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:
X Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/_/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant toss.240.14a-12
IMAGING3, INC.
----------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/_/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/_/ Fee paid previously with preliminary materials.
/_/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 30, 2010
DEAR STOCKHOLDER:
Notice is hereby given that the 2010 Annual Meeting of Stockholders
("Annual Meeting") of Imaging3, Inc. ("Imaging3" or the "Company") will be held
at 10:00 a.m. Pacific Time, on Thursday, September 30, 2010 at 3200 W. Valhalla
Drive, Burbank, California 91505.
At the Annual Meeting, you will be asked to consider and vote upon the
following proposals:
1. An amendment to the Company's Articles of Incorporation in
order to increase the number of authorized shares of common
stock from 500,000,000, par value $0.001 per share, to
750,000,000, par value $0.001 per share, and to authorize
1,000,000 shares of preferred stock, par value $0.001 per
share.
2. An amendment to the Company's Bylaws to increase the size of
the Company's Board of Directors from two (2) to a range of
five (5) to nine (9), with the exact number of directors to be
seven (7).
3. Provided the amendment to the Company's Bylaws is adopted, the
election of three members of the Board of Directors to hold
office until the next annual meeting of stockholders or until
their respective successors have been elected and qualified.
If the amendment to the Company's Bylaws is not adopted, then
the election of two members of the Board of Directors to hold
office until the next annual meeting of stockholders or until
their respective successors have been elected and qualified.
4. Ratification of the appointment M&K CPAS, PLLC as Imaging3,
Inc.'s ("Imaging3") independent registered public accounting
firm for the fiscal year ending December 31, 2010.
5. The transaction of such other business and act upon any other
matter which may properly come before the annual meeting or
any adjournment or postponement of the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on September 1,
2010 as the record date for the determination of stockholders entitled to notice
of and to vote at this 2010 Annual Meeting and at any adjournment or
postponement thereof.
A copy of the Company's Form 10-K for the fiscal year ended December
31, 2009 is included with this Proxy Statement. A copy of the Annual Report and
Proxy Statement can also be found on the Internet at www.imaging3.com.
Sincerely,
/s/ Dean Janes
Dean Janes
Chairman and Chief Executive Officer
IMPORTANT
PLEASE SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
POSTAGE-PAID RETURN ENVELOPE SO THAT YOUR SHARES MAY BE VOTED IF YOU ARE UNABLE
TO ATTEND THE ANNUAL MEETING.
IMAGING3, INC.
3200 W. VALHALLA DRIVE
BURBANK, CALIFORNIA 91505
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 30, 2010
- --------------------------------------------------------------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy ("Proxy") is solicited on behalf of the Board of
Directors (the "Board") of Imaging3, Inc., a California corporation ("Imaging3"
or the "Company"), for use at its 2010 Annual Meeting of Stockholders (the
"Annual Meeting") to be held 10:00 a.m. Pacific Time, on Thursday, September 30,
2010 at 3200 W. Valhalla Drive, Burbank, California 91505 and at any adjournment
or postponement thereof.
This Proxy Statement and the accompanying form of Proxy were first
mailed to all stockholders entitled to vote at the Annual Meeting on or about
September 1, 2010.
The Company's principal executive offices are located at 3200 W.
Valhalla Drive, Burbank, California 91505. Its telephone number is (818)
260-0930.
RECORD DATE AND VOTING
Stockholders of record at the close of business on September 1, 2010
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
As of the close of business on the Record Date, there were 375,749,189 shares of
the Company's Common Stock (the "Common Stock") outstanding and entitled to
vote. Each stockholder is entitled to one vote for each share of Common Stock
held by such stockholder as of the Record Date.
The required quorum for the transaction of business at the Annual
Meeting is a majority of the shares of Common Stock issued and outstanding on
the Record Date. Shares that are voted "FOR," "AGAINST," or "ABSTAIN" on a
matter are treated as being present at the meeting for purposes of establishing
a quorum. Broker non-votes (i.e., the submission of a Proxy by a broker or
nominee specifically indicating the lack of discretionary authority to vote on
the matter) are also counted for purposes of determining the presence of a
quorum for the transaction of business. Shares voted "FOR" or "AGAINST" a
particular matter presented to stockholders for approval at the Annual Meeting
will be treated as shares entitled to vote ("Votes Cast") with respect to such
matter. Abstentions also will be counted toward the tabulation of Votes Cast on
proposals presented to the stockholders and will have the same effect as
negative votes. Broker non-votes will not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Accordingly, broker non-votes will not affect
the outcome of the voting on a proposal that requires a majority of the Votes
Cast (such as an amendment to, or adoption of, a stock purchase plan).
All votes will be tabulated by the inspector of election appointed for
the Annual Meeting, who will separately tabulate affirmative and negative votes,
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abstentions and broker non-votes. Stockholders may cumulate votes in the
election of directors. If a choice as to the matters coming before the Annual
Meeting has been specified by a stockholder on the Proxy, the shares will be
voted accordingly. If a Proxy is returned to the Company and no choice is
specified, the shares will be voted "FOR" each of the Company's nominees for
director and "FOR" the approval of each of the proposals described in the Notice
of Annual Meeting of Stockholders and in this Proxy Statement.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting the Corporate Secretary, in writing
at 3200 W. Valhalla Drive, Burbank, California 91505 or by telephone at (818)
260-0930. To provide the Company sufficient time to arrange for reasonable
assistance, please submit such requests by September 15, 2010.
REVOCABILITY OF PROXIES
Any stockholder giving a Proxy pursuant to this solicitation, and any
beneficial owner of the stock who has voting power over it for which a Proxy has
been submitted, may revoke it at any time prior to the meeting. Revocation is
accomplished by filing with the Secretary of the Company at its principal
executive offices at 3200 W. Valhalla Drive, Burbank, California 91505, a
written notice of such revocation or a duly executed Proxy bearing a later date,
or by attending the Annual Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of this solicitation, including
the preparation, assembly, printing and mailing of the Notice of Annual Meeting,
this Proxy Statement, the Proxy and any additional solicitation materials
furnished to stockholders. Copies of solicitation materials will be furnished to
brokerage houses, fiduciaries and custodians holding shares in their names that
are beneficially owned by others so that they may forward this solicitation
material to such beneficial owners. To assure that a quorum will be present in
person or by proxy at the Annual Meeting, it may be necessary for certain
officers, directors, employees or other agents of the Company to solicit proxies
by telephone, facsimile or other means or in person. The Company will not
compensate such individuals for any such services. Except as described above,
the Company does not presently intend to solicit proxies other than by mail.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's fiscal 2011 annual
meeting of stockholders is the close of business on May 30, 2011. Proposals of
stockholders intended to be presented at the Company's fiscal 2010 annual
meeting of stockholders without inclusion of such proposals in the Company's
proxy statement and form of proxy relating to the meeting must be received by
the Company no later than the close of business on April 30, 2011 and no earlier
than the close of business on May 30, 2011.
* * * * *
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PROPOSALS TO BE VOTED ON
PROPOSAL NO. 1
AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE
AMOUNT OF AUTHORIZED COMMON STOCK
As described in the accompanying NOTICE, the Company proposes to amend
its Articles of Incorporation in order to increase the number of authorized
shares of the Company's common stock from 500,000,000 to 750,000,000, par value
$0.001 per share (the "Common Stock Articles Amendment"). As of September 1,
2010 and before the increase in authorized shares, 124,250,811 shares of the
Company's common stock are not reserved for any specific use and are available
for future issuance. As of September 1, 2010 and after the increase in
authorized shares, 374,250,811 shares of the Company's common stock are not
reserved for any specific use and are available for future issuance, except that
the Company may set aside shares (currently estimated to be 16,000,000) to be
authorized for a customary stock option plan for the Company's directors,
officers, employees and key consultants in the future. The Company's Board of
Directors has not yet adopted such a plan and is not certain when the plan will
be adopted. If and when such a plan is adopted, the Company will then submit it
to the shareholders for a vote to ratify it.
The Board of Directors of the Company voted unanimously to implement
the Common Stock Articles Amendment because the Board of Directors believes that
an increase to the number of authorized shares of the Company's common stock
will allow the Company to raise part of the capital necessary for the Company to
grow its business in the future.
The Company is not expected to experience a material tax consequence as
a result of the Common Stock Articles Amendment. Increasing the number of
authorized shares of the Company's common stock may, however, subject the
Company's existing shareholders to future dilution of their ownership and voting
power in the Company.
POTENTIAL ANTI-TAKEOVER EFFECT
The additional shares of common stock that would become available for
issuance if the proposal were adopted could also be used by the Company to
oppose a hostile takeover attempt or delay or prevent changes in control or
management of the Company. For example, without further stockholder approval,
the Board could strategically sell shares of common stock in a private
transaction to purchasers who would oppose a takeover or favor the current
Board. Although this proposal to increase the authorized common stock has been
prompted by business and financial considerations and not by the threat of any
hostile takeover attempt (nor is the Board currently aware of any such attempts
directed at the Company), nevertheless, stockholders should be aware that
approval of this Proposal No. 1 could facilitate future efforts by the Company
to deter or prevent changes in control of the Company, including transactions in
which the stockholders might otherwise receive a premium for their shares over
then current market prices.
REQUIRED VOTE
Approval of the Common Stock Articles Amendment requires the
affirmative "FOR" vote of a majority of the Votes Cast on the proposal. Unless
marked to the contrary, proxies received will be voted "FOR" approval of the
Common Stock Articles Amendment.
RECOMMENDATION
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE COMMON STOCK
ARTICLES AMENDMENT.
* * * * *
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PROPOSAL NO. 2
AMENDMENT TO ARTICLES OF INCORPORATION TO AUTHORIZE PREFERRED STOCK
As described in the accompanying NOTICE, the Company proposes to amend
its Articles of Incorporation in order to authorize 1,000,000 shares of
preferred stock, par value $0.001 per share (the "Preferred Stock Articles
Amendment").
The Board of Directors of the Company voted unanimously to implement
the Preferred Stock Articles Amendment because the Board of Directors believes
that the authorization of shares of preferred stock will allow the Company to
raise part of the capital necessary for the Company to grow its business in the
future. At this time, however, the Company does not plan to create a series of
preferred stock. When the Company determines to create a series of preferred
stock, the terms of the preferred stock, including dividend or interest rates,
conversion prices, voting rights, redemption prices, maturity dates, and similar
matters will be determined by the Company's Board of Directors.
The Company is not expected to experience a material tax consequence as
a result of the Preferred Stock Articles Amendment. Authorizing preferred stock
may, however, subject the Company's existing shareholders to future dilution of
their ownership and voting power in the Company.
POTENTIAL ANTI-TAKEOVER EFFECT
The shares of preferred stock that would become available for issuance
if the proposal were adopted could also be used by the Company to oppose a
hostile takeover attempt or delay or prevent changes in control or management of
the Company. For example, without further stockholder approval, the Board could
strategically sell shares of preferred stock in a private transaction to
purchasers who would oppose a takeover or favor the current Board. Although this
proposal to authorize preferred stock has been prompted by business and
financial considerations and not by the threat of any hostile takeover attempt
(nor is the Board currently aware of any such attempts directed at the Company),
nevertheless, stockholders should be aware that approval of this Proposal No. 2
could facilitate future efforts by the Company to deter or prevent changes in
control of the Company, including transactions in which the stockholders might
otherwise receive a premium for their shares over then current market prices.
REQUIRED VOTE
Approval of the Preferred Stock Articles Amendment requires the
affirmative "FOR" vote of a majority of the Votes Cast on the proposal. Unless
marked to the contrary, proxies received will be voted "FOR" the Preferred Stock
Articles Amendment.
RECOMMENDATION
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PREFERRED STOCK
ARTICLES AMENDMENT.
* * * * *
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PROPOSAL NO. 3
AMENDMENT TO BYLAWS
As described in the accompanying NOTICE, the Company proposes to amend
its Bylaws (the "Bylaws Amendment") in order to increase the size of the
Company's Board of Directors from two (2) to a range of five (5) to nine (9),
with the exact number of directors to be seven (7) (the "Bylaws Amendment").
The Board of Directors of the Company approves of implementing the
Bylaws Amendment because the Board of Directors believes that increasing the
size of the Company's Board of Directors is necessary to allow the Company to
add additional advisors to the Board of Directors, including advisors who are
independent as defined in Rule 4200 of Financial Industry Regulatory Authority's
listing standards. In particular, the Board is motivated to recruit, appoint,
and in the future nominate candidates for director who are qualified to serve on
the Audit Committee.
The Company last elected directors on October 1, 2004, prior to the
Company becoming a reporting company.
The Company's Bylaws permit the Company's Board of Directors to fill
the vacancies on the Board created by the proposed Bylaws Amendment. Although
the Company's Board of Directors does not intend to fill the vacancies,
circumstances may change, such as the opportunity to fill a vacancy with a
strong independent director, and there is no assurance that the Board of
Directors will not fill one or more vacancies prior to the Company's next
shareholder meeting.
The Company is not expected to experience a tax consequence as a result
of the Bylaws Amendment.
REQUIRED VOTE
Approval of the Bylaws Amendment requires the affirmative "FOR" vote of
a majority of the Votes Cast on the proposal. Unless marked to the contrary,
proxies received will be voted "FOR" the Bylaws Amendment.
RECOMMENDATION
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE BYLAWS AMENDMENT.
* * * * *
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PROPOSAL NUMBER 4
ELECTION OF DIRECTORS
The Board recommended and nominated Dean Janes, Xavier Aguilera, and
Christopher Sohn as nominees for election at the annual meeting. At the Annual
Meeting, three directors will be elected to the Board of Directors. Except as
set forth below, unless otherwise instructed, the persons appointed in the
accompanying form of proxy will vote the proxies received by them for the
nominees named below, who are all presently directors of Imaging3. Your proxies
cannot be voted for a greater number of persons than the number of nominees
named in the proxy statement. In the event that any nominee becomes unavailable,
the proxy holders will vote in their discretion for a substitute nominee. The
term of office of each person elected as a director will continue until the next
annual meeting or until a successor has been elected and qualified, or until the
director's earlier death, resignation or removal.
After the Annual Meeting, the Company's Board of Directors will still
have four vacancies. The existing directors have not at this time identified any
candidates to fill those vacancies, but will have the right to fill them until
the next Annual Meeting of Stockholders. Accordingly, the vacancies may be
filled by resolution of the Company's Board of Directors, or may be filled by
election at the next Annual Meeting of Stockholders in 2011.
If Proposal Number 3 is not adopted by the shareholders, then only two
directors will be elected at the Annual Meeting of the Shareholders. In that
case, the two directors with the highest number of votes will be elected to the
Board.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The following information provided with respect to the principal occupation,
affiliations and business experience during the last five years for each of the
nominees has been furnished to us by such nominees. We identify and describe the
key experience, qualifications and skills our directors bring to the Board that
are important in light of the Company's business and structure. The directors'
experiences, qualifications and skills that the Board considered in their
nomination are included in their individual biographies.
o Leadership experience. We believe that directors with experience in
significant leadership positions such as chief executive officer and
chief financial officer provide the Company with special insights.
These people generally possess leadership qualities and the ability to
identify and develop those qualities in other people. They demonstrate
a practical understanding of organizations, processes, strategy, risk
management and the methods to drive change and growth. Through their
service as leaders in other organizations, they also have access to
important sources of market intelligence, analysis and relationships
that may benefit the Company.
o Finance experience. We believe that an understanding of finance and
financial reporting processes is important for our directors. The
Company measures its operating and strategic performance by reference
to financial targets. We seek to have directors who are financially
knowledgeable.
o Industry experience. We seek to have directors with experience as
executives, directors or in other leadership positions in the industry
in which we participate.
o Government experience. We seek directors with governmental experience
because of our interactions with a variety of governing agencies, both
as customers and regulatory bodies. The Company recognizes the
importance of working constructively with governments and values
directors with this experience.
o Technology and education experience; As a technology based company, we
seek directors with backgrounds in technology and education because our
success depends in part on developing and accessing new ideas.
-6-
The name and certain information regarding each nominee are set forth
below as of September 1, 2010. There are no family relationships among directors
or executive officers of Imaging3.
NAME AGE CURRENT POSITION WITH IMAGING3
- --------------------- ------ ---------------------------------------------------
Dean Janes 44 Chairman and Chief Executive Officer
Xavier Aguilera (1) 61 Executive Vice President, Chief Financial Officer,
Corporate Secretary and Director
Christopher Sohn 49 President and Chief Operating Officer
- ---------------------
(1) Member of Audit Committee.
DEAN JANES has been the Chairman and Chief Executive Officer of the
Company since its inception in October 1993. Mr. Janes founded Imaging Services,
Inc. in October 1993 which changed its name to Imaging3, Inc. in 2002. Mr. Janes
was the President and Chief Executive Officer of Imaging Services, Inc. from
1993 to 2001, where his responsibilities included business development and
overseeing operations, sales and marketing, operations and finance. In 2001 Mr.
Janes brought Mr. Christopher Sohn on as President and Chief Operating Officer
with Mr. Janes taking the position of Chairman and Chief Executive Officer. His
duties remain the same with the exception of directly overseeing operations and
finance. Prior to founding the Company, Mr. Janes worked for COHR, Center for
Health Resources, from 1992 to 1993 as a Senior Field Service Engineer. His job
responsibilities included technical support for junior engineers and business
development of service contracts and revenues for all makes of medical imaging
equipment. From 1991 to 1992, Mr. Janes worked for Toshiba American Medical
Corporation, where his job title was National Technical Support Engineer. His
primary responsibilities were to assist Service Engineers throughout the United
States with problems and design errors with Cath Labs and Angio Suites. He
served as a conduit between Japan and the Service Engineers in the United
States. From 1990 to 1991, Mr. Janes worked for OEC Medical Systems, Inc. as a
Senior Field Service Engineer, where his responsibilities were to maintain,
repair and install c-arms and urology systems in the Southern California area.
From 1988 to 1990 Mr. Janes worked for Kaiser Medical Physics as an in-house
X-ray Service Engineer for Kaiser Harbor City Hospital. His responsibilities
were to maintain and repair medical imaging equipment within the hospital and
three outlying clinics. Mr. Janes also served in the United States Army Reserves
as a Biomedical engineer, where his service was from 1983 to 1991, with a tour
in the first Gulf War from December 1990 to April 1991. He majored in
Bio-Medical Electronic Engineering at the University of Colorado Technical
Institute (1984-1988). Mr. Janes is the principal inventor of Imaging3 real-time
3D medical diagnostic imaging technology. Mr. Janes is a member of MENSA.
Mr. Jane's qualifications:
o Leadership experience - Chairman of the Board, founder and
Chief Executive Officer of the Company since its inception in
October 1993.
o Finance experience - As founder and Chief Executive Officer,
Mr. Janes has supervised the financial management of the
Company since its inception.
o Industry experience - Mr. Janes is the founder of the Company
who has developed and implemented the Company's business plan
since inception, and is managing the Company's submissions to
the Food and Drug Administration. He has senior management
experience with OEC Medical Systems, Inc., Kaiser Medical
Physics, the Center for Health Resources and other firms in
the industry.
o Government experience - Mr. Janes served in the United States
Army Reserves as a Biomedical engineer.
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o Technology and education experience - Mr. Janes is an inventor
of the Company's proprietary real time 3D medical diagnostic
imaging technology, is a member of MENSA, and majored in
Bio-Medical Engineering at the University of Colorado
Technical Institute.
XAVIER AGUILERA has been the Executive Vice President, Chief Financial
Officer and Corporate Secretary of the Company since June 1999. Mr. Aguilera's
responsibilities include managing the Company's finances, accounting, taxes,
credit facilities and interfacing and developing new relationships with banks
and other financial institutions. Prior to working for the Company, Mr. Aguilera
was self-employed as a consultant for Xavier Aguilera & Associates from 1997 to
1999. His responsibilities were to manage and open primary healthcare facilities
throughout Southern California. He provided property management, estate
planning, credit facility and Import/Export consulting for several businesses in
Southern California. From 1995 to 1997, Mr. Aguilera was the Chief
Administrative Officer for East Los Angeles Doctors Hospital, where his
responsibilities were to manage administrative personnel within the hospital,
manage public relations, business development and JCAHO compliance. From 1992 to
1995, Mr. Aguilera was the Chief Executive Officer for El Centro Human Services
Corporation, where his responsibilities were to develop and implement a
community based mental health facility consisting of eight satellite centers. He
managed a $9.4 million budget and a full time staff of 240 employees. From 1990
to 1992, Mr. Aguilera was a Deputy Director/Administrator for Northeast
Community Clinic, where his responsibilities were to implement and administer
the clinics health programs and oversee operations. From 1988 to 1990, Mr.
Aguilera was self employed as a consultant for finance, management and
international finance. He provided these services to banks as well as businesses
throughout Southern California. From 1987 to 1988, Mr. Aguilera was Vice
President of International Banking Marketing for California Commerce Bank, where
his responsibilities were to manage and administer a $14 million portfolio,
develop new business in the Southern California with Hispanic Businesses and
develop business relationships with Northern Mexico businesses and banks. From
1981 to 1987, Mr. Aguilera was an Assistant General Manager/Deputy Director for
Banco Nacional de Mexico (BANAMEX). He was responsible for $60 million in new
deposits as well as new business development and management of commercial and
personal lending departments. He holds a bachelor degree in business from
California State University at Northridge (1983) and a Certificate of Medical
Management from the University of California at Los Angeles (1995).
Mr. Aguilera's qualifications:
o Leadership experience - Mr. Aguilera served as our Executive
Vice President, Chief Financial Officer and Corporate
Secretary since June 1999 and Chairman of the Audit Committee
since 2003.
o Finance experience - Mr. Aguilera is currently the Chief
Financial Officer of the Company and had extensive experience
in financial management with other companies prior to joining
the Company in June 1999.
o Industry experience - Mr. Aguilera has over 25 years of
financial and management experience in the medical and banking
industries.
o Technology and education experience - Mr. Aguilera has a
Bachelors Degree in Business from California State University
at Northridge and a Certificate of Medical Management from the
University of California at Los Angeles.
CHRISTOPHER SOHN has been the President and Chief Operating Officer of
the Company since June 2001. As a Chief Operating Officer for Imaging3, Mr.
Sohn's responsibilities include developing international sales, marketing and
resourcing network, organizing and strategizing with manufacturing companies and
researching new sources of products from developing countries for import into
the United States, overseeing of business operations and human resources. Prior
to working for the Company, Mr. Sohn was President and Chief Executive Officer
of DMI, Inc. from 1994 to 2000. As Chief Executive Officer for an international
trading company of diagnostic medical imaging system, Mr. Sohn's main
responsibility was to develop business relationships and dealer networks in
Central and South American markets, connecting this with the needs of Asian
medical equipment manufactures as well as manufactures in the United States and
North America. Mr. Sohn has also organized and participated in more than a dozen
medical exhibitions during this period including the Hospitalar (Brazil
1995-2000), and RSNA during the same period. From 2000 to 2001, Mr. Sohn was
Chief Executive Officer of ISOL America, Inc., where his responsibilities
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included starting up an overseas headquarters for the parent company ISOL Korea
in the United States as well as setting up a distribution and dealer network in
the United States, Central and South America for ISOL's products, which included
MRI, Magnetic Resonance Imaging and Bone Desitometry Systems. Mr. Sohn also
assisted in the Company's efforts to achieve FDA and UL approval of its products
as well as researching manufacturing partners for the assembly and manufacture
of ISOL products within the United States. Mr. Sohn majored in biochemistry and
computer science at the University of California at Los Angeles (1978-1982).
Mr. Sohn's qualifications:
o Leadership experience - President and Chief Operating Officer
of the Company since June 2001, and previously President and
Chief Executive Officer of DMI, Inc., an international trading
company for diagnostic medical imaging systems.
o Industry experience - Mr. Sohn has organized and participated
in more than a dozen medical exhibitions and serves and has
served in senior management positions with the Company and
other firms in the medical imaging systems industry.
o Technology and education experience - Mr. Sohn majored in
biochemistry and computer science at the University of
California at Los Angeles.
No officer or director is required to make any specific amount or
percentage of his business time available to us. Each of our officers intends to
devote such amount of his or her time to our affairs as is required or deemed
appropriate by us.
REQUIRED VOTE
If the Bylaws Amendment is adopted, the three nominees receiving the
highest number of affirmative "FOR" votes shall be elected as directors. If the
Bylaws Amendment is not adopted, the two nominees receiving the highest number
of affirmative "FOR" votes shall be elected as directors. Stockholders may
cumulate votes in the election of directors. Unless marked to the contrary,
proxies received will be voted "FOR" these nominees.
RECOMMENDATION
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION TO THE
BOARD OF DIRECTORS OF EACH OF THE FOREGOING NOMINEES.
PREVIOUS ELECTION OF DIRECTORS
At the time of the election of directors on October 1, 2004, the
Company was still subject to the reporting and proxy solicitation rules of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), because the
Company did not file its Form 15 voluntarily withdrawing from those requirements
until July 9, 2004. Under Rule 12g-4 of the Exchange Act, the Company was
required to comply with the Exchange Act rules and regulations for a transition
period of 90 days after the filing of Form 15, which means that the Company was
required to comply until October 8, 2004. Consequently, by electing directors
without Exchange Act compliance before October 8, 2004, the Company
inadvertently committed a technical violation of the Exchange Act at that time.
The Company has not been notified of any planned enforcement action by the
Securities and Exchange Commission nor shareholder lawsuit. While management
does not believe that the Company will incur damage or be subject to legal
proceedings because of the inadvertent violation, there is no assurance that an
adverse action relating to that election of directors may not be brought against
the Company in the future.
* * * * *
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PROPOSAL NUMBER 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed M&K CPAS,
PLLC as the independent registered public accounting firm to audit our
consolidated financial statements for the year ending December 31, 2010.
Notwithstanding its selection, the Audit Committee, in its discretion, may
appoint another independent registered public accounting firm at any time during
the year if the Audit Committee believes that such a change would be in the best
interest of Imaging3 and its stockholders. If the appointment is not ratified by
our stockholders, the Audit Committee may reconsider whether it should appoint
another independent registered public accounting firm. Representatives of M&K
CPAS, PLLC are expected to attend the Annual Meeting, where they will be
available to respond to appropriate questions and, if they desire, to make a
statement.
Our prior accounting firm, Kabani & Company, Inc., Certified Public
Accountants ("KC"), was dismissed in April 2009 after it completed the audit of
our financial statements for the fiscal year ending December 31, 2008. KC's
report on our financial statements for our past two fiscal years ending December
31, 2008 did not contain an adverse opinion or a disclaimer of opinion, or was
qualified or modified as to uncertainty, audit scope, or accounting principles,
other than the "going concern" qualifications. The decision to change
accountants was recommended by the Company's Audit Committee. During the past
two fiscal years the Company did not have any disagreements with KC on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of KC, would have caused it to make reference to the subject matter
of the disagreement in connection with its reports. The Company did not have any
disagreements with KC with respect to accounting principles, financial statement
disclosure, or auditing scope or procedure, nor were there any "reportable
events" during that time period. The Company reported the change of accountants
on its Report on Form 8-K, dated April 13, 2009, and has provided KC and M&K
CPAS, PLLC with a copy of this disclosure in this Proxy Statement.
REQUIRED VOTE
Ratification of the appointment of M&K CPAS, PLLC as our independent
registered public accounting firm for the year ending December 31, 2010 requires
the affirmative "FOR" vote of a majority of the Votes Cast on the proposal.
Unless marked to the contrary, proxies received will be voted "FOR" ratification
of the appointment of M&K CPAS, PLLC.
RECOMMENDATION
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF M&K CPAS, PLLC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR THE YEAR ENDING DECEMBER 31, 2010.
* * * * *
-10-
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE MATTERS
We are committed to maintaining the highest standards of business
conduct and corporate governance, which we believe are essential to running our
business efficiently, serving our stockholders well and maintaining our
integrity in the marketplace. We have adopted a code of business conduct and
ethics for directors, officers (including our principal executive officer and
principal financial officer) and employees, known as the Imaging3 Code of
Conduct. The Imaging3 Code of Conduct is available at: http://www.imaging3.com.
Imaging3 will post on this web site any amendments to the Imaging3 Code of
Conduct or waivers of the Imaging3 Code of Conduct for directors and executive
officers.
Stockholders may request free printed copies of the Imaging3 Code of
Conduct from:
Investor Relations
Imaging3 Inc.
3200 W. Valhalla Drive
Burbank, California 91505
Our Board of Directors held a total of five meetings during our fiscal
year ended December 31, 2009. Each director attended all of the fiscal year 2010
meetings of our Board of Directors and each committee on which he served. We
have no formal policy regarding attendance by our directors at Board meetings,
although we encourage attendance and most of our directors have historically
attended the meetings. Our executive officers are elected annually by our Board
of Directors and serve at the discretion of the Board of Directors. Our
directors hold office until the expiration of their respective terms or until
their successors have been duly elected and qualified.
BOARD OF DIRECTORS INDEPENDENCE
The Board of Directors has determined that none of the director
nominees standing for election is an "independent director" as defined in Rule
4200 of Financial Industry Regulatory Authority's ("FINRA") listing standards.
In determining the independence of our directors, the Board of Directors has
adopted independence standards that mirror exactly the criteria specified by
applicable laws and regulations of the Securities and Exchange Commission (the
"SEC") and FINRA rules. In making the determination of the independence of our
directors, the Board of Directors considered all transactions in which Imaging3
and any director had any interest, including those discussed under "Certain
Relationships and Related Transactions" below, and transactions involving
payments made by Imaging3 to companies in the ordinary course of business where
the candidate serves on the board of directors or as a member of the executive
management of the other company.
BOARD LEADERSHIP STRUCTURE AND COMMITTEE COMPOSITION
Mr. Dean Janes serves as both our Chairman of the Board and Chief
Executive Officer. At this time, the Board of Directors believes that Mr. Janes'
dual role serves the best interests of the Company and our stockholders. As
Chairman of the Board, Mr. Jane consults with the chairpersons of the committees
of the Board of Directors and establishes the agenda for each meeting of the
Board of the Directors. As our founder and our Chairman of the Board and Chief
Executive Officer since inception, Mr. Jane is uniquely suited to lead our Board
of Directors and to ensure that critical business issues are brought before the
Board of Directors. We believe that Mr. Janes' guidance enables the Board of
Directors to efficiently and effectively develop and implement business
strategies and oversee our risk management efforts.
The Board of Directors appreciates that the advantages gained by having
a single Chairman of the Board and Chief Executive Officer must be viewed in
light of potential independence concerns. The Board of Directors believes that
we have adequate safeguards in place to address those concerns. The Board of
Directors meets regularly, and each director is an equal participant in each
discussion made by the full Board of Directors.
Each of our directors is involved in our management. As necessary or
appropriate, the Board of Directors and its committees may also retain outside
legal, financial or other advisors.
-11-
The Board of Directors has appointed an Audit Committee. As of
September 1, 2010, the sole member of the Audit Committee is Xavier Aguilera,
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 written charter of the Audit Committee. The Audit
Committee is authorized by the Board of Directors to review, with the Company's
independent accountants, the annual financial statements of the Company prior to
publication, and to review the work of, and approve non-audit services performed
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 the Company. The Audit Committee was formed on
August 31, 2003. The Audit Committee held one meeting during fiscal year ended
December 31, 2009.
The Company established a Compensation Committee on August 31, 2003,
which consists of one director, Dean Janes. The Compensation Committee is
responsible for reviewing general policy matters relating to compensation and
benefits of directors and officers, determining the total compensation of our
officers and directors. The Board of Directors does not have a nominating
committee. Therefore, the selection of persons or election to the Board of
Directors was neither independently made nor negotiated at arm's length.
BOARD ROLE IN RISK OVERSIGHT
The Board of Directors carries out its role in the oversight of risk
both directly and through committees. The Board of Directors' direct role
includes the consideration of risk in the strategic and operating plans that are
presented to it by management. The various committees established by the Board
of Directors carry out the Board of Directors' oversight of risk as follows:
o The Audit Committee oversees the integrity of the Company's
financial reporting process and internal control environment,
legal and regulatory compliance, qualifications of our
independent registered public accounting firm, performance of
our internal audit function, financial and disclosure
controls, adherence to the Company's Code of Business Conduct
and Code of Ethics, and makes determinations regarding
significant transactions with related parties.
o The Compensation Committee determines the compensation of our
executive officers and directors, administers benefit plans
and policies with respect to our executive officers and
considers whether any of those plans or policies create risks
that are likely to have a material adverse effect on the
Company.
At this time all of our committees lack independence because all
directors are also executive officers, in part because of the small size of our
Board. The Company intends to try to expand the Board of Directors and its
committees in the future by appointing and nominating for election new
independent members to fill the four vacancies that currently exist on the Board
of Directors. While our Board of Directors oversees our management of risk as
outlined above, management is responsible for identifying and managing risks.
NOMINATIONS PROCESS AND DIRECTOR QUALIFICATIONS
The Board of Directors has not yet established a Nominating and
Corporate Governance Committee. The current small size of the Board has not yet
made the formation of those committees feasible. Accordingly, the Board of
Directors reviews the skills and characteristics required of Board members. The
two current members of the Board of Directors, Mr. Dean Janes and Mr. Xavier
Aguilera, are both involved in the nomination consideration process. The Board
will consider a candidate's independence, as well as the perceived needs of the
Board and the candidate's background, skills, business experience and expected
contributions. At a minimum, members of the Board must possess the highest
professional ethics, integrity and values, and be committed to representing the
long-term interests of our shareholders. The Company does not have a particular
policy regarding considering potential candidates for nomination for election as
directors that may be suggested by our shareholders. We believe that we would
give them the same consideration as other candidates.
They must also have an inquisitive and objective perspective, practical
wisdom and mature judgment. The Board may also take into account the benefits of
diverse viewpoints, as well as the benefits of constructive working
relationships among directors.
-12-
The Board of Directors also reviews and determines whether existing
members of the Board should stand for re-election, taking into consideration
matters relating to the number of terms served by individual directors and the
changing needs of the Board. We do not have a limit on the number of terms an
individual may serve as a director on our Board.
The Board of Directors utilizes a variety of methods for identifying
and evaluating nominees for director. The Board regularly assesses the
appropriate composition, size and independence of the Board, and whether any
vacancies are expected due to change in employment or otherwise. In the event
that vacancies are anticipated, or otherwise arise, the Board considers various
potential candidates for director. Candidates are evaluated at regular or
special meetings of the Board of Directors, and may be considered at any point
during the year. The Board will consider shareholder recommendations for
candidates for the Board that are properly submitted in the same manner it
considers nominees from other sources. In evaluating such recommendations, the
Board will use the qualifications standards described above and will seek to
achieve a balance of knowledge, experience and capability on the Board.
In the future the Company will seek to add new independent directors to
its Board of Directors by appointing or nominating them for election to fill
vacancies that now exist on the Board. When making determinations regarding
independence, the Board of Directors will periodically evaluate the independence
of each member and prospective member of the Board of Directors. The Board of
Directors will analyze whether a director or candidate is independent by
evaluating, among other factors, the following:
1. whether the person, or any of such person's family members,
has accepted any compensation from us in excess of $120,000
during any period of twelve consecutive months within the
three years preceding the determination of independence, other
than (i) as compensation for Board or Board committee service,
(ii) compensation paid to a family member who is employed by
us other than as an executive officer, or(iii) benefits under
a tax-qualified retirement plan or non-discretionary
compensation;
2. whether the person has any material relationship with us,
either directly, or as a partner, stockholder or officer of an
organization with which we have a relationship;
3. whether the person is our current employee or was one of our
employees within three years preceding the date of
determination;
4. whether the person is, or in the three years preceding the
date of determination has been, affiliated with or employed by
(i) a present internal or external auditor of ours or any
affiliate of such auditor or (ii) any former internal or
external auditor of ours or any affiliate of such auditor,
which performed services for us within three years preceding
the date of determination;
5. whether the person is, or in the three years preceding the
date of determination has been, part of an interlocking
directorate, in which one of our executive officers serves on
the compensation committee of another company that
concurrently employs the director as an executive officer;
6. whether the person receives any compensation from us, other
than fees or compensation for service as a member of the Board
of Directors and any of its committees, including
reimbursement for reasonable expenses incurred in connection
with such service, and for reasonable educational expenses
associated with Board of Directors or committee membership
matters;
7. whether an immediate family member of the person is one of our
current executive officers or was an executive officer within
three years preceding the date of determination;
8. whether an immediate family member of the person is, or in the
three years preceding the date of determination has been,
affiliated with or employed in a professional capacity by (i)
a present internal or external auditor of ours or any of our
affiliates or (ii) any of our former internal or external
auditors or any affiliate of ours which performed services for
us within three years preceding the date of determination; and
-13-
9. whether an immediate family member of the person is or in the
three years preceding the date of determination has been part
of an interlocking directorate in which one of our executive
officers serves on the compensation committee of another
company that concurrently employs the immediate family member
of the member of the Board of Directors as an executive
officer.
The above list is not exhaustive and the Board of Directors considers
all other factors which could assist it in its determination that a person has
no material relationship with us that could compromise that person's
independence.
RISK CONSIDERATIONS IN OUR COMPENSATION PROGRAMS
We have reviewed our compensation structures and policies as they
pertain to risk and have determined that our compensation programs do not create
or encourage the taking of risks that are reasonably likely to have a material
adverse effect on the Company.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders may contact the Board of Directors about bona fide issues or
questions regarding Imaging3 by sending an email to Dean Janes at
djanes@imaging3.com or by writing the Corporate Secretary at the following
address:
Imaging3, Inc.
Attn: Corporate Secretary
3200 W. Valhalla Drive
Burbank, California 91505
EXECUTIVE OFFICERS
Executive officers of the Company, and their ages as of September 1,
2010, are as follows:
NAME AGE CURRENT POSITION WITH IMAGING3
- --------------------- ------ ---------------------------------------------------
Dean Janes 44 Chairman and Chief Executive Officer
Xavier Aguilera (1) 61 Executive Vice President, Chief Financial Officer,
Corporate Secretary and Director
Christopher Sohn 49 President and Chief Operating Officer
See section entitled "Nominees" under Proposal 4, Election of Directors
above, for a brief description of the business experience and educational
background of Mr. Janes, Mr. Aguilera, and Mr. Sohn.
EXECUTIVE COMPENSATION
The following table summarizes compensation paid or accrued by Imaging3
and its subsidiaries for the years ended December 31, 2009 and December 31, 2008
for services rendered in all capacities, by the Chief Executive Officer and the
other most highly compensated executive officers during the fiscal years ended
December 31, 2009 and December 31, 2008.
-14-
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
- ---------------------- ------- ---------- -------- --------- ------------- -------------- --------------- -----------
Dean Janes,
Chief Executive 2008 $138,092 0 0 0 0 0 $138,092
Officer 2009 $149,604 0 0 0 0 0 $149,604
Christopher Sohn,
President and Chief 2008 $115,384 0 0 0 0 0 $115,384
Operating Officer 2009 $125,008 0 0 0 0 0 $125,008
Xavier Aguilera,
Chief Financial
Officer/Treasurer,
Executive Vice
President, and 2008 $92,000 0 0 0 0 0 $92,000
Corporate Secretary 2009 $95,000 0 0 0 0 0 $95,000
Michele Janes,
Vice President of 2008 $46,153 0 0 0 0 0 $46,153
Administration 2009 $49,998 0 0 0 0 0 $49,998
Officers as a Group 2008 $391,629 0 0 0 0 0 $391,629
2009 $369,612 0 0 0 0 0 $369,612
- -------------------------
(1) All officers serve at will without employment contracts except that Dean
Janes is employed under a Consulting Agreement under which the Company pays
Mr. Janes approximately $12,000 per month until either party terminates the
Agreement on 30 days written notice.
EMPLOYMENT AGREEMENTS
Imaging3 and its subsidiaries have not entered into any employment
agreements with their executive officers to date, and do not intend to enter
into employment agreements with them at the time. Imaging3 and its subsidiaries
may enter into employment agreements with them in the future.
Dean Janes, the Company's Chief Executive Officer, is engaged pursuant
to a consulting agreement.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
None of Imaging3's executive officers received any equity awards during
the year ended December 31, 2009.
EMPLOYEE BENEFIT PLANS
The Company has not yet, but may in the future, establish a management
stock option plan pursuant to which stock options may be authorized and granted
to the executive officers, directors, employees and key consultants of the
Company. In the event the Company establishes the stock option plan, the Company
expects to authorize approximately 16,000,000 shares or more for future
issuance.
DIRECTOR COMPENSATION
None of the Company's directors received any compensation for their
respective services rendered to the Company as directors during the year ended
December 31, 2009.
-15-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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 Imaging3 at September 1, 2010. 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 September 1, 2010 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
375,749,189 outstanding shares of common stock. Except as otherwise listed
below, the address of each person is c/o Imaging3, Inc., 3200 W. Valhalla Drive,
Burbank, California 91505. 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.
NUMBER OF SHARES BENEFICIALLY
NAME, TITLE AND ADDRESS OWNED (1) PERCENTAGE OWNERSHIP
- ----------------------- ----------------------------- --------------------
Dean Janes
(includes shares owned by wife, Michele Janes)
Chairman and Chief Executive Officer 59,576,328 15.9%
Christopher Sohn
President and Chief Operating Officer 23,000,000 6.1%
Xavier Aguilera
Director, Chief Financial Officer/Treasurer,
Executive Vice President, and Secretary 200,000 *%
All current Executive Officers as a Group 82,776,328 22.0%
- --------------
* Less than 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
September 1, 2010.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Imaging3's officers and
directors, and certain persons who own more than 10% of a registered class of
Imaging3's equity securities (collectively, "Reporting Persons"), to file
reports of ownership and changes in ownership ("Section 16 Reports") with the
SEC. Reporting Persons are required by the SEC to furnish Imaging3 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 Imaging3's
Reporting Persons during and with respect to the fiscal year ended December 31,
2008 have been complied with on a timely basis, except that our Chief Executive
Officer, Dean Janes, was late on the filing of three Forms 4 covering a total of
eleven transactions.
-16-
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Mr. Janes, the Company, and UBS Financial Services entered into an
arrangement pursuant to which Mr. Janes had agreed to invest in the Company,
using the proceeds from the sale by Mr. Janes of a portion of his existing
shares in the open market. Effective March 23, 2009 and applicable retroactively
to February 4, 2008, Mr. Janes modified and terminated his program with
Imaging3, Inc. and UBS Financial Services. Under the modification, Mr. Janes
will not have the right to purchase any shares of the common stock of the
Company from the proceeds of his sales of stock in the open market through UBS
Financial Services. Furthermore, effective March 23, 2009, Mr. Janes ceased
sales of his common stock in the open market through UBS Financial Services. Mr.
Janes sold a total of 7,532,374 shares of his common stock in the Company in the
open market through UBS Financial Services from February 4, 2008 to March 23,
2009, resulting in net proceeds to Mr. Janes of approximately $610,039.35. Since
February 4, 2008, Mr. Janes has loaned all of those proceeds to the Company
without interest, payable to Mr. Janes on demand. Originally, Mr. Janes had the
right to convert those advances into shares of the Company's common stock, at an
aggregate conversion price approximately equal to the net proceeds from his
stock sales, although no such conversions were ever made. Under the
modifications, Mr. Janes does not have the right to convert any of the advances
into shares of common stock. Instead, Mr. Janes and the Company modified Mr.
Janes' demand notes into long-term noninterest bearing loans payable in full by
the Company on or before December 31, 2012. On December 15, 2008, the Company
prepaid $140,039.35 of the outstanding balance of these promissory notes to Mr.
Janes. On November 5, 2009, the Company prepaid $470,000 of the outstanding
balance of these promissory notes to Mr. Janes. The Company does not intend to
resume or to engage in the future in any other program similar to the one
previously conducted with UBS Financial Services.
As disclosed in its reports on Form 8-K filed with the Securities and
Exchange Commission, during the period from January 25, 2008 to March 23, 2009,
the Chief Executive Officer of the Company sold a portion of the Company's stock
owned by him through UBS Financial Services, Inc., a registered member of FINRA,
in the open market in a series of transactions under Rule 144 of the Securities
Act of 1933, as amended. The Chief Executive Officer then used the net proceeds
of those sales to make loans to the Company. Initially under the program with
UBS, the Chief Executive Officer had the right to convert those loans into newly
issued shares of the Company's common stock at the same price at which he sold
his shares in the open market. The program was modified to provide that those
loans were not convertible into shares but rather became long-term noninterest
bearing loans to the Company. As a result, no shares of the Company's common
stock were issued to the Company's Chief Executive Officer during the UBS
program or from any notes issued to him from the program. The Company terminated
the program in March 2009 when it realized that the program with UBS could be
deemed to be the indirect sale of securities by the Company itself without
registration in violation of the Securities Act of 1933, as amended, even though
there was compliance with the conditions of Rule 144, and even after the program
was modified to eliminate the convertibility of the loans made by the Chief
Executive Officer to the Company. While the Company disagrees with this
interpretation of the UBS program, it recognizes that claims can be made against
it for the indirect public sale of securities without registration as required
by the Securities Act of 1933, as amended. The Company is subject to the risk
that purchasers of securities from the Company's Chief Executive Officer during
the program could attempt to seek the rescission of those sales on the basis
that the shares sold should have first been registered with the Securities and
Exchange Commission. If purchasers were to be successful in making those
rescission claims against the Company and its Chief Executive Officer, or if the
Securities and Exchange Commission were to seek an enforcement action against
the Company for such sales, the Company could experience a material adverse
impact on its financial condition and operating results.
To date, the Company has not been notified of any claim or action nor
has it been threatened with one. Management presently believes that the Company
will not be subject to private claims or an enforcement action from the
Securities and Exchange Commission because (a) it fully disclosed the UBS
program in public reports filed with the Securities and Exchange Commission from
the program's inception, and modified and then terminated the program promptly
upon learning that it could be interpreted to be a plan to evade the
registration requirements of the Securities Act of 1933, as amended, (b) it
-17-
complied with the reporting requirements of Rule 144 of the Securities Act of
1933, as amended, and Section 16 of the Securities Exchange Act of 1934, as
amended, and (c) the Company's stock price has appreciated substantially since
the Chief Executive Officer sold his shares. Furthermore, the Company and its
Chief Executive Officer would vigorously resist such claims on the basis that
there was full compliance with Rule 144 during the UBS program and that the
program was modified so that no new shares of the Company's common stock were
ever issued to replace the shares sold by its Chief Executive Officer. There is
no assurance that the Company or its Chief Executive Officer would prevail in
such a defense, should it ever become necessary.
Mr. Janes is employed pursuant to a consulting agreement for $12,000
per month plus expenses. The Agreement is terminable by either party on 30 days
written notice. The Company owes Mr. Janes $50,766 under the consulting
agreement for the year ended December 31, 2009. On April 13, 2010, the Company
issued a noninterest bearing promissory note to Mr. Janes in the amount of
$66,500, payable on demand, for monies loaned by him to the Company. On June 28,
2010, Mr. Janes loaned another $100,000 to the Company pursuant to a noninterest
bearing promissory note payable on demand.
AUDIT AND NON-AUDIT FEES
Kabani & Company, Inc., Certified Public Accountants ("KC") was the
Company's principal auditing accountant firm for the fiscal year ended December
31, 2008. KC has also provided other non-audit services to the Company. The
Audit Committee approved the engagement of KC before KC rendered audit and
non-audit services to the Company.
M&K CPAS, PLLC ("MK") was the Company's principal auditing accountant
firm for the fiscal year ended December 31, 2009. MK did not provide non-audit
services to the Company during its fiscal year ending December 31, 2009. The
Audit Committee approved the engagement of MK before MK rendered audit services
to the Company.
Each year the independent auditor's retention to audit our financial
statements, including the associated fee, is approved by the Board before the
filing of the previous year's Annual Report on Form 10-K.
KC AND MK FEES
2008 2009
------------------------
Audit Fees(1) $39,500 $ 29,000
Audit Related Fees -0- -0-
Tax Fees(2)
All Other Fees 1,350 -0-
------------------------
$40,850 $29,000
========================
(1) Audit Fees consist of fees for the audit of our financial statements and
review of the financial statements included in our quarterly reports. An
amount equal to $39,500 was paid to Kabani and Associates for year ending
December 31, 2008 and $29,000 was paid to M&K CPAS, PLLC during the year
ending December 31, 2009.
(2) Tax fees consist of fees for the preparation of original federal and state
income tax returns and fees for miscellaneous tax consulting services.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
The Audit Committee's policy is to pre-approve, typically at the
beginning of our fiscal year, all audit and non-audit services, other than de
minimis non-audit services, to be provided by an independent registered public
accounting firm. These services may include, among others, audit services,
audit-related services, tax services and other services and such services are
generally subject to a specific budget. The independent registered public
accounting firm and management are required to periodically report to the full
Board regarding the extent of services provided by the independent registered
public accounting firm in accordance with this pre-approval, and the fees for
the services performed to date. As part of the Board's review, the Board will
evaluate other known potential engagements of the independent auditor, including
the scope of work proposed to be performed and the proposed fees, and approve or
reject each service, taking into account whether the services are permissible
under applicable law and the possible impact of each non-audit service on the
independent auditor's independence from management. At Audit Committee meetings
throughout the year, the auditor and management may present subsequent services
-18-
for approval. Typically, these would be services such as due diligence for an
acquisition, that would not have been known at the beginning of the year.
The Audit Committee has considered the provision of non-audit services
provided by our independent registered public accounting firm to be compatible
with maintaining their independence. The Audit Committee will continue to
approve all audit and permissible non-audit services provided by our independent
registered public accounting firm.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Company's Audit Committee has reviewed and discussed the Company's
audited financial statements for the fiscal year ended December 31, 2009 with
senior management. The Audit Committee has reviewed and discussed with
management the Company's audited financial statements. The Audit Committee has
also discussed with M&K CPAS, PLLC, Certified Public Accountants ("MK"), the
Company's independent auditors for the year ended December 31, 2008, 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 KC required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees). The Audit Committee has
discussed with MK the independence of MK as auditors of the Company. Finally,
the Audit Committee has considered whether the independent auditors' provision
of non-audit services to the Company is compatible with the auditors'
independence. Based on the foregoing, the Company's Audit Committee has
recommended to the Board of Directors that the audited financial statements of
the Company be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2009 for filing with the United States Securities
and Exchange Commission ("SEC"). The Audit Committee also approved MK's
engagement to prepare the Company's consolidated tax returns for its fiscal year
ending December 31, 2009. The Company's Audit Committee did not submit a formal
report regarding its findings.
AUDIT COMMITTEE
XAVIER AGUILERA
INCORPORATION BY REFERENCE
In our filings with the SEC, information is sometimes "incorporated by
reference." This means that we are referring you to information that has
previously been filed with the SEC, so the information should be considered as
part of the filing you are reading. Based on SEC regulations, the "Audit
Committee Report" specifically is not incorporated by reference into any other
filings with the SEC.
This proxy statement is sent to you as part of the proxy materials for the
2010 Annual Meeting of Stockholders. You may not consider this proxy statement
as material for soliciting the purchase or sale of our common stock.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the 2010 Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
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No person is authorized to give any information or to make any
representation not contained in this Proxy Statement, and, if given or made,
such information or representation should not be relied upon as having been
authorized. This Proxy Statement does not constitute the solicitation of a
proxy, in any jurisdiction, from any person to whom it is unlawful to make such
proxy solicitation in such jurisdiction. The delivery of this Proxy Statement
shall not, under any circumstances, imply that there has not been any change in
the information set forth herein since the date of the Proxy Statement.
By Order of the Board of Directors
Dean Janes
Chief Executive Officer
September 1, 2010
In some cases, only one Annual Report or Proxy Statement is being
delivered to multiple stockholders sharing an address unless the Company has
received contrary instructions from one or more of the stockholders. The Company
will furnish, without charge, a copy of its Annual Report on Form 10-K for the
fiscal year ended December 31, 2009 or Proxy Statement, to each stockholder
residing at an address to which only one copy was mailed. Requests for
additional copies should be directed to: Corporate Secretary, Imaging3, Inc.,
3200 W. Valhalla Drive, Burbank, California 91505 or by telephone at (818)
260-0930. Additionally, any stockholders who are presently sharing an address
and receiving multiple copies of the Annual Report or Proxy Statement and who
would rather receive a single copy of these materials in the future may instruct
the Company by directing their request in the same manner.
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EXHIBIT A
AMENDMENT TO CERTIFICATE OF INCORPORATION
AMENDMENT TO
ARTICLES OF INCORPORATION
OF
IMAGING3, INC.
The undersigned, Dean Janes and Xavier Aguilera, hereby certify that:
1. They are the Chief Executive Officer and Secretary, respectively, of
Imaging3, Inc., a California corporation (the "Corporation").
2. The Articles of Incorporation of the Corporation are hereby amended
as follows:
Article IV is hereby amended and restated to read as follows:
IV.: The Corporation is authorized to issue two classes of shares.
One class of shares shall be designated as common stock, par
value $0.001 per share, and the total number of common shares
which this Corporation is authorized to issue is 750,000,000.
The other class of shares shall be designated as preferred
stock, par value $0.001 per share, and the total number of
preferred shares which this Corporation is authorized to issue
is 1,000,000. The preferred stock authorized by these Articles
of Incorporation shall be issued in series. The Board of
Directors of this Corporation is authorized to determine or
alter the rights, preferences, privileges, and restrictions
granted to or imposed upon any wholly unissued series of
preferred stock, and within the limitations or restrictions
stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting
any series, to increase or decrease (but not below the number
of shares of any such series then outstanding) the number of
shares of any such series subsequent to the issue of shares of
that series, to determine the designation and par value of any
series, and to fix the number of shares of any series.
3. The foregoing Amendment to Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing Amendment to the Articles of Incorporation has been
duly approved by the required vote of shareholders in accordance with Section
902 of the Corporations Code. The total number of outstanding shares of the
Corporation entitled to vote was 375,749,189 shares of Common Stock. The number
of shares voting in favor of the amendment equaled or exceeded the vote
required. The percentage vote required was more than fifty percent (50%).
The undersigned further declare under penalty of perjury under the laws
of the State of California that the matters set forth in this certificate are
true and correct of their own knowledge.
Dated: September 30, 2010
-----------------------------------
Dean Janes, Chief Executive Officer
-----------------------------------
Xavier Aguilera, Secretary
EXHIBIT B
AMENDMENT TO BYLAWS
AMENDMENT TO
BYLAWS
OF
IMAGING3, INC.
A CALIFORNIA CORPORATION
The following provision of the Bylaws of Imaging3, Inc. adopted on or about
September 30, 2010 (the "Bylaws") is hereby amended and restated (the
"Amendment"):
Article III, Section 2 of the Company's Bylaws is hereby amended and
restated in its entirety as follows: "Number. The Corporation shall
have no fewer than five (5) nor more than nine (9) directors. Initially
the exact number of directors will be seven (7). The exact number of
directors will be determined from time to time by resolution adopted by
approval of the outstanding shares or by the affirmative vote of a
majority of the Whole Board of Directors. Notwithstanding the
foregoing, before the issuance of any shares and so long as the
Corporation has only one shareholder, the number of directors may be
one or two, and so long as the Corporation has two shareholders, the
number may be two. As used in these Bylaws, the term "Whole Board"
means the number of directors that the Corporation would have if there
were no vacancies. After the issuance of shares, a bylaw specifying the
changing of the maximum or minimum number of directors or changing from
a variable to a fixed board or vice versa may be adopted only by
approval of the outstanding shares. No reduction of the authorized
number of directors shall have the effect of removing any director
before the expiration of his term of office."
The Bylaws shall remain in effect as modified by this Amendment to the Bylaws
(the "Amendment") except to the extent that the Bylaws contradict the Amendment,
in which case this Amendment shall govern.
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of Imaging3, Inc., a
California corporation (the "Company"), and that the foregoing Amendment to the
Bylaws was validly adopted on September 30, 2010 by written consent of the
shareholders entitled to vote a majority of the outstanding capital stock of the
Company.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of September 2010.
------------------------------------
Xavier Aguilera, Secretary
BALLOT
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IMAGING3, INC.
3200 W. VALHALLA DRIVE
BURBANK, CALIFORNIA 91505
(818) 260-0930
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, September 30, 2010
PROXIES ARE BEING SOLICITED BY THE BOARD OF DIRECTORS.
WE ARE ASKING YOU FOR A PROXY, AND YOU ARE
REQUESTED TO SEND US A PROXY.
The undersigned hereby appoints Dean Janes, Chief Executive proxy, with
full power of substitution, for and in the name or names of the undersigned, to
vote all shares of Common Stock of Imaging, Inc. held of record by the
undersigned at the Annual Meeting of Stockholders to be held on September 30,
2010, at 10:00 a.m., Pacific Time, at 3200 W. Valhalla Drive, Burbank,
California, and at any adjournment thereof, upon the matters described in the
accompanying Notice of Annual Meeting and Proxy Statement, receipt of which is
hereby acknowledged, and upon any other business that may properly come before,
and matters incident to the conduct of, the meeting or any adjournment thereof.
Said person is directed to vote on the matters described in the Notice of Annual
Meeting and Proxy Statement as follows, and otherwise in their discretion upon
such other business as may properly come before, and matters incident to the
conduct of, the meeting and any adjournment thereof.
1. To increase the number of authorized shares of common stock from
500,000,000, par value $0.001 per share, to 750,000,000, par value
$0.001 per share. (Amendment to Articles of Incorporation)
[_] FOR [_] AGAINST [_] ABSTAIN
2. To authorize 1,000,000 shares of preferred stock, par value $0.001 per
share. (Amendment to Articles of Incorporation)
[_] FOR [_] AGAINST [_] ABSTAIN
3. To increase the size of the Company's Board of Directors from two (2)
to a range of five (5) to nine (9) with the exact number of directors
to be seven (7). (Amendment to Bylaws)
[_] FOR [_] AGAINST [_] ABSTAIN
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4. To elect a Board of up to three (3) directors to hold office until the
next annual meeting of stockholders or until their respective
successors have been elected and qualified:
Nominees: Dean Janes, Xavier Aguilera, and Christopher Sohn
[_] FOR: nominees listed above (except as marked to the
contrary below).
[_] WITHHOLD authority to vote for nominee(s) specified
below.
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), write
the applicable name(s) in the space provided below.
- --------------------------------------------------------------------------------
5. To ratify the appointment of M&K CPAS, PLLC as independent accountants
for the fiscal year ending December 31, 2010:
[_] FOR [_] AGAINST [_] ABSTAIN
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU MAY SIGN AND RETURN THIS PROXY
CARD IN THE ENCLOSED ENVELOPE.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" THE STATED PROPOSALS.
Number of shares owned ________________and voted hereby.
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Name & Address of Shareholder
_____________________________
_____________________________
(VOID WITHOUT INFO)
______________________________
Signature of Stockholder
______________________________
Signature if held jointly
Dated: _______________________, 2010
IMPORTANT: If shares are jointly owned, both owners should sign. If signing as
attorney, executor, administrator, trustee, guardian or other person signing in
a representative capacity, please give your full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
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