock the undersigned was
present at the Meeting, and the person named is specifically directedwould be entitled to vote as
indicated herein. The undersigned hereby undertakes to ratify and confirmif personally present, on all the said proxy may do by virtue hereof, and hereby revokes any proxy previously
given in respect of the Meeting. Without limiting the general authorization and
power hereby given, all of the common shares registeredmatters set forth in the nameProxy Statement sent to stockholders, a copy of which has been received by the undersigned, are toas follows:
| Pleasemark your votes as indicated [X] | Total Number of Shares Held: ____________ |
This proxy when properly signed will be voted in the manner directed herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS.
| 1. | To approve a proposed amendment to the Company’s Articles of Incorporation to recapitalize the Company, by reverse-splitting the outstanding common stock 1,000-to-one and reducing the authorized common stock to 100,000,000 shares, par value $0.001: | ||||
| FOR | AGAINST | ABSTAIN | |||
| [ ] | [ ] | [ ] | |||
| 2. | To approve a proposed amendment to the Company’s articles of incorporation to authorize a class of 5,000,000 shares of preferred stock and to authorize the Board to fix the number of shares and rights, preferences, and limitations of each series: | ||||
| FOR | AGAINST | ABSTAIN | |||
| [ ] | [ ] | [ ] | |||
| 3. | To approve a proposal to recess the Special Meeting on one or more occasions, if necessary or appropriate, to solicit additional Proxies: | ||||
| FOR | AGAINST | ABSTAIN | |||
| [ ] | [ ] | [ ] | |||
In their discretion, the proxies are authorized to vote upon such other business as follows:
FOR WITHHOLD FOR ALL
1. Election of Directors ALL AS TO ALL EXCEPT
INSTRUCTIONS: IF YOU MARK THE "FOR
ALL EXCEPT" CATEGORY, INDICATE |_| |_| |_|
THE NOMINEE(S) AS TO WHICH YOU DESIRE
TO WITHHOLD AUTHORITY BY STRIKING A
LINE THROUGH SUCH NOMINEE(S) NAME IN
THE LIST BELOW:
Iehab J. Hawatmeh
Fadi Nora
FOR WITHHOLD
2. Approval of 2006 Stock Plan VOTE
To approvemay properly come before the adoption of the 2006
Stock Plan and awards made since |_| |_|
adoption
3. Approval of 2008 Stock Plan FOR WITHHOLD
VOTE
To approve the adoption of the 2008
Stock Plan and awards made since
adoption |_| |_|
4. Appointment of Auditor FOR WITHHOLD
VOTE
To appoint Hansen Barnett & Maxwell,
P.C. as the Independent Registered
Public Accounting Firm and Auditor |_| |_|
of the Company and to authorize the
Board of Directors to fix the
Independent Registered Public
Accounting Firm and Auditor's
remuneration.
Signature Signature of joint holder, if any
------------------------ ----------
Date
---------------------------------------
Please sign exactly as the shares are issued.meeting.
IMPORTANT - PLEASE SIGN AND RETURN PROMPTLY. When shares are held by joint tenants hold shares, both should sign. When signing as attorney, as executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by an authorized person. - ---------------------------
29
NOTES:
1. If no choice is specified, the proxy will be VOTED FOR items 1, 2, 3 and
4.
2. Shareholders are entitled to vote at the Meeting either in person or by
proxy. A proxy must be dated and signed by the shareholder or his or her
attorney duly authorized in writing or, if the shareholder is a
corporation, by an officer or attorney thereof duly authorized. The
signature should agree with thePlease sign exactly as your name appears on this proxy. If the proxy is not
dated in the above space, it will be deemed to bear the date on which it
was mailed by the Company.
3. Each shareholder has the right to appoint a person to represent the
shareholder at the Meeting other than the persons specified above. Such
right may be exercised by inserting in the space provided the name of the
person to be appointed, who need not be a shareholder of the Company.
4. This proxy confers authority for the above-named persons to vote in their
discretion with respect to amendments or variations to the matters
identified in the notice of meeting which accompanied this proxy and with
respect to other matters which may properly come before the Meeting.
30
- --------------------------------------------------------------------------------
your stock certificate(s).
| Print Name | Signature | Date |