SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Corgenix Medical Corporation
-------------------------------------------------------------------
(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)(4) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(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 of Schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF CORGENIX MEDICAL CORPORATION
To be held December 11, 2001
--------------------
TO THE STOCKHOLDERS OF
CORGENIX MEDICAL CORPORATION:
Notice is hereby given that an annual meeting ("the Annual Meeting") of
stockholders of Corgenix Medical Corporation ("Corgenix or the Company") will be
held at our corporate offices located at 12061 Tejon Street, Westminster,
Colorado, 80234, on Tuesday, December 11, 2001 at 9:00 a.m. Mountain Standard
Time for the following purposes:
1. The election of four directors;
2. To authorize the Board of Directors to effect a reverse stock split
of one-for-five (the "Reverse Stock Split") of the Company's
outstanding Common Stock, depending upon a determination by the Board
of Directors that a Reverse Stock Split is in the best interests of
the Company;
3. To ratify the appointment of KPMG LLP, as our independent public
accountants for the fiscal year ending June 30, 2002.
4. To consider and act upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on November 2, 2001 as
the record date for determination of the stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournment thereof.
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. IF YOU DO ATTEND THE MEETING, YOU
MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
CORGENIX MEDICAL CORPORATION
12061 Tejon Street
Westminster, CO 80234
(303) 457-4345
-----------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished to you as a holder of outstanding shares
of Corgenix common stock, par value $.001 per share, in connection with the
solicitation of proxies by the Board of Directors of Corgenix Medical
Corporation, for use at the Annual Meeting of Stockholders to be held at our
corporate offices located at 12061 Tejon Street, Westminster, Colorado, USA,
80234, on Tuesday, December 11, 2001 at 9:00 a.m. 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.
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. You may
revoke a Proxy given to us at any time before it is voted either by filing with
the Secretary of Corgenix at our 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 your shares in person.
The close of business on November 2, 2001, 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 adjournments of the Annual Meeting. As of the record date,
we had outstanding 21,406,230 shares of common stock, par value $.001 per share,
the only outstanding voting security of Corgenix. As of the record date, we had
approximately 162 stockholders of record. A stockholder is entitled to cast one
vote for each share held on the record date on all matters to be considered at
the Annual Meeting.
Our principal executive offices are located at 12061 Tejon Street, Westminster,
Colorado 80234. This Proxy Statement and the accompanying proxy will be mailed
to our stockholders on or about November 12, 2001.
At the Annual Meeting, the stockholders will consider and vote upon proposals to
(i) elect four directors, (ii) authorize the Board of Directors to effect a
Reverse Stock Split of one for five, (iii) ratify the appointment of KPMG LLP as
our independent public accountants for the fiscal year ending June 30, 2002 and
(iv) such other proposals as may properly come before the Annual Meeting or any
adjournment thereof.
By order of the Board of Directors
CORGENIX MEDICAL CORPORATION
S/ Douglass T. Simpson
----------------------
Douglass T. Simpson,
President
November 12, 2001
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. CORGENIX
HAS NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED
IN THIS PROXY STATEMENT. THE DELIVERY OF THIS PROXY STATEMENT DOES NOT MEAN THAT
INFORMATION CONTAINED IN THIS PROXY STATEMENT IS CORRECT AFTER THE DATE OF THIS
PROXY STATEMENT. THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE OFFER OR
SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
PAGE
Questions and Answers........................... 4
Proposals You May Vote On....................... 8
General Information............................. 10
PROPOSAL NO. 1:
Election of Directors........................... 11
Board and Committees............................. 13
Management of the Company........................ 15
Executive Compensation........................... 18
Beneficial Ownership of Common Stock............. 19
Common Stock Performance......................... 21
Certain Relationships and Related Transactions... 22
.............................
PROPOSAL NO. 2: Reverse Stock Split............. 23
PROPOSAL NO. 3: Ratification of Independent
Public Accountants............................... 26
QUESTIONS AND ANSWERS
1. Q: What may I vote on?
A: You may vote on each of the following three proposals:
(a) The election of nominees to serve on our Board of
Directors;
(b) The proposal to authorize the Board of Directors to effect
a reverse stock split of one-for-five of the Company's
outstanding Common Stock.
(c) The ratification of the appointment of KPMG LLP to serve as
our independent auditors for the fiscal year ending June
30, 2002.
2. Q: How does the Board recommend I vote on the proposals?
A: The Board recommends a vote FOR each of the nominees; FOR the
proposal to authorize the Board to effect a Reverse Stock Split;
and FOR the ratification of the appointment of KPMG LLP as the
Company's independent auditors for the fiscal year ending June
30, 2002.
3. Q: Who is entitled to vote?
A: Shareholders as of the close of business on November 2, 2001
(the Record Date) are entitled to vote at the Annual Meeting.
4. Q: How do I vote?
A: Sign and date the proxy card you receive and return it in the
prepaid envelope. If you return your signed proxy card but do
not mark the boxes showing how you wish to vote, your shares
will be voted FOR the three proposals. You have the right to
revoke your proxy at any time before the meeting by:
(a) notifying our Corporate Secretary;
(b) voting in person; or
(c) returning a later-dated proxy card.
5. Q: How does discretionary authority apply?
A: If you sign your proxy card, but do not make any selections,
you give authority to Douglass T. Simpson, President, to vote
on the proposals and any other matter that may arise at the
meeting.
6. Q: Is my vote confidential?
A: Proxy cards, ballots and voting tabulations that identify
individual shareholders are mailed or returned directly to
Computershare Investor Services and handled in a manner that
protects your voting privacy. Your vote will not be disclosed
except:
(a) as needed to permit Computershare Investor Services to
tabulate and certify the vote;
(b) as required by law; or
(c) in limited circumstances such as a proxy contest in
opposition to the Board.
Additionally, all comments written on the proxy card or
elsewhere will be forwarded to management, but your identity
will be kept confidential unless you ask that your name be
disclosed.
7. Q: What does it mean if I get more than one proxy card?
A: If your shares are registered differently and are in more than
one account, you will receive more than one proxy card. Sign and
return all proxy cards to ensure that your shares are voted. We
encourage you to have all accounts registered in the same name
and address (whenever possible). You can accomplish this by
contacting our transfer agent, Computershare Investor Services
at (303) 235-5300.
8. Q: How many shares can vote?
A: As of the Record Date, November 2, 2001, 21,406,230 shares of
common stock were issued and outstanding. Every shareholder of
common stock is entitled to one vote for each share held.
9. Q: What is a "quorum"?
A: A "quorum" is a majority of the outstanding shares. They may
be present at the meeting or represented by proxy. There must
be a quorum for the meeting to be held, and a proposal must
receive more than 50% of the shares voting to be adopted. If
you submit a properly executed proxy card, even if you abstain
from voting, then you will be considered part of the quorum.
However, abstentions are not counted in the tally of votes FOR
or AGAINST a proposal. A WITHHELD vote is the same as an
abstention.
10. Q: Who can attend the Annual Meeting?
A: All shareholders that held shares of Corgenix on November 2,
2001 can attend.
11. Q: How will voting on any other business be conducted?
A: Although we do not know of any business to be considered at the
2001 Annual Meeting other than the proposals described in this
proxy statement, if any other business is presented at the
Annual Meeting, your signed proxy card gives authority to
Douglass T. Simpson, President, to vote on such matters at his
discretion.
12. Q: What percentage of stock do the directors and officers own?
A: On September 27, 2001, approximately 14.2% of our common stock
was owned by the directors and executive officers of Corgenix.
13. Q: Who are the largest principal shareholders?
A: As of June 30, 2001, Corgenix believes that the following
shareholders owned more than 5% of our issued and outstanding
common stock:
Dr. Luis R. Lopez, Chairman and Chief Executive Officer of
Corgenix (12061 Tejon Street, Westminster, Colorado 80234)
owned 2,186,762 shares or 10.7%;
Dallas Marckx, (c/o Corgenix, 12061 Tejon Street, Westminster,
Colorado 80234) owned 1,440,2000 shares or 7.1%.
Raul Diez Canseco (c/o Corgenix, 12061 Tejon Street,
Westminster, Colorado 80234) owned 1,125,221 shares or 5.5%;
Jana Hartinger Mazzini (c/o Corgenix, 12061 Tejon Street,
Westminster, Colorado 80234) owned 1,095,788 shares or 5.4%; and
Leland P. Snyder (c/o Corgenix, 12061 Tejon Street, Westminster,
Colorado 80234) owned 1,023,997 shares or 5.0%.
14. Q: Can a shareholder nominate someone to be a director of
Corgenix?
A: As a shareholder, you may recommend any person as a nominee for
director of Corgenix by writing to the Board of Directors, c/o
Corgenix Corporation, 12061 Tejon Street, Westminster, Colorado
80234. )
We must receive any recommendations by September 1, 2002 for the
2002 Annual Meeting and should include:
o the name, residence and business address of the nominating
shareholder;
o a representation that the nominating shareholder is a
record holder of Corgenix stock or holds Corgenix stock
through a broker and the number and class of shares held;
o a representation that the nominating shareholder intends
to appear in person or by proxy at the meeting of the
shareholders to nominate the individual(s) if the
nominations are to be made at a shareholder meeting;
o information regarding each nominee that would be required
to be included in a proxy statement;
o a description of any arrangement or understanding
between and among the nominating shareholder and each and
every nominee; and
o the written consent of each nominee to serve as a
director, if elected.
15. Q: Who is soliciting proxies?
A. The enclosed proxy is being solicited by the Board of Directors of
Corgenix on behalf of Corgenix. The cost of the solicitation shall
be borne by Corgenix. In addition to solicitation by mail, the
officers, directors and employees of Corgenix may solicit proxies
in person or by telephone, electronic mail or facsimile
transmission.
16. Q: How much did this proxy solicitation cost?
A: The total cost is estimated to be $15,000, which includes
estimated out-of-pocket expenses. We also reimburse brokerage
houses and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses for forwarding proxy and
solicitation materials to shareholders.
PROPOSALS YOU MAY VOTE ON
Abstentions or votes withheld on any of the following proposals will be treated
as present at the meeting for purposes of determining a quorum, but will not be
counted as votes cast.
1. ELECTION OF DIRECTORS
There are four nominees for election this year. Detailed information on
each nominee is provided on pages 11 to 12. If any director is unable to
stand for re-election, the Board may reduce its size or designate a
substitute. If a substitute is designated, proxies voting on the original
director candidate will be cast for the substituted candidate.
Your Board unanimously recommends a vote FOR each of these nominees for
directors.
2. AUTHORIZATION OF BOARD TO EFFECT A REVERSE STOCK SPLIT.
The authorized capital stock of the Corporation is 40,000,000 shares of
common stock, par value $.001 per share (the "Common Stock"), and
5,000,000 shares of preferred stock, $.001 par value ("the Preferred
Stock"). Each five (5) shares of the Corporation's Common Stock issued as
of the date of the Board of Director's final approval (the "Split
Effective Date"), shall be automatically changed and reclassified, as of
the Split Effective Date and without further action, into one (1) fully
paid and nonassessable share of the Corporation's Common Stock; provided,
however, that any fractional interest resulting from such change and
classification shall be rounded upward to the nearest whole share.
Your Board unanimously recommends a vote FOR the approval of the proposal
to authorized the Board of Directors to effect a one-for-five Reverse
Stock Split.
3. RATIFICATION OF INDEPENDENT AUDITORS.
The Audit Committee of the Board of Directors recommended and the board
has selected, subject to ratification by a majority vote of the
shareholders in person or by proxy at the annual meeting, the firm of KPMG
LLP (the "Auditors") to continue as our independent public accountant for
the current fiscal year ending June 30, 2002. The Auditors served as the
principal independent public accounting firm utilized by us during the
fiscal year ended June 30, 2001. We anticipate that a representative of
the Auditors will attend the Annual Meeting for the purpose of responding
to appropriate questions. At the Annual Meeting, a representative of the
Auditors will be afforded an opportunity to make a statement if the
Auditors so desire.
Your Board unanimously recommends that stockholders vote FOR ratifying the
appointment of KPMG LLP as our independent auditors.
GENERAL INFORMATION
Corgenix Medical Corporation, a Nevada corporation, is a diagnostic
biotechnology company whose principal focus has been the discovery and
development of diagnostic markers for the detection and management of important
immunological disorders. Until May 22, 1998, our business was conducted by and
under the name of REAADS Medical Products, Inc., a Delaware corporation
("REAADS"). On May 22, 1998, REAADS became a subsidiary of Corgenix, and its
name was changed to Corgenix, Inc. when its wholly owned subsidiary merged with
and into REAADS (the "Merger"). Corgenix was incorporated under the name Benjun
Chemicals Inc. on April 22, 1994 as a wholly owned subsidiary of Superior
Equities Limited (the "Predecessor"). The Predecessor was incorporated on April
9, 1985 under the laws of the Province of British Columbia, Canada.
Our principal offices are located at 12061 Tejon Street, Westminster, Colorado
80234, and our telephone number is (303) 457-4345.
AVAILABLE INFORMATION
We file reports, proxy materials and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy materials and other
information concerning Corgenix can be inspected and copied at the Public
Reference Section maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549; The Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and at Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies can be obtained by
mail from the Commission at prescribed rates from the Public Reference Section
of the Commission at its principal office in Washington D.C. The Commission also
maintains a site on the World Wide Web (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants (including Corgenix) that file electronically with the Commission.
PROPOSAL 1
ELECTION OF THE BOARD OF DIRECTORS
Introduction
Four individuals have been nominated to be elected at the Annual Meeting to
serve as directors until the next Annual Meeting of the shareholders and until
their successors have been elected and qualified. Information about each nominee
is given below.
Nominees
LUIS R. LOPEZ, M.D.
Age: 53
Director since 1998
Dr. Lopez has served as the Chief Executive Officer and Chairman of the Board of
Directors of Corgenix since May 1998 and of Corgenix's operating subsidiary
since it was founded in July 1990. From 1987 to 1990, Dr. Lopez was Vice
President of Clinical Affairs at BioStar Medical Products, Inc., a Boulder,
Colorado diagnostic firm. From 1986 to 1987 he served as Research Associate with
the Rheumatology Division of the University of Colorado Health Sciences Center,
Denver, Colorado. From 1980 to 1986 he was Professor of Immunology at Cayetano
Heredia University School of Medicine in Lima, Peru, during which time he also
maintained a medical practice with the Allergy and Clinical Immunology group at
Clinica Ricardo Palma in Lima. From 1978 to 1980 Dr. Lopez held a fellowship in
Clinical Immunology at the University of Colorado Health Sciences Center. He
received his M.D. degree in 1974 from Cayetano Heredia University School of
Medicine in Lima, Peru. He is a clinical member of the American College of
Rheumatology, and a corresponding member of the American Academy of Allergy,
Asthma and Immunology. Dr. Lopez is licensed to practice medicine in Colorado,
and is widely published in the areas of immunology and autoimmune disease.
DOUGLASS T. SIMPSON
Age: 53
Director since 1998
Mr. Simpson has been the President of Corgenix since May 1998 and was elected
a director in May 1998. Mr. Simpson joined Corgenix's operating subsidiary
as Vice President of Business Development in 1992, was promoted to Vice
President, General Manager in 1995, to Executive Vice President in 1996 and
then to President in February 1998. Prior to joining Corgenix's operating
subsidiary, he was a Managing Partner at Venture Marketing Group in Austin,
Texas, a health care and biotechnology marketing firm, and in that capacity,
served as a consultant to REAADS from 1990 until 1992. From 1984 to 1990 Mr.
Simpson was employed by Kallestad Diagnostics, Inc. (now part of BioRad
Laboratories, Inc.), one of the largest diagnostic companies in the world,
where he served as Vice President of Marketing, in charge of all marketing
and business development. Mr. Simpson holds B.S. and M.S. degrees in Biology
and Chemistry from Lamar University in Beaumont, Texas.
JACK W. PAYNE
Age: 71
Director since March 2001
Mr. Payne was appointed as a director of Corgenix in March 2001. Mr. Payne
is currently and has since 1992 been a co-founder, Executive Vice President
and a member of the Board of Directors of Sequin Medical Corporation, a
privately held, Denver-based medical device manufacturer with manufacturing
facilities in Nebraska. From 1989-1992 Mr. Payne was founder, President and
Chairman of the Board of Designer Labels, Inc., a privately held supplier of
personalized paper products. During the 1990's, Mr. Payne served on three
publicly held corporate boards--Luther Medical, Inc., a manufacturer of
medical devices (1989-1997); First Fidelity Acceptance Corporation
(1992-1997), and Marquest Medical, Inc., a manufacturer of medical devices
(1993-1998). Mr. Payne began his career with Parke Davis, and proceeded to
work for Johnson & Johnson and Baxter International, the latter for 20 years,
serving as its Vice President-Canadian operations. Mr. Payne was also a
group Vice President with the R.P. Scherer Company, a pharmaceutical, device
and consumer products company, where he had worldwide responsibilities for
twelve operating companies with sales in excess of $125 million. Subsequent
to his service with the R.P. Scherer Company, Mr. Payne became the chief U.S.
executive for Terumo Corporation, a Japanese Medical device, lab diagnostic,
and pharmaceutical manufacturer. He received a B.S. in Microbiology and
Chemistry from De Pauw University and completed the executive management
program at the Colgate Darden School at the University of Virginia.
WENDELL J. GARDNER
Age 68
Director since--New Nominee
Mr. Gardner is currently and has since 1996 been a founding member and on the
Board of Directors of Foothills Bank in Wheat Ridge, Colorado. From 1968 to 1998
Mr. Gardner served in various capacities for COBE Laboratories, Inc. (Gambro AB)
in Lakewood, Colorado, serving as their Chief Financial Officer, Vice President
for European Operations, President of COBE Cardiovascular and most recently from
1994 to 1998 as their Corporate Senior Vice President (transition to
retirement). Mr. Gardener has served on numerous Boards of Directors, including
Thoratec Laboratories, Inc. (1992-1997); Colorado National Bank Arvada
(1983-1993) and Colorado National Bank Lakewood (1990-1993). Mr. Gardner was the
Chairman of the Jefferson Economic Council Board of Directors from 1987-1995 and
the founding member, president and a member of the board of directors of the
Colorado Medical Device Association from 1994-1998 and the Commissioner of the
Colorado Advanced Technology Institute (CATI) from 1994-1998. Mr. Gardner is a
Certified Public Accountant in the State of Colorado. He received his BS degree
in Accounting and Finance from Kansas State University in 1961 and completed the
Stanford Graduate School of Business Executive Program in General Management in
1975.
Votes Required to Elect Directors
The affirmative vote of a majority of the shares of common stock represented and
voting at the meeting assuming a quorum is present is needed to elect a
director. Abstentions and votes withheld as to a director will have the same
effect as voting against the director.
BOARD AND COMMITTEES
Structure and Operation of the Board: You should know the following information
about the structure of the board and its operations:
o Each director serves for a term of one year or until the director's
successor is duly elected, appointed or seated.
o The Board currently consists of one outside director (the "Outside
Director"), the Chief Executive Officer and the President (the Chief
Operating Officer). At the 2001 Annual Meeting, shareholders are
considering the election of four directors, after which the Board
will consist of two Outside Directors.
o None of the directors has a consulting arrangement with Corgenix.
o The Board usually meets as required, both in scheduled meetings and
conference telephone calls, and in Corgenix's 2001 fiscal year, the
Board met and/or took action by unanimous consent on 23 occasions. No
board member, other than Mr. Payne who was not appointed as a
Director until March 2001, attended fewer than 75% of the meetings of
the Board or a committee in the last fiscal year.
Structure and Operation of the Committees: The full Board considers all major
decisions of Corgenix. However, the Board has established the following two
standing committees, both of which are chaired by the Outside Director. You
should know the following information about the operations of the two Committees
of the Board of Directors:
o The Audit Committee currently consists of the Outside Director, Mr. Jack
W. Payne, and its functions include:
o making recommendations to the Board regarding the
selection of independent auditors,
o reviewing the results and scope of the audit and other services
provided by Corgenix's independent auditors, and
o reviewing and evaluating Corgenix's audit and control functions.
No audit committee meetings were held during the last fiscal year.
o The Compensation Committee currently consists of the Outside Director,
Mr. Jack W. Payne, and its functions include:
o reviewing and recommending for Board approval compensation for
executive officers, and
o making policy decisions concerning salaries and incentive
compensation for employees and consultants of Corgenix.
Two compensation committee meetings were held during the last fiscal
year.
Audit Committee Report
The Audit Committee assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing and financial
reporting practices of the Company. Because the Company's Common Stock is traded
on the Over the Counter Bulletin Board, the Company is not subject to the
listing requirements of any securities exchange or Nasdaq regarding the
membership of the Company's Audit Committee. However, the member of the audit
committee is independent as defined in Rule 4200 (a) (15) for the listing
standards of the Nasdaq Stock Market. The Audit Committee does not have a
written charter.
In discharging its responsibility for oversight of the audit process, the Audit
Committee obtained from the independent auditors, KPMG LLP, a formal written
statement describing any relationships between the auditors and the Company that
might bear on the auditors' independence consistent with the Independent
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," discussed with the auditors any relationships that might impact the
auditors' objectivity and independence and satisfied itself as to the auditors'
independence.
The Audit Committee of the Board of Directors of the Company reported the
following:
(1) The Audit Committee has reviewed the audited financial statements as of
and for the fiscal year ended June 30, 2001, with management and the
independent auditors. Management has the responsibility for preparation of
the Company's financial statements and the independent auditors have the
responsibility for auditing those statements.
(2) The Audit Committee has discussed with the independent auditors the
matters required to be discussed by SAS 61, as may be modified or
supplemented.
(3) The Audit Committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with the independent account and the
independent accountant's independence; and
(4) Based on the review and discussion referred to in paragraphs (a)(1)
through (a)(3) of this item, the audit committee recommended to the Board
of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-KSB (17 CFR 249.310b) for the fiscal
year ended June 30, 2001.
/S/ Jack W. Payne
Jack W. Payne,
Director and sole member of Audit Committee
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of Corgenix is currently composed of the Outside
Director. No interlocking relationship exists between any member of Corgenix's
Board of Directors or Compensation Committee and any member of the board of
directors or compensation committee of any other company, nor has any such
interlocking relationship existed in the past.
Board Compensation Committee Report on Executive Compensation
The Company's executive compensation program is administered by the Compensation
Committee of the Board. Formerly, Mr. Brian Johnson and currently, Mr. Jack
Payne, the Committee's only members for the fiscal year ended June 30, 2001, are
non-employee directors. The Committee recommends the compensation of all
executive officers of the Company to the Board, including the compensation of
the executive officers named in the Summary Compensation Table. In reviewing the
compensation of individual executive officers, the Committee takes under
consideration the recommendations of management, published compensation surveys
and current market conditions.
Compensation Programs. The Company's compensation programs are aimed at enabling
it to attract and retain the best possible executive talent and rewarding those
executives commensurate with their ability and performance. The Company's
compensation programs consist primarily of base salary, bonus plan, automobile
allowance and stock option plan.
Base Salary. Base salaries for executive officers are determined in the same
manner as that of other salaried employees. Salary guidelines are established by
comparing the responsibilities of the individual's position in relation to
similar positions in other medical related companies. Individual salaries were
determined this year by considering respective levels of responsibility,
position and regional comparables, etc.
Bonus Plan. Bonuses for executive officers are determined based on achievement
of pre-established goals related to corporate sales and earnings in addition to
specific goals related to the executive's respective areas of responsibility.
Incentive Stock Option Plan. The Incentive Stock Plan is intended to encourage
ownership of shares of the Company by Employees, Directors and Consultants of
the Company, thereby providing additional incentives for such Employees,
Directors and Consultants to promote the success of the business. Options
granted to executive officers hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, and Shares may be sold or granted at the discretion
of the Board and as reflected in the terms of a written stock option agreement.
Director Compensation: The Outside Director, Mr. Jack W. Payne, currently
receives an annual stock grant for service on the Board. Mr. Payne may be
reimbursed for certain expenses in connection with attendance at Board and
committee meetings. For fiscal year 2001, the Outside Directors, formerly Mr.
Johnson and currently Mr. Payne, received 20,000 shares and options to
purchase 20,000 shares, respectively, (Mr. Brian Johnson for service ending
March 19, 2001 and Mr. Payne for service beginning March 19, 2001). Mr.
Payne, the Outside Director, also received $500 for each meeting in which he
attended in person. No compensation was paid to non-outside directors.
Technical and Scientific Advisors: Corgenix periodically draws on the expertise
of several advisors and consultants in fields related to its technology and
markets. Corgenix has a Scientific Advisory Council currently consisting of Dr.
Luis Lopez and Dr. Douglas Triplett. These members are available to Corgenix as
needed on an individual basis to provide advice with respect to clinical
medicine and other matters requiring scientific and clinical expertise.
Non-employee members of the Scientific Advisory Council are compensated for
participation on this board.
MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information with respect to the directors
and executive officers of Corgenix as of June 30, 2001:
------------------------------------------------------------------
Name Age Position Director/Officer
Since
------------------------------------------------------------------
------------------------------------------------------------------
Luis R. Lopez, 53 Chief Executive 1998
M.D. (1) Officer and
Chairman
------------------------------------------------------------------
------------------------------------------------------------------
Douglass T. 53 President, Chief 1998
Simpson (1) Operating Officer
------------------------------------------------------------------
------------------------------------------------------------------
W. George 70 Vice President, 1996
Fleming, Ph.D. International
(1) Operations
------------------------------------------------------------------
------------------------------------------------------------------
Ann L. 48 Vice President, 1996
Steinbarger (1) Sales and Marketing
------------------------------------------------------------------
------------------------------------------------------------------
Taryn G. 42 Vice President, 1998
Reynolds (1) Technology
------------------------------------------------------------------
------------------------------------------------------------------
Catherine A. 36 Vice President, 1999
Fink, Ph.D. (1) General Manager
------------------------------------------------------------------
------------------------------------------------------------------
William H. 55 Vice President, 2000
Critchfield (1) Chief Financial
Officer
------------------------------------------------------------------
------------------------------------------------------------------
Jack W. Payne 71 Director 2001
------------------------------------------------------------------
------------------------------------------------------------------
Douglas A. 56 Member, Scientific 1991
Triplett, M.D. Advisory Council
------------------------------------------------------------------
------------------------------------------------------------------
(1) Executive Officer
Luis R. Lopez, M.D. Dr. Lopez' biographical information is on page 11 of
this proxy statement.
Douglass T. Simpson. Mr. Simpson's biographical information is on page 11 of
this proxy statement.
W. George Fleming, Ph.D., has been the Vice President, International
Operations, of Corgenix since May 1998. Dr. Fleming joined Corgenix's
operating subsidiary as Director of European Operations in 1992, after
serving as a consultant in international distribution to Corgenix from 1990
to 1992. He was promoted to Managing Director, European Operations, and in
1996 to Vice President, International. Prior to joining Corgenix's operating
subsidiary, Dr. Fleming was a director of Unilever's Medical Products Group
in the UK, a(pound)41 million health care company. He joined Oxoid, a
subsidiary of Brooke Bond in 1968, serving in a number of management
positions leading to his appointment as Director of Marketing in 1976,
managing their growth up to (pound)31 million in 1985, when it was
acquired by Unilever. Dr. Fleming received a B.Sc. degree from Queens
University, Belfast, Northern Ireland, and a Ph.D. in Business Administration
from Fairfax University, Baton Rouge, Louisiana.
Ann L. Steinbarger has been the Vice President, Sales and Marketing, of
Corgenix since May 1998. Ms. Steinbarger joined Corgenix's operating
subsidiary in January 1996 as Vice President, Sales and Marketing with
responsibility for its worldwide marketing and distribution strategies.
Prior to joining Corgenix, Ms. Steinbarger was with Boehringer Mannheim
Corporation, Indianapolis, Indiana, a $200 million IVD company. At
Boehringer from 1976 to 1996, she served in a series of increasingly
important sales management positions. Ms. Steinbarger holds a B.S. degree in
Microbiology from Purdue University in West Lafayette, Indiana.
Taryn G. Reynolds has been a Vice President of Corgenix since May 1998. Mr.
Reynolds joined Corgenix's operating subsidiary in 1992, serving first as
Director of Administration, then as Managing Director, U.S. Operations. He
has served as Vice President, Operations and in 1999, became Vice President,
Technology. Prior to joining Corgenix, Mr. Reynolds held executive positions
at Brinker International, MJAR Corporation and M&S Incorporated, all
Colorado-based property, operational and financial management firms.
Catherine A. Fink, Ph.D., was elected Vice President, General Manager of the
Company on October 7, 1999. She had been Corgenix's Executive Scientific
Director since May 1998. Dr. Fink joined Corgenix's operating subsidiary in
1996 as Director of Research and Development with responsibility for product
development, and in 1997 was promoted to Executive Scientific Director with
additional responsibilities for Quality Control. She chairs Corgenix's
technical committee. Prior to joining Corgenix, Dr. Fink was with DDx, Inc.,
a Denver, Colorado based privately-held biotechnology firm from 1994 until
1996, and from 1993 to 1994 was Product Development Manager at Trinity
Biotech plc., an Irish biotechnology company which develops and manufactures
rapid saliva and blood based diagnostic tests. From 1990 to 1993, she was
with Biosyn Ltd. (Belfast), a manufacturer of diagnostic tests for medical
and veterinary applications. Dr. Fink received a B.Sc. (with Honors) from
University College Dublin, and a Ph.D. in immunology from the National
University at Ireland.
William H. Critchfield, has been Vice President and Chief Financial Officer
of the Company since December 2000. Prior to joining Corgenix, Mr.
Critchfield was Executive Vice President and Chief Financial Officer of U.S.
Medical, Inc., a Denver, Colorado based privately held distributor of new and
used capital medical equipment. From May of 1994 through July of 1999, he
served as President and Chief Financial Officer of W.L.C. Enterprises, Inc.,
a retail business holding company. From November 1991 to May 1994, Mr.
Critchfield served as Executive Vice President and Chief Financial Officer of
Air Methods Corporation, a publicly traded company which is the leading U.S.
company in the air medical transportation industry and was the successor
company to Cell Technology, Inc., a publicly traded biotechnology company,
where he served in a similar capacity from 1987-1991. From 1986 through
September 1987 he served as Vice President of Finance and Administration for
Biostar Medical Products, Inc., a developer and manufacturer of diagnostic
immunoassays. In the past, Mr. Critchfield also served as Vice President of
Finance for Nuclear Pharmacy, Inc., (now Syncor, Inc.) a publicly traded
company and the world's largest chain of centralized radiopharmacies. Mr.
Critchfield is a certified public accountant in Colorado. He graduated magna
cum laude from California State University at Northridge with a Bachelor of
Science degree in Business Administration and Accounting.
Jack W. Payne, Mr. Payne's biographical information is on page 11 of this
proxy statement.
Douglas A. Triplett, M.D., has been an advisor to Corgenix's operating
subsidiary with respect to research and development activities since 1991.
He is Vice President and Director of Medical Education and Director of
Hematology for Ball Memorial Hospital in Muncie, Indiana. Since 1980 he has
also been a Professor of Pathology, and since 1981 Assistant Dean, of Indiana
University School of Medicine. He previously served as the Director of the
Hematopathology Program at Ball Memorial Hospital, Associate Professor of
Pathology at Indiana University School of Medicine and Chief of Pathology at
the Raymond W. Bliss Army Hospital. A graduate of Indiana University School
of Medicine, Dr. Triplett is Chairman of the Coagulation Resource Committee
of the College of American Pathologists and Co-Chairman of the Scientific
Subcommittee of the International Committee on Thrombosis and Hemostasis:
Lupus Anticoagulants. He is certified by the American Board of Pathology in
Anatomic and Clinical Pathology, Hematology and Transfusion Medicine. Dr.
Triplett received the 1989 Medal of the American Society of Clinical
Pathologists.
EXECUTIVE COMPENSATION
Compensation
The following table shows how much compensation was paid by Corgenix's operating
subsidiary for the last three fiscal years to Corgenix's Chief Executive Officer
and each other executive officer whose total annual salary and bonus exceeded
$100,000 for services rendered to the subsidiary during such fiscal years
(collectively, the "Named Executive Officers").
Summary Compensation Table
Long-Term
Annual n
Cash
CompensationCompensatio
-----------------------
Options
Name and Principal Fiscal Salary (# of
Position Year and Bonus* Shares)
-----------------------------------------------------
Dr. Luis R. Lopez .. 2001 $160,000 12,000
Chairman, Chief 2000 $160,000 11,400
Executive Officer 1999 $169,000 -
Douglass T Simpson . 2001 $140,000 172,000
President, Chief 2000 $140,000 9,400
Operating Officer 1999 $149,000 -
Ann L. Steinbarger . 2001 $107,292 137,000
Vice President, 2000 $100,000 10,400
Sales and Marketing 1999 $109,000 -
* No bonuses were paid to any officer for each of the three years reported.
Long-Term Incentive Compensation
On October 27, 1999, the Board approved an incentive stock plan (the "1999
Incentive Stock Plan") which was subsequently approved by the stockholders of
the Company on January 26, 2000. This plan is intended to encourage ownership of
shares of the Company by employees, directors and consultants to promote the
success of the business. No stock options were issued prior to the fiscal year
ended June 30, 2000. During the fiscal year ended June 30, 2001, stock options
for 705,000 shares of Common Stock were granted.
During the fiscal year ended June 30, 2001, the Company granted stock options to
the Named Executive Officers as reflected in the summary compensation table
shown above. At June 30, 2001, none of the options were exercisable.
On December 17, 1998, the Board approved a stock compensation plan (the "Stock
Compensation Plan") effective January 1, 1999 pursuant to which executive
officers and certain consultants may elect to receive a portion of their salary
in Corgenix common stock. This plan is intended to further the growth and
advance the best interests of Corgenix by supporting and increasing the
Company's ability to attract, retain and compensate persons of experience and
ability and whose services are considered valuable, to encourage the sense of
proprietorship in such persons in the development and success of the Company.
The Plan provides for stock compensation through the award of the Company's
Common Stock, as a bonus or, at the Participant's election, in lieu of cash
compensation for services rendered. To date, all compensation has been in lieu
of cash compensation for services rendered. During the fiscal year ended June
30, 2001, there was no issuance of stock under the Stock Compensation Plan.
Employment and Consulting Agreements
Corgenix has entered into employment agreements with the following officers as
of the respective dates and for the minimum annual salaries as noted opposite
each of their names:
o Luis R. Lopez, M.D. - $160,000, dated April 1, 2001
o Douglass T. Simpson - $140,000, dated April 1, 2001,
o William H. Critchfield--$125,000, dated March 1, 2001
o Ann L. Steinbarger - $125,000, dated April 1, 2001
o Taryn G. Reynolds - $100,000, dated April 1, 2001
o Catherine A. Fink, Ph.D. - $100,000, dated April 1, 2001
Each of the above employment agreements is for a term of three years, provides
for severance payments equal to twelve month's salary and benefits if the
employment of the officer is terminated without cause (as defined in the
respective agreements), and an automobile expense reimbursement of $500 per
month.
Corgenix has also executed a consulting contract with Wm. George Fleming,
Ph.D., Corgenix's Vice President, International Operations for a minimum
annual fee of $60,000.
BENEFICIAL OWNERSHIP
OF CORGENIX MEDICAL STOCK
The following table sets forth as of June 30, 2001, certain information
regarding the ownership of Corgenix's common stock by (i) each person known by
Corgenix to be the beneficial owner of more than 5% of the outstanding shares of
common stock, (ii) each of Corgenix's directors, (iii) each named executive and
(iv) all of Corgenix's executive officers and directors as a group. Unless
otherwise indicated, the address of each person shown is c/o Corgenix, 12061
Tejon Street, Westminster, CO 80234. References to options to purchase common
stock are either currently exercisable or will be exercisable within 60 days of
June 30, 2001. Other than Dr. Lopez, no other director or executive officer
beneficially owned more than 5% of the common stock, and directors and executive
officers as a group beneficially owned 14.2% of the common stock.
----------------------------------------------------------
Shares Beneficially
Owned
-------------------------------- -----------------------
-------------------------------- -----------------------
Name of Beneficial Owner Number Percent
-------------------------------- ---------- ---------
-------------------------------- ---------- ----------
Dr. Luis R. Lopez(1)......... 2,161,762 10.7%
---------------------------------------------------------
----------------------------------------------------------
Dallas Marckx................ 1,440,000 7.1%
-----------------------------------------------------------
-----------------------------------------------------------
Raul Diez Canseco............ 1,125,221 5.5%
-----------------------------------------------------------
-----------------------------------------------------------
Jana Hartinger Mazzini....... 1,095,778 5.4%
-----------------------------------------------------------
-----------------------------------------------------------
Leland P. Snyder ............ 1,023,997 5.0%
-----------------------------------------------------------
-----------------------------------------------------------
Jack W. Payne(1) ............ 20,000 *
-----------------------------------------------------------
-----------------------------------------------------------
Douglass T. Simpson (1)...... 299,838 1.5%
-----------------------------------------------------------
-----------------------------------------------------------
Ann L. Steinbarger(1)........ 116,576 *
-----------------------------------------------------------
-----------------------------------------------------------
All current directors and 2,958,368 17.0%
current executive officers as
a group (7 persons) (1)
-----------------------------------------------------------
* Less than 1% (1) Current director or officer.
COMMON STOCK PERFORMANCE
The common stock of Corgenix is reported on the NASD Stock Market's OTC Bulletin
Board (R) under the symbol "COGX." The common stock began active trading in June
1998.
The following table sets forth the high and low quarterly trade prices for our
common stock for the periods indicated as reported by OTCBB. No dividends have
been declared or paid on Corgenix's common stock during such periods. Corgenix
does not intend to declare or pay cash dividends on its common stock in the
foreseeable future, but rather to retain any earnings to finance the growth of
its business. Any future determination to pay dividends will be at the
discretion of the Board of Directors and will depend on results of operations,
financial condition, contractual and legal restrictions and other factors the
Board of Directors deems relevant. The stock price performance shown below is
not necessarily indicative of future price performance:
Stock Price Dates Stock Price Ranges
High Low
Quarter Ended:
September 30, 2001 $.30 $.21
Fiscal Year 2000
Quarter Ended:
September 30, 2000 $.31 $.16
December 31, 2000 $.25 $.09
March 31, 2001 $.16 $.13
June 30, 2001 $.35 $.13
Fiscal Year 1999:
Quarter Ended:
September 30, 1999 $.28 $.13
December 31, 1999 $.25 $.09
March 31, 2000 $.72 $.19
June 30, 2000 $.50 $.22
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
During fiscal 2001 there has not been any transaction, or series of similar
transactions, since the beginning of the Company's last fiscal year, or any
currently proposed transaction, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeds $60,000 and in which any director or executive officer of the
company, nominee for election as a director, any five percent security holder or
any member of the immediate family of any of the foregoing persons had, or will
have, a direct or indirect material interest.
COMPLIANCE WITH SECTION 16 (a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, as well as persons beneficially
owning more than 10% of the Company's outstanding Common Stock, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC") within specified time periods. Such officers, directors
and shareholders are also required to furnish the Company with copies of all
Section 16 (a) forms they file.
Based solely on its review of such forms received by it, or written
representations from certain reporting persons, the Company believes that all
Section 16 (a) filing requirements applicable to its officers, directors and 10%
shareholders were complied with during the fiscal year ended June 30, 2001.
PROPOSAL 2
APPROVAL FOR THE BOARD OF DIRECTORS
TO EFFECT A REVERSE STOCK SPLIT
The Company's Board of Directors has unanimously approved and determined to
submit to the Company's shareholders a proposal to effect a reverse stock split
(the "Reverse Split") of one share of the Company's Common Stock for every 5
shares of Common Stock that are currently issued and outstanding. The Board of
Directors has unanimously approved and recommends a vote FOR Proposal Two.
If the Shareholders approve Proposal Two, the Company's Board of Directors will
have authority, in its discretion, to effect the Reverse Split.
If the Shareholders approve Proposal Two, the Reverse Split will become
effective upon the final approval by the Board of Directors. If Proposal Two is
not approved by the shareholders, the Reverse Split will not be able to be
effected by the Company's Board of Directors.
The proposed Reverse Split will not affect any shareholder's proportionate
equity interest in the Company or the rights, preferences, privileges or
priorities of any shareholder, other than an adjustment that may occur due to
the rounding up of fractional shares. Likewise, the Reverse Split will not
affect the total shareholders' equity of the Company or any components of
shareholders' equity as reflected on the financial statements of the Company
except (i) to change the number of the issued and outstanding shares of capital
stock and (ii) for an adjustment which will occur due to the costs incurred by
the Company in connection with this Proxy Statement and the implementation of
Proposal Two as approved by the shareholders. However, because the number of
shares of capital stock that the Company is authorized to issue will not be
decreased in proportion to the one for every 5 share decrease in the number of
issued shares, the number of shares which are authorized but unissued, and the
percentage of ownership of such shares if they are issued in the future in the
discretion of the Board of Directors, effectively will be increased.
The following table illustrates the principal effects on the Company's capital
stock of the Reverse Split, assuming a one-for-five reverse split:
NUMBER OF SHARES OF CAPITAL STOCK
PRIOR TO REVERSE AFTER REVERSE
SPLIT SPLIT
COMMON
Authorized 40,000,000 40,000,000
Issued and outstanding (10/02/01) 21,406,230 4,281,246
Available for future issuance 18,693,770 35,738,754
PREFERRED
Authorized 5,000,000 5,000,000
Issued and outstanding 0 0
NO EXCHANGE OF SHARES; NO FRACTIONAL SHARES
Pursuant to the proposed Reverse Split, every 5 shares of issued and outstanding
Common Stock would be converted and reclassified into one share of post-split
Common Stock, and any fractional interests resulting from such reclassification
would be rounded upward to the nearest whole share. For example, a holder of 100
shares prior to the Split Effective Date would be the holder of 20 shares at the
Split Effective Date. The proposed Reverse Split would become effective upon the
Split Effective Date. Shareholders will be notified after the Split Effective
Date that the Reverse Split has been effected.
Shareholders will not receive certificates for shares of post-split Common
Stock. Accordingly, shareholders should not forward their certificates to the
Company or its transfer agent. Beginning on the Split Effective Date, each
certificate representing shares of the Company's pre-split Common Stock will be
deemed for all corporate purposes to evidence ownership of the appropriate
number of shares of post-split Common Stock.
Shareholders have no right under Nevada law to dissent from the Reverse Split or
to dissent from the rounding up of fractional interests resulting from the
Reverse Split.
PURPOSES OF THE REVERSE SPLIT
The Board of Directors believes that the current price per share of the
Company's Common Stock may reduce the effective marketability of the Common
Stock because of the reluctance of certain brokerage firms to recommend the
purchase of lower-priced stocks to their clients. Certain institutional
investors have internal policies preventing the purchase of lower-priced stocks
and many brokerage houses do not permit lower-priced stocks to be used as
collateral for margin accounts. Further, a number of brokerage houses have
policies and practices that tend to discourage individual brokers within those
firms from dealing in lower-priced stocks. Some of those policies and practices
pertain to the payment of brokers' commissions and to time-consuming procedures
that function to make the handling of lower-priced stocks unattractive to
brokers from an economic standpoint. In addition, the structure of trading
commissions tends to have an adverse impact upon holders of lower-priced stocks
because the brokerage commission on a sale of lower-priced stocks generally
represents a higher percentage of the sale price than the commission on a
relatively higher-priced stock.
The Board of Directors believes that the historically low per share market price
of the Company's Common Stock impairs the marketability of the Common Stock to
institutional investors and members of the investing public and creates a
negative impression with respect to the Company. Many investors and market
makers look upon lower priced stocks as unduly speculative in nature and, as a
matter of policy, avoid investment and trading in such stocks. The foregoing
factors adversely affect both the pricing and the liquidity of the Common Stock.
Thus, the potential increase in trading price is expected to be attractive to
the financial community and the investing public and in the best interests of
the shareholders.
The Board of Directors is hopeful that the decrease in the number of shares of
Common Stock outstanding as a consequence of the proposed Reverse Split and the
resulting anticipated increased price-level, will stimulate additional interest
in the Company's Common Stock and possibly promote greater liquidity for the
Company's shareholders. There can be no assurance, however, that there will be
any greater liquidity, and it is possible that the liquidity could even be
adversely affected by the reduced number of shares of Common Stock that would be
outstanding after the proposed Reverse Split is effected.
Similarly, the Board of Directors is hopeful that such an increase in the per
share price of the Company's Stock will improve the Company's future prospects
for seeking the listing of the Common Stock on the American Stock Exchange
("AMEX") or the Nasdaq Small Cap Market ("NASDAQ"). In order to qualify for
initial listing on AMEX the Company's Common Stock must have a minimum bid price
of $3 per share and to qualify for initial listing on NASDAQ, the price must be
$4 per share. Currently, the Company does not meet the requirements for listing
on AMEX or NASDAQ and there can be no assurance that, even after effecting the
Reverse Split, the Company will ever meet such listing requirements.
If the Reverse Split becomes effective, management expects the quoted market
price of the Company's Common Stock to increase as a result of decreasing the
number of shares outstanding without altering the aggregate economic interest in
the Company represented by such shares. The Board believes that the increased
market price may serve to mitigate the present reluctance, policies and
practices on the part of brokerage firms referred to above and diminish the
adverse impact of trading commissions on the potential market for the Company's
shares of Common Stock. There can be no assurance, however, that the Reverse
Split will achieve these desired results, that any such increase would be in
proportion to the one-for-five Reverse Split Ratio or that the per share price
level of the Common Stock immediately after the proposed Reverse Split can be
maintained for any period of time.
The Reverse Split may result in some shareholders owning "odd lots" of less than
100 shares. The costs, including brokerage commissions, of transactions in odd
lots are generally higher than the costs in transactions in "round lots" of even
multiples of 100.
Another result of the effective increase in the number of shares of Common Stock
which are authorized but unissued, and in the percentage of ownership of the
Company represented by such shares if they are issued in the future in the
discretion of the Board of Directors of the Company, is for the Company to have
additional shares of Common Stock authorized and available for issuance as the
need arises for possible future financing transactions, stock acquisitions,
asset purchases, stock dividends or splits, issuances under any stock option
plan that may be adopted in the future, and other general corporate purposes. If
proposal Two is approved, shareholders will have no preemptive rights with
respect to the additional authorized shares of Common Stock. Such shares of
Common Stock may be issued on such terms, at such times and on such conditions
as the Board may determine in its discretion.
The Board of Directors is not aware of any present efforts by any person to
accumulate the Company's capital stock or to obtain control of the Company
through a tender offer, merger or other business combination, proxy contest or
otherwise. The Board has not formulated any program, nor entered into any
agreement or understanding, and has no current intention, to issue any unissued
and unreserved shares of Common Stock for the purpose of impeding or preventing
any proposed takeover.
EFFECTS OF FAILURE TO OBTAIN SHAREHOLDER APPROVAL OF THE REVERSE SPLIT
PROPOSAL
In the event shareholder approval is not obtained for the Reverse Split, the
Company will find it considerably more difficult to complete acquisitions of
potential Companies, divisions or subsidiaries of companies or related product
lines in exchange for the Company's Common Stock, in lieu of cash or debt
financing on terms acceptable to the Company. Thus, the Company will find it
more difficult and potentially more expensive to continue its efforts to locate
a suitable acquisition or merger candidate or obtain alternative sources of
financing to fund the Company's future working capital needs. If the Company is
unable to locate a suitable acquisition or merger candidate or otherwise obtain
financing on terms acceptable to the Company, the Company's business, financial
condition, results of operations and prospects may be materially adversely
affected.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Company has not sought and will not seek a ruling from the Internal Revenue
Service or an opinion of counsel regarding the federal income tax consequences
of the Reverse Split. A summary of the federal income tax consequences of the
Reverse Split as contemplated in Proposal Two is set forth below. The discussion
is based on the present federal income tax law. The discussion is not intended
to be, nor should it be relied on as, a comprehensive analysis of the tax issues
arising from or relating to the proposed Reverse Split. Income tax consequences
to shareholders may vary from the federal tax consequences described generally
below. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE EFFECT OF
THE CONTEMPLATED REVERSE SPLIT UNDER APPLICABLE FEDERAL, STATE AND LOCAL INCOME
TAX LAWS.
The proposed Reverse Split constitutes a "recapitalization" to the Company and
its shareholders to the extent that issued shares of Common Stock are exchanged
for a reduced number of shares of Common Stock. Therefore, neither the Company
nor its shareholders will recognize any gain or loss for federal income tax
purposes as a result thereof.
The shares of Common Stock to be issued to each shareholder will have an
aggregate basis, for computing gain or loss, equal to the aggregate basis of the
shares of such stock held by such shareholder immediately prior to the Split
Effective Date. A shareholder's holding period for the shares of Common Stock to
be issued will include the holding period for the shares of Common Stock held
thereby immediately prior to the Split Effective Date provided that such shares
of stock were held by the shareholder as capital assets on the Split Effective
Date.
VOTE REQUIRED; BOARD RECOMMENDATION
Each holder of Common Stock is entitled to one vote per share held. The
affirmative vote of holders of a majority of the outstanding shares of Common
Stock of the Company entitled to vote at the annual meeting is required for
approval of Proposal Two. In the event that a quorum is not present or
represented at the annual meeting, the shareholders entitled to vote at the
annual meeting present, in person or by proxy, shall have the power to adjourn
said meeting until a quorum shall be present or represented. Proxies solicited
by the Board of Directors will be voted for approval of Proposal Two. A
Shareholder voting through a proxy who abstains with respect to approval of
Proposal Two shall be considered to have cast a negative vote with respect to
Proposal Two.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL TWO.
PROPOSAL 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors recommended and the board has
selected, subject to ratification by a majority vote of the shareholders in
person or by proxy at the annual meeting, the firm of KPMG LLP to continue as
our independent public accountant for the current fiscal year ending June 30,
2002. The Auditors served as the principal independent public accounting firm
utilized by us during the year ended June 30, 2001. We anticipate that a
representative of the Auditors will attend the Annual Meeting for the purpose of
responding to appropriate questions. At the Annual Meeting, a representative of
the Auditors will be afforded an opportunity to make a statement if the Auditors
so desire.
KPMG LLP billed the Company $63,000 for professional services rendered for the
annual audit and quarterly reviews of the Company's financial statements. KPMG
LLP did not provide financial information system design or implementation
services or any other services to the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFYING THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT AUDITORS.
SHAREHOLDER PROPOSALS
No shareholder proposals were received by Corgenix for inclusion in this year's
proxy statement. If a shareholder wishes to present a proposal to be included in
the proxy statement for the next Annual Meeting of Shareholders, the proposal
must be submitted in writing and received by the Corporate Secretary of Corgenix
at its corporate offices located at 12061 Tejon Street, Westminster, Colorado
80234, no later than September 1, 2002.
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN
YOUR PROXY CARD
IN THE ENVELOPE PROVIDED
AS SOON AS POSSIBLE