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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
SCHEDULE 14A
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 Under Rule 14a-12
INGEN TECHNOLOGIES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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:
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INGEN TECHNOLOGIES, INC.
35193 Avenue "A", Suite-C
Yucaipa, California 92399
Telephone: (800) 259-9622
Dear Shareholder:
On behalf of the Board of Directors, I invite you to attend the annual meeting
of shareholders of Ingen Technologies, Inc. to be held at 9:00 a.m., Pacific
Time on Saturday, February 9, 2008, at our corporate offices located at
35193 Avenue "A", Suite-C, Yucaipa, California 92399.
This mailing includes the formal notice of the meeting, the Reports on Form
10-KSB and Form 10-QSB to the Securities and Exchange Commission and the Proxy
Statement. The Proxy Statement tells you more about the agenda and procedures
for the annual meeting. It also describes how the Board of Directors operates
and gives personal information about our director candidates.
Even if you only own a few shares, we want your shares to be represented at the
meeting. Please complete, sign, date, and return your proxy promptly in the
enclosed envelope, even if you plan to attend the meeting in person. Please note
that sending us a proxy will not prevent you from voting in person at the
meeting should you wish to do so. This Proxy Statement and form of proxy are
first being mailed to shareholders on January 29, 2008.
Sincerely yours,
/s/ Scott R. Sand
Scott R. Sand
Chief Executive Officer and Chairman
January 29, 2008
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INGEN TECHNOLOGIES, INC.
35193 Avenue "A", Suite-C
Yucaipa, California 92399
Telephone: (800) 259-9622
NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS
TIME: 9:00 a.m., Pacific Time
DATE: Saturday, February 9, 2008
PLACE: 35193 Avenue "A", Suite-C, Yucaipa, California
PURPOSE:
1. To re-elect Scott R. Sand, Yong Sin Khoo, Christopher A. Wirth, Curt
A. Miedema, Stephen O'Hara, John Finazzo and Brad Klearman as
directors of the company;
2. To approve an amendment to our Articles of Incorporation to increase
the number of authorized shares of common stock from 100,000,000
shares to 750,000,000 shares;
3. To approve an amendment to our Articles of Incorporation to include
a provision for shareholder action in lieu of a meeting by
non-unanimous written consent;
4. To ratify the appointment by the Board of Directors of Child, Van
Wagoner & Bradshaw, PLLC, independent certified public accountants,
as our independent auditors for the fiscal year ending May 31, 2008;
and
5. To transact such other business as may properly come before the
meeting or any adjournment of the meeting.
Only shareholders of record at the close of the business on January 2, 2008 may
vote at the annual meeting. There are no dissenter's rights of appraisal under
Georgia law in connection with the above-listed actions.
Your vote is important. Please complete, sign, date, and return your proxy
promptly in the enclosed envelope.
By Order of the Board of Directors
Sincerely yours,
/s/ Scott R. Sand
Scott R. Sand
Chief Executive Officer and Chairman
January 29, 2008
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE 2008 ANNUAL MEETING OF
SHAREHOLDERS OF INGEN TECHNOLOGIES, INC. IF YOU ATTEND THE MEETING, YOU MAY VOTE
YOUR SHARES IN PERSON IF YOU WISH, EVEN IF YOU PREVIOUSLY RETURNED YOUR PROXY.
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INGEN TECHNOLOGIES, INC.
PROXY STATEMENT
GENERAL INFORMATION
THIS PROXY STATEMENT IS BEING SENT TO YOU IN CONNECTION WITH THE SOLICITATION OF
PROXIES FOR THE 2008 ANNUAL MEETING OF SHAREHOLDERS (THE "ANNUAL MEETING") BY
THE BOARD OF DIRECTORS OF INGEN TECHNOLOGIES, INC. ("INGEN", "WE" OR "US") TO BE
HELD AT OUR CORPORATE OFFICES LOCATED AT 35193 AVENUE "A", SUITE-C, YUCAIPA,
CALIFORNIA, AT 9:00 A.M., PACIFIC TIME, ON SATURDAY, FEBRUARY 9, 2008, AND ANY
ADJOURNMENTS THEREOF. This proxy statement and the accompanying Notice of 2008
Annual Meeting of Shareholders and form of proxy is being first mailed to
shareholders on or about January 29, 2008. Shareholders are encouraged to
review the information provided in this proxy statement in conjunction with our
Annual Report on Form 10-KSB for the fiscal year ended May 31, 2007 and Form
10-QSB, copies of which accompany this proxy statement.
VOTING SECURITIES
Only shareholders of the company as recorded in our stock register at the close
of business on January 2, 2008 (the "Record Date") are entitled to notice of and
to vote at the Annual Meeting. At the close of business on the Record Date, we
had 56,008,474 common shares outstanding and entitled to vote and 24,275,960
shares of Series A Convertible Preferred Stock outstanding and entitled to vote.
Each common share is entitled to one vote on each matter properly brought before
the Annual Meeting. Each share of Series A Convertible Preferred Stock is
entitled to vote on all matters with holders of the common stock. Each Series A
Convertible Preferred Stock is entitled to one vote per share. Each share of
Series A Convertible Preferred Stock is convertible, at the option of the holder
and subject to a 65 day written notice to the company, at any time after the
date of the issuance into one share of fully paid and non-assessable share of
common stock.
QUORUM
To conduct the business of the Annual Meeting, we must have a quorum. This means
the holders of a majority of the outstanding shares entitled to vote, which
includes our common stock and Series A Convertible Preferred Stock, must be
represented at the Annual Meeting, present either by proxy or in person.
VOTES NEEDED
The nominees for directors receiving a plurality of the votes cast in person or
by proxy at the Annual Meeting shall be elected. There are no cumulative voting
rights with respect to the election of directors. Approval to amend our Articles
of Incorporation to increase the number of authorized common stock to
750,000,000 shares requires the affirmative vote of the majority of the common
stock entitled to vote and the affirmative vote of a majority of the preferred
stock entitled to vote. Approval to amend our Articles of Incorporation to
include a provision for shareholder action in lieu of a meeting by non-unanimous
written consent requires the affirmative vote of the majority of the shares
entitled to vote, which includes our common and preferred stock. Ratification of
the appointment of Child, Van Wagoner & Bradshaw, PLLC, independent certified
public accountants, as our independent auditors for the fiscal year ending May
31, 2008, requires that the number of votes cast for this item exceeds the
number of votes cast against this item at the Annual Meeting. If the Annual
Meeting is adjourned, your shares may be voted by the proxy holder on the new
meeting date unless you have revoked your proxy.
Abstentions and broker non-votes (which occurs when a broker returns a proxy but
does not have the authority to vote on a specific proposal) will be counted as
present for purposes of determining the presence or absence of a quorum with
regard to any proposal at the Annual Meeting, but will have no effect on the
election of directors or ratification of Child, Van Wagoner & Bradshaw, PLLC, as
our independent certified public accountants. Abstentions and broker non-votes
will have the effect of votes against the amendments to our Articles of
Incorporation.
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VOTING OF PROXIES AND SOLICITATION
All valid proxies received prior to the meeting will be voted. All shares
represented by a proxy will be voted, and where a shareholder specifies a choice
with respect to any matter to be acted upon, the shares will be voted in
accordance with the specification so made. If no choice is indicated on the
proxy, the shares will be voted in favor of the approval of the actions proposed
and in the discretion of the proxy holders on any other matter that comes before
the Annual Meeting. A stockholder giving a proxy has the power to revoke his or
her proxy, at any time prior to the time it is voted, by delivery to our
secretary of either a written instrument revoking the proxy or a duly executed
proxy with a later date, or by attending the Annual Meeting and voting in
person.
We will pay the expenses of soliciting proxies. In addition to the use of the
mails, proxies may be solicited by our directors, officers or employees
personally, by telephone, or by facsimile and we may reimburse brokerage firms
and other persons holding shares in the company in their name or those of their
nominees for their reasonable expenses in forwarding soliciting materials to
beneficial owners.
ATTENDING IN PERSON
Only shareholders, their proxy holders, and Ingen's guests may attend the Annual
Meeting.
If you hold your shares through someone else, such as a bank or a broker, send
proof of your ownership to Scott R. Sand, Chairman at 35193 Avenue "A", Suite-C,
Yucaipa, California 92399, or you may bring proof of ownership with you to be
admitted to the Annual Meeting. Acceptable proof could include an account
statement showing that you owned Ingen shares on the Record Date.
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS, AND CERTAIN BENEFICIAL OWNERS
As of the Record Date, 56,008,474 shares of common stock and 24,275,960 shares
of Series A Convertible Preferred Stock were issued and outstanding. The
following table sets forth, as of such date, certain information regarding
beneficial ownership of our shares by (i) each person who is known by us to
beneficially own more than 5% of our voting securities; (ii) by each of our
officers and directors, and (iii) by all of our officers and directors as a
group.
Beneficial ownership has been determined in accordance with Rule 13d-3 of the
Exchange Act. Under this Rule, beneficial ownership includes voting or
investment power over a security. Further, securities are deemed to be
beneficially owned by a person if the person has the right to acquire beneficial
ownership within 60 days of the date of the table pursuant to options, warrants,
conversion privileges or other rights.
Except as otherwise indicated in the footnotes, all information with respect to
share ownership and voting and investment power has been furnished to us by the
persons listed. Except as otherwise indicated in the footnotes and subject to
applicable community property laws, each person listed has sole voting and
investment power with respect to the shares shown as beneficially owned.
- ------------------------- ----------------------------- ------------------------------- ---------------------------------
Name and Address Shares of Common Shares of Series A Total Percentage of
of Beneficial Owner(1) Stock Beneficially Convertible Voting Power (4)
Owned (2) Preferred Stock
Beneficially Owned (3)
- ------------------------- ----------------------------- ------------------------------- ---------------------------------
Number % Number % Number %
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Scott R. Sand, CEO,
Chairman, Director 2,285,796 4.1% 20,275,960 83.5% 22,561,756 28.1 %
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Thomas Neavitt, CFO,
Secretary 318,750 0.6% - - 318,750 0.4%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Yong Khoo Sin,
Director 100,000 0.2% - - 100,000 0.1%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
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- ------------------------- ----------------------------- ------------------------------- ---------------------------------
Name and Address Shares of Common Shares of Series A Total Percentage of
of Beneficial Owner(1) Stock Beneficially Convertible Voting Power (4)
Owned (2) Preferred Stock
Beneficially Owned (3)
- ------------------------- ----------------------------- ------------------------------- ---------------------------------
Number % Number % Number %
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Christopher A. Wirth,
Director 430,000 0.8% - - 430,000 0.5%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Curt A. Miedema,
Director 221,250 0.4% - - 221,250 0.3%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Stephen O'Hara, Director 215,000 0.4% - - 215,000 0.3%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
John Finazzo, Director 2,200,000 3.9% - - 2,200,000 2.7%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Brad Klearman, Director 110,000 0.2% - - 110,000 0.1%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Jeffrey Gleckman 3,000,000 5.4% 4,000,000 16.5% 7,000,000 8.7%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Salvatore Amato 2,592,823 4.6% - - 2,592,823 3.2%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
Xcel Associates, Inc. 5,139,766 9.2% - - 5,139,766 6.4%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
All officers and
directors as a group (8
persons) 5,880,796 10.5% 20,275,960 83.5% 26,156,756 32.6%
- ------------------------- --------------- ------------- ----------------- ------------- ----------------- ---------------
(1) Unless otherwise indicated, the address for each beneficial owner is 35193
Avenue "A", Suite-C Yucaipa, California 92399.
(2) Does not include the Series A Convertible Preferred Stock which is entitled
to vote on all matters with holders of common stock.
(3) Each share of Series A Convertible Preferred Stock is entitled to vote on
all matters with holders of the common stock. Each share of Series A Convertible
Preferred Stock is entitled to 1 vote per share. Each share of Series A
Convertible Preferred Stock is convertible, at the option of the holder and
subject to a 65 day written notice to the company, at any time after the date of
the issuance into one share of fully paid and non-assessable share of common
stock.
(4) This column includes the common stock and Series A Preferred Stock held by
each person. Applicable percentages are based on 80,284,434 common and preferred
shares outstanding on the Record Date.
ITEM 1:
ELECTION OF DIRECTORS
The board of directors has nominated and recommends a vote for election of its
current directors, Scott R. Sand, Yong Sin Khoo, Christopher A. Wirth, Curt A.
Miedema, Stephen O'Hara, John Finazzo and Brad Klearman at the Annual Meeting.
The enclosed Proxy will be voted FOR the persons nominated unless otherwise
indicated. If the nominee(s) are unable to serve or should decline to do so, the
proxy will be voted by such person as shall be designated by the Board of
Directors to replace such nominee. The Board of Directors has no reason to
believe that any substitute nominee or nominees will be required.
Under our bylaws, the number of directors constituting the board shall be at
least one and not more than seven. The number may be fixed from time to time by
the action of the shareholder or of the directors. The nominees elected as
directors will hold office until the next annual meeting of shareholders or
until their successors are elected and qualified, or until their earlier death,
resignation or retirement. Officers are appointed by the Board of Directors and
serve at the discretion of the board. Set forth below for the nominees are their
ages, their positions in the company and short biographies.
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The information set forth below as to the nominees for director has been
furnished to us by the nominees.
DIRECTORS AND EXECUTIVE OFFICERS
NAME AGE POSITION HELD AND TENURE
- ---- --- ------------------------
Scott R. Sand 49 Chairman, Chief Executive Officer and Director
(March 29, 2004 to present)
Thomas J. Neavitt 76 Secretary and Chief Financial Officer (March 29,
2004 to present)
Yong Sin Khoo 43 Director (March 29, 2004 to present)
Christopher A. Wirth 52 Director (March 29, 2004 to present)
Curt A. Miedema 50 Director (March 29, 2004 to present)
Stephen O'Hara 54 Director (September 22, 2005 to present)
John Finazzo 42 Director (March 20, 2006 to present)
Brad Klearman 47 Director (December 14, 2007 to present)
The biographical information of our officers and directors is as follows:
SCOTT SAND, CEO & CHAIRMAN: Scott Sand has a diversity of experience in the
health care industry both domestic and abroad which spans more than 25 years.
His contributions and accomplishments have been published in the Los Angeles
Times and the Sacramento Tribune. He has been the recipient of recognition
awards by high honored factions such as the United States Congress and the State
Assembly, receiving the highest Commendation in the County of Los Angeles for
his contributions to health care. Mr. Sand served as the CEO of Medcentrex, Inc.
for 10 years in the 1990's, a medical service provider to more than 600
physicians nationwide. He served as the Director of Sales & Marketing for Eye
Dynamics, Inc. for 7 years, a public company and manufacturer of Video ENG
systems; assisting in their technology upgrades and design for VNG and
increasing their sales each quarter during that time. He resigned from Eye
Dynamics, Inc. to accept the full-time position as CEO & Chairman of Ingen
Technologies, Inc. in 2004. Mr. Sand received a Bachelor of Science Degree in
Computer Science from California State University and an MBA from California
State University.
THOMAS J. NEAVITT, SECRETARY AND CFO: Thomas J. Neavitt has held a variety of
executive level positions for product and service based corporations over the
last 40 years. Mr. Neavitt's experience includes finance, marketing, business
development, sales, and collections. Additionally, Mr. Neavitt has experience in
real estate as both a broker and developer. Mr. Neavitt served in the U.S. Navy.
Mr. Neavitt left the Navy and became President and CEO of Penn-Akron Corporation
and its wholly owned subsidiary Eagle Lock Corporation. He was instrumental in
the successful acquisition of this company. Mr. Neavitt also served as President
of TR-3 Chemical Corporation for nearly 20 years who sold products throughout
the U.S. and some foreign countries. Mr. Neavitt now serves as a consultant to
various corporations throughout the country. Mr. Neavitt has been President of
AmTech Corporation, which manufactures stabilizing systems, for the past 5
years.
YONG SIN KHOO, DIRECTOR: Yong Sin Khoo lives in Singapore. He worked as an
engineer for 12 years and a further 5 years managing a portfolio of business
assets. He has been a deputy director in the Strategic Investments Division of
Singapore Power Limited since 2001. He has extensive experience as a logistics
systems engineer in the military and retail engineering. In addition, he has
significant experience in the area of mergers & acquisitions. In 1984, he was
awarded a scholarship by the Singapore government to pursue electrical
engineering at the University of Queensland, Australia. In the area of
information technology, he was responsible for managing Shell Singapore's y2k
project for the marketing function. Another IT pioneering effort was the use of
artificial intelligence to develop diagnostic tools for maintenance support for
the Army's radar systems. His current business interests are focused in the
areas of biomedical and environmental technologies. He has a Bachelor's Degree
in Electrical Engineering from the University of Queensland.
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CHRISTOPHER A. WIRTH, DIRECTOR: Christopher A. Wirth has over 20 years of
business consulting, finance, construction and real estate development
experience. He brings a working knowledge of finance and the mechanics of
syndications, construction planning and startup business expansion skills. Mr.
Wirth has knowledge and experience in SEC, HUD, SBA, USDA, banking and
businesses. He attended San Bernardino Valley College and takes continuing
education courses. He continues to consult to environmental and renewable energy
firms, and has worked as a HUD YouthBuild construction instructor. Mr. Wirth has
previous medical background training through his service in the U.S. Navy, from
1973 to 1977, as a Hospital Corpsman. Mr. Wirth has been a director and
spokesperson for AgriHouse, an urban agricultural technology company, since
2000.
CURT A. MIEDEMA, DIRECTOR. For the last 5 years, Mr. Miedema has been
self-employed with his own investment company called Miedema Investments. Mr.
Miedema graduated from Unity Christian High School in 1975 and attended
Davenport College for 1 year thereafter.
STEPHEN O'HARA, MD, DIRECTOR. The Consumer's Research Council of America, an
independent organization based in Washington, D.C. recently ranked Dr. Stephen
O'Hara among the top two percent of clinical neurologists nationwide. He
attended Stanford University and graduated in 1975 with a Bachelor of Science
degree in biology and performed honors research in the laboratory of Dr. Donald
Kennedy, who subsequently served as President of Stanford University. Dr. O'Hara
obtained his M.D. from Northwestern University in 1979, where he became
president of the Northwestern chapter of the American Medical Student
Association, then proceeded to complete his residency in neurology at UCLA in
1983. Dr. O'Hara is board-certified in neurology through the American Board of
Psychiatry and Neurology. Since completing his residency, Dr. O'Hara has
continued to teach the residents in the neurology program at UCLA while
maintaining a private practice in Century City, California for the past 16 years
with an emphasis on geriatric neurology and disorders of balance.
JOHN J. FINAZZO, MD, DIRECTOR. Dr. Finazzo graduated from the University of
California, Riverside in 1986 with a degree in Bio-Medical Sciences. He received
his MD degree from the UCLA School of Medicine in 1989. He completed a two-year
Surgical Internship at UCLA Center for Health Science in 1991. He then completed
residency in Otolaryngology - Head and Neck Surgery at the State University of
New York Health Science Center, Brooklyn in 1995. He is Board Certified in
Otolaryngology (since 1996). Dr. Finazzo has been in private practice in the
Palm Springs area for eight years. He is also on the surgical staffs at the
Desert Regional Medical Center, the John F. Kennedy Medical Center and the
Eisenhower Medical Center. Dr. Finazzo is also Section Chief - Division of
Otolaryngology at Eisenhower Medical Center. He resides in Palm Springs with his
wife of 15 years. He is active in clinical research for the treatment of acute
sinusitis.
BRAD KLEARMAN, DIRECTOR. Mr. Klearman is a 27-year veteran executive
salesman/consultant, business owner, and entrepreneur. Mr. Klearman has a career
specializing in negotiating with medical manufacturers and distributors on
multi-million dollar projects that continues to have far-reaching implications
within the medical industry. Mr. Klearman's current accomplishments include the
recently secured exclusive placement of Ingen Technologies respiratory products
for the largest respiratory manufacturing company in the world. From 2001 -
2007, Mr. Klearman served as Executive Vice President of Medigroup Physicians
Services in St. Louis, Missouri, developing multiple relations with a myriad of
medical distributors and medical manufacturers servicing the United States. From
1998 - 2001, he served as Regional Manager of King Systems, Indiana and
represented manufacturers of the highest quality anesthesia apparatus in the
country and was responsible for making the company's third largest region into
the company's top-selling number one region within three years. From 1996 -
1998, he served as Vice President of Two Rivers Medical, St. Louis, MO, a major
contributor to development of the company with sole purpose of distributing
medical products, equipment and pharmaceuticals to the Federal Government
worldwide. From 1982-1996, Mr. Klearman worked with Midwest Medical Supply Co.,
Inc. in St. Louis, MO, where he began as Territory Manager in an area which was
grossing 70-thousand dollar per month and within two years, brought that average
up to $210,000 per month. In 1986, he was promoted to Executive Vice President
of the company and created a division that served the Federal Government world
wide. This division averaged 1 million dollars per month in sales at a 23%
profit margin, making it by far the most profitable division of the company
which was known as a regional distributor to hospitals, long term care
facilities and physician offices. From 1978 - 1982, Mr. Klearman attended
Columbia College in Columbia, MO, with undergraduate studies in business and
marketing.
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MEETINGS OF THE BOARD OF DIRECTORS
The size of the board of directors for the coming year is seven. Pursuant to
Rule 10A-3 promulgated under the Exchange Act, Scott R. Sand does not qualify as
independent director due to his affiliation with us as an officer. Our Board of
Directors has determined that Yong Sin Khoo, Curt A. Miedema, Stephen O'Hara,
John Finazzo and Brad Klearman are "independent," as that term is defined by the
NASDAQ Stock Market.
During the fiscal year ended May 31, 2007, the Board of Directors held 1 annual
meeting, and took action by unanimous written consent on approximately 11
occasions. No directors attended fewer than 75% of all meetings of the board of
directors during the 2007 fiscal year.
Directors standing for election are expected to attend the Annual Meeting.
COMMITTEES
We do not have separately designated compensation committee and director and
officer compensation decisions are made by the full Board of Directors. The
Board has complete authority for establishing executive officer and director
compensation and does not delegate any authority with respect to such
compensation. Our Chief Executive Officer and Chairman is also a member of the
Board and therefore, has the opportunity to discuss compensation with the Board
and to vote to determine compensation. We have not engaged any compensation
consultants in determining or recommending the amount or form of executive and
director compensation.
We also do not have a nominating committee and do not have formal written
charter provisions or policies addressing the nominations process. Director
nominations are made by the Board of Directors as a whole. We do not have a
formal policy with regard to the consideration of any director candidates
recommended by security holders. The entire Board will consider any person
nominated by security holders and presented to the board that is reputable and
that has experience in the industry in which we operate or business experience
in general. The Board will also consider the extent of any nominee's educational
background in deciding whether to nominate a person for a director position. We
do not pay any fee to third parties to help the Board to nominate or evaluate
director candidates and the Board does not obtain such services from any third
party. We have elected not to have a compensation committee or nominating
committee or formal policies at this time because of the limited size of our
operations, however, our Board of Directors intends to continually evaluate the
need for a compensation or nominating committee.
We do not have an audit committee and are not required to have one under Section
302 of Sarbanes-Oxley. Our financial matters and relationship with our
independent auditors is overseen by our two officers, the CEO and Secretary-CFO.
The Board reviewed and discussed the audited financial statements for the fiscal
year ended May 31, 2007 with management, and members of the Board have discussed
with our auditors the matters required by SAS 61. Members of the Board have
reviewed written disclosures and a letter from the independent accountants
required by Independence Standards Board Standard No. 1 and discussed with the
independent accountants, the independent accountants' independence. Based on
such review and discussions, the Board recommended that the financial statements
be included in our annual report on Form 10-KSB for the fiscal year ended May
31, 2007.
The Board of Directors consists of Scott R. Sand, Yong Sin Khoo, Christopher A.
Wirth, Curt A. Miedema, Stephen O'Hara, John Finazzo and Brad Klearman
(appointed December 14, 2007).
AUDIT COMMITTEE FINANCIAL EXPERT
We do not have an audit committee and therefore do not have an audit committee
financial expert.
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SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders who wish to communicate with the Board of Directors or a particular
director may send a letter to Scott R. Sand, Chairman at 35193 Avenue "A",
Suite-C, Yucaipa, California 92399. The mailing envelope should contain a clear
notation indicating that the enclosed letter is a "Shareholder-Board
Communication" or "Shareholder-Director Communication." All such letters must
identify the author as a shareholder and clearly state whether the intended
recipients are all members of the board or just certain specified individual
directors. We will make copies of all such letters and circulate them to the
appropriate director or directors.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our officers, directors
and persons who own more than 10% of a class of our securities registered under
Section 12(g) of the Exchange Act to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than 10% stockholders
are required by SEC regulation to furnish us with copies of all Section 16(a)
forms they file. Based solely upon a review of copies of the forms furnished to
us and information involving securities transactions of which we are aware, we
are aware of officers, directors and holders of more than 10% of the outstanding
common stock of the company who failed to file reports required by Section 16(a)
of the Exchange Act during the last two fiscal years. To our knowledge, at May
31, 2007, Scott Sand, an officer and director of the company, Stephen O'Hara,
Curt A. Miedema, John J. Finazzo, Yong Sin Khoo, and Christopher A. Wirth,
directors of the company, and Thomas Neavitt, an officer of the company, and
Jeffrey Gleckman, a greater than 10% holder of the company's common stock during
the last two fiscal years, did not file required Section 16(a) forms.
Subsequent to the fiscal year ended May 31, 2007, Scott Sand filed a Form 5
reporting his initial holdings and nine transactions, Stephen O'Hara filed a
Form 5 reporting his initial holdings and three transactions, Curt A. Miedema
filed a Form 5 reporting his initial holdings and two transactions, John J.
Finazzo filed a Form 5 reporting his initial holdings and two transactions, Yong
Sin Khoo filed a Form 5 reporting his initial holdings and three transactions,
and Christopher A. Wirth filed a Form 5 reporting his initial holdings and four
transactions.
DIRECTOR AND EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual and other compensation paid by us to
Scott R. Sand, the only member of our management paid monthly compensation in
the last two fiscal years.
Summary Compensation Table
--------------------------
- -------------------- ------- ---------- --------- --------------- --------- --------------- --------------- ----------- ------------
Name and Principal Year Salary Bonus Stock Awards Option Non-Equity Non-Qualified All Other Total
Position ($) ($) ($) Awards Incentive Deferred Compen- ($)
($) Plan Comp. ($) Comp. Sation
Earnings ($) ($)
- -------------------- ------- ---------- --------- --------------- --------- --------------- --------------- ----------- ------------
Scott R. Sand, 2007 $116,667 - $17,301(2) - - - - $133,968
Chairman and
Chief Executive ------- ---------- --------- --------------- --------- --------------- --------------- ----------- ------------
Officer(1) 2006 $60,000 - - - - - $60,000
- -------------------- ------- ---------- --------- --------------- --------- --------------- --------------- ----------- ------------
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(1)We entered into an employment agreement with Mr. Sand effective as of October
1, 2006. This agreement calls for an annual salary of $200,000 and 300,000
shares of our restricted stock to be issued to Mr. Sand each year of the
five-year term of the agreement.
(2) Mr. Sand was issued 300,000 shares of restricted common stock valued at
$9,000 for director's services. Mr. Sand was issued 300,000 shares of restricted
common stock in September 2006 under the terms of his employment agreement. This
stock was valued at $0.04 per share (a total of $12,000). The value of this
issuance is being amortized over a one-year period. We expensed $8,301 of this
$12,000 as of May 31, 2007.
There were no options granted to executive officers or directors during fiscal
year 2007.
DIRECTOR COMPENSATION
Set forth below is information regarding compensation paid to each director
during fiscal year 2007.
- --------------------- ------------ ------------- -------------- --------------------- ------------------ ------------- -------------
Name Fees Earned Stock Awards Option Awards Non-Equity Incentive Change in Pension All Other Total ($)
or Paid in ($) ($) Plan Compensation ($) Value and Compensation
Cash ($) Non-Qualified ($)
Deferred
Compensation
Earnings
- --------------------- ------------ ------------- -------------- --------------------- ------------------ ------------- -------------
Scott R. Sand, - 9,000(1) - - - - 9,000(1)
Chairman
- --------------------- ------------ ------------- -------------- --------------------- ------------------ ------------- -------------
Curt A. Miedema - 3,000 - - - - 3,000
- --------------------- ------------ ------------- -------------- --------------------- ------------------ ------------- -------------
Christopher A. Wirth - 3,000 - - - - 3,000
- --------------------- ------------ ------------- -------------- --------------------- ------------------ ------------- -------------
Stephen O'Hara - 3,000 - - - - 3,000
- --------------------- ------------ ------------- -------------- --------------------- ------------------ ------------- -------------
John Finazzo - 3,000 - - - - 3,000
- --------------------- ------------ ------------- -------------- --------------------- ------------------ ------------- -------------
Yong Sin Khoo - 3,000 - - - - 3,000
- --------------------- ------------ ------------- -------------- --------------------- ------------------ ------------- -------------
(1) Reported in Summary Compensation table above.
Our Directors (with the exception of our Chairman) are paid $500 for each
Directors meeting that is actually held (as opposed to actions taken by our
Board of Directors by Resolution and Waiver of Notice) and Consent to Action
taken at a special Board of Directors' meeting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 25, 2007, Mr. Sand was issued 8,333,333 shares of restricted Class A
Preferred Shares. This stock was issued in exchange for retirement of $200,000
in debt owed by the company to Mr. Sand. After the issuance of this stock there
still remains $47,697.61 in unpaid executive compensation to Mr. Sand.
As of August 31, 2007, the Company owed Mr. Sand accrued salary of $163,356
under his employment contract and also owes him $92,829 in loans made to the
Company. The bulk of the loan balance due was the result of business expenses
paid by Mr. Sand on his personal credit cards. The company will record interest
in the amount of finance charges on the credit cards. The related accrued
interest of $4,988 is included in the note balance as of August 31, 2007.
During the fiscal year ending May 31, 2007, Mr. Sand received 4,444,444 shares
of Series A Preferred for satisfaction of accrued compensation of $95,311 and
for payment of $4,689 of the loan amount owed to him.
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REQUIRED VOTE
Assuming a quorum is present, the affirmative vote of a plurality of the votes
cast on this Item at the Annual Meeting is required for the election of
directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT. Proxies solicited by the Board of
Directors will be so voted unless shareholders specify otherwise on the
accompanying Proxy.
ITEM 2:
TO APPROVE AN AMENDMENT TO OUR ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 100,000,000 SHARES TO 750,000,000 SHARES
Our Articles of Incorporation currently authorize the issuance of 100,000,000
shares of common stock. At the Record Date, 56,008,474 shares of common stock
were issued and outstanding and 24,275,960 shares of Series A Convertible
Preferred Stock were issued and outstanding. Each share of Series A Convertible
Preferred Stock is convertible, at the option of the holder and subject to a 65
day written notice to us, at any time after the date of the issuance into one
share of fully paid and non-assessable share of common stock. Further, we issued
options to purchase 1,000,000 shares of Series A Preferred Stock to Peter Wilke,
our general counsel on January 18, 2007. The option price is $0.04 and the term
is five years.
The general purpose and effect of the amendment to the Articles of Incorporation
is to authorize 650,000,000 additional shares of common stock. A copy of the
proposed amendment to our Articles of Incorporation reflecting the increase to
our authorized shares is attached hereto as Exhibit A. The Board of Directors
believes it is in our best interest to have additional shares of common stock
authorized for general corporate purposes, including acquisitions, equity
financings and grants of stock and stock options. Specifically, we must increase
the authorized shares to fulfill our obligations under various convertible
debenture agreements as set forth below. Other than set forth below, there are
no present plans for significant future issuances.
CALLABLE SECURED CONVERTIBLE NOTES AND WARRANTS
July 25, 2006 Securities Purchase Agreement
On July 25, 2006, we entered into a Securities Purchase Agreement with New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
Ltd. and AJW Partners, LLC (the "Investors") and agreed to issue and sell (i)
callable secured convertible notes up to $2 million, and (ii) warrants to
acquire an aggregate of 20 million shares of our common stock. The notes bear
interest at 6% per annum (15% "default interest" per annum), and mature three
years from the date of issuance. The notes are convertible into our common stock
at the applicable percentage of the average of the lowest three trading prices
for our shares of common stock during the twenty trading day period prior to
conversion. The applicable percentage is 50%; however, the percentage shall be
increased to: (i) 55% in the event that a Registration Statement is filed within
thirty days from July 25, 2006, and (ii) 60% in the event that the Registration
Statement becomes effective within one hundred and twenty days from July 26,
2006. Since we did not have a Registration Statement become effective within one
hundred and twenty days of July 25, 2006, the applicable percentage is 50%.
Under the agreement, the conversion price of the secured convertible notes will
be adjusted in the event we issue securities below the fixed conversion price
and may be adjusted in certain circumstances such as merger, consolidation or if
we pay a stock dividend. At May 31, 2007, only $1.5 million of the convertible
notes were funded.
We received the first tranche of $700,000 on July 27, 2006, less issuance costs
of $295,200, the second tranche of $600,000, less issuance costs of $13,000 on
August 30, 2006, and the third tranche of $200,000 was received on January 24,
2007.
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We may prepay the notes in the event that no event of default exists, there are
a sufficient number of shares available for conversion, and the market price is
at or below $0.10 per share. Prepayment of the convertible notes is to be made
in cash equal to 140% of the outstanding principal and accrued interest (for
prepayment occurring after the 60th day following the issue date of the notes).
In addition, in the event that the reported average daily price of the common
stock for each day of the month ending on any determination date is below $0.10,
we may repay a portion of the outstanding principal amount of the notes equal to
101% of the principal amount divided by thirty-six plus one month's interest and
this will stay all conversions for the month.
Events of default under the notes generally include failure to repay the
principal or interest when due, failure to issue shares of common stock upon
conversion by the holder, failure to timely file a registration statement or
have such registration statement declared effective, breach of certain covenants
or representation or warranty in the Securities Purchase Agreement or related
convertible note, the assignment or appointment of a receiver to control a
substantial part of our property or business, a money judgment, writ or similar
process entered or filed against us in excess of $50,000 which continues for 20
days unless consented to by the holder, the commencement of a bankruptcy,
insolvency, reorganization or liquidation proceeding against us without stay or
the delisting of our common stock. Upon the occurrence of an event of default,
the note holders may by written notice demand repayment in an amount equal to
the greater of (i) the then outstanding principal amount of the convertible
notes, together with unpaid interest and any outstanding penalties times 140% or
(ii) the "parity value" of the default sum, where parity value means (a) the
highest number of shares of common stock issuable upon conversion of the default
sum, treating the trading day immediately preceding the prepayment date as the
"conversion date" for the purpose of determining the lowest applicable
conversion price (unless the event of default is a result of a breach in
reference to a specific conversion date), multiplied by (b) the highest closing
price for the common stock during the period beginning on the date of first
occurrence of the event of default and ending one day prior to the prepayment
date. In addition, we granted the Investors a security interest in substantially
all of our assets and intellectual property pursuant to a Security Agreement and
an Intellectual Property Security Agreement.
The warrants have an exercise price of $0.10 per share and expire after seven
years. The Investors 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 addition, the exercise price of the
warrants will be adjusted in the event we issue common stock at a price below
market, with the exception of any securities issued as of the date of the
warrants, certain issuances under our employee stock plans, or shares issued
upon exercise of the warrants.
The Investors have contractually agreed to restrict their ability to convert the
notes and exercise the warrants and receive shares of our common stock so that
the number of shares of our common stock held by them and their affiliates after
such conversion or exercise does not exceed 4.99% of the then issued and
outstanding shares of our common stock.
Without the prior written consent of a majority-in-interest of the Investors,
subject to certain exceptions as set forth in the agreement, we may not
negotiate or contract with any party to obtain additional equity financing
(including debt financing with an equity component) that involves (i) the
issuance of common stock at a discount to the market price of the common stock
on the date of issuance (taking into account the value of any warrants or
options to acquire common stock issued in connection therewith) or (B) the
issuance of convertible securities that are convertible into an indeterminate
number of shares of common stock or (C) the issuance of warrants during the
lock-up period beginning on the July 25, 2006 and ending on the later of (i) two
hundred seventy (270) days from July 25, 2006 and (ii) one hundred eighty (180)
days from the date the registration statement is declared effective. In
addition, subject to certain exceptions as set forth in the agreement, we agreed
that we would not conduct any equity financing (including debt with an equity
component) during the period beginning on July 25, 2006 and ending two (2) years
after the end of the above lock-up period unless we have first provided to each
Investor an option to purchase its prorata share (based on the ratio of each
Investor's purchase under the Securities Purchase Agreement) of the securities
being offered in any proposed equity financing. We must provide each Investor
written notice describing any proposed equity financing at least 20 business
days prior to the closing and the option must be extended to each Investor for
15 days following delivery of the notice.
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We agreed to file a registration statement for the shares underlying the notes
and the warrants within thirty days of closing, to be declared effective within
120 days of closing. Because the required registration statement was not
effective by the due date, we may be declared to be in default under the
agreement. Further, per the agreement, we are subject to liquidated damages in
amount of 0.02% of the outstanding principal amount of the notes per month,
payable in cash or common stock, until the registration is effective.
We also agreed to increase our number of authorized shares of common stock from
100 million to 500 million within thirty days of the agreement. From this
reserved amount, we are required to have a number of common shares reserved for
issuance equal to no less than two times the number issuable upon conversion of
the notes and the warrants (based on the conversion price of the notes and the
exercise price of the warrants in effect from time to time). If the amount
reserved is below the amount to be reserved for the Investors under the
agreement, we are required to take all corporate action necessary to authorize
and reserve a sufficient number of shares. Under the agreement, if we fail to
obtain the shareholder approval necessary to increase the number of authorized
shares within thirty days following the date which the number of required
reserve shares exceeds the authorized and reserved shares, we may be noticed of
an event of default and required to pay the Investors liquidated damages of
three (3) percent of the outstanding amount of the notes per month plus accrued
and unpaid interest on the notes, prorated for partial months, in cash or shares
at the Investor's option. As set forth below, we currently do not have enough
shares reserved under the agreement.
March 15, 2007 Securities Purchase Agreement
On March 15, 2007, we entered into a Securities Purchase Agreement with New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
Ltd. and AJW Partners, LLC (the "Investors") and agreed to issue and sell (i)
callable secured convertible notes up to $450,000, and (ii) warrants to acquire
an aggregate of 9 million shares of our common stock. The callable secured
convertible notes (4 notes, $450,000 total loan principal; 3 year term; 6%
annual interest, 15% annual "default interest") are convertible into shares of
our common stock at a variable conversion price based upon the applicable
percentage of the average of the lowest three trading prices for the common
stock during the twenty trading day period prior to conversion. The "Applicable
Percentage" means 50%; provided, however, that the Applicable Percentage shall
be increased to (i) 55% in the event that a Registration Statement is filed
within thirty days of the required filing and (ii) 60% in the event that the
Registration Statement becomes effective within ninety days from the required
filing. Under the agreement, the conversion price of the secured convertible
notes will be adjusted in the event we issue securities below the fixed
conversion price and may be adjusted in certain circumstances such as merger,
consolidation or if we pay a stock dividend.
We received the first tranche of $120,000 on March 15, 2007, less issuance costs
of $20,000, the second tranche of $110,000, less issuance costs of $10,000 on
April 16, 2007, and the third tranche of $110,000 was received on May 15, 2007,
less issuance costs of $10,000. The final tranche of $110,000 was received in
June 2007, after the close of the fiscal year ended May 31, 2007.
We may prepay the notes in the event that no event of default exists, there are
a sufficient number of shares available for conversion, and the market price is
at or below $0.10 per share. Prepayment of the convertible notes is to be made
in cash equal to either (i) 120% of the outstanding principal and accrued
interest for prepayments occurring with 30 days following the issuance of the
notes, (ii) 130% of the outstanding principal and accrued interest for
prepayment occurring between 31 and 60 days following the issue dates of the
notes; and (iii) 140% of the outstanding principal and accrued interest for
prepayment occurring after the 60th day following the issue date of the notes.
In addition, in the event that the average daily price of the common stock for
each day of the month ending on any determination date is below $0.10, we may
repay a portion of the outstanding principal amount of the notes equal to 101%
of the principal amount divided by thirty-six plus one month's interest and this
will stay all conversions for the month.
Events of default under the notes generally include failure to repay the
principal or interest when due, failure to issue shares of common stock upon
conversion by the holder, failure to timely file a registration statement or
have such registration statement declared effective, breach of certain covenants
or representation or warranty in the Securities Purchase Agreement or related
convertible note, the assignment or appointment of a receiver to control a
substantial part of our property or business, a money judgment, writ or similar
process entered or filed against us in excess of $50,000 which continues for 20
days unless consented to by the holder, the commencement of a bankruptcy,
insolvency, reorganization or liquidation proceeding against us without stay, or
the delisting of our common stock. Upon the occurrence of an event of default,
the note holders may demand repayment in an amount equal to the greater of (i)
the then outstanding principal amount of the convertible notes, together unpaid
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interest and any outstanding penalties times 140% or (ii) the "parity value" of
the default sum, where parity value means (a) the highest number of shares of
common stock issuable upon conversion of the default sum, treating the trading
day immediately preceding the prepayment date as the "conversion date" for the
purpose of determining the lowest applicable conversion price (unless the event
of default is a result of a breach in reference to a specific conversion date),
multiplied by (b) the highest closing price for the common stock during the
period beginning on the date of first occurrence of the event of default and
ending one day prior to the prepayment date. In addition, we granted the
Investors a security interest in substantially all of our assets and
intellectual property pursuant to a Security Agreement and an Intellectual
Property Security Agreement.
We issued seven year warrants to purchase 9,000,000 shares of our common stock
at an exercise price of $0.06 per share. The Investors 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
addition, the exercise price of the warrants will be adjusted in the event we
issue common stock at a price below market, with the exception of any securities
issued as of the date of the warrants, certain issuances under our employee
stock plans, or shares issued upon exercise of the warrants. Under the terms of
the callable secured convertible notes and the related warrants, the callable
secured convertible notes and the warrants are exercisable by any holder only to
the extent that the number of shares of common stock issuable pursuant to such
securities, together with the number of shares of common stock owned by such
holder and its affiliates (but not including shares of common stock underlying
unconverted shares of callable secured convertible notes or unexercised portions
of the warrants) would not exceed 4.99% of the then outstanding common stock.
Per the agreement, we must file a registration statement covering two times the
number of shares underlying the notes and the shares underlying the warrants,
within 30 days of written demand. A penalty of .02% of the outstanding principal
amount per month for each month will accrue if the registration is not effective
in ninety days from filing.
Without the prior written consent of a majority-in-interest of the Investors,
subject to certain exceptions as set forth in the agreement, we may not
negotiate or contract with any party to obtain additional equity financing
(including debt financing with an equity component) that involves (i) the
issuance of common stock at a discount to the market price of the common stock
on the date of issuance (taking into account the value of any warrants or
options to acquire common stock issued in connection therewith) or (B) the
issuance of convertible securities that are convertible into an indeterminate
number of shares of common stock or (C) the issuance of warrants during the
lock-up period beginning on the March 15, 2007 and ending one hundred eighty
(180) days from March 15, 2007. In addition, subject to certain exceptions as
set forth in the agreement, we agreed that we will not conduct any equity
financing (including debt with an equity component) during the period beginning
on March 15, 2007 and ending two (2) years after the end of the above lock-up
period unless we have first provided to each Investor an option to purchase its
prorata share (based on the ratio of each Investor's purchase under the
Securities Purchase Agreement) of the securities being offered in any proposed
equity financing and the option must be extended to each Investor during the
15-day period following delivery of notice.
Subject to shareholder approval, we are required to have a number of common
shares reserved for issuance equal to no less than two times the number issuable
upon conversion of the notes and the warrants (based on the conversion price of
the notes and the exercise price of the warrants in effect from time to time).
If the amount reserved is below the amount to be reserved for the Investors
under the agreement, we are required to take all corporate action necessary to
authorize and reserve a sufficient number of shares. Under the agreement, if we
fail to obtain the shareholder approval necessary to increase the number of
authorized shares within thirty days following the date which the number of
required reserve shares exceeds the authorized and reserved shares, we may be
noticed of default and required to pay the Investors liquidated damages of three
(3) percent of the outstanding amount of the notes per month plus accrued and
unpaid interest on the notes, prorated for partial months in cash or shares at
the Investor's option.
On July 30, 2007, we issued a callable secured convertible note in the amount of
$110,000. This note was issued under the same terms as the 6% $450,000
Convertible Debt described above (the March 15, 2007 Securities Purchase
Agreement).
The foregoing is a general description of the securities purchase agreements and
related obligations, copies of the July 25, 2006 agreements were filed as
exhibits to our Current Report on Form 8-K, filed with the SEC on August 8, 2006
and copies of the March 15, 2007 agreements were filed as exhibits to our Form
10-KSB, filed with the SEC on August 29, 2007.
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$75,000 CONVERTIBLE DEBT
On June 7, 2006, we entered into an agreement with an accredited investor for
sale of a convertible debenture. We received proceeds of $75,000 from the sale
of the convertible debenture on June 7, 2006. The debenture is convertible at
any time within a three year period into 3,750,000 shares of common stock at
$0.02 per share. The debenture carries an interest rate of 6% per annum, which
is payable annually. In the event that the debenture is not converted to common
stock, any unpaid balance, including interest and the principal, becomes due on
May 31, 2009.
As set forth above, we have entered into convertible debenture agreements that
total $2,135,000. As of January 2, 2008, these notes were convertible into
141,083,334 shares of our common stock. This calculation is based on $2,060,000
of the notes convertible at a conversion price of $.015 (50% of the market price
of the average of the lowest three (3) trading prices for the common stock
during the twenty (20) trading day period prior to conversion) equaling
137,333,334 shares of common stock and 3,750,000 shares of common stock
underlying the $75,000 debenture. Additionally, the Investors were granted
options to purchase up to 29,000,000 shares of our common stock. Failure to
obtain stockholder approval to increase the number of authorized shares could
result in the noteholders commencing legal action against the company and
foreclosing on our assets to recover damages. Any such action would require the
company to curtail or cease operations. Further, we are also required to reserve
25,275,960 shares of common stock for conversion of the Series A Convertible
Preferred Stock and option. We also have authorized 20,000,000 shares of common
stock to be reserved under our January 2007 Non-Qualified Stock Plan. The
increase in authorized shares has been determined by the Board of Directors to
allow for these obligations and to provide for a sufficient amount of common
stock to support our expansion and future financing activities, if any. Other
than set forth in the above agreements, there are no present plans for
significant future issuances. When the Board of Directors deems it to be in the
best interest of the company and stockholders to issue additional shares of
common stock in the future from authorized shares, the Board of Directors
generally will not seek further authorization by vote of the stockholders,
unless such authorization is otherwise required by law or regulation.
The additional authorized shares of common stock could also have an
anti-takeover effect. If our Board of Directors desires to issue additional
shares in the future, such issuance could also dilute the voting power of a
person seeking control of us, thereby deterring or rendering more difficult a
merger, tender offer, proxy contest or an extraordinary corporate transaction
opposed by us.
RISKS RELATING TO OUR CURRENT FINANCING AGREEMENTS:
EVENTS OF DEFAULT UNDER OUR CONVERTIBLE DEBENTURES
As previously disclosed in our current reports on Form 8-K filed August 8, 2006,
and March 16, 2007, we entered a series of agreements to obtain financing during
the last 18 months. Under the transaction documents, we have committed various
acts and failed to timely perform other acts that constitute events of default
under the transaction documents. We have received assurance from counsel for the
investors that "You are not in default. We [the investors] have to put you into
default and we have not." There can be no assurance that the investors will not
declare a default in the future. Our stockholders should be aware that if the
investors provide written notice of default to us, then our liabilities would
increase dramatically due to the penalties, reset provisions, and other damages
specified in the transaction documents. The increase in liabilities attributed
to a notice of default under the transaction documents could exceed our current
market capitalization and affect negatively our financial condition The
debentures are collateralized by our assets and, in the event we are unable to
repay or restructure these debentures, there is no assurance that the holders of
the debentures will not institute legal proceedings to recover the amounts owed
including foreclosure on our assets.
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THE CONTINUOUSLY ADJUSTABLE CONVERSION PRICE FEATURE OF OUR CONVERTIBLE
DEBENTURES COULD REQUIRE US TO ISSUE A SUBSTANTIALLY GREATER NUMBER OF SHARES TO
THE HOLDERS, WHICH WILL CAUSE DILUTION TO OUR EXISTING STOCKHOLDERS.
Our obligation to issue shares upon conversion of our convertible securities
under the June 2006 and March 2007 agreements is essentially limitless.
The following table shows the effect on the number of shares issuable upon full
conversion ($2,060,000 aggregate principal)(without taking into account the
4.99% limitation or any interest, penalties, events of default or other amounts
under the notes), in event our common stock price declines by 25%, 50% and 75%
from the trading price at January 2, 2008.
PRICE DECREASES BY
- -------------------------- ---------------- ---------------- ---------------- ----------------
1/02/08 25% 50% 75%
- -------------------------- ---------------- ---------------- ---------------- ----------------
Common Stock Price(1) 0.03 0.0225 0.015 0.0075
- -------------------------- ---------------- ---------------- ---------------- ----------------
Conversion Price (2) 0.015 0.0113 0.0075 0.0038
- -------------------------- ---------------- ---------------- ---------------- ----------------
100% Conversion Shares 137,333,334 182,300,885 274,666,667 542,105,264
- -------------------------- ---------------- ---------------- ---------------- ----------------
(1) Represents the average of the lowest three (3) trading prices for the
common stock during the twenty (20) trading day period prior to January 2,
2008 as calculated pursuant to the agreements
(2) Assuming 50% applicable percentage
The issuance of shares upon conversion of the convertible debentures and
exercise of warrants may result in substantial dilution to the interests of
other stockholders since the holders of such securities may ultimately convert
and sell the full amount issuable on conversion. Although the holders of our
convertible debentures and warrants may not convert and/or exercise such
securities if such conversion or exercise would cause them to own more than
4.99% of our outstanding common stock, this restriction does not prevent them
from converting and/or exercising some of their holdings and then converting the
rest of their holdings. In this way, the holders of our convertible debentures
and warrants could sell more than this limit while never holding more than this
limit. There is no upper limit on the number of shares that may be issued which
will have the effect of further diluting the proportionate equity interest and
voting power of all holders of our common stock. In addition, the number of
shares of common stock issuable upon conversion of the outstanding convertible
debentures may increase if the market price of our stock declines. The sale of
these shares may adversely affect the market price of our common stock.
IF WE ARE REQUIRED FOR ANY REASON TO REPAY OUR OUTSTANDING CONVERTIBLE
DEBENTURES, WE WOULD BE REQUIRED TO DEPLETE OUR WORKING CAPITAL, IF AVAILABLE,
OR RAISE ADDITIONAL FUNDS. OUR FAILURE TO REPAY THE CONVERTIBLE DEBENTURES, IF
REQUIRED, COULD RESULT IN LEGAL ACTION AGAINST US, WHICH COULD REQUIRE THE SALE
OF SUBSTANTIAL ASSETS.
We have entered into convertible debenture agreements that total $2,135,000.
Unless sooner converted into shares of our common stock, we are required to
repay the convertible debentures. To do so, we would be required to use our
working capital, if any at that time, and/or raise additional funds. If we were
unable to repay the debentures when required, the debenture holders could
commence legal action against us to recover the amounts due. Any such action may
require us to curtail or cease operations.
REQUIRED VOTE
The affirmative vote of a majority of the common stock entitled to vote and a
majority of the preferred stock entitled to vote at the Annual Meeting is
required for approval of the increase in authorized common stock to 750,000,000
shares.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF AN
AMENDMENT TO OUR ARTICLES OF INCORPORATION TO INCREASE OUR AUTHORIZED COMMON
STOCK TO 750,000,000 SHARES. Proxies solicited by the Board of Directors will be
so voted unless shareholders specify otherwise on the accompanying Proxy.
ITEM 3:
TO APPROVE AN AMENDMENT TO OUR ARTICLES OF INCORPORATION
TO INCLUDE A PROVISION
FOR SHAREHOLDER ACTION IN LIEU OF A MEETING BY NON-UNANIMOUS WRITTEN CONSENT
Under Georgia Code, Section ss.14-2-704 and our bylaws, action required or
permitted to be taken by shareholders under Georgia law may be taken without a
meeting if the action is taken by all shareholders entitled to vote on the
action, or if so provided in the Articles of Incorporation, by persons who would
be entitled to vote at a meeting shares having voting power to cast not less
than the minimum number (or numbers in the case of voting by groups) of votes
that are necessary to authorize or take the action at a meeting at which all
shareholders entitled to vote were present and voted. Our Board of Directors has
determined that it is in our best interest to amend the Articles of
Incorporation to specifically provide that persons holding the voting power
required to effect certain actions may take action without a meeting. The effect
of this amendment is that shareholders holding the majority of voting power will
be able to taken action by written consent and without a formal meeting, subject
to any limitations in Georgia Code, our Articles or bylaws. This amendment will
allow shareholder action without the delay and expense of calling a meeting. The
Board believes that this provision will allow our shareholders to act more
efficiently with respect to any matters on which stockholder approval may be
necessary or appropriate. The proposed text of the amendment to the Articles for
this provision is set forth in Exhibit A.
REQUIRED VOTE
The affirmative vote of a majority of the votes entitled to vote on this Item at
the Annual Meeting is required for approval of an amendment to our Articles of
Incorporation to include a provision for shareholder action by non-unanimous
written consent.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR AN AMENDMENT TO OUR
ARTICLES OF INCORPORATION TO INCLUDE A PROVISION FOR SHAREHOLDER ACTION IN LIEU
OF A MEETING BY NON-UNANIMOUS WRITTEN CONSENT. Proxies solicited by the Board of
Directors will be so voted unless shareholders specify otherwise on the
accompanying Proxy.
ITEM 4:
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The firm of Child, Van Wagoner & Bradshaw, PLLC, independent certified public
accountants, has been appointed by the Board of Directors to serve as our
independent auditors for the fiscal year ended May 31, 2008.
Representatives of Child, Van Wagoner & Bradshaw, PLLC are not expected to be
present at the annual meeting.
As previously reported on Form 8-K dated February 19, 2007, as amended, we had a
change in our certifying accountant. In a letter dated February 19, 2007, our
Chief Executive Officer was notified by Spector & Wong, LLP, the auditors for
the last three years, to take steps to find another qualified member of the
PCAOB to review our interim filings, commencing with November 30, 2006. On
February 20, 2007, we entered into an agreement with Child, Van Wagoner &
Bradshaw, PLLC, a qualified member of the PCAOB, to review our interim filings,
commencing with November 30, 2006 and to audit our financial statements for the
year ending May 31, 2007. Our Board of Directors approved the change in auditors
during a board meeting on February 24, 2007.
A letter from Spector & Wong, LLP, dated February 26, 2007, addressing the
revised disclosures in the filing was filed as an Exhibit to the Form 8-K, as
amended on February 28, 2007. Spector & Wong, LLP's report on the company's
17
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financial statements for the fiscal years ended May 31, 2006 and 2005
respectively, and the company's interim financial statements for the quarter
ended August 31, 2006 included a disclosure of uncertainty regarding the
company's ability to continue as a going concern and did not include any adverse
opinion or qualification as to audit scope or accounting principles. The content
of the going concern qualification reads as follows:
The Company's consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
liabilities and commitments in the normal course of business. In the near
term, the Company expects operating costs to continue to exceed funds
generated from operations. As a result, the Company expects to continue to
incur operating losses and may not have sufficient funds to grow its
business in the future. The Company can give no assurance that it will
achieve profitability or be capable of sustaining profitable operations.
As a result, operations in the near future are expected to continue to use
working capital.
To successfully grow the individual segments of the business, the Company
must decrease its cash burn rate, improve its cash position and the
revenue base of each segment, and succeed in its ability to raise
additional capital through a combination of primarily public or private
equity offering or strategic alliances. The Company also depends on
certain contractors, and its sole employee, the CEO, and the loss of any
of those contractors or the employee, may harm the Company's business.
There were no disagreements with the former accountants on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which would have caused the former accountants to make
reference to the subject matter of the disagreement in connection with its
report. The departing accountants advised our board of directors and audit
committee that they may want to devote additional attention to the company's
accounting functions, controls, and procedures. In assisting with the transfer
of responsibilities to Child, Van Wagoner & Bradshaw, PLLC, Spector & Wong, LLP
advised Child, Van Wagoner & Bradshaw, PLLC that Spector & Wong, LLP was
overloaded and could not meet the company's deadlines for review of the
company's interim financial statements.
Fees
The following table summarizes the aggregate fees billed to the company by
Child, Van Wagoner and Bradshaw, PLLC, our independent auditor, for the audit of
our annual financial statements for the fiscal year ended May 31, 2007 and fees
billed for other services rendered by Child Van Wagoner and Bradshaw, PLLC
during that period. The table also includes fees billed to us by Spector & Wong,
LLP, the independent auditor for the audit of our annual financial statements
for the fiscal year ended May 31, 2006. Spector & Wong resigned as our
independent auditor on February 19, 2007.
Type of Fee 2007 2006
- ----------- ---- ----
Audit Fees (1) $29,500 $20,000
Audit-related fees $ 0 $ 0
Tax Fees (2) $ 3,000 $ 1,500
All Other Fees $ 0 $ 0
Total $32,500 $21,500
(1) Fees for audit services billed in the fiscal year ended May 31, 2007
consisted of the aggregate fees paid by us for the fiscal year indicated
for professional services rendered by Child, Van Wagoner and Bradshaw,
PLLC for the audit of our annual financial statements and review of
financial statements included in our reports on Form 10-KSB and Forms
10-QSB for the quarters ended November 30, 2006 and February 28, 2007.
(2) Fees for tax services estimated for the fiscal year ended May 31, 2007 to
be rendered by Child Van Wagoner and Bradshaw, PLLC for tax compliance.
Tax compliance services are rendered based on facts already in existence
or transactions that have already occurred to document, compute and obtain
governmental approval for amounts to be included in tax filings and
consisted of federal and state income tax return assistance.
18
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AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
We do not have an audit committee. Our financial matters and relationship with
our independent auditors is overseen by our two officers, the CEO and
Secretary-CFO.
REQUIRED VOTE
The number of votes cast on this Item must exceed the number of votes cast
against this item at the Annual Meeting for the ratification of the appointment
of Child, Van Wagoner & Bradshaw, PLLC, independent certified public
accountants, as our auditors for the fiscal year ending May 31, 2008.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF
CHILD, VAN WAGONER & BRADSHAW, PLLC, INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS,
AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MAY 31, 2008. Proxies
solicited by the Board of Directors will be so voted unless shareholders specify
otherwise on the accompanying Proxy.
REQUIREMENTS, INCLUDING DEADLINES, FOR
SUBMISSION OF PROXY PROPOSALS, NOMINATION OF DIRECTORS
AND OTHER BUSINESS OF SHAREHOLDERS
Under the rules of the SEC, if a shareholder wants the company to include a
proposal in its Proxy Statement and form of proxy for presentation at our 2009
Annual Meeting of Shareholders, the proposal must be received by the company,
Attention: Mr. Scott R. Sand, Chief Executive Officer, at our principal
executive offices no later than January 15, 2009 and all the other conditions of
Rule 14a-8 under the Securities Exchange Act of 1934 must be satisfied, for such
proposals to be included in our proxy statement and form of proxy relating to
that meeting. Any shareholder proposal not received at our principal executive
offices by January 15, 2009 will be considered untimely and, if presented at
the 2009 Annual Meeting of Shareholders, the proxy holders will be able to
exercise discretionary authority to vote on any such proposal to the extent
authorized by Rule 14a-4(c) of the Exchange Act.
The Board is not aware of any matters that are expected to come before the
Annual Meeting other than those referred to in this Proxy Statement. If any
other matter should come before the Annual Meeting, the persons named in the
accompanying proxy intend to vote the proxies in accordance with their best
judgment.
The chairman of the Annual Meeting may refuse to allow the transaction of any
business not presented beforehand, or to acknowledge the nomination of any
person not made in compliance with the foregoing procedures.
It is important that the proxies be returned promptly and that your shares are
represented. Shareholders are urged to mark, date, execute and promptly return
the accompanying proxy card in the enclosed envelope.
FORM 10-KSB AND FORM 10-QSB
OUR ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED MAY 31, 2007,
INCLUDING THE FINANCIAL STATEMENTS AND A LIST OF EXHIBITS, AND MOST RECENT
QUARTERLY REPORT ON FORM 10-QSB ARE ENCLOSED WITH THIS PROXY STATEMENT.
WE WILL MAIL TO ANY SHAREHOLDER, WITHOUT CHARGE AND UPON WRITTEN REQUEST, A COPY
OF ANY EXHIBIT TO THE ANNUAL OR QUARTERLY REPORT. REQUESTS SHOULD BE SENT TO
35193 AVENUE "A", SUITE-C, YUCAIPA, CALIFORNIA 92399.
By Order of the Board of Directors
/s/ Scott R. Sand
-----------------
Scott R. Sand
Chief Executive Officer and Chairman
January 29, 2008
19
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INGEN TECHNOLOGIES, INC.
PROXY
2008 ANNUAL MEETING OF SHAREHOLDERS
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
KNOW ALL MEN BY THESE PRESENTS, that the undersigned shareholder of Ingen
Technologies, Inc., hereby constitutes and appoints Scott R. Sand, or instead of
the foregoing, __________________ as the attorney(s) and proxies of the
undersigned with full power of substitution to act and vote for in the name,
place and stead of the undersigned, at the 2008 Annual Meeting of the
Shareholders of Ingen Technologies, to be held at 9:00 a.m. on Saturday,
February 9, 2008 at the company's offices located at 35193 Avenue "A", Suite-C,
Yucaipa, California 92399, and at any adjournments thereof, the number of votes
the undersigned would be entitled to cast if present upon all matters referred
to below and described in the Proxy Statement for the meeting and, at their
discretion, upon any other matters that may properly come before the meeting:
(1) ELECTION OF DIRECTORS:
VOTE FOR ALL NOMINEES LISTED BELOW [ ]
Nominees:
Scott R. Sand
Yong Sin Khoo
Christopher A. Wirth
Curt A. Miedema
Stephen O'Hara
John Finazzo
Brad Klearman
WITHHOLD AUTHORITY [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s)
listed above, write the nominee's name in the space provided below.
EXCEPTIONS ________________________
(2) TO APPROVE THE AMENDMENT TO OUR ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED COMMON STOCK TO 750,000,000
SHARES.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) TO APPROVE THE AMENDMENT TO OUR ARTICLES OF INCORPORATION TO INCLUDE
A PROVISION FOR SHAREHOLDER ACTION IN LIEU OF A MEETING BY
NON-UNANIMOUS WRITTEN CONSENT.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) RATIFICATION OF APPOINTMENT OF CHILD, VAN WAGONER & BRADSHAW, PLLC,
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, AS OUR INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDED MAY 31, 2008.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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When properly executed, this Proxy will be voted in the manner specified by the
Shareholder. Unless you specify otherwise, this Proxy will be voted "FOR" the
election of the nominee as directors in Item 1 and "FOR" Items 2 through 4.
A majority of the proxies, or their substitutes at the meeting, or any
adjournments thereof may exercise all of the powers given by this Proxy. Any
Proxy to vote any of the shares for which the undersigned is or would be
entitled to vote previously given to any person or persons other than the
person(s) named above is hereby revoked.
IN WITNESS WHEREOF, the undersigned has signed and sealed this Proxy and
acknowledges receipt of a copy of the notice of said meeting and proxy statement
in reference thereto both dated ___________________, 2008.
Dated: __________________, 2008
NUMBER OF SHARES __________________________________
PRINT NAME OF SHAREHOLDER _________________________
SIGNATURE OF SHAREHOLDER __________________________
JOINT OWNERS SHOULD EACH SIGN. ATTORNEYS-IN-FACT, ADMINISTRATORS, CUSTODIANS,
PARTNERS, OR CORPORATION OFFICERS SHOULD GIVE FULL TITLE.
NOTE: This proxy, properly completed, dated and signed, should be returned
immediately in the enclosed envelope to Ingen Technologies, Inc., 35193 Avenue
"A", Suite-C, Yucaipa, California 92399.
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Exhibit A
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INGEN TECHNOLOGIES, INC.
Pursuant to the provisions of the Georgia Business Corporation Code, the
undersigned corporation hereby amends its Articles of Incorporation, as amended
and restated (the "Articles of Incorporation"), and for that purpose, submits
the following statement:
1. The name of the corporation is: INGEN TECHNOLOGIES, INC.
2. The articles of incorporation are amended as follows:
(i) Article Three of the Articles of Incorporation is amended as
follows:
3.1 The corporation has the authority to issue not more than:
(a) SEVEN HUNDRED FIFTY MILLION (750,000,000) SHARES OF COMMON STOCK OF
NO PAR VALUE PER SHARE (THE "COMMON STOCK"); and
(b) Forty Million (40,000,000) shares of preferred stock of no par
value per share (the "Preferred Stock") which may be issued in one or
more classes or one or more series by the Board of Directors as
hereinafter provided.
3.2 The shares of Common Stock shall be entitled to receive the net
assets of the corporation upon dissolution and shall be entitled to one (1) vote
per share on all matters and shall be entitled to receive distributions from
time to time, from legally available funds, as determined by the board of
directors.
3.3 The shares of Preferred Stock of the corporation may be issued from
time to time in one or more classes or one or more series. The Preferred Stock
shall have such voting rights, no voting rights, or such special voting rights
as the Board of Directors may fix and determine in issuing such stock, and shall
have rights to receive cumulative, non-cumulative, or partially cumulative
dividends as the Board of Directors shall fix and determine. Moreover, the
shares of Preferred Stock shall have such other rights and preferences,
including, but not limited to redemption, liquidation preference, conversion,
and dilution rights as may be allowed under the Georgia Business Corporation
Code and set forth by the Board of Directors in writing and filed with the
Georgia Secretary of State at the time such class or series is designated.
3.4 The corporation designates Forty Million (40,000,000) shares of its
Preferred Stock as the Series A Convertible Preferred Stock (the "Series A")
with the following rights, preferences and limitations.
(a) CLASS OR SERIES. The number of shares of Preferred Stock
constituting the Series A shall be Forty Million (40,000,000).
(b) DIVIDENDS. The Series A shall not be entitled to receive any
dividends from the corporation.
(c) REDEMPTION. The corporation shall have the right, but not the
obligation to redeem each share of Series A for One Dollar ($1.00) per share.
(d) LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
liquidation, dissolution, or winding up of the corporation, each share of Series
A shall be entitled to receive from the assets of the corporation One Dollar
($1.00) per share, which shall be paid or set apart before the payment or
distribution of any assets of the corporation to the holders of the Common Stock
or any other equity securities of the corporation.
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(e) VOTING RIGHTS. Each share of Series A shall be entitled to vote on
all matters with the holders of the Common Stock. Each share of Series A shall
be entitled to one (1) vote. Further, the holders of the Series A voting as a
class shall be entitled to elect one person to serve on the corporation's Board
of Directors.
(f) CONVERSION RIGHTS. Each share of Series A shall be convertible, at
the option of the holder thereof and subject to notice requirements of paragraph
(f)(i) below, at any time after the date of issuance of such share into one (1)
share of fully paid and non-assessable share of Common Stock.
(i) Each Series A stockholder who desires to convert into the
corporation's Common Stock must provide a 65 day written notice to the
corporation of their intent to convert one or more shares of Series A into
Common Stock. The corporation may, in its sole discretion, waive the written
notice requirement and allow the immediate exercise of the right to convert.
Before any holder shall be entitled to convert, he shall surrender the
certificate or certificates representing Series A to be converted, duly endorsed
or accompanied by proper instruments of transfer, at the office of the
corporation or of any transfer agent, and shall given written notice to the
corporation at such office that he elects to convert the same. The corporation
shall, as soon as practicable thereafter, issue a certificate or certificates
for the number of shares of Common Stock to which the holder shall be entitled.
The corporation shall reserve and keep available out of its authorized, but
unissued Common Stock, such number of shares of Common Stock as shall from time
to time be sufficient to effect conversion of the Series A.
(g) DILUTION PROTECTION. The shares of Series shall not be effected by
or subject to adjustment following any change to the amount of authorized shares
of Common Stock or the amount of Common Stock issued and outstanding caused by
any split or consolidation of the corporation's Common Stock.
(ii) Article Eight is hereby added to the Articles of Incorporation:
ARTICLE EIGHT
-------------
8.1 ANY ACTION THAT IS REQUIRED OR PERMITTED TO BE TAKEN AT A MEETING
OF THE SHAREHOLDERS MAY BE TAKEN WITHOUT A MEETING IF THE ACTION IS TAKEN BY
PERSONS WHO WOULD BE ENTITLED TO VOTE AT A MEETING SHARES HAVING VOTING POWER TO
CAST NOT LESS THAN THE MINIMUM NUMBER (OR NUMBERS, IN THE CASE OF VOTING GROUPS)
OF VOTES THAT WOULD BE NECESSARY TO AUTHORIZE OR TAKE SUCH ACTION AT A MEETING
AT WHICH ALL SHAREHOLDERS ENTITLED TO VOTE WERE PRESENT AND VOTED. THE ACTION
MUST BE EVIDENCED BY ONE OR MORE WRITTEN CONSENTS BEARING THE DATE OF SIGNATURE
AND DESCRIBING THE ACTION TAKEN, SIGNED BY SHAREHOLDERS ENTITLED TO TAKE ACTION
WITHOUT A MEETING AND DELIVERED TO THE CORPORATION FOR INCLUSION IN THE MINUTES
OR FILING WITH THE CORPORATE RECORDS.
(iii) All other provisions of the Articles of Incorporation shall
remain in full force and effect.
3. The date of adoption of each amendment by the stockholders was ____________.
4. The amendment was duly approved by the shareholders in accordance with the
provisions of Code Section 14-2-1003.
Date: ______________, 2008
INGEN TECHNOLOGIES, INC.
By: ______________________
Name: Scott R. Sand
Title: Chief Executive Officer and
Chairman of the Board of Directors