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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INTELLECTUAL TECHNOLOGY, INC.
(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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a) (2) and identify the filing for which the
offsetting fee was 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: ____________________________________________
INTELLECTUAL TECHNOLOGY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held October 23, 2002
TO THE STOCKHOLDERS OF INTELLECTUAL TECHNOLOGY, INC.:
You are cordially invited to attend the Annual Meeting of Stockholders
("Annual Meeting") of Intellectual Technology, Inc. ("ITI" or the "Company"),
which will be held at the Hilton Garden Inn located at 6450 Carlsbad Blvd.,
Carlsbad, California 92009, on Wednesday, October 23, 2002, at 9:00 a.m.
Pacific time, to consider and act upon the following matters:
1. The election of four (4) directors;
2. The ratification of the selection of Comiskey & Company P.C. to
serve as auditors of the Company for the fiscal year ending
December 31, 2002; and
3. Such other business as may properly come before the Annual
Meeting or any adjournments of the Annual Meeting.
Only holders of record our Common Stock at the close of business on
September 9, 2002, will be entitled to notice of, and to vote at, the Annual
Meeting and any continuations or adjournments of the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE MEETING IN
PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES. IF YOU DO ATTEND THE
MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
By Order of the Board of Directors
/s/ Walter G. Fuller________
Walter G. Fuller
Chief Executive Officer and Chairman
of the Board
1040 Joshua Way
Vista, CA 92083
(760) 599-8080
September 23, 2002
PROXY STATEMENT
INTELLECTUAL TECHNOLOGY, INC.
1040 Joshua Way
Vista, CA 92083
________________
ANNUAL MEETING OF STOCKHOLDERS
To Be Held October 23, 2002
Solicitation of Proxies
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Intellectual Technology, Inc., a Delaware
corporation (the "Company") for use at the Annual Meeting of Stockholders to
be held at the Hilton Garden Inn located at 6450 Carlsbad Blvd., Carlsbad,
California 92009, on Wednesday, October 23, 2002, at 9:00 a.m. Pacific time,
and at any and all adjournments thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. Accompanying this Proxy Statement is the Board of Directors'
Proxy for the Annual Meeting, which you may use to indicate your vote as to
the proposals described in this Proxy Statement. In addition to solicitation
by use of the mail, certain of our officers and employees may, without
receiving additional compensation therefor, solicit the return of proxies by
telephone, telegram or personal interview. We have requested that brokerage
houses and custodians, nominees and fiduciaries forward soliciting materials
to their principals, the beneficial owners of Common Stock, and have agreed to
reimburse them for reasonable out-of-pocket expenses in connection therewith.
Revocation of Proxies
All Proxies which are properly completed, signed and returned to us prior to
the Annual Meeting, and which have not been revoked, will be voted in favor of
the proposals described in this Proxy Statement unless otherwise directed. A
Stockholder may revoke his or her Proxy at any time before it is voted either
by filing with the Secretary of the Company, at its principal executive
offices, a written notice of revocation or a duly-executed proxy bearing a
later date or by attending the Annual Meeting and expressing a desire to vote
his or her shares in person.
Record Date and Voting Securities
The close of business on September 9, 2002, has been fixed as the record date
for the determination of Stockholders entitled to notice of and to vote at the
Annual Meeting or any adjournment of the Annual Meeting. As of September 9,
2002, we had outstanding: 9,842,680 shares of Common Stock, par value $.0001
per share. The holders of Common Stock have the right to cast one vote for
each share held of record on all matters submitted to a vote of the holders of
Common Stock, including the election of directors. Except as described
herein, no preemptive, subscription, or conversion rights pertain to the
Common Stock and no redemption or sinking fund provisions exist for the
benefit thereof. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote at the
meeting will be required to approve each proposal. Pursuant to the General
Corporation Law of the State of Delaware, only votes cast "FOR" a matter
constitute affirmative votes, except that proxies in which the stockholder
fails to make a specification as to whether he votes "FOR," "AGAINST,"
"ABSTAINS" or "WITHHOLDS" as to a particular matter shall be considered as a
vote "FOR" that matter. Votes will be tabulated by an inspector of election
appointed by the Board of Directors. Votes in which the stockholder specified
that he is "WITHHOLDING" or "ABSTAINING" from voting are counted for quorum
purposes, but are not considered as votes "FOR" a particular matter. Broker
non-votes (shares held by a broker or nominee which are represented at the
meeting, but with respect to which the broker or nominee is not empowered to
vote on a particular proposal) are counted for quorum purposes, but are not
considered as votes "FOR" a particular matter.
Mailing of Proxy Statement and Proxy Card
Our Annual Report for 2001 is enclosed for your convenience but is not
incorporated into this Proxy Statement and is not to be considered part of the
solicitation material. We will pay the cost for preparing, printing,
assembling and mailing this Proxy Statement and the Proxy Card and all of the
costs of the solicitation of the Proxies.
Our principal executive offices are located 1040 Joshua Way, Vista, CA 92083.
This Proxy Statement and the accompanying proxy are first being mailed to
Stockholders on or about September 23, 2002.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Certificate of Incorporation and Bylaws of the
Company, the Board of Directors consists of not less than one nor more than
seven members, the exact number to be determined by the Board of Directors.
At each Annual Meeting of the Stockholders of the Company, directors are
elected to serve until the next Annual Meeting or until their successors are
elected or appointed. The Board of Directors has been set at four members.
The Board of Directors proposes the election of the nominees named below.
Unless marked otherwise, proxies received will be voted FOR the election
of each of the nominees named below. If any such person is unable or
unwilling to serve as a nominee for the office of director at the date of the
Annual Meeting or any postponement or adjournment thereof, the proxies may be
voted for a substitute nominee, designated by the proxy holders or by the
present Board of Directors to fill such vacancy. The Board of Directors has
no reason to believe that any such nominee will be unwilling or unable to
serve if elected a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ELECTION OF THE DIRECTORS NOMINATED HEREIN.
The Board of Directors proposes the election of the following nominees as
members of the Board of Directors:
Nicholas Litchin
Walter G. Fuller
Christopher M. Welch
Bradford A. Morrow
If elected, the nominees are expected to serve until the 2003 Annual
Meeting of Stockholders.
Information with Respect to Each Nominee and Executive Officers.
The following table sets forth certain information with respect to each
nominee and executive officer of the Company as of September 9, 2002.
Name Age Position
Walter G. Fuller 59 Chief Executive Officer, Chairman
of the Board, Director and
Director Nominee
Nicholas Litchin 73 Director and Director Nominee
Christopher M. Welch 31 Director and Director Nominee
Bradford A. Morrow 47 Director and Director Nominee
Other Officers:
Craig Litchin 46 President, Chief Operating
Officer, Treasurer, Principal
Financial Officer, Principal
Accounting Officer
George McGill 66 Vice President, Secretary
Robert Neece 54 Former Director, Former Chief
Executive Officer, Former Chairman
of the Board, Former Assistant
Secretary
Directors serve until the next Annual Meeting or until their successors
are elected or appointed. All officers are appointed by and serve at the
discretion of the Board of Directors. Craig Litchin is the son of Nicholas
Litchin. Walter G. Fuller was once married to the maternal aunt of Christopher
M. Welch. There are no other family relationships between any directors or
executive officers.
Nicholas Litchin is a director of the Company. He was Chairman of the
Board of Directors from July 1998 to April 1999. He was Vice Chairman from
March 12, 1997 to June 1998, and has been a director of the Company since the
formation of Image Technology, Inc., a Nevada corporation and wholly owned
subsidiary of the Company, ("Image Technology") in April 1992. Mr. Litchin
has been a retired investor since 1991.
Walter G. Fuller has been a Director of the Company and Image Technology
since March 12, 1997 and the formation of Image Technology in 1992,
respectively. He was appointed Chairman of the Board and Chief Executive
Officer of the Company in August of 2001. He is the President of M&S Steel
Co., Inc., an Indiana corporation that is a supplier of structural steel to
the construction industry.
Christopher M. Welch was elected Director of the Company in February
1999. Mr. Welch was an agent with New York Life from 1995-2000. He attended
graduate school during 2001. He is now employed as a staff accountant with
Sound Image Inc., a private company in Escondido, CA.
Bradford A. Morrow was elected Director in December 2000. He has been
the Managing Director of Paradigm Capital LLC since the Fall of 1997
("Paradigm"). Paradigm is involved in private placements, mergers and
acquisitions and providing consulting services to emerging companies,
primarily software and satellite based technologies.
Craig Litchin has been President, Chief Operating Officer, Treasurer,
Principal Financial Officer and Principal Accounting Officer of the Company
since November 30, 2000. Mr. Litchin joined the Company as Vice President in
July 1997. Prior to that, he served for eight years as Legal Counsel to the
Bitove Corporation ("Bitove"). Bitove, a Canadian company, operated several
different businesses throughout Canada.
George McGill was appointed Vice-President and Secretary of the Company
on August 30, 2000. He is an attorney in private practice in Cardiff,
California and has advised the Company since its inception. Mr. McGill has
been practicing law since 1961.
Robert Neece was Chairman of the Board, Chief Executive Officer and
Assistant Secretary until August 23, 2001. Mr. Neece resigned from the Board
of Directors on October 12, 2001. Mr. Neece had been a Director of the
Company since July of 1998. He has been engaged in the private practice of
law in Denver, Colorado since 1981. Throughout that period of time, he has
concentrated his practice in the areas of corporation, commercial, and
securities law. Since 1992, Mr. Neece has been Special Counsel with the
Denver law firm of Burns, Wall, Smith and Mueller, P.C.
Board Meetings and Committees
The Board of Directors held 9 meetings in 2001 in which the Directors
were present either in person or telephonically. No director attended fewer
than 75 percent (75%) of the aggregate number of meetings held by the
Board of Directors and the committee on which he served during 2001. The
Board of Directors has an Audit Committee which reviews the results and scope
of the audit and other accounting related matters. The members of the Audit
Committee are currently Messrs. Welch and Morrow. The Audit Committee held 1
meeting during 2001.
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is included in this Proxy Statement as Exhibit A.
The Company does not have a nominating or compensation committee.
Audit Fees
The aggregate fees billed by Comiskey & Company, P.C. for professional
services rendered for the audit of the Company's annual financial statements
for the fiscal year ended December 31, 2001, and for the reviews of the
financial statements included in the Company's Quarterly Reports on Form
10-QSB and Form 10-KSB for that fiscal year were $32,791.23. Audit-related
services generally include fees for accounting consultations, business
acquisitions, and work related to equity offerings. The Audit Committee has
considered whether the provision of non-audit services is compatible with
maintaining the principal accountant's independence.
Financial Information Systems Design and Implementation
There were no fees billed by Comiskey & Company for professional services
rendered for information technology services relating to financial information
systems design and implementation for the fiscal year ended December 31, 2001.
All Other Fees
There were no fees billed by Comiskey & Company for services other than
the reviews of the financial statements included in the Company's Quarterly
Reports on Form 10-QSB and Form 10-KSB for the fiscal year ended December 31,
2001 as set forth herein.
Audit Committee Report
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR
INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the Company's audited
financial statements with Company management and has discussed certain
required matters with the Company's independent auditors, in accordance with
Statement of Auditing Standards No. 61.
The Company's independent auditors also provided written documentation to
the Audit Committee, describing all relationships between the auditors and the
Company that might bear on the auditors' independence as required by
Independence Standards Board Standard No. 1. The Audit Committee discussed
with the auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditors' independence.
Based on the above-mentioned reviews and discussions with management and
the independent auditors, the Audit Committee recommended to the Board that
the Company's audited financial statements be included in its Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2001. The Audit
Committee also recommended the re-appointment of the independent auditors and
the Board concurred in such recommendation.
All members of the Audit Committee are considered to be "independent
directors," as defined in NASDAQ Marketplace Rule 4200.
AUDIT COMMITTEE
Christopher M. Welch and Bradford A. Morrow
MANAGEMENT
EXECUTIVE COMPENSATION
The following table sets forth certain information as to our Chief
Executive Officer. None of the Company's executive officers' total annual
salary and bonus for the fiscal year ending December 31, 2001, exceeded
$100,000:
SUMMARY COMPENSATION TABLE
Annual Compensation(1)
Other
Name and Principal Position Year Salary Bonus Compensation
Walter G. Fuller
Chief Executive Officer 2001 $ 7,250 $ - $ -
2000 $ 1,750 $ - $ -
1999 $ - $ - $ -
Robert Neece
Former Director, Former Chief 2001 $10,000 $ - $ -
Executive Officer, Former 2000 $ 2,250 $ - $ -
Chairman of the Board, Former 1999 $ 700 $ - $ -
Assistant Secretary
____________________
(1) The compensation described in this table does not include medical
insurance, retirement benefits and other benefits which are available
generally to all employees of the Company and certain perquisites and other
personal benefits, the value of which did not exceed the lesser of $50,000
or 10% of the executive officer's compensation in the table.
EMPLOYMENT AGREEMENTS
Mr. Keith Winn entered into an employment agreement with the Company to
serve as its Chief Technology Officer. This agreement became effective
May 1, 2001 and has a term of one year. The agreement automatically renews
annually subject to termination and severance clauses. The agreement provides
or annual compensation of $150,000.
COMPENSATION OF DIRECTORS
The Company has adopted a policy of paying directors $250 per meeting
plus salary. Effective December 1, 2000, all directors except Mr. Neece
received $500 per month salary. Mr. Neece received $1,000 per month salary
and $250 per meeting until his resignation in October 2001.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of our Common Stock as of September 9, 2002, by (i) each
person who is known by us to own beneficially more than 5% of any class of our
outstanding voting securities, (ii) each of our directors and executive
officers, and (iii) all of our officers and directors as a group. The number
and percentage of shares beneficially owned is determined in accordance with
Rule 13d-3 of the Securities Exchange Act of 1934, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rule, beneficial ownership includes any shares as to which the selling
stockholder has sole or shared voting power or investment power and also any
shares which the selling stockholder has the right to acquire within 60 days.
Percentages are based on a total of 9,842,680 shares of common stock
outstanding on September 9, 2002.
Common Stock
Name and Address of Beneficially Percent of
Title of Class Beneficial Owner(1) Owned Ownership
Common Stock Sandra K. Leatherman(2) 1,651,820 13.7%
Common Stock Walter G. Fuller(3) 2,974,880 25.4%
Common Stock Nicholas Litchin (4)(5) 1,589,760 13.6%
Common Stock Robert Neece(6) 523,000 4.5%
Common Stock Christopher M. Welch(7) 1,379,410 11.8%
Common Stock Kelly Manoccio (8) 1,231,610 10.5%
Common Stock Craig Litchin (9) 85,000 .7%
Common Stock George E. McGill (10) 439,920 3.8%
Common Stock Bradford A. Morrow (11) 130,000 1.1%
All executive officers
and directors as a group
Common Stock (5 persons) (12) 9,955,400 85%
_____________________
(1) Except as otherwise indicated, the address of each principal
stockholder is c/o the Company at 1040 Joshua Way, Vista, CA 92083.
The Company believes that all persons named have sole voting power and
sole investment power, subject to community property laws where
applicable.
(2) The address of Sandra K. Leatherman is 3345 Fosca Street Carlsbad, CA,
92009. Includes 1,651,820 shares held as trustee of the J&S Trust.
(3) The address of Walter G. Fuller is 217 E. Railroad Street, P.O. Box
299, Garrett, IN, 46738. Includes options to purchase 315,000 common
shares under the Company's stock option plan.
(4) The address of Nicholas Litchin is 6401 Constitution Drive, Ft. Wayne,
IN, 46804. Includes 214,920 shares held of record by L&R Realty, an
Indiana general partnership, of which Mr. Litchin is a partner,
699,840 shares held of record by the Litchin Family Partnership, of
which Mr. Litchin is a general partner, and 360,000 shares held of
record by Mercer Beverage Co., an Ohio corporation, of which Mr.
Litchin is the President and of which Mrs. Litchin is a principal
shareholder. Mr. Litchin disclaims beneficial ownership of these
shares.
(5) Includes options to purchase 315,000 common shares under the Company's
stock option plan.
(6) The address of Robert Neece is c/o 303 East 17th Avenue, Denver, CO,
80202. Includes options to purchase 315,000 common shares under the
Company's stock option plan. Mr. Neese was an officer until
August 23, 2001 and a director until October 12, 2001.
(7) The address of Christopher M. Welch is 920 Sycamore Avenue #62 Vista,
CA, 92083.
(8) The address of Kelly Manoccio is 1027 Orchard Lane, Broadview Heights,
OH, 44147. Includes 465,020 shares held as beneficial owner of the
Janice Welch Trust.
(9) Includes options to purchase 85,000 common shares under the Company's
stock option plan.
(10) The address of George E. McGill is 120 Birmingham #240, Cardiff, CA,
92007. Includes options to purchase 315,000 common shares under the
Company's stock option plan.
(11) The address of Bradford A. Morrow is 9025 E. Jenan Drive, Scottsdale,
AZ, 85260. Includes options to purchase 130,000 common shares under
the Company's stock option plan.
(12) Adjusted for the effect of 1,882,500 shares issuable upon exercise of
outstanding stock options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Form 3s are being filed by the following individuals as indicated: V.
Craig Litchin, due December 18, 2000; Bradford A. Morrow, due December 18,
2000; and George E. McGill, due December 18, 2000. Form 4s are being filed by
the following individuals as indicated: Christopher M. Welch, due January 10,
2001; Nicholas Litchin, due January 10, 2001; and Walter G. Fuller, due
October 10, 1998 and January 10, 2001. Based solely upon a review of copies
of reports on Form 3, Form 4 and Form 5 furnished to us, and written
representations to us from reporting persons, we believe that no other
officers, directors or beneficial owners of over 10% of the Company's Common
Stock failed to timely file required reports under Rule 16(a) of the
Securities and Exchange Act of 1934, as amended, during 2001 or previous
fiscal years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From April 2000 through January 2001, the Company rented office space for
$650 a month from a company partly owned by Nicholas Litchin. For the years
ended December 31, 2001 and 2000, the aggregate rent was $650 and $5,949.
As of September 1999, the Company entered into an agreement with American
Registration Systems, Inc., a company whose sole shareholder at the time was
the late Chief Executive Officer of the Company, for the purchase of a patent
for $130,000. For the years ended December 31, 2001 and 2000, installments of
principal and interest of $20,000 and $25,000, respectively, were paid,
including interest of $9,384 and $10,087, respectively. Future payments are
due in quarterly installments of $5,000, inclusive of interest of 6.61%.
During 2000, the Company leased five (5) service vehicles from a company
owned by Kent Litchin, the son of Nicholas Litchin, an ITI Director. In 2000,
the Company paid $28,136 in operating lease payments. During December 2000,
the Company purchased the vehicles for $14,089.
During 1999, the Company advanced $28,285 to a trust of late Chief
Executive Officer of the Company. The amount due including $3,602 imputed
interest is estimated to be uncollectible and has been recorded as a "loss
on uncollectible advance to affiliate." For the years ended December 31, 2001
and 2000, the Company recorded imputed interest income of $1,518 and $1,446,
respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has authorized the firm of Comiskey & Company P.C.,
independent public accountants, to serve as auditors for the fiscal year
ending December 31, 2002. A representative of Comiskey & Company P.C. will be
present telephonically at the Annual Meeting and will have the opportunity to
make a statement if he or she desires to do so. Further, the representative
of Comiskey & Company P.C. will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF COMISKEY & COMPANY AS THE AUDITORS OF THE
COMPANY.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matter shall properly come
before the Annual Meeting, the proxy holders named in the proxy accompanying
this statement will have discretionary authority to vote all proxies in
accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR THE 2003 ANNUAL MEETING
Any stockholder who wishes to present a proposal for consideration at the
Annual Meeting of Stockholders to be held in 2003 must submit such proposal in
accordance with the rules promulgated by the Securities and Exchange
Commission. In order for a proposal to be included in the Company's proxy
materials relating to the 2003 Annual Meeting of Stockholders, the stockholder
must submit such proposal in writing to the Company so that it is received no
later than June 25, 2003. Any stockholder proposal submitted with respect to
the Company's 2003 Annual Meeting of Stockholders which proposal is received
by the Company after August 8, 2003, will be considered untimely for purposes
of Rule 14a-4 and 14a-5 under the Exchange Act and the Company may vote
against such proposal using its discretionary voting authority as authorized
by proxy.
ANNUAL REPORT TO STOCKHOLDERS
Our Annual Report for the fiscal year ended December 31, 2001, is being
mailed to Stockholders along with this Proxy Statement. The Annual Report is
not to be considered part of the soliciting material.
By Order of the Board of Directors
Vista, California
September 23, 2002
EXHIBIT A
INTELLECTUAL TECHNOLOGY, INC.
AUDIT COMMITTEE CHARTER
Organization
The Audit Committee (the "Committee") of Intellectual Technology, Inc.
("ITI") is appointed by the Board of Directors (the "Board"), each member of
whom shall meet the independence and experience requirements of the Nasdaq
Stock Exchange. In particular, the Chairman of the Audit Committee shall
have accounting or related financial management expertise.
Purpose
The primary purpose of the Committee is to assist the Board in
fulfilling the Board's oversight responsibilities over ITI's financial
reporting process and systems of internal controls, monitoring the
independence and performance of ITI's independent auditors and maintaining
open communication between the Board and the independent auditors and
financial management.
Responsibilities
Review Procedures
1. Annually review the Charter and the Committee's adherence to it.
2. Annually review with ITI's counsel, legal matters that could have
a significant impact on the financial statements.
3. Review with financial management and the independent accountants the
annual and quarterly financial statements prior to filing or
distribution. Discuss with management and the independent auditors
any accounting policies which may be viewed as critical and any
significant changes to ITI's accounting principles and any items
required to be communicated by the independent accountants in
accordance with the American Institute of Certified Public
Accountants Statement on Auditing Standards No. 61 ("AICPA SAS 61").
4. Discuss with management and the independent accountants any
significant financial risks and the actions required to minimize such
risks.
5. Annually review related party transactions for potential conflicts of
interest.
6. Review financial and accounting personnel succession planning.
Independent Auditors
1. Annually recommend to the Board the independent auditors to be
appointed after evaluating independence, performance and cost
effectiveness. The Committee must approve any discharge of the
independent auditor. The independent auditors are ultimately
accountable to the Audit Committee and the Board.
2. Annually obtain and review a written report from the independent
auditors disclosing all relationships with ITI and consider any
impact on their independence and objectivity. Review any non-audit
services provided by the independent auditor and the fees for such
services to determine the compatibility of such services with the
independent auditors' independence and objectivity.
3. Review with the independent auditors the scope and procedures of the
audit and approve all amounts to be paid to the independent auditors.
4. Review the experience and qualifications of the senior members of the
independent auditors and their quality control procedures.
5. Review with the independent auditors (a) the results of their audit
in accordance with AICPA SAS 61, as amended, (b) their findings and
recommendations, (c) the opinion to be issued in respect to ITI's
financial statements prior to any filings or other distribution and
(d) the quality and acceptability of ITI's accounting principles.
6. Review with the independent auditors and financial management, the
integrity, adequacy and effectiveness of the accounting and other
financial controls of ITI.
7. Provide an opportunity for direct communication between the Board and
the independent auditors, including the opportunity to meet with the
Audit Committee without members of management present.
8. Review with management and the independent auditors the financial
information, including management's discussion and analysis, to
determine that the independent auditors are satisfied with the
disclosure and content of the financial information.
Other Responsibilities
1. Consider, and, if appropriate, investigate any matter brought to the
attention of the Audit Committee within the scope of its duties. The
Committee shall have direct access to the independent auditors and ITI
personnel and may retain, at ITI's expense, special legal, accounting
or other consultants or experts.
2. Maintain minutes of meetings and periodically report to the Board on
its activities.
3. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, the Audit Committee is not responsible for planning or
conducting audits or determining that ITI's financial statements are complete
and accurate and prepared in accordance with generally accepted accounting
principles. Those duties are the responsibility of management and the
independent auditors. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent auditors or to assure compliance with laws and regulations and
ITI's Code of Conduct, when formally established.
This Charter was adopted by the Board as of September 9, 2002.
INTELLECTUAL TECHNOLOGY, INC.
1040 Joshua Way
Vista, CA 92083
________________
ANNUAL MEETING OF SHAREHOLDERS - October 23, 2002
The undersigned shareholder(s) of Intellectual Technology, Inc. (the
"Company") hereby appoints Craig Litchin and George McGill (the "Proxy"), or
each of them, the attorney, agent and proxy of the undersigned, with
full power of substitution, to vote all the shares of the Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be
held at the Hilton Garden Inn located at 6450 Carlsbad Blvd., Carlsbad,
California 92009, on Wednesday, October 23, 2002, at 9:00 a.m. Pacific time,
and any and all adjournments thereof, as fully and with the same force and
effect as the undersigned might or could do if personally present thereat, as
follows:
1. Election of Directors. To elect the following four (4) persons to the
Board of Directors of the Company to serve until the 2003 Annual Meeting
of Stockholders and until their successors are elected and have
qualified:
Nicholas Litchin Walter G. Fuller
Bradford A. Morrow Christopher M. Welch
[ ] For all nominees listed above [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary) nominees listed above.
A shareholder may withhold authority to vote for any nominees by drawing
a line through or otherwise striking out the name of such nominee.
If no specification is made, the votes represented by this proxy will be
cast FOR the election of the nominees listed above. This proxy vests
discretionary authority to cumulate votes for directors.
2. Ratification of the selection of Comiskey & Company P.C. to serve as
auditors of the Company for the fiscal year ending December 31, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Unless otherwise specified, the votes represented by this Proxy will be
cast FOR ratification and approval of the above proposal.
3. In their discretion, the Proxy are authorized to vote upon such other
business as may properly come before the meeting and any adjournment(s)
thereof.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. Shareholders who are present at the
meeting may withdraw their proxy and vote in person if they so desire.
This proxy is solicited on behalf of the Board of Directors.
Please sign exactly as your name appears on your stock certificates. When
shares are held by joint tenants, both should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: ______________________________, 2002
________________________________
Signature
________________________________
Signature, if held jointly
________________________________
Printed Name(s)
I (We) [ ] will [ ] will not
attend the Annual Meeting in person.
NO POSTAGE IS REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.