Voting
For the election of directors, the two nominees receiving the highest number of affirmative (FOR) votes cast at the Meeting will be elected as directors. Neither abstentions nor broker “non-votes” will affect the outcome of the election of directors. You do not have the right to cumulate your votes for the election of directors. Unless otherwise instructed, the proxy holders of the management proxy will vote the proxies received by them “FOR” each of the two nominees described in this Proxy Statement.
The Proposal for approval of amending the Articles of Incorporation to increase the authorized Common Stock to 950,000,000 shares requires the affirmative vote of a majority of the outstanding shares of the Common Stock present and entitled to vote on the matters. Therefore, an abstention or a broker "non vote"“non vote” will have the effect of a negative vote.
The Proposal for approval of the adoption of the 2006 Equity Incentive Compensation Plan (the “2006 Incentive Plan”) requires the vote of a majority of the shares of Common Stock present and voting at the Meeting. For purposes of this Proposal, abstentions will have the same effect on the outcome as votes cast “AGAINST” the Proposal, but broker “non-votes” will be considered as votes not entitled to be cast and will have no effect on the outcome.
If you are the beneficial owner, but not the registered holder of our shares, you cannot directly vote those shares at the Meeting. You must provide voting instructions to your nominee holder, such as your brokerage firm or bank. While your nominee holder may vote your shares without instructions on the election of directors, as this is a routine matter, it cannot vote without instructions from you on the two other Proposals.
Stockholders whose shares are registered in their own names may vote via the Internet, by telephone or by mailing a completed proxy card as an alternative to voting in person at the meeting. Instructions for voting via the Internet or by telephone are set forth on the enclosed proxy card. To vote by mailing a proxy card, sign and return the enclosed proxy card in the enclosed prepaid and addressed envelope, and your shares will be voted at the meeting in the manner you direct.
If your shares are registered in the name of a bank or brokerage firm you will receive instructions from your holder of record that must be followed in order for the record holder to vote the shares per your instructions. Many banks and brokerage firms have a process for their beneficial holders to provide instructions over the phone or via the Internet. If Internet or telephone voting is unavailable from your bank or brokerage firm, please complete and return the enclosed voting instruction card in the addressed, postage paid envelope provided. If you either return your signed proxy or submit your proxy using the Internet or telephone procedures that may be available to you, your shares will be voted as you direct.
If you wish to vote in person at the Meeting but you are not the record holder, you must obtain from your record holder a “legal proxy” issued in your name and bring it to the Meeting.
At the Meeting, ballots will be distributed with respect to each Proposal to each stockholder (or the stockholder’s proxy if not the management proxy holders) who is present and did not deliver a proxy to the management proxy holders or another person. The ballots shall then be tallied, one vote for each share owned of record, the votes being in three categories: “FOR,” “AGAINST” or “ABSTAIN” (or “FOR,” “WITHHELD” or “FOR EXCEPT THE FOLLOWING NOMINEES” in the case of “Proposal No. 1”).
Proxies
The form of proxy solicited by the Board of Directors affords you the ability to specify a choice among approval of, disapproval of, or abstention with respect to, each matter to be acted upon at the Meeting. Shares represented by the proxy will be voted and, where the solicited shareholder indicates a choice with respect to any matter to be acted upon, the shares will be voted as specified. If no choice is given, a properly executed proxy will be voted in favor of the election of the directors designated by the Board, the proposal to increase of authorized common stock proposal and the proposal to adopt the 2006 Equity Incentive Compensation Plan, and any other matters that may properly come before the Meeting, at the discretion of the persons designated as proxies.
In addition, the proxy confers discretionary authority to the persons named in the proxy authorizing those persons to vote, in their discretion, on any other matters properly presented at the Annual Meeting of Stockholders. The Board of Directors is not currently aware of any such other matters. The persons named as proxies may propose one or more adjournments of the meeting to permit further solicitations of proxies or for other reasons. Any such adjournment would require the affirmative vote of the majority of the outstanding shares present in person or represented by proxy at the meeting.
Revocability of Proxies
Even if you execute a proxy, you retain the right to revoke it and to change your vote by notifying us at any time before your proxy is voted. Mere attendance at the meeting will not revoke a proxy. Such revocation may be effected by execution of a subsequently dated proxy, or by a written notice of revocation, sent to the attention of the Secretary at the address of our principal office set forth above in the Notice to this Proxy Statement or your attendance and voting in person at the Meeting. Unless so revoked, the shares represented by proxies, if received in time, will be voted in accordance with the directions given therein.
If the Meeting is postponed or adjourned for any reason, at any subsequent reconvening of the Meeting, all proxies will be voted in the same manner as the proxies would have been voted at the original convening of the Meeting (except for any proxies that have at that time effectively been revoked or withdrawn), even if the proxies had been effectively voted on the same or any other matter at a previous Meeting.
You are requested, regardless of the number of shares you own or your intention to attend the Meeting, to sign the proxy and return it promptly in the enclosed envelope.
Delivery of Proxy Materials to Households
Only one copy of NanoSensor’s 2005 Annual Report and Proxy Statement for the 2006 Annual Meeting of Stockholders will be delivered to an address where two or more stockholders reside unless we have received contrary instructions from a stockholder at the address. A separate Proxy Card will be delivered to each stockholder at the shared address.
If you are a stockholder who lives at a shared address and you would like additional copies of the 2005 Annual Report, this Proxy Statement, or any future annual reports or proxy statements contact Joshua Moser, Secretary, NanoSensors, Inc., 1800 Wyatt Drive, Suite No. 2, Santa Clara, CA 95404, telephone number (408) 855-0051, and we will promptly mail you copies.
Interest of Officers and Directors in Matters to Be Acted Upon
None of our officers or directors has any interest in any of the matters to be acted upon, except to the extent they have been granted options under the 2006 Incentive Plan or may be granted options thereunder at some further date. See “Proposal 3.”
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to us with respect to the beneficial ownership of 300,278,978301,945,645 shares of our common stock outstanding, as of the close of business on the Record Date, reflecting our 10 for 1 forward split declared on January 12, 2006 by:
· By each person or entity known by us to beneficially own more than 5% of the outstanding shares of our common stock;
· By each of our executive officers and directors; and
· By all of our executive officers and directors as a group.
Beneficial ownership is determined under the rules of the Securities and Exchange Commissionand generally includes voting or investment power with respect to securities. Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Percentage ownership is based on 300,278,978301,945,645 shares of common stock outstanding as of the Record Date. Shares of common stock subject to options or warrants exercisable within 60 days of the Record Date are deemed to be outstanding and beneficially owned for purposes of computing the percentage ownership of such person but are not treated as outstanding for purposes of computing the percentage ownership of others.
Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership (1) | | Percentage of Class (%) | |
| | | | | | | |
Common Stock | | | Ted Wong | | | 22,000,000 (2 | ) | | 7.3 | |
| | | | | | | | | | |
Common Stock | | | Robert A. Baron | | | 20,000 (3 | ) | | * | |
| | | | | | | | | | |
Common Stock | | | Joshua Moser | | | 0 (4 | ) | | 0 | |
| | | | | | | | | | |
Common Stock | | | Matthew Zuckerman 0120 Letey Lane P.O. Box 344 Woody Creek, CO 81656 | | | 27,175,000 (5 | ) | | 9.0 | |
| | | | | | | | | | |
Common Stock | | | Bruce Meyers 45 Broadway, 2nd Floor New York, New York 10006 | | | 28,550,000 (6 | ) | | 9.5 | |
| | | | | | | | | | |
Common Stock | | | Imtiaz Khan 45 Broadway, 2nd Floor New York, New York 10006 | | | 20,750,000 (7 | ) | | 6.9 | |
| | | | | | | | | | |
Common Stock | | | Blue Green T, LLC 55 Frederick Street PO Box CB 13039 Nassau, Bahamas | | | 24,500,000 (8 | ) | | 8.1 | |
| | | | | | | | | | |
Common Stock | | | All officers and directors as a group (3 persons) (2), (3) and (4) | | | 22,020,000 | | | 7.3 | |
Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership (1) | | Percentage of Class (%) |
| | | | | | |
Common Stock | | Ted Wong | | 22,000,000 (2) | | 7.3 |
| | | | | | |
Common Stock | | Robert A. Baron | | 20,000 (3) | | * |
| | | | | | |
Common Stock | | Joshua Moser | | 0 (4) | | 0 |
| | | | | | |
Common Stock | | Matthew Zuckerman 0120 Letey Lane P.O. Box 344 Woody Creek, CO 81656 | | 27,175,000 (5) | | 9.1 |
| | | | | | |
Common Stock | | Bruce Meyers 45 Broadway, 2nd Floor New York, New York 10006 | | 28,550,000 (6) | | 9.5 |
| | | | | | |
Common Stock | | Imtiaz Khan 45 Broadway, 2nd Floor New York, New York 10006 | | 20,750,000 (7) | | 6.9 |
| | | | | | |
Common Stock | | Blue Green T, LLC 55 Frederick Street PO Box CB 13039 Nassau, Bahamas | | 24,500,000 (8) | | 8.2 |
| | | | | | |
Common Stock | | All officers and directors as a group (3 persons) (2), (3) and (4) | | 22,020,000 | | 7.3 |
4
_________________
(1) Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of common stock listed as owned by that person or entity. The number of shares beneficially owned is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power, and also any shares which the individual has the right to acquire within 60 days of the Record Date, through the exercise or conversion of any stock option, convertible security, warrant or other right (a “Presently Exercisable” security). Including those shares in the table does not, however, constitute an admission that the named stockholder is a direct or indirect beneficial owner of those shares.
(2) Does not include options to purchase a total of 18,000,000 shares of common stock which will be granted to Mr.Dr. Wong upon the approval by our stockholders of the equity compensation plan described in Proposal No. 3.
(3) Does not include options to purchase 2,000,000 shares of common stock which will be granted to Mr. Baron upon the approval by our stockholders of the equity compensation plan described in Proposal No. 3.
(4) Does not include options to purchase 14,200,000 shares of common stock which will be granted to Mr. Moser upon the approval by our stockholders of the equity compensation plan described in Proposal No. 3.
(5) Based on Mr.Dr. Zuckerman’s Schedule 13D/A filed on June 21, 2006. The Company, however, has been advised orally by representatives of Mr.Dr. Zuckerman that Mr.Dr. Zuckerman has disposed of a material portion of these shares and will be amending the Schedule 13D.
(6) Based on Schedule 13D/AandA and Form 4/A filed by Mr. Meyers on July 27, 2006. Consists of 20,600,000 shares of Common Stock owned by Bruce Meyers (including 250,000 owned by his spouse) and 7,950,000 shares held by Meyers Associates, L.P. of which entity Bruce Meyers is President and holds voting and investment control. Excludes 3,600,000 Unit Purchase Options to acquire 3,600,000 shares of common stock and 3,600,000 warrants, which are subject to a non-exercise agreement between the listed selling stockholder and NanoSensors pursuant to which the listed selling stockholder agreed not to exercise the Unit Purchase Options until the earlier of the six month anniversary of the effective date of the registration statement filed in connection with the private placement financing or one year from the effective date of the non-exercise agreement, which would be July 21, 2007. Also excludes up to 18,300,000 Unit Purchase Warrants which will not be issued unless we satisfy the post-closing conditions of our recent private placement of units in which Meyers Associates served as a selling agent.
(7) Based on Schedule 13D/A filed by Mr. Khan on July 27, 2006. Consists of 20,750,000 shares of Common Stock and does not include the securities listed in note (4) above held by Meyers Associates, L.P. by whom Imtiaz Khan is employed, but does not exercise voting and investment control. Excludes 5,500,000 Unit Purchase Warrants to acquire 5,500,000 shares of common stock and 5,500,000 warrants, which are subject to a non-exercise agreement between the listed selling stockholder and NanoSensors pursuant to which the listed selling stockholder agreed not to exercise the Unit Purchase Warrants until the earlier of the six month anniversary of the effective date of the registration statement filed in connection with the private placement financing or one year from the effective date of the non-exercise agreement, which would be July 21, 2007.
(8) Includes warrants to purchase 500,000 shares of common stock. Excludes warrants to purchase 24,000,000 shares of common stock which includes a clause restricting the exercise of such warrants where the holder is the beneficial owner of 5.0% or more of our common stock. Also excludes 36,000,000 shares of common stock and 36,000,000 warrants which will not be issued unless we satisfy the post-closing conditions of our recent private placement of units.
The issuer is not aware of any person who owns of record, or is known to own beneficially, five percent or more of the outstanding securities of any class of the issuer, other than as set forth above. There are no classes of stock other than common stock issued or outstanding. There are no known current arrangements that will result in a change in control.
ELECTION OF DIRECTORS
General
Our by-laws provide that the number of persons on the Board of Directors shall be between one and nine persons, as determined by the Board of Directors. The Board of Directors currently consists of two members elected for a term of one year and until their successors are duly elected and qualified. At this Meeting, the Board of Directors, has nominated the two persons listed below in the table captioned “Nominees” for election at the Meeting to serve for a term of one year and until their successors are duly elected and qualified. All of the nominees for directors being voted upon at the Meeting are directors standing for re-election. However, Mr. Robert Baron was initially elected to the Board of Directors on July 10, 2006 by action of the Board pursuant to our by-laws and this Meeting represents the first opportunity for our shareholders to consider his nomination.
The affirmative vote of a plurality of the outstanding shares of common stock present in person or represented by proxy at the Meeting and entitled to vote in the election of directors is required to elect the directors. All proxies received by the Board of Directors will be voted for the election as directors of the nominees listed below if no direction to the contrary is given. In the event any nominee is unable to serve, the proxy solicited hereby may be voted, in the discretion of the proxies, for the election of another person in his stead. The Board of Directors knows of no reason to anticipate this will occur.
All directors hold office until the next annual meeting of stockholders, or until their earlier death, resignation, removal or disqualification, and until their respective successors are duly elected and qualified. Officers are elected annually by, and serve at the discretion of, the Board of Directors. There are no arrangements or understandings between any of the nominees, directors or executive officers and any other person pursuant to which any of our nominees, directors or executive officers have been selected for their respective positions. No nominee, member of the board of directors or executive officer is related to any other nominee, member of the board of directors or executive officer. Biographical information regarding the nominees for election as directors and our executive officers is included below. The following table sets forth certain information about our nominees for election to the Board of Directors and our current executive officers.
Nominees
The names, the positions with the Company and the ages as of the Record Date of the individuals who are our nominees for election as directors are:
Name | | Age | | Position | | Director Since | |
| | | | | | | |
Dr. Ted L. Wong | | 66 | | | Chairman of the Board, Chief Executive Officer, President and Chief Financial Officer | | | 2003 | |
| | | | | | | | | |
Robert Baron | | 66 | | | Director | | | 2006 | |
For information as to the shares of the Common Stock held by each nominee, see the section “Securities Ownership of Certain Beneficial Owners and Management,” which starts on page 64 of this Proxy Statement. The following are biographical summaries for our nominees for election as directors:
Dr. Ted Wong has been our Chief Executive Officer, President and a Director since our inception in December 2003. He has over thirty years of U.S. and international business experience spanning the operational functions of research and development, sales, finance, and general business. From January 2002 until August 2003, Dr. Wong was Chief Strategy Officer of KT-Tech, Inc., a video compression company. From 2001 until January 2002, Dr. Wong was engaged in consulting. From 1999 to 2001, he served at different times as Chairman, CEO, CTO and COO of Zerotree Technologies, a firm he founded to develop video compression technologies for the Internet. From 1993 until 1998, Dr. Wong was President of Prime Technology Inc., business consultants. From 1988 to 1993, Dr. Wong served as President of INTEG, Inc., a firm he founded to market and distribute electronic learning aids in the U.S. market for Team Concepts of Hong Kong. During this period, Dr. Wong was co-founder and President of Fox Electronics and Technology, Inc., a firm founded to market and distribute Team Concept’s consumer electronics products. From 1969 through 1983, He worked in research and development for North American Rockwell and General Electric Company where he became proficient at developing technology from concept to application. Dr. Wong holds a B.S. and a Ph.D. in Chemical Engineering from the University of Utah.
Robert Baronwas appointed to our board July 10, 2006. Mr. Baron presently serves as a member of the board of directors of two publicly-traded companies, Hemobiotech, Inc. and Exegenics, Inc. Hemobiotech is a development stage biotechnology company and Exegenics, which formerly operated as a biotechnology company, is currently seeking to redeploy its assets and actively pursue a new business. From 1998 to August 2004, he served as President of Cash City Inc., a payday advance and check cashing business. Previously, Mr. Baron served as President of East Coast Operations of CSS/TSC, a subsidiary of Tultex, Inc., a New York Stock Exchange listed company engaged in the manufacturing of activewear products, such as t-shirts and as Chairman of T-Shirt City Inc., a company engaged in the distribution of activewear products. Mr. Baron received his B.S. degree from Ohio State University. Mr. Baron was a limited partner in Meyers Associates, LP from February 2002 until July 2006. Meyers Associates, LP served as a selling agent in our recently announced private placement.
Executive Officers
The following table sets forth certain information about each of our executive officers:
Name | | Age
| | Position |
| | | | |
Dr. Ted L. Wong | | 66 | | Chairman of the Board, Chief Executive Officer, President and Chief Financial Officer |
| | | | |
Joshua Moser | | 35 | | Vice President, Chief Operating Officer and Corporate Secretary |
Mr.Joshua Moser was appointed as our Vice President and Chief Operating Officer on August 3, 2006 and has been our Corporate Secretary since June 2006. Mr. Moser has been providing consulting services to us since November 2005. Prior to working with NanoSensors, Inc., from September 1999 to October 2000, Mr. Moser was the Director of Business Development at GCN, Inc., an online market research company. From October 2000 to September 2002, Mr. Moser was a research analyst at Tufan, Inc., where he analyzed and managed investments in privately-held software, semiconductor and technology service companies. From September 2002 through February 2005, Mr. Moser was employed as a Vice President with Sherwood Partners, Inc., a business and financial advisory consulting firm that assists commercial lending institutions and venture capital firms in managing and structuring corporate turnarounds. Thereafter and prior to joining the Company, Mr. Moser has been providing management consulting services, including serving as Interim Chief Financial Officer at Chuckwalla, Inc., a privately-held software company. Mr. Moser graduated from Denison University in 1994 with a B.A. in History. Mr. Moser is 35 years of age.
Board of Directors; Committees
Dr. Wong and Mr. Baron are currently the only member of our Board of Directors. Our Board has determined that Mr. Baron qualifies as an independent director within the meaning of the Nasdaq Marketplace Rules. In light of the fact that Dr. Wong served as our sole director until Mr. Baron’s election on July 10, 2006, actions taken by the Board prior to such date have been by written consent from time to time, as considered necessary or reasonable. We had no arrangements pursuant to which any director was compensated during our last fiscal year for any service provided as a director. We are in the process of seeking additional members to serve as directors. The directors are expected to attend the Meeting. We did not have an annual meeting in 2005.
Since our Board of Directors presently consists only of Dr. Wong and Mr. Baron, we have not formed any Board committees. All matters relating to audit, compensation, nominations and corporate governance are considered and acted upon by our entire Board of Directors. We are currently seeking to identify suitable candidates in order to increase the membership of our Board of Directors and to establish separate audit, compensation and nominating committees, each comprised solely of directors that satisfy the independence criteria of the Securities and Exchange Commission and the Nasdaq Stock Market.
Compensation of Directors
Effective July 7, 2006, we adopted a compensation plan for non-executive members of our Board of Directors. Pursuant to this plan, each non-executive director will be paid an annual retainer of $18,000, payable in equal quarterly installments of $4,500; provided, however, that for the initial quarter in which a non-executive director commences service on the board, such director shall receive a prorated fee for such quarter based on the date such service commences, as follows: (a) if service commences during the first month of such fiscal quarter the fee for such quarter shall be $4,500; (b) if service commences during the second month of such fiscal quarter, the fee for such quarter shall be $3,000; and (c) if service commences during the third month of such fiscal quarter, the fee for such quarter shall be $1,500.
In addition, subject to the approval of our stockholders, effective July 7, 2006, each non-executive director will, upon his or her appointment to our board of directors, receive a grant of options to purchase 2,000,000 shares of common stock, exercisable for a period of ten years at an exercise price equal to the closing price of our common stock on the date of issuance. These options will vest 50% on the first anniversary of the issue date and the balance on the second anniversary of such date. Subject to the approval of Stockholders of Proposal No. 3, Mr. Robert Baron was granted options to purchase 2,000,000 shares of common stock on July 10, 2006, which options will be on the terms described herein.
Compensation Committee Interlocks and Insider Participation in Compensation Decisions
The Board does not have a compensation committee and there are no interlocks between our directors and directors of other companies.
Audit Committee and Audit Committee Financial Expert
We do not have an Audit Committee of the Board. Because of the small size of our Board and because we are not traded on an exchange or on the Nasdaq Stock Market, we are not required by law or applicable regulations to have an Audit Committee. The Board acts as a whole with respect to matters which might otherwise be acted upon by an Audit Committee. We have not designated a board member as an audit committee financial expert pursuant to Item 401 of Regulation S-B. Both our directors, however, are financially literate, generally as a result of their education and/or past experience.
Shareholder-Director Communication and Director Nominations
We have neither a nominating committee for persons to be proposed as directors for election to the Board of Directors nor a formal method of communicating nominees from shareholders. We do not have any restrictions on shareholder nominations under our certificate of incorporation or by-laws. The only restrictions are those applicable generally under Nevada Corporate Law and the federal proxy rules. Currently the Board of Directors decides on nominees, on the recommendation of one or more members of the board. The board of directors will consider suggestions from individual shareholders, subject to evaluation of the person’s merits. Stockholders may communicate nominee suggestions directly to any of the Board members, accompanied by biographical details, employment history of such person, all information related to such person as is required to be disclosed under the SEC proxy disclosure rules, and a statement of support for the nominees. The suggested nominee must also provide a statement of consent to being considered for nomination.
The selection of director nominees includes consideration of factors deemed appropriate by the Board. We may engage a firm to assist in identifying, evaluating, and conducting due diligence on potential board nominees. Factors will include integrity, achievements, judgment, intelligence, personal character, any prior contact or relationship between a candidate and a one or more of our current or former directors or officers, the interplay of the candidate’s relevant experience with the experience of other Board members, the willingness of the candidate to devote adequate time to Board duties and the likelihood that he or she will be willing and able to serve on the Board for a sustained period. The Board will consider the candidate’s independence, as defined by the rules of the SEC and any securities exchange on which our securities may then be listed. In connection with the selection, due consideration will be given to the Board’s overall balance of diversity of perspectives, backgrounds, and experiences. Experience, knowledge, and skills to be represented on the Board include, among other considerations, financial expertise (including an “audit committee financial expert” within the meaning of the SEC’s rules), technical expertise and/or knowledge and contacts, financing experience, strategic planning, business development, and community leadership.
The Board of Directors has not adopted a formal methodology for communications from stockholders on the belief that any communication would be brought to the Boards’ attention by virtue of the current size of our Board and the extensive involvement of Mr. Wong as our Chairman and Chief Executive Officer. Any shareholder who wishes to communicate with the Board of Directors should send a written letter to Chairman of the Board of Directors, at our principal address. Letters may be directed to the Board as a whole or to individual members.
Certain Relationships and Related Transactions
For information concerning employment agreements with, and compensation of, our executive officers, see the disclosure in the section of this Proxy Statement captioned “Employment, Severance and Change of Control AgreementsAgreements.”.”
On May 10, 2006, we entered into a Selling Agent Agreement with Meyers Associates, LP pursuant to which they agreed to serve as a selling agent in our recently completed private placement. Pursuant to the selling agency agreement, to date we have paid Meyers Associates total commissions of $81,450 and $51,885 in non-accountable expenses in this financing. We also issued Meyers Associates an aggregate of 16,290,000 unit purchase warrants, pursuant to which Meyers Associates has the right to purchase, at the price of $.01 per unit, 16,290,000 units of our securities, each unit consisting of one share of common stock and one common stock purchase warrant. The unit purchase warrants expire five years from the effective date of the registration statement. In the event we satisfy the post-closing covenants of the private placement financing and issue additional shares to the investors, we will pay to Meyers Associates additional commissions of $91,500 and issue them 18,300,000 additional unit purchase warrants.
Prior to entering into an employment agreement with Joshua Moser, in November 2005, we retained Mr. Moser on a consultancy basis pursuant to which he provided us with managerial services. Pursuant to that consulting arrangement, we have paid Mr. Moser consulting fees at the rate of $6,500 per month from November 2005 through May 2006 and thereafter at the rate of $10,000 per month.
On July 21, 2006, we entered into an agreement with Meyers Associates, L.P., Bruce Meyers and Imtiaz Khan, whereby each of them agreed not to exercise either the Unit Purchase Options or Unit Purchase Warrants held by them for a period equal to the earlier of six months from the effective date of the registration statement filed in connection with the private placement financing or one year from the date of the agreement. In consideration of such agreement, we agreed that effective as of the date of the non-exercise agreement, the prior lock-up agreement, which was to expire on November 10, 2006, would be terminated. In addition, on July 21, 2006 we agreed with Meyers Associates on an amendment to the Unit Purchase Option to clarify the circumstances under which adjustments to the exercise price and number of shares issuable pursuant to the anti-dilution provisions of the Unit Purchase Option and the underlying warrants may be made.
During the year ended November 30, 2005, Dr. Ted Wong, our President and Chief Executive Officer made advances to us in the aggregate amount of $9,658. These advances are non-interest bearing and are payable upon demand. As of November 30, 2005, accounts and advances payable to related parties include advances of $9,658 and consulting fees payable to Dr. Ted Wong and Dr. Matthew Zuckerman of $89,318 and $64,781, respectively. As described above under the caption “Legal Proceedings,” we entered into a Settlement Agreement and Release with Dr. Zuckerman in April, 2006 and pursuant to that agreement paid him $32,391 in July 2006 in full payment of outstanding consulting fees previously owed.
We entered into a two-year office lease with rent of $2,304 at the commencement of the lease, which is personally guaranteed by Dr. Ted Wong, Chief Executive Officer.
See the discussion under the caption “Executive Compensation Consulting Agreement” abovebelow for the terms and conditions of a consulting agreement we entered into with Dr. Ted Wong and Dr. Matthew Zuckerman. Dr. Zuckerman resigned from all positions with us as of March 1, 2005.
In December 2003, we issued 50,000,000 founders shares to Dr. Ted Wong, valued at $.0001 per share, for services related to our business. We also issued 50,000,000 founders shares to Dr. Matthew Zuckerman, our former Chief Scientist, valued at $.0001 per share, in connection with the license agreement entered into between us and Axiom Corp. and Dr. Zuckerman. Dr. Wong and Dr. Zuckerman each assigned a portion of their shareholdings as gifts to friends and non-affiliated parties in February 2004, when we first issued the common shares and their current shareholdings are listed under the caption “Security Ownership of Certain Beneficial Owners and Management” elsewhere in this proxy statement.
In February 2004, we issued 62,500,000 founders shares, valued at $.0001 per share, in consideration of cancellation of a note payable from us to Meyers Associates L.P. and its affiliates for financial advisory services previously rendered to us in connection with the formation and capitalization of our business. Meyers Associates has assigned a portion of their shareholdings as gifts to employees, friends and non-affiliated parties and its current shareholdings are listed under the caption “Security Ownership of Certain Beneficial Owners and Management” elsewhere in this proxy statement.
In February 2004, we borrowed $100,000 in the aggregate from two private investors obtained through our investment banker, Meyers Associates. Meyers Associates received a 10% sales commission and a 3% non-accountable expense allowance. We used the net proceeds for product development and working capital. Interest on each note, referred to herein as the “Bridge Notes”, accrued at a rate of 10% per annum. These notes mature on the earlier of (a) August 15, 2004, (b) the completion of a private placement of at least $500,000, or (c) an event of default. Payment of the Bridge Notes was guaranteed by our two founders, Dr. Ted Wong and Dr. Matthew Zuckerman. The investors also each received five-year warrants to purchase 500,000 shares of common stock exercisable at $.025 per share. The Bridge Notes were repaid in our April 2004 Private Placement.
By virtue of their ownership of common stock and efforts in organizing our company, Ted Wong and Matthew Zuckerman may be deemed “founders,” “parents” and promoters of our company, and Meyers Associates and its principals may be deemed a “founder” of our company as such terms are defined in the Securities Act of 1933 and the Rules and Regulations promulgated thereunder. As described above, Ted Wong and Matthew Zuckerman each received 50,000,000 founders’ shares in connection with the formation of our company and Meyers Associates received 62,500,000 founders’ shares as payment for financial advisory services. Dr. Zuckerman resigned from all positions with us as of March 1, 2005.
We believe, based on management’s experience that the above transactions are as fair as what could have been obtained from unaffiliated third parties. All future transactions and loans with affiliates of the issuer, including 5% or greater stockholders are to be on terms no less favorable than could be obtained from an unaffiliated third party. All future affiliated transactions and any forgiveness of loans must be (a) for a bona fide business purpose and approved by a majority of our independent directors who do not have an interest in the transactions and who had access, at our expense, to our independent legal counsel, or (b) a transaction permitted under Section 13(k) of the Securities Exchange Act of 1934, as amended.
Section 16(a) Beneficial Ownership Reporting Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Executive officers, directors, and greater-than-ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms received by us and written representations from our reporting persons, we believe that all of our reporting persons have filed their respective Section 16(a) forms for the year ended November 30, 2005 except Matthew Zuckerman, a holder of more than 10% of our common stock filed a Form 4 dated Janaury 4, 2006 reporting transactions on March 15, 2005 and December 9, 2005.
Code of Ethics
We have adopted a code of ethics in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 rules established by the SEC. The code of ethics establishes guidelines to be followed by our principal executive officer, who is our chief executive officer, and our senior financial officers. Currently our chief executive officer and chief operating officer are our only senior financial officers under the code of ethics. Currently, our chief executive officer also serves as our chief financial officer. In the event that we appoint a treasurer, controller, or other officer who is principally responsible for our accounting, such employees will automatically be deemed as senior financial officers. In addition, our audit committee may, from time to time, change the officers designated as senior financial officers. Compliance is mandatory for those employees subject to our code of ethics. Waivers or amendments to this code will be disclosed to the public, and filed with the SEC, on Form 8-K.
A copy of this Code of Ethics was filed as an exhibit to our annual report on Form 10-KSB filed with the SEC on March 17, 2005. A copy of the Code of Ethics may also be obtained without charge by writing to Dr. Ted L. Wong, at NanoSensors, Inc., 1800 Wyatt Drive, Suite 2, Santa Clara, CA 95054.
Indemnification
The laws of Nevada permit the indemnification of directors, employees, officers and agents of Nevada corporations. Our bylaws provide that we shall indemnify to the fullest extent permitted by Nevada law any person whom we are able to indemnify under that law. The provisions of Nevada law that authorize indemnification limit their application only to circumstances where the indemnified person acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation and with respect to any criminal action or proceeding had no reasonable cause to believe his conduct was unlawful. The statute does not affect a director’s responsibilities under any other law, such as the federal securities laws. To the extent that we indemnify our management for liabilities arising under securities laws, we have been informed by the SEC that this indemnification is against public policy and is therefore unenforceable.
Vote Required
The affirmative vote of the holders of a plurality of the shares of common stock voting at the Meeting is required for the approval of the nominees for Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
YOU VOTE FORTHESE NOMINEES.
Summary Compensation Table
The following table sets forth information concerning the total compensation that we have paid or that has accrued on behalf of our chief executive officer and other executive officers (the “Named Executive Officers”) with annual compensation exceeding $100,000 during the fiscal year ended November 30, 2005.
| | Annual Compensation | Long Term Compensation | | Annual Compensation | | Long Term Compensation | |
Name and Principal Position | | Year | | Salary (1) | | Bonus | | Restricted Stock Awards | | Securities Underlying Options/SARs | | All Other Compensation | | Year | | Salary (1) | | Bonus | | Restricted Stock Awards | | Securities Underlying Options/ SARs | | All Other Compensation | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Ted L. Wong, Ph.D. | | 2005 | | $ | 25,500 | (2) | 0 | | 0 | | 0 | | 0 | | | | 2005 | | $ | 25,500 | (2) | | 0 | | 0 | | 0 | | 0 | |
Chief Executive Officer | | 2004 | | $ | 178,174 | (3) | 0 | | 0 | | 0 | | 50,000,000 | (6) | | | 2004 | | $ | 178,174 | (3) | | 0 | | 0 | | 0 | | 50,000,000 | (6) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Matthew Zuckerman, Ph.D. | | 2005 | | $ | 25,500 | (4) | 0 | | 0 | | 0 | | 0 | | | | 2005 | | $ | 25,500 | (4) | | 0 | | 0 | | 0 | | 0 | |
Chief Scientist (former) | | 2004 | | $ | 178,174 | (5) | 0 | | 0 | | 0 | | 50,000,000 | (6) | | | 2004 | | $ | 178,174 | (5) | | 0 | | 0 | | 0 | | 50,000,000 | (6) |
__________________
(1)Based on an annual salary of $180,000 which was reduced to $102,000 per annum in May 2004.
(2)Includes $4,399 paid to Dr. Wong. We owed Dr. Wong $89,318 as of November 30, 2005. See note 6 to our audited financial statements for the fiscal year ended November 30, 2005.
(3)Includes $109,957 paid and $68,217 owed to Dr. Wong, as of November 30, 2004.
(4)We owed to Dr. Zuckerman $64,781as of November 30, 2005. Dr. Zuckerman terminated his consulting relationship with us as of March 1, 2005.
(5)Includes $138,893 paid and $39,281 owed to Dr. Zuckerman, as of November 30, 2004,
(6)Upon our formation in December 2003, 50,000,000 restricted shares of Common stock were issued as founders shares to each of Dr. Mathew Zuckerman and Dr. Ted Wong. These Shares were issued pursuant to the terms of the license agreement entered into between the Company and Axiom Corp. on behalf of Dr. Zuckerman and Dr. Wong. The shares were valued at an aggregate of $5,000 as of the original issue date.
Consulting Agreements
Pursuant to the December 2003 License Agreement between us and Axiom Corp. and Matthew Zuckerman, described below, Axiom entered into a consulting agreement with us. Dr. Matthew Zuckerman is President of Axiom which, under the agreement, was to be paid a consulting fee of $15,000 per month starting September 1, 2003, for a two-year period plus reimbursement of the consultant's direct costs. Axiom was paid $15,000 per month until April 2004. Beginning in May 2004, Axiom was being compensated at the rate of $8,500 per month, or $102,000 per annum until March 1, 2005 when the agreement was effectively terminated. Axiom is an independent contractor and only Dr. Zuckerman was providing services to us under the consulting agreement. On December 11, 2003, we purchased a worldwide, perpetual, royalty free, executive license for all commercial markets to use and further develop Dr. Zuckerman’s sensor technologies to detect BCX agents. We paid Zuckerman and Axiom a one time licensing fee of $90,000, 50,000,000 shares of our Common Stock and entered into the above-described consulting agreement.
We entered into a two-year consulting agreement with Dr. Ted Wong commencing on September 1, 2003. The contract provides for Dr. Wong to be paid $14,833 per month plus reimbursement of direct costs. Dr. Wong is employed on a full-time basis for the Company. Dr. Wong was paid $14,833 per month until April 2004. Beginning in May 2004, he is being compensated at the reduced rate of $8,500 per month or $102,000 per annum. All inventions and ideas, whether patentable or not, made by Dr. Wong or with others relating to our business shall belong to us. As described below, we entered into an employment agreement with Dr. Ted Wong, Chief Executive Officer and President, which agreement supersedes this consulting agreement.
Employment, Severance and Change of Control Agreements
Employment Agreement with Ted L. Wong
We entered into an employment with Ted L. Wong, our Chief Executive Officer, President and Chairman, dated as of August 3, 2006 pursuant to which:
· Mr.Dr. Wong will continue to serve as our Chief Executive Officer, President and Chairman for an employment period of 36 months from the effective date of the employment agreement.
· Mr.Dr. Wong will receive an annual base salary of $144,000 under the employment agreement and was granted a signing bonus of $40,000, of which $20,000 was previously paid. In addition, Mr.Dr. Wong will be entitled to a performance bonus of up to a maximum of $50,000 in the event he achieves certain milestones defined in the employment agreement.
·In connection with his entering into the employment agreement, Mr.Dr. Wong was awarded two grants of options, both of which are subject to the approval of the Registrant’sour stockholders of an equity compensation plan to be presented to them at the Registrant’s nextour stockholders meeting. The initial grant consisted of options to purchase 5,000,000 shares of common stock, all of which shall vest on the six month anniversary of the effective date of the employment agreement. The second grant consists of options to purchase 13,000,000 shares of common stock, which shall vest in equally monthly installments commencing on the six month anniversary date of the employment agreement. Both options shall be exercisable for a period of ten years at a per share exercise price equal to the closing price of the Registrant’sour common stock on the effective date of the employment agreement. Further, all of the options granted to Mr.Dr. Wong will become immediately vested and exercisable in accordance with, and subject to, the terms and conditions of such plan, in the event of a change of control of the Registrantour company or if Mr.Dr. Wong is terminated without cause.
·If Mr.Dr. Wong’s employment is terminated by us without “cause” (as defined in the employment agreement), he would be entitled to a severance payment of his base salary, at the rate then in effect, for a period of six months. If Mr.Dr. Wong’s employment is terminated by us for “cause”, he (a) would not be entitled to any further compensation or benefits and (b) would not be entitled to any additional rights or vesting with respect to the stock options following the date of termination.
· Mr.Dr. Wong is subject to customary confidentiality obligations, non-solicitation and non-competition that survive the termination of the employment agreement.
Employment Agreement with Joshua Moser
We entered into an employment with Joshua Moser, our new Vice President and Chief Operating Officer, dated as of August 3, 2006 pursuant to which:
·Mr. Moser will serve as our Vice President and Chief Operating Officer for an employment period of 36 months from the effective date of the employment agreement.
·Mr. Moser will receive an annual base salary of $120,000 under the employment agreement.agreement .
·In connection with his entering into the employment agreement, Mr. Moser was awarded two grants of options, both of which are subject to the approval of the Registrant’sour stockholders of an equity compensation plan to be presented to them at the Registrant’s nextour stockholders meeting. The initial grant consisted of options to purchase 4,000,000 shares of common stock, all of which shall vest on the six month anniversary of the effective date of the employment agreement. The second grant consists of options to purchase 10,200,000 shares of common stock, which shall vest in equally monthly installments commencing on the six month anniversary date of the employment agreement. Both options shall be exercisable for a period of ten years at a per share exercise price equal to the closing price of the Registrant’sour common stock on the effective date of the employment agreement. Further, all of the options granted to Mr. Moser will become immediately vested and exercisable in accordance with, and subject to, the terms and conditions of such plan, in the event of a change of control of the Registrantour company or if Mr. Moser is terminated without cause.
·If Mr. Moser’s employment is terminated by us without “cause” (as defined in the employment agreement), he would be entitled to a severance payment of his base salary, at the rate then in effect, for a period of six months. If Mr. Moser’s employment is terminated by us for “cause”, he (a) would not be entitled to any further compensation or benefits and (b) would not be entitled to any additional rights or vesting with respect to the stock options following the date of termination.
·Mr. Moser is subject to customary confidentiality obligations, non-solicitation and non-competition that survive the termination of the employment agreement.
PROPOSAL 2
APPROVAL OF AMENDMENT TO
OUR ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
Our Board of Directors has approved, declared it advisable and in our best interest and directed that there be submitted to the holders of a majority of our common stock for approval, the amendment to Article THIRD of our Articles of Incorporation to effectuate an increase in the authorized common stock from 500,000,000 shares with a par value of $0.001 to 950,000,000 shares with a par value of $0.001. If adopted by the stockholders, the amendment would be effective upon filing of an appropriate certificate of amendment with the Secretary of State of the State of Nevada.
The Board of Directors believes that it is advisable and in our best interest to increase the authorized common stock in order to have available additional authorized but unissued shares of common stock in an amount adequate to provide for our future needs. The availability of additional authorized but unissued shares will be achieved by effectuating an increase in the number of authorized shares of common stock from 500,000,000 to 950,000,000 shares. This step is necessary, in the judgment of the Board of Directors, in order to (i) satisfy our obligations to the investors in our recent private placement, (ii) raise additional capital, and (ii) carry out our business objectives.
The text of paragraphs (a) and (b) of Article THIRD, as it is proposed to be amended, is as follows:
(a)The Corporation is authorized to issue up to Nine Hundred and Seventy Million (970,000,000) shares, consisting of Nine Hundred and Fifty Million (950,000,000) shares of Common Stock $.001 par value (“Common Stock”) and Twenty Million (20,000,000) shares of Preferred Stock, $.001 par value (“Preferred Stock”). |
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(b)There are currently authorized 500,000,000 share of Common Stock, $.001 par value: There shall be 950,000,000 shares of Common Stock, $.001 par value authorized after this Certificate of Amendment is filed. Holders of a majority in interest of the Common Stock have consented to the filing of this Certificate of Amendment. |
A form of the Amendment to our Articles of Incorporation reflecting the increase in our authorized capital is annexed to this Proxy Statement as Exhibit A.
Under the present Articles of Incorporation, as amended, we have the authority to issue 500,000,000 shares of common stock and 20,000,000 shares of Preferred Stock. As of the Record Date, 300,278,978301,945,645 shares of common stock were issued and outstanding and no shares of Preferred Stock were outstanding.
Holders of our common stock have the right to share ratably in such dividends on shares of common stock as may be declared by the Board of Directors and upon liquidation or dissolution, each outstanding share of common stock will be entitled to share equally in our assets legally available for distribution to stockholders after the payment of all debts and other liabilities, subject to any superior rights of the holders of Preferred Stock. Common stock holders have no pre-emptive rights and there are no conversion or redemption privileges or sinking fund provisions with respect to our common stock. Our common stock does not have cumulative voting rights, so holders of more than 50% of the outstanding common stock can elect all of our Directors as to which common stock holders are entitled to elect.
As of the Record Date, we:
·had 300,278,978301,945,645 shares issued and outstanding;
·had 34,200,000 shares reserved for issuance upon the exercise of stock options (which are subject to the approval by our stockholders of the 2006 Equity Incentive Plan, see Proposal No. 3);
·had 164,055,000162,055,000 shares reserved for issuance upon the exercise of currently outstanding common stock purchase warrants; and
·will issue 91,500,000 shares of common stock and warrants to purchase an additional 91,500,000 shares of common stock to the investors in our recent private placement in accordance with the escrow conditions that we agreed to in that financing, of which obtaining stockholder approval of this Proposal is one condition. In addition, we will issue an additional 36,600,000 shares of common stock upon the exercise of unit purchase warrants which will be issued to the selling agents in our recent private placement, upon our satisfaction of the agreed upon escrow conditions.
Further, we have been informed by the Staff of the Securities and Exchange Commission that the registration statement we filed in accordance with our obligations under the registration rights agreements we entered into in connection with our recent financing will not be declared effective unless we remove from such registration statement the resale of any shares of common stock we are not currently authorized to issue or until such time as our shareholders approve the proposal to increase our authorized number of common stock. In our registration rights agreement, we agreed to register the resale all of the shares of common stock that we issued or may issue in connection with our recent private placement with 100 days from the filing date and to maintain the effectiveness of such registration statement for a period of up to two years. We also agreed in our registration rights agreement to pay to these investors cash damages equal to 2% of the purchase price paid by each investor for each full month in which we are not in compliance with our registration obligations (pro-rata for any partial month) up to a maximum of six months. Due to the foregoing obligations, our management has decided that it is in our best interest to defer the effectiveness of this registration statement until our shareholders approve this Proposal. Accordingly, we require shareholder approval of this Proposal in order to avoid incurring, or to minimize, liability to our investors under the registration rights agreement.
If we are unable to have these additional funds released from escrow, we will need to raise additional capital through other arrangements or substantially reduce our expenses and operations. To raise additional funds, we would attempt to undertake private placements of our securities. However, we cannot assure you that any additional financing will be available or, even if it is available that it will be on terms acceptable to us. If we raise additional funds by selling securities, the ownership of our existing shareholders will be diluted and such securities may include powers, preferences or rights senior to our currently outstanding securities. Any inability to obtain required financing on sufficiently favorable terms could have a material adverse effect on our business, results of operations and financial condition. However, in light of our current capital structure, it will be difficult for use to raise additional capital through private financings without an increase in the number of shares of common stock we are authorized to issue.
Further, if the stockholders do not approve this Proposal No. 2, we may not be able to grant the additional options under the 2006 Equity Incentive Plan for which stockholder approval is sought in Proposal No. 3 of this Proxy Statement.
Purpose and Effects of Proposed Amendment
Our authorized common stock must be increased so that we will have available additional authorized but unissued shares of common stock in an amount adequate to provide for our future needs, including the satisfaction of our obligation to issue shares of common stock upon the exercise of warrants and options already issued and outstanding, and to enable us to satisfy one of the post-closing conditions we agreed to in the recently completed financing.
The additional shares will be available for issuance from time to time in the discretion of the Board of Directors, normally without further stockholder action (except as may be required for a particular transaction by applicable law, requirements of regulatory agencies or by stock exchange rules), for any proper corporate purpose including, among other things, future acquisitions of property or securities of other corporations, stock dividends, stock splits, stock options, convertible debt and equity financing. For instance, if we need to seek additional private financing to secure the necessary capital to implement our business plans, we would require the availability of additional authorized shares. As we are a development stage company with no revenue, we expect that we will require additional financing, although no equity financing is currently contemplated. We also are likely to issue additional shares of common stock in the future for the purpose of providing equity incentives to employees, officers and directors.
The additional common stock to be authorized will become part of the existing class of common stock, and the amendment would not affect the terms of the outstanding common stock or the rights of the holders of the common stock. This proposal will not affect the rights of the holders of currently outstanding common stock, except for effects incidental to increasing the number of shares of common stock outstanding, such as dilution of the earnings per share and voting rights of current holders of common stock. Our stockholders do not have preemptive rights with respect to our common stock. Should the board of directors elect to issue additional shares of common stock, existing stockholders would not have any preferential rights to purchase such shares.
The increase in our authorized common stock from 500,000,000 shares to 950,000,000 shares has important potential dilutive and anti-takeover ramifications because we will have an additional 450,000,000 shares of common stock available for issuance. As such, there can be no assurance that our shareholders will not experience, immediately, or at any time, dilution in the value of their shares of common stock as a result of additional issuances of common stock.
In addition, although we are not adopting the increase in our authorized capital stock with the intent that it be utilized as a type of anti-takeover device, greatly increasing the amount of our authorized common stock can be used as a takeover defense against hostile takeovers. For example, we could use the additional shares of common stock to oppose a hostile takeover attempt or delay or prevent changes of control (whether by merger, tender offer, proxy contest or assumption of control by a holder of a large block of our securities) or changes in or removal of its management. For example, without further stockholder approval, the Board of Directors could strategically sell shares of common stock in a private transaction to purchasers who would oppose a takeover or favor the current Board of Directors. The issuance of a significant amount of additional shares of common stock would effectively dilute the voting power of the other outstanding shares and increase the potential cost to acquire control of our company. Similarly, we could issue additional shares in a manner that would impede the efforts of stockholders to elect directors other than those nominated by the then-current Board of Directors. However, this proposal is not part of any present plan to adopt a series of amendments having an anti-takeover effect, and management presently does not intend to propose anti-takeover measures in future proxy solicitations.
Although the Board of Directors is motivated by business and financial considerations in proposing this amendment, and not by the threat of any attempt to accumulate shares or otherwise gain control of our company (and the Board of Directors is not currently aware of any such attempts), stockholders nevertheless should be aware that approval of the amendment could facilitate our ability to deter or prevent changes of control in the future, including transactions in which the stockholders might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner.
The following is a description of other anti-takeover provisions in our charter documents and other agreements. We have no current plans or proposals to enter into any other arrangement that could have material anti-takeover consequences.
Articles of Incorporation and Bylaws. Other provisions of our Articles of Incorporation and bylaws may have the effect of deterring unsolicited attempts to acquire a controlling interest in our company or impeding changes in our management. The Articles of Incorporation provides that our Board may issue, without stockholder action, up to 20,000,000 shares of preferred stock with voting or other rights. We currently do not have any shares of Preferred Stock outstanding. Our stockholders do not have cumulative voting rights, and stockholders representing a majority of the shares of common stock outstanding are able to elect all of the directors. Our bylaws provide that only our President, the entire Board or any two or more directors may call a special meeting of stockholders.
Employment Agreements with Chief Executive Officer and Chief Operating Officer. We entered into employment agreements with our Chief Executive Officer and Chief Operating Officer as of August 3, 2006. Our agreements with each of these officers provides that in the event their employment is terminated or materially reduced following a change of control (as defined in the employment agreements), we will be required to pay either of them a severance payment equal to six months of the base salary in effect at the time of termination. In addition, all options granted to these officers will be deemed vested and such options will be exercisable for the duration of their term. These features may discourage a merger proposal, tender offer or other attempt to gain control of NanoSensors.
Equity Compensation PlansPlans. . Our proposed 2006 Equity Incentive Plan provides for acceleration of vesting under the circumstances deemed to be a change in control, as described in such plans. The acceleration of vesting of options upon a change of control may be viewed as an anti-takeover measure, and may have the effect of discouraging a merger proposal, tender offer or other attempt to gain control of our company. See Proposal No. 3 of this Proxy Statement. Under the proposed 2006 Equity Incentive Plan, accelerated vesting of outstanding options could occur in the event:
•· the Board (or, if approval of the stockholders is required as a matter of law, our stockholders) approves (a) any consolidation or merger in which we are not the surviving corporation or pursuant to which shares of common stock would be converted into cash, securities or other property, other than a merger in which the holders of common stock immediately prior to the merger have the same proportionate ownership off the surviving corporation immediately after the merger, or (b) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of our assets; or
•· subject to certain exceptions, if any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), corporation or other entity (a) purchases common stock (or securities convertible into common stock) pursuant to a tender offer or exchange offer, without the prior consent of the Board of Directors, or (b) shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of our securities representing 50% or more of the combined voting power of our then outstanding securities; or
We are not aware of any attempt to take control of our company and are not presenting this proposal with the intent that it be utilized as a type of anti-takeover device. The proposal is being made at this time to provide us with greater flexibility to issue shares for general corporate purposes that may be identified in the future.
The proposed Amendment to our Articles of Incorporation, a copy of which is attached to this Proxy Statement as Exhibit A, will be filed with the Nevada Secretary of State and the effective date of the Amendment to our Articles of Incorporation promptly after the stockholders have approved this proposal.
The Nevada Revised Statutes do not provide appraisal rights in connection with the increase of authorized shares of the Company’s capital stock.
Required Vote
Approval of the proposal to increase the number of authorized shares of Common Stock by amending the Articles of Incorporation requires the affirmative vote of a majority of the shares outstanding on the Record Date.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FORAPPROVAL OF THE PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION.
PROPOSAL 3
ADOPTION OF 2006 EQUITY INCENTIVE PLAN
Overview
At the meeting, NanoSensors’s stockholders will be asked to consider and vote upon a proposal to adopt the NanoSensors 2006 Equity Incentive Plan (the “2006 Incentive Plan”) which will permit us to provide a broad range of stock awards to our employees, directors and consultants. If approved by our shareholders, the 2006 Incentive Plan will serve as our primary equity incentive plan for our employees, consultants and directors. The Board of Directors unanimously approved the 2006 Incentive Plan on August 3, 2006, subject to stockholder approval of the 2006 Incentive Plan at the 2006 Annual Meeting. The 2006 Incentive Plan provides for various types of equity awards, and therefore, will provide us with meaningful flexibility in rewarding our employees and those other individuals who provide significant services to us.
Purposes of the Plan
The 2006 Incentive Plan is intended to provide qualifying employees, directors and consultants with equity ownership in NanoSensors, thereby strengthening their commitment to our success, promoting the identity of interests between our stockholders and such employees, directors and consultants and stimulating their efforts on our behalf, and to assist us in attracting and retaining talented personnel. Management believes that assuming approval of this proposal, the ratio of the number of shares available for awards under the 2006 Incentive Plan in relation to the number of outstanding shares of Common Stock would be within the range of outstanding shares ratios for comparable development stage companies.
The 2006 Incentive Plan also:
•· prohibits repricing of stock options or other awards without first obtaining our stockholders’ approval,
•· prohibits the use of stock options with an exercise price less than fair market value on the date of grant, and
•· requires us to obtain our stockholders’ approval before adding additional shares to the 2006 Incentive Plan (there will be no automatic replenishment of authorized shares available under the 2006 Plan).
As of the Record Date, we had granted (subject to the approval by the stockholders’stockholders of this Proposal) options to purchase an aggregate of 34,400,000 shares of Common Stock at exercise prices ranging from $0.049 to $0.05 per share, expiring between July and August 2016. There are approximately five persons currently who will be eligible to be granted awards, including current directors, officers, and employees NanoSensors. We have allocated shares subject to awards under this 2006 Incentive Plan to Ted Wong, Robert Baron and Joshua Moser as set forth below in the table under the caption “New Plan Benefits”. However, unless Proposal No. 2, “Amendment to our Articles of Incorporation to Increase the Authorized Common Stock,” is approved by the Stockholders, we may not be able to grant options under the 2006 Incentive Plan, even if it is approved by the Stockholders. Accordingly, we require shareholder approval of both the 2006 Incentive Plan and Proposal No. 2 in order to grant any further options to our employees, directors and consultants.
If the fair market value of our common stock is higher than the exercise prices of the option awards already allocated under the 2006 Incentive Plan to certain executives and directors, then on the date of stockholder approval of this Proposal, we will incur a charge to our earnings based on the value of the options on the date of stockholder approval. If, however, the fair market value of our common stock on the date of stockholder approval of this Proposal is less than the exercise price of such awards, then these additional options will still be issued at an exercise price equal to the fair market value of our common stock.
If the 2006 Incentive Plan is approved, we will grant equity-based compensation under the 2006 Incentive Plan. All awards will be subject to the recommendations of management and approval of the board of directors. In the future, if a stock option committee or compensation committee is formed, then approval of awards will be subject to their authority as delegated by the board of directors and in compliance with the requirements of the securities laws and any exchange or trading medium on which the shares of common stock may be listed or traded. The Board believes that the adoption of the 2006 Incentive Plan is in the best interests of NanoSensors and its stockholders.
The Board of Directors believes that the 2006 Incentive Plan will is necessary for us to attract and retain capable persons to serve as employees and directors of the Company. As a small development stage company dependent upon equity financings for our capital needs, we seek to conserve our cash resources for use in connection with our activities. This cash conservation policy places limitations on cash compensation arrangements we can have with employees, including executive officers, and directors. To compete with other companies for qualified persons, many of which companies are in the commercialization stage and better financed than us, we expect that our equity compensation program will help us attract and incentivize our employees and directors.
Summary of 2006 Incentive Plan
The following is a summary of the principal provisions of the 2006 Incentive Plan. This summary is qualified in its entirety by reference to the full text of the 2006 Incentive Plan, which is included as Exhibit B hereto.
Purposes of the 2006 Incentive Plan. The primary purpose of the 2006 Incentive Plan is to align the interests of our employees and directors with the interests of NanoSensors’s stockholders by providing participants with the opportunity to share in any appreciation in the value of our stock that their efforts help bring about. If approved, the 2006 Incentive Plan will be an essential component of the total compensation package offered to employees, reflecting the importance that we place on motivating and rewarding superior results with long-term, performance-based incentives.
Shares Reserved for Issuance. The 2006 Incentive Plan includes an initial reserve of 80,000,000 shares of our common stock that will be available for issuance under the plan, subject to adjustment to reflect stock splits and similar events. Shares that are subject to issuance upon exercise of an option but cease to be subject to such option for any reason (other than exercise of such option), and shares that are subject to an award that is granted but is subsequently forfeited, or that are subject to an award that terminates without shares being issued, will again be available for grant and issuance under the 2006 Incentive Plan. The 2006 Incentive Plan provides for the grant of stock options, stock appreciation rights (SARs), restricted stock units (RSUs) and restricted stock grants.
Administration. Our Board will initially administer the 2006 Incentive Plan, until such time as we establish a Compensation Committee of our Board, which will administer the 2006 Incentive Plan (either being referred to as the “Committee”). The Committee determines the persons who are to receive awards, the number of shares subject to each such award and the other terms and conditions of such awards. The Committee also has the authority to interpret the provisions of the 2006 Plan and of any awards granted thereunder and to modify awards granted under the 2006 Incentive Plan. The Committee may not, however, reprice options issued under the 2006 Incentive Plan without prior approval of our stockholders. A compensation committee of the Board must consist of at least two or more members of the Board, all of whom, may qualify as “outside directors” as defined for purposes of the regulations under Section 162(m) of the Internal Revenue Code of 1986 and as “non-employee directors” under Section (b)(3)(i) of Rule 16b-3, under the Exchange Act.
Eligibility. The 2006 Incentive Plan provides that awards may be granted to employees, officers, directors, consultants, independent contractors and advisors of NanoSensors or of any parent, subsidiary or affiliate of NanoSensors as the Committee may determine. The actual number of individuals who will receive awards cannot be determined in advance because the Committee has discretion to select the participants. Our non-employee directors will participate in the 2006 Incentive Plan through the automatic option grant program, which is self-executing. Participation in the automatic option grant program is limited to persons who become and continue as non-employee directors, whether through appointment by the Board or election by our stockholders.
Terms of Options. As discussed above, the Committee determines many of the terms and conditions of awards granted under the 2006 Incentive Plan, including whether an option will be an “incentive stock option” (“(“ISO”) or a non-qualified stock option (“(“NQSO”). An option designated as an ISO is intended to qualify as such under Section 422 of the Code. Thus, the aggregate fair market value, determined at the time of grant, of the shares with respect to which ISO’s are exercisable for the first time by an individual during any calendar year may not exceed $100,000. NQSOs are not subject to this requirement. Each option is evidenced by an agreement in such form as the Committee approves and is subject to the following conditions (as described in further detail in the 2006 Incentive Plan):
• · Vesting and Exercisability: Options become vested and exercisable, as applicable, within such periods, or upon such events, as determined by the Committee and as set forth in the related stock option agreement. The maximum term of each option is ten years from the date of grant.
• · Exercise Price: Each stock option agreement states the exercise price, which may not be less than 100% of the fair market value of one share of our common stock on the date of the grant (and not less than 110% with respect to an ISO granted to a 10% or greater stockholder).
• · Method of Exercise: The exercise price is typically payable in cash or by check, but may also be payable, at the discretion of the Committee, in other forms of legal consideration.
• · Termination of Employment: Options cease vesting on the date of termination of service or the death or disability of the participant. Options granted under the 2006 Incentive Plan generally expire 3 months (or, in the case of options granted to a non-employee director, 7 months) after the termination of the participant’s service to NanoSensors, except in the case of death or disability, in which case the awards generally may be exercised up to 12 months following the date of death or termination of service. However, if the participant is terminated for cause (e.g. for committing an alleged criminal act or intentional tort against NanoSensors), the participant’s options will expire upon termination.
• · Transferability.The 2006 Incentive Plan provides that (a) NQSOs may be assigned or transferred by the participant to (i) one or more members of his or her immediate family; (ii) trusts for his or her benefit; or (iii) entities wholly-owned by the participant; and (b) NQSOs and ISOs may be transferred to the participant’s estate or any person who acquires the right to exercise the option by bequest or inheritance or by reason of the participant’s death, by will or by the laws of descent and distribution.
· Formula for Non-Employee Director Option Grants. Under the 2006 Incentive Plan the following automatic stock option grants will be made under the 2006 Incentive Plan to our non-employee directors: upon first joining the Board, each non-employee director shall receive an automatic stock option grant to purchase 2,000,000 shares. In addition, on the first trading day following the end of each fiscal year, each non-employee director receives an automatic stock option grant for such number of shares as is equal to the quotient obtained by dividing the annual cash retainer paid to a non-employee director during such fiscal year (not including any additional fees which may be paid for service as a member of Chairman of any committee of the Board of Directors) by the fair market value of the shares on the grant date (pro rata in the case the director served for less than the entire year prior to such grant date). Stock option grants to non-employee directors become vested and one year from the grant, subject to a non-employee’s continued service with NanoSensors or a parent, subsidiary or affiliate of NanSsensors.NanoSensors. As of the Record Date, NanoSensors’sour Board hadhas one non-employee director, Robert Baron, thatwho was eligible to receive these option grants.
· Terms of Restricted Stock Awards. Each restricted stock award is evidenced by a restricted stock purchase agreement in such form as the committee approves and is subject to the following conditions (as described in further detail in the 2006 Incentive Plan):
• · Vesting: Shares subject to a restricted stock award may become vested over time or upon completion of performance goals set out in advance, which may include the following types of criteria: (a) net revenue and/or net revenue growth; (b) earnings before income taxes and amortization and/or earnings before income taxes and amortization growth; (c) operating income and/or operating income growth; (d) net income and/or net income growth; (e) earnings per share and/or earnings per share growth; (f) total stockholder return and/or total stockholder return growth; and (g) individual business objectives.
• · Purchase Price: Each restricted stock purchase agreement states the purchase price, which may not be less than the par value of our common stock on the date of the award (and not less than 110% of fair market value with respect to an award to a 10% of greater stockholder), payment of which may be made as described under “Terms of Stock Options” above.
• · Termination of Employment. Restricted stock awards shall cease to vest immediately if a participant is terminated for any reason, unless provided otherwise in the applicable restricted stock purchase agreement or unless otherwise determined by the Committee.
• · Change of Control: Restricted stock awards shall be treated in the same manner as described under “Terms of Stock Options” above.
· Stock Appreciation Rights. Stock appreciation rights (“(“SARs”) are awards in which the participant is deemed granted a number of shares subject to vesting. When the SARs vest, then the participant can exercise the SARs. Exercise, however, does not mean the number of shares deemed granted are issued. Rather, the participant will receive cash (or shares, if so determined by the Committee) having a value at the time of exercise equal to (1) the number of shares deemed exercised, times (2) the amount by which our stock price on the date of exercise exceeds our stock price on the date of grant. SARs expire under the same rules that apply to options.
· Restricted Stock Units. Restricted stock units (“RSUs”(“RSU’s”) are awards that result in a payment to the participant in cash or shares if the performance goals established by the Committee are achieved. The applicable performance goals will be determined by the Committee and may be applied on a company-wide, departmental or individual basis.
· Modification and Termination of the Plan.The Committee may from time to time, in its discretion, amend the 2006 Incentive Plan without the approval of shareholders, except (a) as such shareholder approval may be required under the listing requirements of any securities exchange or national market system on which our equity securities are listed and (b) that the Committee may not without the approval of the Company's shareholders amend the Plan to increase the total number of shares reserved for the purposes of the Plan. The 2006 Incentive Plan shall continue in effect until the earlier of its termination by the Committee or the date on which all of the shares of common stock available for issuance thereunder have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing options granted under the Plan have lapsed.
· Adjustments.In the event any change is made to the common stock issuable under the 2006 Incentive Plan by reason of any stock split, stock dividend, combination of shares or recapitalization, appropriate adjustment will be made to the share reserve of the Plan and to the number of shares and the exercise price of the Common Stock subject to outstanding options.
Federal Income Tax Information
The following is a general summary as of the date of this proxy statement of the U.S. federal income tax consequences to NanoSensors and participating employees associated with awards granted under the 2006 Plan. U.S. federal tax laws may change and U.S. federal, state and local tax consequences for any participant will depend upon his or her individual circumstances. Each participating employee has been and is encouraged to seek the advice of a qualified tax advisor regarding the tax consequences of participation in the 2006 Incentive Plan.
Tax Treatment of the Participant
Incentive Stock Options. An optionee will recognize no income upon grant of an ISO and will incur no tax upon exercise of an ISO unless for the year of exercise the optionee is subject to the alternative minimum tax (“(“AMT”). If the optionee holds the shares purchased upon exercise of the ISO (the “ISO“ISO Shares”) for more than one year after the date the ISO was exercised and for more than two years after the ISO’s grant date (the “required“required holding period”), then the optionee generally will realize long-term capital gain or loss (rather than ordinary income or loss) upon disposition of the ISO Shares. This gain or loss will equal the difference between the amount realized upon such disposition and the amount paid for the ISO Shares upon the exercise of the ISO. If the optionee disposes of ISO Shares prior to the expiration of the required holding period (a “disqualifying disposition”), then gain realized upon such disposition, up to the difference between the option exercise price and the fair market value of the ISO Shares on the date of exercise (or, if less, the amount realized on a sale of such ISO Shares), will be treated as ordinary income. Any additional gain will be capital gain, and treated as long-term capital gain or short-term capital gain depending upon the amount of time the ISO Shares were held by the optionee.
Alternative Minimum Tax. The difference between the exercise price and fair market value of the ISO Shares on the date of exercise is an adjustment to income for purposes of the AMT. The AMT (imposed to the extent it exceeds the taxpayer’s regular tax) is currently 26% of an individual taxpayer’s alternative minimum taxable income (28% percent in the case of alternative minimum taxable income in excess of $175,000). Alternative minimum taxable income is determined by adjusting regular taxable income for certain items, increasing that income by certain tax preference items and reducing this amount by the applicable exemption amount (currently $58,000 in the case of a joint return, subject to reduction under certain circumstances). If a disqualifying disposition of the ISO Shares occurs in the same calendar year as exercise of the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon a sale of ISO Shares that is not a disqualifying disposition, alternative minimum taxable income is reduced in the year of sale by the excess of the fair market value of the ISO Shares at exercise over the amount paid for the ISO Shares.
Nonqualified Stock Options. An optionee will not recognize any taxable income at the time a NQSO is granted. However, upon exercise of a NQSO, the optionee must include in income as compensation an amount equal to the difference between the fair market value of the shares on the date of exercise and the optionee’s exercise price. The included amount must be treated as ordinary income by the optionee and will be subject to income tax withholding by Nanosensors. Upon resale of the shares by the optionee, any subsequent appreciation or depreciation in the value of the shares will be treated as long-term or short-term capital gain or loss.
A transferee can file an election with the IRS, not later than 30 days after the date of the transfer of the restricted shares, to include in income as compensation (treated as ordinary income), in the year of the transfer of such restricted shares, an amount equal to the difference between the fair market value of such shares on the date of transfer and any amount paid for such shares. The included amount must be treated as ordinary income by the transferee and may be subject to income tax withholding by Nanosensors. Income is not again required to be included upon the lapse of the restrictions. However upon resale of the shares by the transferee, any appreciation or depreciation in the value of the shares after the date of receipt will be treated as capital gain or loss.
Maximum Tax Rates for Noncorporate Taxpayers. The maximum federal tax rate for noncorporate taxpayers applicable to ordinary income is 35%. Long-term capital gain for noncorporate taxpayers on stock held for more than twelve months will be taxed at a maximum rate of 15%. Capital gains may be offset by capital losses and up to $3,000 of capital losses may be offset annually against ordinary income.
Tax Treatment of NanosensorsNanoSensors
Subject to any withholding requirement, the standard of reasonableness, and (if applicable) Section 162(m) of the federal income tax code, we will be entitled to a deduction to the extent any participant recognizes ordinary income from an award granted under the 2006 Incentive Plan.
New Plan Benefits
Future awards to our executive officers and employees are discretionary. At this time, therefore, the benefits that may be received by our executive officers and other employees and directors if our stockholders approve the 2006 Incentive Plan cannot be determined, other than with respect to the options allocated to Messrs. Wong and Moser. Further, because the value of stock issuable to our non-employee directors under the 2006 Incentive Plan will depend on the fair market value of our common stock at future dates, it is not possible to determine exactly the benefits that might be received by our non-employee directors under the 2006 Incentive Plan. With respect to the options allocated to Messrs. Wong, Baron and Moser, the following table summarizes the benefits that will be issued to our executive officers and non-employee director under the 2006 Incentive Plan if this 2006 Incentive Plan is adopted by our stockholders.
Name and Position | | Number of Options Granted | | Exercise Price |
| | | | |
Ted Wong, Chairman, President and Chief Executive Officer | | 18,000,000 | | $0.049 |
| | | | |
Joshua Moser, Vice President and Chief Operating Officer | | 14,200,000 | | $0.049 |
| | | | |
Executive Officers as a Group (2 persons) | | 32,400,000 | | $0.049 |
| | | | |
Non-Executive Director Group (1 person) | | 2,000,000 | | $0.05 |
Name and Position | | Number of Options Granted | | Exercise Price | |
| | | | | |
Ted Wong, Chairman, President and Chief Executive Officer | | | 18,000,000 | | $ | 0.049 | |
| | | | | | | |
Joshua Moser, Vice President and Chief Operating Officer | | | 14,200,000 | | $ | 0.049 | |
| | | | | | | |
Executive Officers as a Group (2 persons) | | | 32,400,000 | | $ | 0.049 | |
| | | | | | | |
Non-Executive Director Group (1 person) | | | 2,000,000 | | $ | 0.05 | |
Required Vote
Approval of this Proposal to increase the number of shares of Common Stock underlying the 2006 Incentive Plan requires the affirmative vote of a majority of the shares present and voting at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FORADPOPTION OF THE 2006 EQUITY INCENTIVE COMPENSATION PLAN
Accounting and Audit Matters
Lazar, Levine and Felix (“Lazar”) was our independent auditor and examined our financial statements issued during the period from August 18, 2005 through November 30, 2005. Madsen & Associates, Inc. (“Madsen”) was our independent auditor and examined our financial statements issued during the period from inception (December 23, 2003) through August 18, 2005.
Audit Fees
Lazar was paid aggregate audit fees of approximately $26,000 for the fiscal year ended November 30, 2005 for professional services rendered. Madsen was paid aggregate audit fees of $9,000 for the period from inception (December 23, 2003) through November 30, 2004, for professional services rendered.
Audit Related Fees
Lazar and Madsen were not paid audit related fees for either of the fiscal years ended November 30, 2005 or November 30, 2004 for assurance and related services reasonably related to the performance of the audit or review of the Company's financial statements.
Tax Fees
Lazar and Madsen were not paid tax fees for either the fiscal years ended November 30, 2005 or November 30, 2004.
All Other Fees
Lazar did not provide any other professional services for the fiscal period ended November 30, 2005. Madsen was paid $4,630 for other professional services for the fiscal period from inception (December 23, 2003) through November 30, 2004.
Changes In and Disagreements with Accountants
On Accounting and Financial Disclosure
On August 18, 2005, Lazar Levine & Felix LLP was appointed as our independent public accountant for the year ending November 30, 2005, replacing Madsen & Associates, Inc. We made this change in independent public accountant because we wanted a larger, nationally-based firm as our accountant. This action dismissed Madsen as our independent registered public accountant for the year ending November 30, 2005. This change in independent public accountant was approved by our Board of Directors on August 18, 2005.
The audit report of Madsen on the financial statements of NanoSensors at November 30, 2004 and for the period December 23, 2003 (date of inception) to November 20, 2004 did not contain an adverse opinion or disclaimer of opinion, nor was the opinion qualified or modified as to uncertainty, audit scope or accounting principles, other than to contain an explanatory paragraph as to our ability to continue as a going concern. During the period December 23, 2003 (date of inception) to November 30, 2004 and through August 18, 2005, there were no disagreements between us and Madsen on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Madsen, would have caused Madsen to make reference to the subject matter of the disagreement(s) in connection with its reports.
During the period December 23, 2003 (date of inception) to November 30, 2004 and through August 18, 2005, we did not consult with Lazar Levine & Felix regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (ii) any matter that was either the subject of a disagreement or event identified in paragraph (a)(1)(iv) of Item 304 of Regulation S-B.
We requested that Madsen furnish us with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with our statements. A copy of the letter furnished by Madsen in response to that request, dated July 13, 2005, and was filed as Exhibit 16.1 to our Report on Form 8-K/A filed on September 14, 2005.
AVAILABLE INFORMATION
Please read all the sections of this Proxy Statement carefully. We are subject to the informational requirements of the Exchange Act and in accordance therewith, file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information filed by us with the SEC may be inspected without charge at the public reference section of the SEC at 100 F Street, NE, Washington, DC 20549, Office of Investor Education and Assistance, as well as at the regional offices of the SEC. Copies of this material also may be obtained from the SEC at prescribed rates. The SEC also maintains a website that contains reports, proxy and information statements and other information regarding public companies that file reports with the SEC. Copies of these materials may be obtained from the SEC's website at http://www.sec.gov.
COPIES OF OUR ANNUAL REPORT FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2005 ON FORM 10-KSB ARE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO NANOSENSORS, INC., 1800 WYATT DRIVE, SUITE # 2, SANTA CLARA, CA 95054.Each such request must set forth a good faith representation that as of the Record Date the person making the request was the beneficial owner of common stock of NanoSensors entitled to vote at the Annual Meeting of Stockholders.
INCORPORATION BY REFERENCE
Our audited financial statements for the fiscal year ended November 30, 2005, management’s discussion and analysis of operations and plan of operation and a description of our business, as included in our Annual Report on Form 10-KSB for such fiscal year, are incorporated herein by reference to such Annual Report, a copy of which has been mailed to our stockholders as of the Record Date along with this Proxy Statement.
STOCKHOLDER PROPOSALS
Inclusion in Next Year’s Proxy Statement.If you wish to have a proposal included in our proxy statement and form of proxy for next year’s annual meeting in accordance with Rule 14a-8 under the Exchange Act, your proposal must be received by us at our principal executive offices on or before ___________, 2007. A proposal which is received after that date or which otherwise fails to meet the requirements for stockholder proposals established by the SEC will not be included. The submission of a stockholder proposal does not guarantee that it will be included in the proxy statement.
Presentation at Meeting. For any proposal that is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph), but is instead sought to be presented directly at next year’s annual meeting, SEC rules permit our management to vote proxies in their discretion on any stockholder proposal if the stockholder does not comply with the requirements of Rule 14a-4(c)(2) under the Exchange Act.
As of the date of this Proxy Statement, the only business which the Board of Directors intends to present, and knows that others will present, at the Annual Meeting are those herein above set forth. If any other matter or matters are properly brought before the Annual Meeting, or any adjournments thereof, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance with their judgment.
AugustSeptember __, 2006 | By Order of the Board of Directors Ted L. Wong, Ph.D., SecretaryChairman
|
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE UNITED STATES OF AMERICA.
PRELIMINARY
COPIES
NANOSENSORS, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBEROCTOBER __, 2006
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of NANOSENSORS, INC., a Nevada corporation (the “Company”), acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, dated AugustSeptember __, 2006, and hereby constitutes and appoints Ted L. Wong, with full power of substitution, the proxies of the undersigned to vote with the same force and effect as the undersigned all shares of the Company’s Common Stock which the undersigned is entitled to vote at the 2006 Annual Meeting of Stockholders to be held on SeptemberOctober __, 2006, and at any adjournment or adjournments thereof, hereby revoking any proxy or proxies heretofore given and ratifying and confirming all that said proxies may do or cause to be done by virtue thereof with respect to the following matters:
The undersigned hereby instructs said proxies or their substitutes:
| 1. | Elect as Directors the nominees listed below: |
| | FOR ALL NOMINEES (Except (Except as specified below)
| o | | WITHHELD FROM ALL NOMINEES | o |
(Instruction: to withhold authority to vote for any individual nominee or nominees, write that nominee’s or nominees’ name(s) in the space provided below)
TED L. WONG ROBERT BARON
| 2. | Approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock to 950,000,000 shares. |
| | FORo | | AGAINST oABSTAIN o | | AGAINST | o | | ABSTAIN | o |
| 3. | Approve the adoption of the Company’s 2006 Equity Incentive Plan. |
| | FORo | | AGAINST oABSTAIN o | | AGAINST | o | | ABSTAIN | o |
| 4. | In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Meeting, and any adjournment or adjournments thereof. |
This Proxy when properly executed will be voted as directed. If no direction is indicated, this Proxy will be voted FOR the three proposals, including FOR all nominees listed above for Director.
Please sign, date and mail this proxy immediately in the enclosed envelope.
| Name ______________________________________ Name (if joint) Date _____________, 2006 Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as it appears hereon. When signing as joint tenants, all parties in the joint tenancy must sign. When a proxy is given by a corporation, it should be signed by an authorized officer and the corporate seal affixed. No postage is required if returned in the enclosed envelope. |