SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a- 12
--------------------------------------------------------------------------------
Avitar, Inc. (File Number 1-15695)
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
AVITAR, INC.
65 Dan Road
Canton, Massachusetts 02021
November 1, 2007
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders of Avitar, Inc., a Delaware corporation ("Avitar"), at 65 Dan Road, Canton, Massachusetts on December 18, 2007 at 10:00 a.m.
At the meeting you will be asked to consider and vote upon (1) the election of four Directors to Avitar's Board of Directors; (2) the approval of an Amendment of the Certificate of Incorporation to increase our authorized common stock from 100 million to 800 million; (3) the ratification of appointment of BDO Seidman, LLP as Avitar's independent registered public accounting firm for the fiscal year ending September 30, 2007; and (4) any other business that properly comes before the meeting or any adjournments or postponements thereof.
The Board of Directors recommends that shareholders vote FOR Items 1, 2 and 3.
Your vote is important. We urge you to complete, sign, date and return the enclosed proxy card promptly in the accompanying prepaid envelope. You may, of course, attend the Meeting and vote in person, even if you have previously returned your proxy card.
Sincerely yours,
Peter P. Phildius,
Chairman and Chief Executive Officer
Avitar, Inc.
65 Dan Road
Canton, Massachusetts 02021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on December 18, 2007.
To the Stockholders of Avitar, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Avitar, Inc., a Delaware corporation ("Avitar") will be held at 10:00 a.m., local time, on December 18, 2007 at 65 Dan Road, Canton, Massachusetts, for the following purposes:
(1) To consider and vote upon the election of the Board of Directors consisting of four persons to serve until the next annual meeting of the stockholders;
(2) To consider and vote upon a proposal to approve an amendment to Avitar's Certificate of Incorporation that would increase the number of authorized shares of our common stock from 100,000,000 to 800,000,000; and
(3) To consider and vote upon a proposal to ratify the selection of BDO Seidman, LLP as Avitar's independent registered public accounting firm for the fiscal year ending September 30, 2007.
Only record holders of Common Stock at the close of business on November 1, 2007 are entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof. To ensure that your vote will be counted, please complete, sign, date and return the Proxy in the enclosed prepaid envelope whether or not you plan to attend the Annual Meeting. You may revoke your proxy by notifying the Secretary of the Company in writing at any time before it has been voted at the Annual Meeting.
By Order of the Board of Directors
Canton, Massachusetts Jay C. Leatherman,
November 1, 2007 Secretary, Avitar, Inc.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING
Avitar, Inc.
-----------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 18, 2007
------------------------------------
THE ACCOMPANYING PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AVITAR, INC.
If properly signed and returned and not revoked, the proxy will be voted in accordance with the instructions it contains. The persons named in the accompanying proxy will vote the proxy for the Board of Directors' slate of directors and for the other matters listed on the proxy, in each case as recommended by the Board of Directors unless contrary instructions are given. At any time before it is voted, each proxy granted may be revoked by the stockholder by a later dated proxy, by written revocation addressed to the Secretary of Avitar, Inc. at the address below or by voting by ballot at the Annual Meeting.
The Company's principal executive offices are located at 65 Dan Road, Canton, Massachusetts 02021. This proxy statement and the accompanying proxy are being sent to stockholders on or about November 3, 2007. ANY PROXY MAY BE REVOKED IN PERSON AT THE ANNUAL MEETING, BY SUBMITTING A PROXY DATED LATER THAN THE PROXY TO BE REVOKED OR BY NOTIFYING THE SECRETARY OF THE COMPANY IN WRITING AT ANY TIME PRIOR TO THE TIME THE PROXY IS VOTED.
VOTING SECURITIES
The Board has fixed the close of business on November 1, 2005 as the record date (the "Record Date") for determination of stockholders entitled to receive notice of and to vote at the Annual Meeting or any adjournment thereof. Only stockholders of record at the close of business on the Record Date will be entitled to notice of and to vote at the Annual Meeting.
On the Record Date, the Company had outstanding 63,047,897 shares of Common Stock and 36,297 shares of Preferred Stock, of which 2,000 were shares of 6% Convertible Preferred Stock, 28,608 were shares of Series C Convertible Preferred Stock, and 5,689 were shares of Series B Preferred Stock. Stockholders are entitled to one vote for each share of Common Stock (including the shares into which each share of 6% Convertible Preferred Stock are convertible) and each share of Series B Preferred Stock on the business as may properly come before the meeting or any adjournments thereof. The holders of a majority of the outstanding voting shares constitute a quorum. Abstentions from voting and broker non-votes on a particular Proposal will be counted for purposes of determining the presence of a quorum but will not be counted as affirmative or negative votes on the Proposals. In the case of Proposal No. 2, which requires a majority of outstanding shares to amend our Certificate of Incorporation, abstentions from voting and broker non-votes will have the effect of a negative vote.
ACTION TO BE TAKEN UNDER PROXY
All proxies for stockholders in the accompanying form that are properly executed and returned will be voted at the Annual Meeting and any adjournments thereof in accordance with any specifications thereon or, if no specifications are made, will be voted for the election of the four nominees described herein and for Items 1, 2 and 3.
SOLICITATION
Avitar will bear the entire cost of the solicitation of proxies from its stockholders, including preparation, assembly, printing and mailing of this Proxy Statement, the proxy card and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares beneficially owned by others to forward to such beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone, facsimile, telegram or personal solicitation by directors, officers or other regular employees of Avitar. No additional compensation will be paid to such persons for such services. Avitar may also employ the services of a professional solicitation company to assist with solicitation of stockholders; but as of November 1, 2007 Avitar has not determined to retain a solicitation company. If such a company were subsequently retained, Avitar would bear the entire cost.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Four (4) directors will be elected to hold office until the next Annual Meeting of stockholders and until their successors have been elected and duly qualified. The persons named on the accompanying proxy will vote all shares for which they have received proxies for the election of the nominees named below unless contrary instructions are given. In the event that any nominee should become unavailable, shares will be voted for a substitute nominee unless the number of directors constituting a full board is reduced. Directors are elected by plurality vote.
NOMINEES
The name, age and position with Avitar of each nominee for director is listed below, followed by summaries of their background and principal occupations.
Name Age Title
Peter P. Phildius 77 Chairman of the Board/Chief Executive Officer
Douglas W. Scott 61 President and Chief Operating Officer/Director
Neil R. Gordon (1)(2) 59 Director
Charles R. McCarthy, Jr. 68 Director
(1)(2)
1. Member of Audit Committee.
2. Member of Compensation Committee.
PETER P. PHILDIUS
Mr. Phildius has been Chairman of the Board of Directors since October 1990 and Chief Executive Officer since July 1996. He has been a general partner in Phildius Kenyon & Scott, a partnership ("PKS"), since that firm's founding in 1985. Prior to 1985, Mr. Phildius was an independent consultant and Chairman and co-founder of Nutritional Management, Inc., a company that operated weight loss clinics (1983 - 1985), President and Chief Operating Officer of Delmed, Inc., a medical products company (1982 - 1983), President and Chief Operating Officer of National Medical Care, Inc., a dialysis and medical products company (1979-1981) and held a variety of senior management positions with Baxter Laboratories, Inc. ("Baxter"), a hospital supply company and the predecessor of Baxter Healthcare Corporation. During the last eight years of his 18 year career at Baxter (1961 - 1979), Mr. Phildius was Group Vice President and President of the Parenteral Division, President of the Artificial Organs Division and President of the Fenwal Division.
DOUGLAS W. SCOTT
Mr. Scott has been the Chief Operating Officer since July 1996, was the Chief Executive Officer from August 1989 until July 1996 and has been a director since August 1989. Mr. Scott has been a general partner in PK&S since its founding in 1985. Prior to 1985, Mr. Scott was Executive Vice President of Nutritional Management, Inc. (1983 - 1985); Senior Vice President, Operations of Delmed, Inc. (1982 - 1983); Vice President, Quality Assurance of Frito-Lay, Inc., a consumer products company (1980 - 1982); and held several senior positions at Baxter from 1970 to 1980. The last two of these senior positions at Baxter were General Manager of the Vicra Division and General Manager of Irish Operations. Mr. Scott is also a director of Candela Corporation, a publicly-traded company in the business of manufacturing and marketing medical lasers. Mr. Scott received an M.B.A. from the Harvard Business School.
NEIL R. GORDON
Mr. Gordon has served as a director since June 1997. He has been President of N.R. Gordon & Company, Inc., a company that provides a broad range of financial consulting services, since 1995. From 1981 to 1995, he was associated with Ekco Group, Inc. and served as its Treasurer from 1987 to 1995. Mr. Gordon has also served as Director of Financing and Accounting for Empire of Carolina, Inc. He received a Bachelor of Science Degree from the Pennsylvania State University. Mr. Gordon is also a director of Datameg Corporation, a publicly-traded company focused on supplying products and related services that support critical network performance requirements in the voice, data and video communications industry.
CHARLES R. McCARTHY, JR.
Mr. McCarthy was elected as a director in February 1999. He has been a counsel in the Washington D.C. law firm, O'Connor & Hannan, since 1993. Previously, Mr. McCarthy was General Counsel to the National Association of Corporate Directors, served as a trial attorney with the Securities and Exchange Commission, was Blue Sky Securities Commissioner for the District of Columbia and was a law professor teaching securities law topics and served as a Board member of and counsel to a number of public companies over the last 30 years.
NUMBER OF DIRECTORS
The Company's Bylaws allow the Board to fix the number of Board members between 3 and 7. The number has been fixed, at present, at 4. The Board can increase the number to 7 at any time without stockholder approval. There are no family relationships between any Director or Executive Officer of Avitar and any other Director or Executive Officer of Avitar.
TERM
Directors hold office for a period of one year from the Annual Meeting of Stockholders at which they are elected or until their successors are duly elected and qualified. Officers are appointed by the Board of Directors and hold office at the will of the Board.
BOARD MEETINGS AND COMMITTEES
The Board held 2 meetings during the fiscal year ended September 30, 2006 and 1 meeting during the fiscal year ended September 30, 2007. In each of fiscal year 2007 and 2006, the Directors also executed six (6) unanimous written consents authorizing financings.
The Board has two standing committees: the Audit Committee and the Compensation Committee. The Board does not have a standing nominating committee or any committee performing the function of such a committee. During fiscal year 2006, each Board member attended at least 75% of the aggregate number of meetings of the Board and the Committee of the Board on which he served.
CONTACTING OUR BOARD
Our stockholders and other interested parties who wish to communicate with our Board or individual Directors may send written correspondence addressed to them, care of Secretary, Avitar, Inc., 65 Dan Road, Canton, Massachusetts 02021. All written correspondence addressed to our Directors will be forwarded promptly by our Secretary to the Directors to whom it is addressed.
The Company has no policy on attendance by Directors at the Annual Meeting of Shareholders, although the By-Laws provide that the Annual Meeting of Directors shall be held as soon as possible after the Annual Meeting of Shareholders. In fact, all Directors attended the last Annual Meeting of Shareholders.
NOMINATION OF DIRECTORS
The Board of Directors does not have a separately constituted nominating committee. The Board believes that it is appropriate under existing circumstances not to have a separate nominating committee because the Board is comprised of only four (4) existing members, two (2) of whom are "independent" as that term is defined in certain listing standards. All members of the Board of Directors participate in the consideration of director nominees. The Board of Directors does not have a formal policy with regard to the consideration of any director candidates recommended by shareholders. However, the Board of Directors would consider for possible nomination qualified nominees recommended by shareholders. Shareholders who wish to propose a qualified nominee for consideration should submit complete information as to the identity and qualifications of that person to the Secretary of the Company at 65 Dan Road Canton, MA 02021, sufficiently in advance of an annual meeting. Absent special circumstances, the Board of Directors will continue to nominate qualified incumbent Directors whom the Board of Directors believes will continue to make important contributions to the Board of Directors. The Board generally requires that nominees be persons of sound ethical character, be able to represent all shareholders fairly, have no material conflicts of interest, have demonstrated professional achievement, have meaningful experience and have a general appreciation of the major business issues facing Avitar. The Board of Directors does not have a formal process for identifying and evaluating nominees for Director.
AUDIT COMMITTEE
The Audit Committee of the Avitar Board of Directors, which consists of Messrs. Gordon and McCarthy (and which included Mr. Groth until his death in July 2007), held one (1) telephone meeting concerning fiscal year 2006. In addition, the Audit Committee reviewed and approved the financial statements that were included in each of the quarterly reports on Form 10-QSB during the year ended September 30, 2006. The Board of Directors has determined that each of the members of the Audit Committee is independent as determined in accordance with the listing standards of the American Stock Exchange and Item 7(d)(3)(iv) of Schedule 14A of the Exchange Act. In addition, the Board of Directors has determined that Neil R. Gordon is an audit committee financial expert as defined by SEC rules.
The Audit Committee meets with the independent registered public accounting firm , at a minimum annually, to review the results of the annual audit and discuss the financial statements; recommends to the Board the independent registered public accounting firm to be retained; and receives and considers the registered public accounting firm's comments as to controls, adequacy of staff and management performance and procedures in connection with audit and financial records. Management has primary responsibility for financial statements and the reporting process, including the systems of internal controls, and has represented to the Audit Committee that Avitar's 2006 consolidated financial statements are in accordance with generally accepted accounting principles.
AUDIT COMMITTEE REPORT
In connection with the fiscal 2006 audit, the Audit Committee has:
- reviewed and discussed with management Avitar's audited consolidated
financial statements included in our annual report on Form 10-KSB for
the year ended September 30, 2006,
- discussed with BDO Seidman, LLP the matters required to be discussed
by Statement of Auditing Standards No. 61,
- discussed with BDO Seidman, LLP whether various other services
performed for Avitar during 2006 were compatible with BDO Seidman, LLP
maintaining its independence, and
- received from and discussed with BDO Seidman, LLP the written
disclosures and the letter from BDO Seidman, LLP required by the
Independence Standards Board Standard No. 1 and discussed with BDO
Seidman, LLP its independence.
Based on the review and the discussions described above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our annual report on Form 10-KSB for the year ended September 30, 2006 for filing with the Securities and Exchange Commission.
The Board of Directors has approved a written charter, a copy of which is attached to the Proxy Statement as Annex A. All members of the Audit Committee have been determined to be independent in accordance with the then-applicable requirements of Section 121(A) of the American Stock Exchange listing standards.
Fiscal 2006 and 2005 Audit Firm Fee Summary. During fiscal years 2006 and 2005, Avitar retained its principal auditor, BDO Seidman, LLP to provide services in the following categories and amounts:
| | | 2006 | | | 2005 | |
Audit Fees(services in connection with the audit of the Company's financial statements, review of the Company's quarterly reports of Form 10-QSB and statutory or regulatory filings or engagements | | $ | 154,000 | | | $ | 138,445 | |
| Audit Related Fees (assurance and related services) | | $ | - | | | $ | - | |
Tax Fees (services in connection with the preparation of the Company's tax returns) | | $ | 14,700 | | | $ | 14,500 | |
| All Other Fees. | | $ | - | | | $ | - | |
The Audit Committee has considered whether the provision of non-audit services by the Company's principal auditor was compatible with maintaining auditor independence and has determined such services were not incompatible with maintaining auditor independence.
THE AUDIT COMMITTEE
Neil R. Gordon
Charles R. McCarthy, Jr.
The Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934 (together, the "Acts"), except to the extent Avitar specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE.
The Compensation Committee makes recommendations to the Board concerning salaries and incentive compensation, awards stock options to employees and consultants and otherwise determines compensation levels and performs such other functions regarding compensation as the Board may delegate. The Compensation Committee, comprised of Mr. Gordon, Mr. Groth and Mr. McCarthy, held no meetings in fiscal year 2006.
DIRECTOR COMPENSATION
During Fiscal 2006 in accordance with a plan approved by the Company on September 25, 2001, the Company compensated its non-management directors with a
$5,000 annual retainer, $1,000 for each board meeting attended and $500 for each committee meeting attended. In addition, a plan approved by the Company on August 3, 2004 provides for each non-management director to be granted options covering 100,000 shares of the Company's common stock upon initial election to the Board and 75,000 shares of the Company's common stock for each year in which he/she was selected to serve as a director.
For information on compensation to management directors, see "Management-Executive Compensation" below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Common Stock beneficially owned as of October 1, 2007 by (i) each person believed by Avitar to be the beneficial owner of more than 5% of the Common Stock; (ii) each director; (iii) the Chief Executive Officer and its four most highly compensated executive officers (other than the Chief Executive Officer) who earn over $100,000 a year; and (iv) all directors and executive officers as a group. Beneficial ownership by the stockholders has been determined in accordance with the rules promulgated under Section 13(d) of the Securities Exchange Act of 1934, as amended. All shares of the Common Stock are owned both of record and beneficially, unless otherwise indicated.
| Name and Address of Beneficial Owner (1) | | No. Owned | | | % | |
| Peter P. Phildius (2)(3)(8)(9) | | | 99,413 | | | | * | |
| Douglas W. Scott (2)(4)(8)(10) | | | 68,173 | | | | * | |
| Phildius, Kenyon & Scott("PK&S") (2)(8) | | | 34,652 | | | | * | |
| Jay C. Leatherman, Jr.(2)(5) | | | 10,603 | | | | * | |
| Peter Cholakis (2)(11) | | | 4,800 | | | | * | |
| Neil R.Gordon (2)(6) | | | 6,862 | | | | * | |
| Charles R. McCarthy (2)(7) | | | 8,403 | | | | * | |
| All directors and executive officers as a group (3)(4)(5)(6)(7)(8)(9)(10)(11) | | | 163,606 | | | | * | |
* Indicates beneficial ownership of less than one (1%) percent.
(1) Information with respect to holders of more than five (5%) percent of the
outstanding shares of the Company's Common Stock was derived from, to the
extent available, Schedules 13D and the amendments thereto on file with the
Commission and the Company's records regarding stock issuances.
(2) The business address of such persons, for the purpose hereof, is c/o
Avitar, Inc., 65 Dan Road, Canton, MA 02021.
(3) Includes 33,362 shares of the Company's Common Stock, options
to purchase 31,403 shares of the Company's Common Stock. Also includes the
securities of the Company beneficially owned by PK&S as described below in
Note 8.
(4) Includes 14,310 shares of the Company's Common Stock and options to
purchase 19,211 shares of the Company's Common Stock. Also includes the
securities of the Company beneficially owned by PK&S as described below in
Note 8.
(5) Includes 113 shares of the Company's Common Stock, and options to purchase
10,490 shares of the Company's Common Stock.
(6) Includes 1,812 shares of the Company's Common Stock and options to purchase
5,050 shares of the Company's Common Stock.
(7) Includes 3,453 shares of the Company's Common Stock and options to purchase
4,950 shares of the Common Stock.
(8) Represents ownership of 34,652 shares of the Company's Common Stock. PK&S
is a partnership of which Mr. Phildius and Mr. Scott are general partners.
(9) Does not include 682 shares of the Common Stock owned by Mr. Phildius'
wife, all of which he disclaims beneficial ownership.
(10) Does not include 300 shares of the Common Stock owned by Mr. Scott's
children, all of which he disclaims beneficial ownership.
(11) Includes options to purchase 4,800 shares of the Company's Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the officers and directors, and persons who own more than 10% of a registered class of equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission ("SEC"). Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish Avitar with copies of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it the Company believes that, during Fiscal 2006, all filing requirements applicable to its officers, directors and greater than ten-percent shareholders were met.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PK&S, a 1.8 % beneficial owner of the Company, provided consulting services to the Company from September 1989 to May 1995. On May 28, 1992, the Company entered into a written consulting agreement with PK&S, which reflected the provisions of a previous oral agreement approved by the Company's Board of Directors in October 1990. Pursuant to its arrangement with the Company, PK&S provided the services of each of Messrs. Phildius and Scott to the Company.
On May 19, 1995, the Company's Consulting Agreement ended and was replaced by the Employment Agreements with Messrs. Phildius and Scott (See "Employment Agreements"). As requested by Messrs. Phildius and Scott and approved by the Company's Board of Directors, the salary and benefits provided under the Employment Agreements will be paid directly to PK&S. Under the terms of the current employment agreements with Peter Phildius and Douglas Scott described above, the Company pays their salaries and related expenses directly to PK&S. The aggregate of salaries, fringe benefits and reimbursement of expenses paid to
PK&S by the Company on behalf of Messrs. Phildius and Scott for fiscal years 2006 and 2005 totaled $408,628 and $414,709 respectively.
MANAGEMENT
The executive officers of the Company and their respective ages and positions with the Company, as of September 30, 2007, along with certain biographical information (based solely on information supplied by them), are as follows:
Name Age Title
Peter P. Phildius 77 Chairman of the Board and Chief Executive
Officer/Director
Douglas W. Scott (1) 61 President and Chief Operating Officer/
Director
Jay C. Leatherman Jr. 63 Vice President, Chief Financial Officer and
Secretary
Peter Cholakis 57 Vice President of Marketing
PETER P. PHILDIUS
Biographical information of Mr. Phildius is included under "Proposal No. 1, Election of Directors -- Nominees" in this Proxy Statement.
DOUGLAS W. SCOTT
Biographical information of Mr. Scott is included under "Proposal No. 1, Election of Directors -- Nominees" in this Proxy Statement.
JAY C. LEATHERMAN, JR.
Mr. Leatherman has served as the Company's Chief Financial Officer since October 1992 and its Secretary since July 1994. He has over 27 years experience in financial management in the health care, medical products and medical diagnostic fields. Mr. Leatherman served as Vice President and Chief Financial Officer of 3030 Park, Inc. and 3030 Park Management Company from 1985 to 1992, responsible for financial, management information services and business development functions for this continuing care retirement community and management company. He served as Director of Finance and Business Services for the Visiting Nurses Association of New Haven, Inc. from 1977 to 1985. In addition, he served in a variety of accounting and financial positions with Westinghouse Electric Corporation from 1969 to 1977. Mr. Leatherman has a B.B.A in accounting from the University of Hawaii.
PETER CHOLAKIS
Mr. Cholakis has served as the Company's Vice President of Marketing since February 2004. He has over 20 years of senior marketing experience and is leading Avitar's marketing campaign in penetrating the $1.5 billion drugs-of-abuse market with its point-of-care oral fluid drugs-of-abuse test, ORALscreen(R). Before joining Avitar, Mr. Cholakis worked for VFA, a Boston-based enterprise software and services firm as vice president of marketing. Prior to that, he held key marketing and sales positions in the high technology product and consultative service markets.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth compensation earned by or paid to the Chief Executive Officer, Chief Operating Officer and other executive officers for Fiscal 2006 and, to the extent required by applicable Commission rules, the preceding two fiscal years.
| | | | Annual Compensation | | | Long-Term | |
| Name/Position | Year | | Salary(1) | | | Bonus | | | Compensation Options | |
Peter P. Phildius (Chairman of the Board/Chief Executive Officer) | 2006 | | $ | 200,000 | | | $ | 0 | | | | 0 | |
| | 2005 | | $ | 200,000 | | | $ | 0 | | | | 9,072 | (2) |
| | 2004 | | $ | 200,000 | | | $ | 0 | | | | 0 | |
Douglas W. Scott (President/Chief Operating Officer) | 2006 | | $ | 180,000 | | | $ | 0 | | | | 0 | |
| | 2005 | | $ | 180,000 | | | $ | 0 | | | | 4,752 | (2) |
| | 2004 | | $ | 180,000 | | | $ | 0 | | | | 0 | |
Jay C. Leatherman, Jr. (Chief Financial Officer) | 2006 | | $ | 140,000 | | | $ | 0 | | | | 0 | |
| | 2005 | | $ | 140,000 | | | $ | 0 | | | | 3,150 | (2) |
| | 2004 | | $ | 140,000 | | | $ | 0 | | | | 0 | |
Richard Anderson(7) (Vice President of Research & Development) | 2006 | | $ | 140,000 | | | $ | 0 | | | | 0 | |
| | 2005 | | $ | 140,000 | | | $ | 0 | | | | 0 | |
| | 2004(3) | | $ | - | | | $ | 0 | | | | 8,000 | (4) |
Peter Cholakis (Vice President of Marketing) | 2006 | | $ | 149,995 | | | $ | 0 | | | | 0 | |
| | 2005 | | $ | 143,747 | | | $ | 0 | | | | 0 | |
| | 2004(3) | | $ | - | | | $ | 0 | | | | 8,000 | (5) |
David Greaves (6) (Vice President of Sales | 2006(3) | | $ | - | | | $ | 0 | | | | 0 | |
| | 2005 | | $ | 184,130 | | | $ | 0 | | | | 0 | |
| | 2004(3) | | $ | - | | | $ | 0 | | | | 8,000 | (4) |
(1) Does not include amounts reimbursed for business-related expenses incurred
by the executive officers on behalf of the Company.
(2) Reflects additional stock options granted to executive officers by the
Company's Board of Directors in October 2004.
(3) Compensation was less than $100,000.
(4) Reflects stock options granted to executive officers by the Company's Board
of Directors in June 2004.
(5) Reflects stock options granted to executive officers by the Company's Board
of Directors in February 2004.
(6) Resigned in November 2005.
(7) Resigned in October 2006.
Stock Option Grants in Last Fiscal Year. No stock options were granted to executive officers during Fiscal 2006.
Option Exercises in Last Fiscal Year and Year-Ended Option Values. No stock options or stock appreciation rights were exercised by the executive officers in Fiscal 2006.
As of September 30, 2006, the executive officers held options as follows, none of which are in the money:
| | | Options | | | Value of Options | |
| | | Total Options | | | Exercisable | | | Exercisable | | | Not Exercisable | |
| Peter Phildius | | | 47,632 | | | | 27,270 | | | $ | 0 | | | $ | 0 | |
| Douglas Scott | | | 27,712 | | | | 17,066 | | | | 0 | | | | 0 | |
| Jay Leatherman | | | 16,175 | | | | 8,425 | | | | 0 | | | | 0 | |
| Richard Anderson | | | 8,000 | | | | 3,200 | | | | 0 | | | | 0 | |
| Peter Cholakis | | | 8,000 | | | | 4,800 | | | | 0 | | | | 0 | |
Employment Agreements. Messrs. Phildius and Scott are covered by Employment Agreements (the "Employment Agreements") which commenced on May 19, 1995.
Pursuant to the Employment Agreements, if Messrs. Phildius and/or Scott are terminated without "Cause" (as such term is defined in the Employment Agreements) by the Company or if Messrs. Phildius and/or Scott terminate their employment as a result of a breach by the Company of its obligations under such
Agreements, he will be entitled to receive his annual base salary ($200,000 for Mr. Phildius and $180,000 for Mr. Scott) for a period of up to 18 months following such termination. In addition, if there is a "Change of Control" of the Company (as such term is defined in the Employment Agreements) and, within two years following such "Change of Control", either of Messrs. Phildius or Scott is terminated without cause by the Company or terminates his employment as a result of a breach by the Company, such executive will be entitled to certain payments and benefits, including the payment, in a lump sum, of an amount equal to up to two times the sum of (i) the executive's annual base salary and (ii) the executive's most recent annual bonus (if any). In addition, pursuant to the Employment Agreements, which have a three-year term (subject to extension), Messrs. Phildius and Scott are each entitled to annual bonus payments of up to $150,000 if the Company achieves certain levels of pre-tax income (as such term
is defined in such Agreements) or alternative net income objectives established by the Board of Directors.
REQUIRED VOTE
Election of each of the four nominees for director requires, under Avitar's Bylaws, the affirmative vote of the holders of a majority of the Avitar Common Stock and other voting shares present in person or by proxy at the Avitar Annual Meeting (assuming a quorum exists) and entitled to vote thereon.
BOARD RECOMMENDATION
The Avitar Board of Directors unanimously recommends a vote FOR election of all of the four nominees for director.
PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION THAT WOULD INCREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK FROM 100,000,000 TO 800,000,000.
General
The board of directors has unanimously adopted a resolution approving, subject to approval by our stockholders, the Proposed Amendment to our Certificate of Incorporation, that would increase the number of authorized shares of our common stock from 100,000,000 to 800,000,000. Under the Proposed Amendment, a copy of which is attached hereto as Appendix B, the authorized shares of common stock would be increased to 800 million. Approval of the Proposed Amendment will authorize the board of directors to effect the increase of authorized shares of common stock. . We currently anticipate that if the increase of authorized shares of common stock is approved by stockholders at the Annual Meeting, such increase of authorized shares of common stock would be implemented on the date of the Annual Meeting or as soon as practicable thereafter, subject to compliance with any applicable rules.
Purposes of the Increase of Authorized Shares of Common Stock
Increase in authorized but unissued shares of common stock. The principal reason for the increase in the number of authorized shares of common stock is the availability for issuance of such shares for all of our future purposes, including the shares to be reserved for issuance upon the conversion of the $5,771,000 outstanding convertible notes and exercise of the 68.5 million warrants issued pursuant to our private placements from September 2005 to August 2007. Of the total 700 million increase of the authorized shares of common stock, from 100 million to 800 million, 530.3 million will be reserved for the convertible notes and warrants issued pursuant to our private placements from September 2005 to August 2007. The Company has agreed in the private placements from September 2005 to August 2007 to increase sufficient authorized but unissued shares of common stock as required for the convertible notes and warrants.
Terms of Private Placements from September 2005 to August 2007.
From September 2005 through August 2007, the Company executed notes payable with AJW Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC, New Millennium Capital Partners II, LLC and AJW Master Fund, Ltd. in the total principal amount of $6,165,000 which are payable at maturities from September 2008 through August 2010. Interest on these notes is at 8% per annum and is payable quarterly in cash or the Company’s common stock at the option of the Company.
The Company originally issued warrants to purchase 100,000 shares of common stock at $12.50 per share for five years in connection with certain of these notes executed from September 2005 to April 2006. In conjunction with the notes executed in May 2006, the outstanding warrants were cancelled and replaced with warrants to purchase 3,000,000 shares of common stock at $1.25 per share for seven years. For the notes executed in July 2006 through August 2007, the Company issued warrants to purchase a total of 65,500,000 shares of common stock at $.01 to $.22 per share for seven years.
The collateral pledged by the Company to secure these notes includes all assets of the Company.
Through August 31, 2007, notes totaling $393,717 were converted into 25,305,763 shares of common stock.
The Company entered into the September 2005 $3 million private placement of convertible notes and warrants based upon a Securities Purchase Agreement with accredited investors. The securities issued in the September 2005 private placement were $3 million of 8% Secured Convertible Notes and Warrants to purchase 6,000,000 shares of the Company's Common Stock in exchange for gross proceeds of $3 million, of which $1 million was paid in the first closing on September 23, 2005. A second tranche of $1 million was paid after we filed a registration statement with respect to the shares issuable upon conversion of the Notes and exercise of the Warrants. On December 2, 2005, the Company applied to the SEC to withdraw this registration statement. The Company filed another registration statement with respect to the shares issuable upon conversion of the Notes and exercise of the Warrants (the "Registration Statement") which became effective in June 2006 and all of the shares registered thereunder were issued by mid-August 2007. We received the balance of $1 million from February through May, 2006 and the additional principal amount of $3.165 million in additional private placements with the same or related Purchasers from July 2006 to August 2007.
All the Notes issued in the private placements from September 2005 to August 2007 bear interest at 8%, mature three years from the date of issuance, and are convertible into our common stock at any time, at the Purchasers' option, at 65% (for Notes issued through February 2006) or 55% (for Notes issued after February 2006) of the average of the three lowest intraday trading prices for the Common Stock for the 20 trading days ending the day before the conversion date.
The full principal amount of the Notes, plus a default interest rate of 15%, is due upon a default under the terms of the Notes. We have a right to prepay the Notes under certain circumstances at a premium ranging from 20% to 35% depending on the timing of such prepayment.
In addition, we granted the Purchasers a security interest in substantially all of our assets. We are further required to file another Registration Statement with the Securities and Exchange Commission within 30 days of demand for registration. If the Registration Statement is not filed on time or not declared effective within 120 days from the date of demand, we are required to pay to the Purchasers damages in Common Stock or cash, at the election of the Company, in an amount equal to two percent of the outstanding principal amount of the Notes per month plus accrued and unpaid interest.
The Purchasers may exercise the Warrants on a cashless basis if the shares of Common Stock underlying the Warrants are not then registered pursuant to an effective registration statement. In the event the Purchasers exercise the Warrants on a cashless basis, we will not receive any proceeds. In addition, the Warrants are subject to standard anti-dilution provisions.
The Purchasers have agreed to restrict their ability to convert their Notes or exercise their Warrants and receive shares of our common stock such that the number of shares of common stock held by them and their affiliates in the aggregate after such conversion or exercise does not exceed 4.9% of the then issued and outstanding shares of Common Stock.
As a summary and for illustrative purposes only, the following table shows approximately the present numbers of our common stock and the effect on our common stock of the proposed increase of authorized shares, based on 63,047,897 shares of common stock issued and outstanding as of the close of business on September 28, 2007:
| | | Prior to Increase of Authorized | | | After Increase of Authorized | |
| ◊ Authorized common stock | | | 100,000,000 | | | | 800,000,000 | |
| ◊ Issued and outstanding | | | 63,047,897 | | | | 63,047,897 | |
| ◊ Reserved for issuance upon exercise of outstanding stock options | | | 97,719 | | | | 97,719 | |
| ◊ Reserved for future issuance under each of the Company's stock plans, warrants, contractual commitments or other obligation | | | 82,405,806 | | | | 82,405,806 | |
| ◊ Reserved for future issuance upon conversion of the Company's issued and outstanding preferred stock | | | 11,152,455 | | | | 11,152,455 | |
| ◊ Reserved for future issuance upon conversion of the Company's issued and outstanding convertible notes Prior to September 2005 | | | 260,000 | | | | 260,000 | |
◊ Number of Shares underlying Notes in principal amount of $5,771,000 from September 2005 to August 2007 Private Placements based on approximately $0.0125 per share* | | �� | 461,760,000 | | | | 461,760,000 | |
| ◊ Deficiency in number of authorized shares | | | (518,723,877 | ) | | | - | |
| ◊ Authorized, unreserved and unissued | | | - | | | | 181,373,842 | |
NOTE * If the number of shares underlying the outstanding Notes in the principal amount of $5,771,000 issued in private placements from September 2005 to August 2007 were based upon the closing price on September 28, 2007 of $0.005, the total number of shares reserved would be approximately 2.0 billion, which is 1.2 billion more than the total authorized amount, 800,000,000 shares, that the Board of Directors has approved. [$3,665,000 at 55% (0.00275) = 1,332,727,272 shares and $2,500,000 less conversions of $393,717 through September 28, 2007 = $2,106,000 at 65% (0.00325) = 648,000,000 shares.] However, the Board of Directors has unanimously determined at this time to increase the number of authorized shares of common stock only to 800,000,000. Further, the Board unanimously decided that the numbers of authorized shares that may be indicated by some recent market prices are at this time excessive and inappropriate for the Company
After completion of the increase of authorized (assuming the increase of authorized became effective at the close of business on September 28, 2007) ,we would have approximately 739 million shares of authorized but unissued shares of common stock, of which an aggregate of approximately 556 million would be reserved for issuance pursuant to the Plans and outstanding but unexercised options and warrants and convertible debt and equity securities. The authorized and unissued and unreserved shares, approximately 181 million, would be available from time to time for corporate purposes including raising additional capital, acquisitions of companies or assets, for strategic transactions, including a sale of all or a portion of the Company, and sales of stock or securities convertible into common stock. We currently have no plan, arrangement or agreement to issue shares of our common stock for any purpose, except for the issuance of shares of common stock pursuant to our stock option and employee stock purchase plans and outstanding but unexercised options and warrants and outstanding convertible debt ($5.771 million at present convertible at 35% to 45% below market prices) and equity securities and plans to raise an additional $4 million in our previously reported capital raising plan. If we issue additional shares, the ownership interests of holders of our common stock may be diluted. The issuance of large numbers of shares, particularly at below market prices, is likely to result in substantial dilution to the interests of other stockholders. In addition, issuances of large numbers of shares may further adversely affect the market price of our common stock.
Further Considerations Concerning Convertible Notes. The number of shares issuable upon conversion of the convertible notes, like the outstanding shares of preferred stock, is determined by the market price of our common stock prevailing at the time of each conversion. The lower the market price, the greater is the number of shares issuable under the agreement. Upon issuance of the shares, to the extent that holders of those shares will attempt to sell the shares into the market, these sales may further reduce the market price of our common stock. This in turn will increase the number of shares issuable under the agreement. This may lead to an escalation of lower market
prices and ever greater numbers of shares to be issued. A larger number of shares issuable at a discount to a continuously declining stock price will
expose our stockholders to greater dilution and a reduction of the value of their investment.
The convertible notes have the potential to cause significant downward pressure on the price of our common stock. This is particularly the case if the shares issued upon conversion and placed into the market exceed the market's ability to absorb the increased number of shares of stock. Such an event could place further downward pressure on the price of our common stock. The opportunity exists for short sellers and others to contribute to the future decline of our stock price. If there are significant short sales of our stock, the price decline that would result from this activity will cause the share price to decline more so, which, in turn, may cause long holders of the stock to sell their shares thereby contributing to sales of stock in the market. If there is an imbalance on the sell side of the market for the stock, our stock price will decline. If this occurs, the number of shares of our common stock that is issuable upon conversion of the convertible notes will increase, which will materially dilute existing stockholders' equity and voting rights.
As noted above, the authorized and unissued and unreserved shares would be available from time to time for various corporate purposes. In general, no further shareholder approval will be required for such future issuances. However, shareholder approval may be required for issuances that involve combinations with, or sales to, other parties. In addition, shareholder approval may be required for future issuances if the Company becomes listed on an exchange or quoted on a NASDAQ Market.
Potential Anti-Takeover Effects
If the Proposed Amendment is approved by our stockholders and the increase of authorized shares is implemented, the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect. These authorized but unissued shares could be used by the Company to oppose a hostile takeover attempt or to delay or prevent a change of control or changes in or removal of our board of directors, including a transaction that may be favored by a majority of our stockholders or in which our stockholders might receive a premium for their shares over then-current market prices or benefit in some other manner. For example, without further stockholder approval, our board of directors could issue and sell shares thereby diluting the stock ownership of a person seeking to effect a change in the composition of our board of directors or to propose or complete a tender offer or business combination involving us and potentially strategically placing shares with purchasers who would oppose such a change in our board or such a transaction. Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect, the increase in authorized is not being proposed in response to any effort of which we are aware to accumulate the shares of our common stock or obtain control of us, nor is it part of a plan by our management to recommend a series of similar amendments to our board of directors and stockholders.
BOARD RECOMMENDATION
The Board of Directors of Avitar unanimously recommends a vote FOR Proposal No. 2.
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of Avitar selected BDO Seidman, LLP as auditors for the fiscal year ending September 30, 2007, subject to stockholder approval by ratification. BDO Seidman, LLP has been the independent registered accounting firm for Avitar since December 1992. A representative of BDO Seidman, LLP is expected to be present at the Annual Meeting, at which time he or she will be afforded an opportunity to make a statement, and will be available to respond to questions.
The Board of Directors of Avitar may, in its discretion, direct appointment of new independent auditors at any time during the fiscal year if the Board believes such change would be in the best interests of Avitar and its stockholders. No such change is anticipated.
REQUIRED VOTE
Approval of ratification of BDO Seidman, LLP requires the affirmative vote of the holders of a majority of the Avitar Common Stock and Preferred Stock present in person or by proxy at the Avitar Annual Meeting (assuming a quorum exists) and entitled to vote thereon.
BOARD RECOMMENDATION
The Board of Directors of Avitar unanimously recommends a vote FOR the ratification of BDO Seidman, LLP as registered accounting firm for the fiscal year ending September 30, 2007.
OTHER BUSINESS
The proxy confers discretionary authority on the proxies with respect to any other business, which may come before the Annual Meeting. The Board of Directors of Avitar knows of no other matters to be presented at the Annual Meeting. The persons named in the proxy will vote the shares for which they hold proxies according to their best judgment if any matters not included in this Proxy Statement properly come before the meeting.
CODE OF ETHICS
Avitar has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller and all persons performing similar functions, if any. The Company will provide to any person without charge, upon request, a copy of such code of ethics. Requests should be made in writing to: Corporate Secretary, Avitar, Inc., 65 Dan Road Canton, MA 02021.
INCORPORATION OF ANNUAL REPORT ON FORM 10-KSB
We are incorporating by reference the information contained in the Annual Report on Form 10-KSB for the year ended September 30, 2006, including our most recent audited financial statements and management's discussion and analysis of financial condition and results of operations. The Annual Report was filed with the SEC under the Exchange Act and will be delivered to our shareholders with this Proxy Statement.
STOCKHOLDER PROPOSALS
Any stockholder proposal to be included in the proxy statement and form of proxy relating to the 2008 Annual Meeting of Avitar Stockholders must be received by the close of business on June 30, 2008 and must comply in all other respects with the rules and regulations of the Securities and Exchange Commission. Proposals should be addressed to: Corporate Secretary, Avitar, Inc., 65 Dan Road, Canton, Massachusetts 02021.
APPENDIX A
AVITAR, INC.
AUDIT COMMITTEE CHARTER
Organization
There shall be a committee of the board of directors known as the audit committee. The audit committee shall be comprised of directors, the majority of whom are independent (as defined in the American Stock Exchange Listing Standards) of the management of the corporation and are free of any relationship that, in the opinion of the board of directors, would interfere with their exercise of independent judgment as a committee member.
Statement of Policy
The audit committee shall provide assistance to the corporate directors in fulfilling their responsibilities to the shareholders, potential shareholders and investment community relating to corporate accounting, reporting practices of the corporation, and the quality and integrity of the financial reports of the corporation. In so doing, it is the responsibility of the audit committee to maintain free and open means of communication between the directors, the independent auditors and the financial management of the corporation.
Responsibilities
The audit committee believes its policies and procedures should remain flexible, in order to best react to changing conditions and ensure to the directors and shareholders that the accounting and reporting practices of the corporation are in accordance with all requirements and are of the highest quality.
In carrying out its responsibilities, the audit committee will:
1. Review and make a recommendation to the directors regarding the independent auditors to be selected to audit the financial statements of the
corporation and its subsidiaries.
2. Meet with the independent auditors and financial management of the corporation to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof review such audit, including any comment or recommendations of the
independent auditors.
3. Review with the independent auditors and the corporation's internal financial and accounting personnel the adequacy and effectiveness of the
accounting and financial controls procedures of the corporation, and elicit any recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls or procedures are desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper.
4. Review the audited financial statements to be included in the annual report to shareholders and the annual report filed with Securities and Exchange
Commission ("SEC") on Form 10-KSB with management and the independent auditors to determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be presented to the shareholders and filed with the SEC. Make a recommendation to the board of
directors regarding the inclusion of the audited financial statements in such annual reports. Any changes in accounting principles should be
reviewed.
5. Review the financial information included in the corporations' Quarterly Reports on Form 10-QSB prior to the corporation filing such reports with
Securities and Exchange Commission.
6. Provide sufficient opportunity for the independent auditors to meet with members of the audit committee without members of management present. Among
the items to be discussed in these meetings are the independent auditors' evaluation of the corporation's financial and accounting personnel, and the
cooperation that the independent auditors received during the course of the audit.
7. Review the matters discussed at each committee meeting with the board of directors.
8. Investigate any matter brought to its attention within the scope of its duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
APPENDIX B
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Avitar, Inc., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That by unanimous written consent of the Board of Directors of Avitar, Inc., resolutions were duly adopted setting forth proposed an amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolutions setting forth the proposed amendment are as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered "FOURTH" so that, as amended, said Article shall be and read as follows:
FOURTH: The total number of shares of stock which the corporation shall have authority to issue is Eight Hundred Five Million (805,000,000), of which Eight Hundred Million (800,000,000) shares shall be Common Stock, par value $.01 per share, and Five Million (5,000,000) shares shall be Preferred Stock, par value $.001 per share.
SECOND: That thereafter, pursuant to resolutions of its Board of Directors, the annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voting in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242(c) of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, said Avitar, Inc. has caused this certificate to be signed by Peter P. Phildius, its Chairman and Chief Executive Officer, this
_____day of ____________ , 2007.
By:
--------------------------------
Peter P. Phildius,
Chairman & Chief Executive Office
ATTEST:
By: _____________________
Jay C. Leatherman,
Secretary
SHARES AVITAR, INC. PROXY NO.
65 Dan Road, Canton, Massachusetts 02021
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter P. Phildius and Douglas W. Scott as Proxies, each with the power to appoint his substitute and hereby authorizes them to represent and to vote, as designated below and on the reverse hereof, all shares of common stock of Avitar, Inc. ("Avitar") or shares of Preferred Stock of Avitar held of record by the undersigned on November 1, 2007 at the Annual Meeting of stockholders of Avitar to be held on December 18, 2007 or any adjournments thereof.
The undersigned hereby revokes any proxies heretofore given to vote said shares.
The undersigned hereby acknowledges receipt of Avitar's Annual Report for 2006 and of the Notice of Annual Meeting of Stockholders and attached Proxy Statement dated November 1, 2007.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR Items 1, 2 and 3. Please sign exactly as your name appears to the left hereof. When signing as corporate officer, partner, attorney, administrator, trustee or guardian, please give your full title as such.
Dated , 200_
------------------------
Authorized Signature
Title
Please mark boxes on reverse hereof in blue or black ink. Please date, sign and return this Proxy Card promptly using the enclosed envelope.
1. Election of Directors.
For all nominees listed below (except as marked to the contrary listed below) [ _ ]
Withhold Authority to vote for all nominees marked to the contrary below [ _ ]
(Instruction: To withhold authority to vote for any individual nominee strike a line through the nominee's name below.)
Peter P. Phildius Douglas W. Scott Neil R.Gordon Charles R. McCarthy, Jr.
2.. To approve the proposed amendment to our Certificate of Incorporation to increase the authorized shares of our common stock to 800 million.
For Against Abstain
---------------- ---------------- -------------
3. To ratify the appointment of BDO Seidman, LLP as registered independent public accounting firm for Avitar for the fiscal year ending September 30, 2007.
For Against Abstain
---------------- ---------------- -------------
