FORM 10-KA
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2008
COMMISSION FILE NUMBER 000-49805
MACHINETALKER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 01-05922991
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(State of Incorporation) (I.R.S. Employer Identification No.)
513 DE LA VINA STREET, SANTA BARBARA, CALIFORNIA 93101
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(Address of principal executive offices) (Zip Code)
(805) 957-1680
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Registrant's telephone number, including area code
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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COMMON STOCK OTC
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
Yes |_| No |X|
Indicate by check mark if the registrant is not required to filed
reports pursuant to Section 13 or Section 15(d) of the Act.
Yes |_| No |X|
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
|X|
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [___] Accelerated filer [___]
Non-accelerated filer [___] Smaller reporting company [_X_]
(Do not check if a smaller
reporting company)
Indicate by check mark whether the Registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
The aggregate market value of voting stock held by non-affiliates of
the registrant was approximately $1,025,725 as of March 31, 2009 (computed by
reference to the last sale price of a share of the registrant's Common Stock on
that date as reported by OTC Bulletin Board).
There were 181,976,793 shares outstanding of the registrant's Common
Stock as of May 31, 2009.
TABLE OF CONTENTS
PART III
ITEM 10 Directors, Executive Officers, and Corporate Governance 1
ITEM 11 Executive Compensation 4
ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related 5
Stockholder Matters
ITEM 15 Exhibits, Financial Statement Schedules 6
SIGNATURES 7
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The following table lists the executive officers and directors of the
Company as of April 30, 2009:
NAME AGE POSITION
------------------- --- ----------------------------------------
Roland F. Bryan (1) 74 President, Chief Executive Officer,
Chief Financial Officer, Secretary, and
Chairman of the Board of Directors
Gerald A. Nadler 67 Chief Scientist (Key Employee)
Mark J. Richardson 55 Director
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(1) Member of Audit Committee. Mr. Bryan is not an independent director and he
may not qualify as a financial expert for the purposes of satisfying the
requirements of the Securities and Exchange Commission that audit
committees be comprised of independent directors, at least one of whom is a
financial expert. Management believes that the Company's small size and
limited resources has so far hindered it from attracting a third director
who can serve on the Audit Committee as an independent financial expert.
Nevertheless, the Company will continue to seek such a candidate.
ROLAND F. BRYAN has been the President, Chief Executive Officer, and
Chairman of the Board of Directors of MTI since our inception in January 2002,
the Chief Financial Officer of MTI since November 2003, and the Secretary of MTI
since May 2006. For the six years prior to founding MTI, Mr. Bryan was self
employed as an independent advisor to several high-tech companies on corporate
organization, management, marketing and product development. Mr. Bryan's
professional background is in the areas computer science research and process
control through computer automation. During the last 25 years he has built up
and sold several high-tech companies in the fields of telecommunications
networking, military computer systems and commercial equipment for network
access. In 1974, he founded Associated Computer Consultants, Inc. ("ACC"), a
company that implemented interconnections to the first packet network for many
United States government agencies. In 1983 the name of the company was changed
to Advanced Computer Communications, Inc. and continued to produce networking
products for both military and commercial applications. ACC made the Inc. 500
List of Fastest Growing Companies in 1984. In 1991 the company was split into
two separate businesses, one to concentrate on military products, the other to
concentrate on commercial products. ACC was acquired by Ericsson in 1998 for
$265 million. In September 1994, WIRED MAGAZINE honored Mr. Bryan and 18 others,
as the "Creators of the Internet."
GERALD A. NADLER has been our Chief Scientist and a key employee of MTI
since our inception in January 2002. From 1998 to January 2002, Mr. Nadler was
self employed as an independent advisor consulting on designs of networking
products for Cratos Networks, Nortel/Aptis, Lucent/Ascend, Openroute, Shiva, and
Data General. In 1992, Mr. Nadler founded and from 1992 to 1995 was the
President of Elettra Systems, a data communications company. From 1987 to 1991,
he designed the spread spectrum wireless meter-reading system for Metricom. In
1985, he founded and from 1985 to 1987 was the President of Token Automation, a
data communications company. In 1979, he founded and from 1979 to 1985 was the
President of Distributed Computer Systems, a computer and data communications
company. From 1976 to 1979, he was a computer architect at Wang Laboratories.
MARK J. RICHARDSON has been a director of MTI since October 2008. Mr.
Richardson has been a securities lawyer since he graduated from the University
of Michigan Law School in 1978. He practiced as an associate and partner in
large law firms until 1993, when he established his own practice under the name
Richardson & Associates. He has been the principal securities counsel on a
variety of equity and debt placements for corporations, partnerships, and real
estate companies. His practice includes public and private offerings, venture
capital placements, debt restructuring, compliance with federal and state
securities laws, representation of publicly traded companies, NASDAQ filings,
corporate law, partnerships, joint ventures, mergers, asset acquisitions, and
stock purchase agreements. As a partner in a major international law firm in the
1980's, Mr. Richardson participated in the leveraged buyout and recapitalization
of a well known producer of animated programming for children, financed by
Prudential Insurance and Bear Stearns, Inc. He was also instrumental in
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restructuring the public debentures of a real estate company without resorting
to a bankruptcy proceeding. From 1986 to 1993 Mr. Richardson was a contributing
author to State Limited Partnerships Laws - California Practice Guide, Prentice
Hall Law and Business. Prior to receiving his juris doctor degree cum laude from
the University of Michigan Law School in 1978, Mr. Richardson received a
bachelor of science degree summa cum laude in Resource Economics from the
University of Michigan School of Natural Resources in 1975, where he earned the
Bankstrom Prize for academic excellence and achieved Phi Beta Kappa honors. Mr.
Richardson is an active member of the Los Angeles County and California State
Bar Associations, including the Section on Corporations, Business and Finance
and the Section on Real Estate. Richardson & Associates is outside corporate
legal counsel for the Company and certain of its affiliates.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under Delaware General Corporation Law and our Articles of
Incorporation, our directors will have no personal liability to us or our
stockholders for monetary damages incurred as the result of the breach or
alleged breach by a director of his "duty of care." This provision does not
apply to the directors' (i) acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law, (ii) acts or omissions
that a director believes to be contrary to the best interests of the corporation
or its shareholders or that involve the absence of good faith on the part of the
director, (iii) approval of any transaction from which a director derives an
improper personal benefit, (iv) acts or omissions that show a reckless disregard
for the director's duty to the corporation or its shareholders in circumstances
in which the director was aware, or should have been aware, in the ordinary
course of performing a director's duties, of a risk of serious injury to the
corporation or its shareholders, (v) acts or omissions that constituted an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the corporation or its shareholders, or (vi) approval of an unlawful
dividend, distribution, stock repurchase or redemption. This provision would
generally absolve directors of personal liability for negligence in the
performance of duties, including gross negligence.
The effect of this provision in our Articles of Incorporation is to
eliminate the rights of MTI and our stockholders (through stockholder's
derivative suits on behalf of MTI) to recover monetary damages against a
director for breach of his fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (vi) above. This provision does not
limit nor eliminate the rights of MTI or any stockholder to seek non-monetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care. In addition, our Articles of Incorporation provide that
if Delaware law is amended to authorize the future elimination or limitation of
the liability of a director, then the liability of the directors will be
eliminated or limited to the fullest extent permitted by the law, as amended.
Delaware General Corporation Law grants corporations the right to indemnify
their directors, officers, employees and agents in accordance with applicable
law. Our Bylaws provide for indemnification of such persons to the full extent
allowable under applicable law. These provisions will not alter the liability of
the directors under federal securities laws.
We intend to enter into agreements to indemnify our directors and
officers, in addition to the indemnification provided for in our Bylaws. These
agreements, among other things, indemnify our directors and officers for certain
expenses (including attorneys' fees), judgments, fines, and settlement amounts
incurred by any such person in any action or proceeding, including any action by
or in the right of MTI, arising out of such person's services as a director or
officer of MTI, any subsidiary of MTI or any other company or enterprise to
which the person provides services at the request of MTI. We believe that these
provisions and agreements are necessary to attract and retain qualified
directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling MTI pursuant
to the foregoing provisions, MTI has been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
BOARD COMMITTEES
The Board of Directors has appointed an Audit Committee. As of April
30, 2009, the sole member of the Audit Committee is Roland Bryan, who may not be
considered to be independent as defined in Rule 4200 of the National Association
of Securities Dealers' listing standards. The Board of Directors has adopted a
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written charter of the Audit Committee. The Audit Committee is authorized by the
Board of Directors to review, with our independent accountants, the annual
financial statements of MTI prior to publication, and to review the work of, and
approve non-audit services preformed by, such independent accountants. The Audit
Committee will make annual recommendations to the Board for the appointment of
independent public accountants for the ensuing year. The Audit Committee will
also review the effectiveness of the financial and accounting functions and the
organization, operations and management of MTI. The Audit Committee was formed
on February 8, 2005. The Audit Committee held one meeting during fiscal year
ended December 31, 2008. As of April 30, 2009, we have not yet appointed a
Compensation Committee.
REPORT OF THE AUDIT COMMITTEE
Our Audit Committee has reviewed and discussed our audited financial
statements for the fiscal year ended December 31, 2008 with senior management.
The Audit Committee has also discussed with HJ Associates & Consultants, LLP,
Certified Public Accountants ("HJ"), our independent auditors, the matters
required to be discussed by the statement on Auditing Standards No. 61
(Communication with Audit Committees) and received the written disclosures and
the letter from HJ required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees). The Audit Committee has
discussed with HJ the independence of HJ as our auditors. Finally, in
considering whether the independent auditors provision of non-audit services to
us is compatible with the auditors' independence for HJ, our Audit Committee has
recommended to the Board of Directors that our audited financial statements be
included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2006 for filing with the United States Securities and Exchange Commission.
Our Audit Committee did not submit a formal report regarding its findings.
AUDIT COMMITTEE
ROLAND BRYAN
Notwithstanding anything to the contrary set forth in any of our
previous or future filings under the United States Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate this report in future filings with the Securities and Exchange
Commission, in whole or in part, the foregoing report shall not be deemed to be
incorporated by reference into any such filing.
CODE OF CONDUCT
We have adopted a Code of Conduct that applies to all of our directors,
officers and employees. The text of the Code of Conduct has been posted on MTI's
Internet website and can be viewed at www.machinetalker.com. Any waiver of the
provisions of the Code of Conduct for executive officers and directors may be
made only by the Audit Committee and, in the case of a waiver for members of the
Audit Committee, by the Board of Directors. Any such waivers will be promptly
disclosed to our shareholders.
COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT
Section 16(a) of the Exchange Act requires our officers and directors,
and certain persons who own more than 10% of a registered class of our equity
securities (collectively, "Reporting Persons"), to file reports of ownership and
changes in ownership ("Section 16 Reports") with the Securities and Exchange
Commission (the "SEC"). Reporting Persons are required by the SEC to furnish us
with copies of all Section 16 Reports they file.
Based solely on its review of the copies of such Section 16 Reports
received by it, or written representations received from certain Reporting
Persons, all Section 16(a) filing requirements applicable to our Reporting
Persons during and with respect to the fiscal year ended December 31, 2008 have
been complied with on a timely basis.
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ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE OFFICER COMPENSATION
The following table sets forth the total compensation paid in all forms
to the executive officers and directors of the Company during the periods
indicated:
SUMMARY COMPENSATION TABLE
- ---------------------- ------- ----------- -------- --------- ------------- -------------- --------------- -----------
NON-EQUITY NON-QUALIFIED
NAME AND INCENTIVE DEFERRED
PRINCIPAL POSITION OPTION PLAN COMPENSATION ALL OTHER
(1) YEAR SALARY BONUS AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL
- ---------------------- ------ ----------- -------- --------- ------------- -------------- --------------- -----------
Roland Bryan, Chief 2008 $120,000 (1) 0 0 0 0 0 $120,000(1)
Executive Officer 2007 $120,000 0 0 0 0 0 $120,000
Executive Officers 2008 $120,000 0 0 0 0 0 $120,000
as a Group 2007 $120,000 0 0 0 0 0 $120,000
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(1) Mr. Bryan deferred and accrued the entire amount of his salary in 2008.
EMPLOYMENT AGREEMENTS
The Company has not entered into any employment agreements with its
executive officers to date. The Company may enter into employment agreements
with them in the future.
OUTSTANDING EQUITY AWARDS
None of the Company's executive officers received any equity awards
during the fiscal year ended December 31, 2008.
DIRECTOR COMPENSATION
The following table summarizes the compensation paid or accrued by us
for the year ended December 31, 2008 to MTI's directors who are not also
executive officers of the Company and who were serving as directors of MTI on
December 31, 2008. No other stock or option awards for directors were
outstanding on December 31, 2008.
DIRECTOR COMPENSATION
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FEES EARNED NON-EQUITY ALL OTHER
OR PAID IN STOCK OPTION INCENTIVE PLAN COMPENSATION
NAME CASH AWARDS ($) AWARDS ($) COMPENSATION ($) TOTAL ($)
- ----------------------------------------------------------------------------------------------------------------------
Mark J. Richardson, - 0 - $560 (1) - - 0 - - 0 - - 0 - $ 560
Director
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(1) The Company issued 70,000 shares of common stock to Mr. Richardson for his
services as a director during the year ended December 31, 2008. The
valuation of the award was based upon the fair market value on the closing
price of the Company's common stock as quoted on the OTC Bulletin Board on
the date the shares were issued. This value per share is presented in the
Statement of Shareholder's Deficit included in the Company's financial
statements in Item 8 of this Report.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth the names of our executive officers and directors
and all persons known by us to beneficially own 5% or more of the issued and
outstanding common stock of MachineTalker at April 30, 2009. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission. In computing the number of shares beneficially owned by a
person and the percentage of ownership of that person, shares of common stock
subject to options held by that person that are currently exercisable or become
exercisable within 60 days of April 30, 2009 are deemed outstanding even if they
have not actually been exercised. Those shares, however, are not deemed
outstanding for the purpose of computing the percentage ownership of any other
person. The percentage ownership of each beneficial owner is based on 85,086,699
outstanding shares of common stock (on a post one-for-five reverse split basis).
Except as otherwise listed below, the address of each person is c/o
MachineTalker, Inc., 513 De La Vina Street, Santa Barbara, California 93101.
Except as indicated, each person listed below has sole voting and investment
power with respect to the shares set forth opposite such person's name as of
April 30, 2009 (post one-for-five reverse split).
NUMBER OF SHARES BENEFICIALLY
NAME AND ADDRESS OF STOCKHOLDER OWNED (1)(2) PERCENTAGE OWNERSHIP
- ----------------------------------- ---------------------------------- ------------------------------------
ROLAND F. BRYAN(3) 42,373,429 49.80
CHRISTOPHER T. KLEVELAND (4) 4,450,000 5.23
MARK P. HARRIS(5) 4,450,000 5.23
MARK J. RICHARDSON 70,000 *
233 Wilshire Boulevard, Suite 820
Santa Monica, California 90401
UTEK CORPORATION 9,900,000 11.64
2109 E. Palm Avenue
Tampa, FL 33605
All Current Executive Officers as 42,373,429 49.80
a Group
All Current Directors who are not 70,000 *
Executive Officers as a Group
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* Less than 0.1%.
(1) Except as pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect
to all shares of common stock beneficially owned. The total number of
issued and outstanding shares and the total number of shares owned by
each person does not include unexercised warrants and stock options,
and is calculated as of February 28, 2009.
(2) Roland F. Bryan is the President, Chief Executive Officer, and Chairman
of the Board of Directors of MTI. The Bryan Family Trust owns 4,700,000
of these shares. Mr. Bryan holds an option to purchase 2,700,000 shares
from Mr. Harris at $0.50 per share and an option to purchase 2,700,000
shares from Mr. Kleveland at $0.50 per share. In addition, Mr. Harris
and Mr. Kleveland have agreed that Mr. Bryan has the right to vote the
shares held under these option agreements.
(3) Roland F. Bryan converted promissory notes payable to him by MTI in the
aggregate outstanding principal amount of $347,000 into shares of the
Company's common stock at the price of $0.01 per share for a total of
34,700,000 shares. In December 2008, to the benefit of the Company and
its shareholders, Mr. Bryan cancelled a convertible note from MTI in
the principal amount of $436,000, which was potentially convertible
into 3,480,000 shares of common stock at $0.125 per share. The interest
owed to Mr. Bryan on this cancelled note is $56,842 which remains on
the balance sheet.
(4) Christopher Kleveland is a former director and former Vice President of
Operations of MTI.
(5) Mark P. Harris is a former director of MTI.
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT DESCRIPTION
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3.1 Certificate of Incorporation (1)
3.2 Amendments to Certificate of Incorporation (1)
3.3 Amendment to Certificate of Incorporation
3.4 Bylaws (1)
4.1 Specimen Certificate for Common Stock (1)
4.2 2002 Stock Option Plan (1)
4.3 Form of Incentive Stock Option Agreement (1)
4.4 Form of Non Qualified Stock Option Agreement (1)
4.5 Form of Lock-Up Agreement to be entered into by the Company with Wings Fund, Inc., Roland
Bryan, Mark J. Richardson, and Chris Outwater, dated as of May 2, 2009 (6)
10.1 Lease Agreement by and between MachineTalker, Inc. and SecureCoin, Inc., dated August 20,
2003 (1)
10.2 Agreement No. CA-00062 by and between MachineTalker, Inc. and Kellogg, Brown & Root
Services, Inc., dated December 20, 2004 (2)
10.3 Agreement by and between MachineTalker, Inc. and Science Applications International
Corporation, dated July 1, 2004 (1)
10.4 Acquisition Agreement for Wideband Detection Technologies, Inc. dated July 20, 2007 (4)
10.5 Acquisition Agreement for Micro Wireless Technologies, Inc. dated December 28, 2007 (5)
10.6 Stock Purchase Agreement with Wings Fund, Inc., a Nevada corporation, and Pearl
Innovations, LLC, a Nevada limited liability company, dated as of May 5, 2009 (6)
14.1 Code of Conduct (3)
31.1 Section 302 Certification
32.1 Section 906 Certification
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(1) Incorporated by reference to the Form SB-2 Registration
Statement filed with the Securities and Exchange Commission
dated August 1, 2005.
(2) Incorporated by reference to Amendment No. 4 to the Form SB-2
Registration Statement filed with the Securities and Exchange
Commission dated November 2, 2005.
(3) Incorporated by reference to the Form 10-KSB filed with the
Securities and Exchange Commission dated April 14, 2007.
(4) Incorporated by reference to the Form 8K filed with the
Securities and Exchange Commission dated July 20, 2007.
(5) Incorporated by reference to the Form 8K filed with the
Securities and Exchange Commission dated January 3, 2008.
(6) Incorporated by reference to the Form 8K filed with the
Securities and Exchange Commission dated May 13, 2009.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 10, 2009 MACHINETALKER, INC.
By: /s/ Roland Bryan
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Roland Bryan, Chairman of the Board, Chief
Executive Officer, President (Principal
Executive Officer), and Chief Financial
Officer (Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
By: /s/ Roland Bryan Dated: November 10, 2009
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Roland Bryan, Chairman of the Board, Chief
Executive Officer, President (Principal Executive
Officer), and Chief Financial Officer
(Chief Accounting Officer)
By: /s/ Mark J. Richardson Dated: November 10, 2009
---------------------------------------------------
Mark J. Richardson, Director
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