SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14 INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by 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 to Rule 14a-11(c) or Rule 14a-12
LIFESTREAM TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter
and of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11 (1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid
[ ] 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:
LIFESTREAM TECHNOLOGIES, INC.
510 Clearwater Loop, Suite 101, Post Falls, Idaho 83854
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 20, 2002
To our Stockholders:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders
(hereinafter, "the Annual Meeting") of Lifestream Technologies, Inc.
(hereinafter, "the Company"), a Nevada corporation, which will be held at West
Coast Templin's Resort located at 414 East First Avenue, Post Falls, Idaho, on
December 20, 2002 at 8:30 a.m. Pacific Time, or at any and all adjournments
thereof, for the following purposes:
1. To elect the Company's Board of Directors (hereinafter, "the
Board") in its entirety;
2. To approve the potential issuance of up to ten million newly
issued shares of the Company's common stock pursuant to a
private placement;
3. To ratify the appointment of BDO Seidman, LLP as the Company's
independent public accountants for the fiscal year ending June
30, 2003; and
4. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
These matters are more fully discussed in the Proxy Statement accompanying this
Notice.
The Board has fixed the close of business on October 18, 2002 as the record date
for determining those stockholders who will be entitled to notice of, and to
vote at, the Annual Meeting. The stock transfer books will not be closed between
the record date and the date of the meeting.
Representation of at least a majority of the outstanding shares of the Company's
Common Stock entitled to vote, whether present in person or represented by
proxy, is required to constitute a quorum. Accordingly, it is important that
your shares be represented at the meeting. THE PROMPT RETURN OF PROXIES WILL
SAVE YOUR COMPANY THE EXPENSE OF FURTHER REQUESTS IN ORDER TO OBTAIN A QUORUM.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may
be revoked, in writing, at any time prior to the time it is voted. You may also
revoke your proxy by attending the meeting and voting in person.
The financial statements of the Company for its most recently completed fiscal
year ended June 30, 2002 are incorporated herein by reference to the Company's
Annual Report on Form 10-KSB as filed with the U.S. Securities and Exchange
Commission on September 30, 2002, a copy of which accompanies the accompanying
Proxy Statement.
Please read the proxy materials carefully. Your vote is important and the
Company appreciates your cooperation in considering and acting on the matters
presented.
Very truly yours,
/s/ Christopher Maus
--------------------------
Christopher Maus, Chairman of the
Board of Directors, President and
Chief Executive Officer
Post Falls, Idaho
October 28, 2002
STOCKHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT
CAREFULLY PRIOR TO RETURNING THEIR PROXIES
PROXY STATEMENT FOR THE 2002 ANNUAL MEETING OF STOCKHOLDERS OF
LIFESTREAM TECHNOLOGIES, INC.
TO BE HELD DECEMBER 20, 2002
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (hereinafter, "the Board") of Lifestream Technologies, Inc.
(hereinafter, "the Company"), a Nevada corporation, of proxies to be voted at
the 2002 Annual Meeting of Stockholders (hereinafter, "the Annual Meeting") to
be held at West Coast Templin's Resort located at 414 East First Avenue, Post
Falls, Idaho on December 20, 2002 at 8:30 a.m. Pacific Time or at any and all
adjournments or postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders (hereinafter, "the
Notice"). The Annual Report on Form 10-KSB of the Company for the most recently
completed fiscal year ended June 30, 2002 (hereinafter, "Fiscal 2002") is being
mailed together with this Proxy Statement and form of Proxy. This Proxy
Statement and the proxy card were first mailed to stockholders on or about
November 8, 2002.
VOTING RIGHTS AND SOLICITATION
The close of business on October 18, 2002 was the record date for stockholders
entitled to notice of, and to vote at, the Annual Meeting. As of that date,
24,986,747 shares of the Company's common stock, $.001 par value per share
(hereinafter "the Common Stock"), were issued and outstanding. The Company did
not have any other class of equity securities outstanding as of the record date.
All shares of the Company's Common Stock outstanding on the record date are
entitled to vote at the Annual Meeting, and stockholders of record entitled to
vote at the Annual Meeting will have one vote for each share so held on the
matters to be voted upon. The Company does not have cumulative voting.
Management does not know of any matters to be presented at the Annual Meeting
other than those set forth in this Proxy Statement and accompanying Notice. If
other matters should properly come before the Annual Meeting, the proxy holders
will vote on such matters in accordance with their best judgment regarding the
interests of the Company. Any stockholder has the right to revoke his or her
proxy at any time before it is voted by either delivering to the Company at its
principal executive offices at 510 Clearwater Loop, Suite 101, Post Falls, Idaho
83854, Attn: Chief Financial Officer, a written notice of revocation or duly
executed proxy bearing a later date or by attending the Annual Meeting and
voting in person. Approval of each of the above proposals shall be determined by
a majority of the votes cast by the stockholders entitled to vote at the
election present in person or represented by proxy.
The quorum necessary to conduct business at the Annual Meeting consists of a
majority of the outstanding Common Stock of the Company as of the record date.
Abstentions and broker non-votes are counted and included in the determination
of the number of shares present for quorum purposes but are excluded in
tabulating the vote for directors and in the determination of whether a proposal
has been approved.
The cost of this solicitation will be borne by the Company. Proxies will be
solicited principally through the use of the mail, but, if deemed desirable, may
be solicited personally or by telephone, electronic mail, telegraph, or personal
interview by directors, officers and employees of the Company for no additional
compensation. Arrangements may be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to the
beneficial owners of the Company's Common Stock, and such persons may be
reimbursed for their expenses.
1
PROPOSAL 1
ELECTION OF DIRECTORS
On June 10, 2002, the Company's shareholders approved an amendment to the
Company's Amended and Restated Articles of Incorporation to provide for the
classification of the Board into three classes of directors with three year
staggered terms of office. This election of directors constitutes the initial
implementation of this new Board structure. As such, all of the current members
of the Board are standing for election at this meeting (hereinafter, "the
Nominees").
Each Board nominee set forth below has been initially assigned to one of three
classes. However, in order to fully transition the Board into three classes with
each having a full three year staggered term of office, the initial Classes II
and III nominees set forth below have been designated staggered terms of only
one and two years, respectively. It is intended that each class will serve their
designated term until successors for such class have been qualified and elected,
or until the death, resignation or removal of any such Director.
Election to the Board requires the approval of a majority of the shares voting,
assuming a quorum of the outstanding shares are present or represented at the
Annual Meeting.
Proxies solicited by the Board and returned in the accompanying form will be
voted in accordance with each respective shareholder's instructions. Any
returned proxies that do not set forth a shareholder's instructions will be
voted by the proxy holders for the nominees for Director listed below. In the
event that additional persons are nominated for election as Directors, the proxy
holders intend to vote all proxies received by them for each nominee listed
below. As of the date of this Proxy Statement, the Board is not aware of any
nominee that is unable or unwilling to serve as a Director.
NOMINEES FOR DIRECTOR
- ---------------------
CLASS AND YEAR IN
DIRECTOR WHICH TERM WILL
NAME PRINCIPAL OCCUPATION(S) SINCE EXPIRE AGE
- ----------------------- ------------------------------------------ ----------- ------------------- -------
Christopher Maus President, Chief Executive Officer and 1994 Class I - 2005 49
Chairman of the Board
Michael Crane Chief Executive Officer and Chairman of
the Board of Directors of Dulles
Greenway, Trip II (Toll Investors
Partnership II, L.P.); President of 1998 Class I - 2005 47
Alchemy International
Robert Boyle Certified Public Accountant; Secretary 1999 Class II - 2004 56
and Treasurer of the Company
William Gridley Retired Corporate Executive 1997 Class II - 2004 73
Ronald Kiima President of Kiima Incorporated 2002 Class III - 2003 41
CHRISTOPHER MAUS has served as the Company's President, Chief Executive Officer
and Chairman of the Board since February 1994, except for a brief period from
September 1998 to March 1999 when he served only as Chairman of the Board. From
June 1996 until its acquisition by the Company in September 1999, Mr. Maus
served on the Board of Directors of Secured Interactive Technologies, Inc., a
privately held company co-founded by Mr. Maus that developed the Company's
Privalink software technology. From June 1992 to February 1994, Mr. Maus served
as President of Lifestream Diagnostics, Inc., the privately held legal
predecessor to the Company. From 1989 to June 1992, Mr. Maus was a General
Partner in Lifestream Development Partners, the privately held legal predecessor
to Lifestream Diagnostics, Inc. Mr. Maus attended North Texas State University.
2
MICHAEL CRANE has served as a Director since April 1998. Since September 1993,
Mr. Crane has served as Chief Executive Officer and Chairman of the Board of
Directors of privately held Dulles Greenway, Trip II (Toll Investors Partnership
II, L.P.). Since October 1996, Mr. Crane has also served as President of Alchemy
International, a privately held developer of non-evasive, passive chemistry
treatments for various forms of cancer. Mr. Crane has also served on the Board
of Directors of Discflo Corporation, a privately held manufacturer of medical
and industrial pumps, since 1988, and as Chairman of the Board of Directors for
Lochnau, Inc., a privately held investment management corporation, since 1985.
Mr. Crane has a Bachelor of Science degree in Banking from the University of
Richmond.
ROBERT BOYLE has served as a Director since June 1999, at which time he was also
appointed as the Company's Secretary and Treasurer. Since 1995, Mr. Boyle has
served as President of Robert Boyle, Certified Public Accountant, P.A., a local
public accounting firm located in Idaho. From 1980 to 1995, Mr. Boyle served as
President of Boyle and Stoll, Certified Public Accountants, a local public
accounting firm, located in California. Prior thereto, Mr. Boyle served with the
consulting, tax and audit staffs of a predecessor to KPMG, an international
accounting and consulting firm. Mr. Boyle has a Bachelor of Arts degree in
Accounting from San Diego State University and is licensed as a Certified Public
Accountant in the State of Idaho.
WILLIAM GRIDLEY has served as a Director since April, 1997. Since 1997 Mr.
Gridley has served as Chairman of Hymedix, Inc., a polymer chemicals company,
for which he previously served as President and CEO (1993 - 1997), and as Vice
Chairman (1986 - 1993). From 1983 to 1986, he served as President of Brandywine
Investors, Inc., an investment management firm. From 1979 to 1983, he served as
President of Crescent Diversified, Ltd., and investment vehicle of the Olayan
Group. From 1973 to 1979, he served as Executive Vide President of American
Express International Banking Corporation. He has served as Vice Chairman of
Tuskegee University since 1980, and as a Director of Silverline Technologies (an
Indian software company) from 1996 to 1999. Mr. Gridley has a BA from Yale
University, and studied finance at the NYU Graduate School of Business.
RONALD KIIMA has served as a Director since September 2002, and as a consultant
to the Company since August 2000. Since August 1997, Mr. Kiima has served as
President of Kiima Incorporated, a nationally recognized consulting firm
specializing in SEC compliance and reporting, corporate governance and finance,
and litigation support and testimony. From August 1997 to October 1998, Mr.
Kiima concurrently served as Manager of Financial Compliance and Reporting for
Coldwater Creek Inc., a publicly held national apparel retailer. From March 1990
to July 1997, and prior thereto, from November 1987 to December 1988, Mr. Kiima
served with the United States Securities and Exchange Commission's Division of
Corporation Finance in Washington, D.C., the last five years as an Assistant
Chief Accountant. From December 1988 to January 1990, Mr. Kiima served as
Shareholder - Director of Accounting and Assurance Services with Jones &
Associates, a regional public accounting and management consulting firm. From
January 1985 to November 1987, Mr. Kiima held various positions with the audit
staff of Ernst & Whinney LLP (subsequently renamed Ernst & Young LLP), an
international public accounting and management consulting firm. Mr. Kiima
completed various graduate level courses at, and has a Bachelor of Science
degree in Business Administration / Accountancy (Summa Cum Laude) from, the
University of Baltimore. Mr. Kiima is a licensed Certified Public Accountant in
the State of Maryland.
DIRECTOR RESIGNATIONS SINCE LAST PROXY STATEMENT
- ------------------------------------------------
DAVID HURLEY AND BOYD LYLES. JR. resigned as Board members on July 1, 2002 and
August 2, 2002, respectively, as a result of other professional demands upon
them. There were no disagreements with the Company or its Board at the date of
their respective resignations.
3
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are set forth below:
NAME AGE POSITION(S) HELD
- ---- --- ----------------
Christopher Maus 49 President, Chief Executive Officer and
Chairman of the Board
Robert Boyle 56 Director, Secretary and Treasurer
Michael Crane 47 Director
William Gridley 73 Director
Ronald Kiima 41 Director
Edward Siemens 48 Chief Operating Officer
Paul Beatty 55 Vice President - Sales & Marketing
Brett Sweezy 37 Chief Financial Officer
Ken Clegg 33 Chief Technology Officer
Jackson Connolly 54 Vice President - Product Development
EDWARD SIEMENS has served as Chief Operating Officer since June 2002, and prior
thereto, upon joining the Company in August 2000, as Chief Operating Officer -
Devices. From April 1999 to June 2000, Mr. Siemens served as President of Omron
Healthcare, Inc. ("Omron"), a publicly held manufacturer and marketer of
personal-use medical diagnostic products. Mr. Siemens previously served as
Omron's Senior Vice President of Sales and Marketing from April 1994 to April
1999 and as Omron's Vice President of Sales and Marketing from April 1992 to
April 1994. Prior thereto, Mr. Siemens was employed by McKesson Corporation, a
publicly held wholesale distributor of medical products and supplies, where he
served as Vice President of Sales from 1987 to 1992 and as Product Manager from
1985 to 1987. Mr. Siemens has a Masters degree in Business Administration from
Pepperdine University and a Bachelor of Fine Arts degree from the California
College of Arts and Crafts.
PAUL BEATTY has served as Vice President - Sales & Marketing since October 2002,
and prior thereto, upon joining the Company in October 2000, as Vice President -
Consumer Sales. From July 1994 to September 2000, Mr. Beatty served as Director
of Retail Sales for Optiva Corporation, privately held manufacturer and marketer
of the Sonicare sonic toothbrush. From 1992 to 1994, Mr. Beatty served as
National Accounts Manager for High Performance Appliances, a privately held
marketer of consumer appliances. From 1988 to 1992, Mr. Beatty served as
National Field Sales Manager for Hamilton Beach, Inc., a publicly held marketer
of consumer household appliances. Mr. Beatty has a Bachelor of Arts degree in
Business and Economics from Central Washington University.
BRETT SWEEZY has served as Chief Financial Officer since joining the Company in
June 1999. From June 1996 until its acquisition by the Company in September
1999, Mr. Sweezy served as Chief Financial Officer and Treasurer of Secured
Interactive Technologies, Inc. From March 1994 to August 2000, Mr. Sweezy also
served as President of Brett R. Sweezy, Certified Public Accountant, P.A., a
local public accounting firm, located in Idaho. Mr. Sweezy has a Bachelor of
Science degree in Economics and Business from the New England College and is
licensed as a Certified Public Accountant in the State of Idaho.
4
KEN CLEGG has served as Chief Technology Officer since joining the Company in
July 1998. Mr. Clegg also continues to serve, as he has since 1994, as a
professional consultant to Interlink Services, a privately held regional
Internet service provider, advising on website development projects and on
marketing and sales strategies. From May 1997 to October 1999, Mr. Clegg
co-owned 5Away, a privately held developer and marketer of Internet-based
advertising solutions. In 1992, Mr. Clegg founded Clegg Enterprises, a privately
held developer and marketer of database driven interactive Internet-based web
sites, which he continues to own. Mr. Clegg has a Bachelor of Arts degree, with
majors in Computer Science, Mathematics, and Education, from Whitworth College.
JACKSON CONNOLLY has served as Vice President - Product Development since
November 2000. Mr. Connelly previously served as the Company's Vice-President -
Operations from January 1998 to November 2000 and as Director of Operations from
January 1997 to January 1998. Prior to joining the Company, Mr. Connolly served
as a Senior Sales Engineer at Advanced Input Devices, a subsidiary of publicly
held Esterline Technologies, from January 1994 to April 1997. Mr. Connolly has a
combined Bachelor of Arts and Science degree in Industrial Technology and Arts
from California State University at Fresno.
There are no family relationships among any of the Company's directors and
executive officers.
BOARD MEETINGS AND COMMITTEES
The Company's Board held a total of four meetings during fiscal 2002 for which
there was 100% attendance by its members with the exception of one meeting that
Mr. Crane could not attend and one meeting that Mr. Hurley could not attend. The
Board's Audit Committee held a total of four meetings during fiscal 2002 for
which there was 100% attendance by its members. The Board's Compensation
Committee held one meeting during fiscal 2002 for which there was 100%
attendance by its members. The Board does not have a nominating committee at
this time.
The Audit Committee primarily is responsible for recommending to the Board the
appointment of the Company's independent public accountants, reviewing and
approving the scope of audit and review activities to be performed by the
independent public accountants, reviewing significant accounting policies,
practices and controls, performing independent director duties and reviewing
audit and review results. Since September 25, 2002, the Audit Committee has
consisted of Robert Boyle (Chairman), Michael Crane, William Gridley and Ronald
Kiima. Mr. Kiima is a non-independent, non-voting advisory member. From July 1,
2002 through September 24, 2002, the Audit Committee consisted of William
Gridley (Chairman) and Robert Boyle. From November 5, 2001 through June 30,
2002, the Audit Committee consisted of William Gridley (Chairman), Robert Boyle
and David Hurley. From July 1, 2001 through November 4, 2001, the Audit
Committee consisted of William Gridley (Chairman), Michael Crane and David
Hurley.
The Compensation Committee primarily is responsible for reviewing and
recommending to the Board the compensation structure for the Company's Board
members and executive officers, including salary rates, participation in
incentive compensation and benefit plans and other forms of compensation, and
administering the Company's stock option plans. The Compensation Committee
similarly reviews and approves the compensation of other management personnel.
Since September 25, 2002, the Compensation Committee has consisted of Michael
Crane (Chairman), Robert Boyle and Ronald Kiima. From August 2, 2002 through
September 24, 2002, the Compensation Committee consisted of Michael Crane
(Chairman) and Robert Boyle. From November 5, 2001 through August 1, 2002, the
Compensation Committee consisted of Michael Crane (Chairman), Robert Boyle and
Boyd Lyles, Jr. From July 1, 2001 through November 4, 2001, the Compensation
Committee consisted of Michael Crane (Chairman), Robert Boyle and David Hurley.
5
DIRECTOR REMUNERATION
In April 2001, the Board adopted the recommendation of its Compensation
Committee to retroactively terminate, effective January 1, 2001, the then
existing Board compensation plan and to alternatively grant, retroactive to
January 1, 2001, each employee and non-employee member of the Board stock
options exercisable for 72,000 common shares at $1.50 per share. Each option
vests, and becomes exercisable, on a ratable basis over the subsequent
twenty-four (24) months of Board service, with any unexercised options to expire
on January 1, 2011.
In October 2002, the Board adopted the recommendation of its Compensation
Committee to grant, effective January 1, 2003, each employee and non-employee
Board member stock options exercisable for 108,000 common shares at $1.00 per
share. Each option will vest, and becomes exercisable, on a ratable basis over
the subsequent thirty-six (36) months of Board service, with any unexercised
options to expire on January 1, 2013. Any options which are not vested at the
end of a Board member's service will be immediately cancelled unless otherwise
stated and agreed to by a majority of the then remaining Board members.
Directors currently receive no additional compensation for service on the
Board's Audit and Compensation Committees.
AUDIT COMMITTEE REPORT ON THE FISCAL YEAR ENDED JUNE 30, 2002
The Audit Committee currently is comprised of three independent, non-employee
directors, as the term "independent" is proscribed by the American Stock
Exchange ("AMEX"), and one non-independent, non-employee director, being Mr.
Kiima who serves solely in an advisory, non-voting manner. The Audit Committee
continues to be governed by a written charter which was adopted and approved by
the Board on February 27, 2001. The Company's management is responsible for the
Company's internal controls and financial reporting processes. The Company's
independent public accountants, BDO Seidman, LLP, are responsible for performing
an independent audit of the Company's consolidated financial statements in
accordance with auditing standards generally accepted in the United States of
America and to issue a report thereon. BDO Seidman, LLP has full and unimpeded
access to the Audit Committee and periodically meets with the Audit Committee,
without management being present, to discuss appropriate matters.
Based on (i) its review of the audited consolidated financial statements, (ii)
its discussions with management regarding the audited consolidated financial
statements, (iii) its receipt from BDO Seidman, LLP of the letter required by
Independence Standards Board Standard No. 1, and (iv) its discussions with BDO
Seidman, LLP regarding their independence, the audited financial statements, the
matters required to be discussed by the Statement on Auditing Standards No. 61,
as amended, and other matters, the three voting members of the Audit Committee
unanimously recommended to the Board that the audited consolidated financial
statements for the fiscal year ended June 30, 2002 be included in the Company's
Annual Report on Form 10-KSB for such fiscal year.
September 26, 2002
FROM THE VOTING MEMBERS OF THE AUDIT COMMITTEE
Robert Boyle
Michael Crane
William Gridley
6
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT (1)
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 18, 2002 by (i) each
person known by the Company to be the beneficial owner of more than five percent
of the outstanding shares of Common Stock, (ii) each director and nominee for
director, (iii) each officer listed in the Summary Compensation Table of the
section of this Proxy Statement entitled "Executive Compensation" and (iv) all
current directors and executive officers as a group. A person is also deemed to
be a beneficial owner of any securities to which the person has the right to
acquire beneficial ownership within sixty days. All shares are subject to the
named person's sole voting and investment power unless otherwise indicated.
SHARES PERCENT OF SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER (2) OWNED OWNED (3)
- ------------------------------------------------------------------ ----------------- --------------------
DIRECTORS AND OFFICERS:
- -----------------------
Christopher Maus (4).................................................. 3,228,200 12.61%
Michael Crane (5)...................................................... 1,429,893 5.53%
Robert Boyle (6)....................................................... 259,200 1.03%
William Gridley (7).................................................... 199,000 Less than 1%
Ronald A. Kiima (8).................................................... 37,000 Less than 1%
Edward Siemens (9)..................................................... 216,385 Less than 1%
Paul Beatty (10)....................................................... 183,781 Less than 1%
Brett Sweezy (11)...................................................... 313,717 1.24%
Ken Clegg (12)......................................................... 127,836 Less than 1%
Jackson Connolly (13).................................................. 132,905 Less than 1%
--------- -----------
ALL DIRECTORS AND OFFICERS AS A GROUP (10 PERSONS) (14).............. 6,127,917 22.25%
--------- -----------
OTHER BENEFICIAL OWNERS:
- ------------------------
RAB Europe Fund Limited (15)........................................ 2,636,677 9.99%
c/o RAB Capital Limited
No. 1 Adam Street
London W2CN 6LE
United Kingdom
7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT (CONTINUED) (1)
SHARES PERCENT OF SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER (2) OWNED OWNED (3)
- ------------------------------------------------------------------ ----------------- --------------------
OTHER BENEFICIAL OWNERS (CONTINUED):
- ------------------------------------
RAB Europe Partners (16)............................................ 1,673,227 6.38%
c/o RAB Capital Limited
No. 1 Adam Street
London W2CN 6LE
United Kingdom
Mercer Management (17).............................................. 2,671,097 10.26%
5820 East Mercer Way
Seattle, WA 98040
Commodity Management and Research, Inc. (18)........................ 1,528,993 5.94%
1050 17th Street, Suite 2000
Denver, CO 80265
- --------------------------
(1) Based upon information furnished to the Company by the beneficial
owners or otherwise obtained from the stock transfer books of the
Company.
(2) Unless otherwise indicated, the business address for each beneficial
owner is c/o Lifestream Technologies, Inc., 510 Clearwater Loop, Suite
101, Post Falls, Idaho 83854.
(3) Percentage of ownership includes 24,986,747 actual shares of Common
Stock outstanding on October 18, 2002. Shares of Common Stock subject
to stock options or warrants that are currently exercisable or will
become exercisable after 60 days after October 18, 2002, and shares of
Common Stock subject to convertible term notes that are currently
convertible or will become convertible within 60 days of October 18,
2002, are deemed outstanding for computing the beneficial ownership
percentage of the person or group holding such options, warrants and
notes, but are not deemed outstanding for computing the percentage of
any other person or group.
(4) Includes 622,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
(5) Includes 339,795 shares issuable upon exercise of options and warrants
that are currently exercisable or will become exercisable within 60
days after October 18, 2002. Also includes 508,404 shares issuable upon
conversion of convertible term notes that are currently convertible or
will become convertible within 60 days after October 18, 2002. Excludes
152,000 common shares held by Lochnau, Inc., a privately held
investment management corporation for which Mr. Crane serves as
Chairman of the Board of Directors, to which Mr. Crane disclaims any
beneficial ownership.
(6) Includes 122,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
(7) Includes 72,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
8
(8) Includes 37,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
(9) Includes 212,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
(10) Includes 172,250 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
(11) Includes 226,578 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
(12) Includes 127,836 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
(13) Includes 109,605 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002.
(14) Includes 2,041,064 shares issuable upon exercise of options and
warrants that are currently exercisable or will become exercisable
within 60 days after October 18, 2002. Also includes 508,404 shares
issuable upon conversion of convertible term notes that are currently
convertible or will become convertible within 60 days after October 18,
2002.
(15) RAB Europe Fund Ltd., as of October 18, 2002, (i) owned 1,242,177
shares of our Common Stock, (ii) owned convertible term notes of ours
that can be converted into 5,174,690 shares of our Common Stock, and
(iii) held warrants of ours that can be exercised for 2,500,000 shares
of our Common Stock, except that pursuant to the terms of the warrants,
we shall not effect any exercise of warrants, and RAB Europe Fund Ltd.
does not have the right to exercise any warrants, to the extent such
exercise would cause RAB Europe Fund Ltd., together with its
affiliates, to have acquired a number of shares of our Common Stock
during the 60-day period ending on the date of conversion or exercise
which, when added to the number of shares of our Common Stock held at
the beginning of such 60-day period, would exceed 9.99% of the number
of shares of our Common Stock then outstanding, excluding, for the
purpose of such determination, shares of our Common Stock issuable upon
exercise of the warrants which have not been exercised. The number of
shares beneficially owned by RAB Europe Fund Ltd., in the table above,
reflects this limitation.
(16) Includes 500,000 shares issuable upon exercise of warrants that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002. Also includes 757,344 shares issuable upon conversion
of convertible term notes that are currently convertible or will become
convertible within 60 days after October 18, 2002. Pursuant to the
terms of the warrants, we shall not effect any exercise of warrants,
and RAB Europe Partners does not have the right to exercise any
warrants, to the extent such exercise would cause such RAB Europe
Partners, together with its affiliates, to have acquired a number of
shares of our Common Stock during the 60-day period ending on the date
of conversion or exercise which, when added to the number of shares of
our Common Stock held at the beginning of such 60-day period, would
exceed 9.99% of the number of shares of our Common Stock then
outstanding, excluding, for the purpose of such determination, shares
of our Common Stock issuable upon exercise of the warrants which have
not been exercised.
(17) Includes 699,167 shares issuable upon exercise of warrants that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002. Also includes 353,204 shares issuable upon conversion
of convertible term notes that are currently convertible or will become
convertible within 60 days after October 18, 2002.
(18) Includes 250,000 shares issuable upon exercise of warrant that are
currently exercisable or will become exercisable within 60 days after
October 18, 2002. Also includes 525,243 shares issuable upon conversion
of convertible term notes that are currently convertible or will become
convertible within 60 days after October 18, 2002.
9
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain information regarding compensation earned
by the Company's Chief Executive Officer and each of the Company's five other
most highly compensated executive officers for the fiscal years ended June 30,
2002, 2001 and 2000. The persons named in the table are hereinafter referred to
as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION -
ANNUAL COMPENSATION AWARDS
------------------- ------
SECURITIES ALL OTHER
NAME AND FISCAL SALARY BONUS OTHER UNDERLYING COMPEN-SATION
PRINCIPAL POSITION(S) YEAR (1) ($) ($) ($) OPTIONS (#) ($)
- --------------------------------- --------- ----------- ---------- ---------- -------------- --------------
Christopher Maus............... 2002 180,000 60,000 7,800 - -
President, Chief Executive 2001 150,000 35,000 12,000 872,000 -
Officer and Chairman of the 2000 150,000 - 27,000 250,000 -
Board (2)(3)(4)
Edward Siemens................. 2002 150,000 - - 35,000 -
Chief Operating Officer (5) 2001 102,731 - 15,000 360,000 -
2000 - - - - -
Paul Beatty.................... 2002 145,000 - - 30,000 -
Vice President - Sales 2001 84,997 - 15,000 300,000 -
& Marketing (6) 2000 - - - - -
Brett Sweezy................... 2002 139,731 - - 30,000 -
Chief Financial Officer (7) 2001 90,675 - - 178,970 -
2000 60,786 - - 87,000 -
Brian Packard.................. 2002 138,000 - - 20,000 -
Former Vice President 2001 78,333 - 15,000 240,000 -
- Marketing (8) 2000 - - - - -
Doug Robinson.................. 2002 138,000 - - 20,000 -
Former Chief Operating 2001 80,025 - 15,000 240,000 -
Officer - The Data Concern 2000 - - - - -
and Business Development (9)
- --------------------------
(1) References to a fiscal year refer to the calendar year in which such
fiscal year ends. Fiscal years 2002, 2001 and 2000 ended on June 30th.
(2) On January 3, 2000, the Board, acting upon the recommendation of its
Compensation Committee, granted Mr. Maus 250,000 stock options with an
exercise price of $1.25 per common share that vest, and become
exercisable, as follows: 50,000 immediately, 50,000 on January 3, 2001,
50,000 on January 3, 2002, 50,000 on January 3, 2003, and 50,000 on
January 3, 2004, with any unexercised options to expire on January 3,
10
2010. On May 1, 2001, the Board, acting upon the recommendation of its
Compensation Committee, (i) executed an employment agreement on behalf
of the Company with Mr. Maus that formally established his annual
salary at $150,000 for the fiscal year ending June 30, 2001, (ii)
increased Mr. Maus' annual salary to $180,000 for the fiscal year
ending June 30, 2002, and (iii) granted him 800,000 stock options with
an exercise price of $1.50 per common share that vest, and become
exercisable, as follows: 100,000 on December 31, 2001, 100,000 on
December 31, 2002, 100,000 on December 31, 2003, 100,000 on December
31, 2004, 100,000 upon the Company achieving a $100 million market
capitalization, 100,000 upon the Company achieving a $200 million
market capitalization, and 200,000 upon the Company achieving a $400
million market capitalization, with any unexercised options to expire
on May 1, 2011. It currently is the expectation of the Board's
Compensation Committee that Mr. Maus' current annual salary of $180,000
will be maintained for the duration of our fiscal year ending June 30,
2003.
(3) In connection with his Board service, Mr. Maus received a grant,
effective January 1, 2001, for 72,000 stock options with an exercise
price of $1.50 per common share that vest, and become exercisable, on a
ratable monthly basis over with his subsequent twenty-four months of
Board service, with any unexercised options to expire on January 1,
2011.
(4) The Other Annual Compensation amounts for Mr. Maus represent (i) for
fiscal year 2002, a vehicle allowance and (ii) for fiscal years 2001
and 2000, the then aggregate fair market value of 12,000 and 24,000
common shares awarded to Mr. Maus for his Board service during the six
months ended December 31, 2000 and the fiscal year ended June 30, 2000,
respectively.
(5) Mr. Siemens' employment with the Company began on August 21, 2000
pursuant to a Board-approved compensation package providing him with an
initial annual salary of $125,000, an initial grant of 300,000 stock
options with an exercise price of $3.00 per common share and a $15,000
relocation allowance. The stock options, which were formally granted on
October 4, 2000, vest and become exercisable, as follows: 50,000
immediately, 12,500 on October 4, 2001, 40,000 on December 31, 2001,
12,500 on October 4, 2002, 40,000 on December 31, 2002, 12,500 on
October 4, 2003, 40,000 on December 31, 2003, 12,500 on October 4,
2004, 40,000 on December 31, 2004 and 40,000 on December 31, 2005, with
any unexercised options to expire on October 4, 2010. On May 1, 2001,
the Board, acting upon the recommendation of its Compensation
Committee, (i) increased Mr. Siemens' annual salary to $150,000 for the
fiscal year ending June 30, 2002 and (ii) granted Mr. Siemens 60,000
additional stock options with an exercise price of $1.50 per common
share that vest, and become exercisable, as follows: 15,000
immediately, 15,000 on December 31, 2001, 15,000 on December 31, 2002
and 15,000 on December 31, 2003, with any unexercised options to expire
on May 1, 2011. On December 24, 2001, the Board, acting upon the
recommendation of its Compensation Committee, granted Mr. Siemens
35,000 additional stock options with an exercise price of $1.50 per
common share that vest, and become exercisable, as follows: 7,000
immediately, 7,000 on December 24, 2002, 7,000 on December 24, 2003,
7,000 on December 24, 2004 and 7,000 on December 31, 2005, with any
unexercised options to expire on December 24, 2011. It currently is the
expectation of the Board's Compensation Committee that Mr. Siemen's
current annual salary of $150,000 will be maintained for the duration
of our fiscal year ending June 30, 2003.
(6) Mr. Beatty's employment with the Company began on October 1, 2000
pursuant to a Board-approved compensation package providing him with an
initial annual salary of $120,000, an initial grant of 250,000 stock
options with an exercise price of $3.00 per common share and a $15,000
relocation allowance. The stock options, which were formally granted on
October 4, 2000, vest and become exercisable, as follows: 37,500
immediately, 9,375 on October 4, 2001, 35,000 on December 31, 2001,
9,375 on October 4, 2002, 35,000 on December 31, 2002, 9,375 on October
4, 2003, 35,000 on December 31, 2003, 9,375 on October 4, 2004, 35,000
on December 31, 2004, and 35,000 on December 31, 2005, with any
unexercised options to expire on October 4, 2010. On May 1, 2001, the
Board, acting upon the recommendation of its Compensation Committee,
(i) increased Mr. Beatty's annual salary to $145,000 for the fiscal
year ending June 30, 2002 and (ii) granted Mr. Beatty 50,000 additional
stock options with an exercise price of $1.50 per common share that
vest, and become exercisable, as follows: 12,500 immediately, 12,500 on
11
December 31, 2001, 12,500 on December 31, 2002 and 12,500 on December
31, 2003, with any unexercised options to expire on May 1, 2011. On
December 24, 2001, the Board, acting upon the recommendation of its
Compensation Committee, granted Mr. Beatty 30,000 additional stock
options with an exercise price of $1.50 per common share that vest, and
become exercisable, as follows: 6,000 immediately, 6,000 on December
24, 2002, 6,000 on December 24, 2003, 6,000 on December 24, 2004 and
6,000 on December 31, 2005, with any unexercised options to expire on
December 24, 2011. It currently is the expectation of the Board's
Compensation Committee that Mr. Beatty's current annual salary of
$145,000 will be maintained for the duration of our fiscal year ending
June 30, 2003.
(7) Mr. Sweezy's employment with the Company began on June 01, 1999
pursuant to a Board-approved compensation package providing him with an
initial annual salary of $60,000 and an initial grant of 25,000 stock
options with an exercise price of $1.25 per common share. These stock
options, which were formally granted on July 20, 1999 and deemed to be
immediately vested and exercisable, will expire, to the extent
unexercised, on July 20, 2009. On January 3, 2000, the Board, acting
upon the recommendation of its Compensation Committee, granted Mr.
Sweezy 42,000 additional stock options with an exercise price of $1.25
per common share that vest, and become exercisable, as follows: 8,400
immediately, 3,400 on December 31, 2000, 5,000 on January 3, 2001,
3,400 on December 31, 2001, 5,000 on January 3, 2002, 3,400 on December
31, 2002, 5,000 on January 3, 2003, 3,400 on December 31, 2003, and
5,000 on January 3, 2004, with any unexercised options to expire on
January 3, 2010. On April 6, 2000, the Board, acting upon the
recommendation of its Compensation Committee, granted Mr. Sweezy 20,000
additional stock options with an exercise price of $2.44 per common
share. These stock options, which were deemed to be immediately vested
and exercisable, will expire, to the extent unexercised, on April 6,
2010. On October 4, 2000, the Board, acting upon the recommendation of
its Compensation Committee, granted Mr. Sweezy 162,700 additional stock
options with an exercise price of $3.00 per common share that vest, and
become exercisable, as follows: 25,040 immediately, 8,165 on October 4,
2001, 21,000 on December 31, 2001, 8,165 on October 4, 2002, 21,000 on
December 31, 2002, 8,165 on October 4, 2003, 21,000 on December 31,
2003, 8,165 on October 4, 2004, 21,000 on December 31, 2004 and 21,000
on December 31, 2005, with any unexercised options to expire on October
4, 2010. On May 1, 2001, the Board, acting upon the recommendation of
its Compensation Committee, (i) increased Mr. Sweezy's annual salary to
$139,731 for the fiscal year ending June 30, 2002 and (ii) granted Mr.
Sweezy 15,000 additional stock options with an exercise price of $1.50
per common share that vest, and become exercisable, as follows: 3,750
immediately, 3,750 on December 31, 2001, 3,750 on December 31, 2002 and
3,750 on December 31, 2003, with any unexercised options to expire on
May 1, 2011. On June 22, 2001, the Board, acting upon the
recommendation of its Compensation Committee, granted Mr. Sweezy 1,270
additional stock options with an exercise price of $1.50 per common
share that vest, and become exercisable, as follows: 254 immediately,
254 on June 1, 2002, 254 on June 1, 2003, 254 on June 1, 2004, and 254
on June 1, 2005, with any unexercised options to expire on June 22,
2011. On December 24, 2001, the Board, acting upon the recommendation
of its Compensation Committee, granted Mr. Sweezy 30,000 additional
stock options with an exercise price of $1.50 per common share that
vest, and become exercisable, as follows: 6,000 immediately, 6,000 on
December 24, 2002, 6,000 on December 24, 2003, 6,000 on December 24,
2004 and 6,000 on December 31, 2005, with any unexercised options to
expire on December 24, 2011. It currently is the expectation of the
Board's Compensation Committee that Mr. Sweezy's current annual salary
of $139,731 will be maintained for the duration of our fiscal year
ending June 30, 2003.
(8) Mr. Packard's employment with the Company began on October 1, 2000
pursuant to a Board-approved compensation package providing him with an
initial annual salary of $110,000, an initial grant of 200,000 stock
options with an exercise price of $3.00 per common share and a $15,000
home office allowance. The stock options, which were formally granted
on October 4, 2000, vest and become exercisable, as follows: 25,000
immediately, 6,250 on October 4, 2001, 30,000 on December 31, 2001,
6,250 on October 4, 2002, 30,000 on December 31, 2002, 6,250 on October
4, 2003, 30,000 on December 31, 2003, 6,250 on October 4, 2004, 30,000
on December 31, 2004, and 30,000 on December 31, 2005, with any
unexercised options to expire on October 4, 2010. On May 1, 2001, the
Board, acting upon the recommendation of its Compensation Committee,
(i) increased Mr. Packard's annual salary to $138,000 for the fiscal
year ending June 30, 2002 and (ii) granted Mr. Packard 40,000
additional stock options with an exercise price of $1.50 per common
share that vest, and become exercisable, as follows: 10,000
immediately, 10,000 on December 31, 2001, 10,000 on December 31, 2002
12
and 10,000 on December 31, 2003, with any unexercised options to expire
on May 1, 2011. On December 24, 2001, the Board, acting upon the
recommendation of its Compensation Committee, granted Mr. Packard
20,000 additional stock options with an exercise price of $1.50 per
common share that vest, and become exercisable, as follows: 4,000
immediately, 4,000 on December 24, 2002, 4,000 on December 24, 2003,
4,000 on December 24, 2004 and 4,000 on December 31, 2005, with any
unexercised options to expire on December 24, 2011. On September 30,
2002, Mr. Packard's employment with the Company was terminated by
mutual agreement, pursuant to which he (i) received severance equal to
four weeks of salary and (ii) was granted twelve months during which to
exercise his vested stock options. All of Mr. Packard's unvested
options were immediately cancelled.
(9) Mr. Robinson's employment with the Company began on September 25, 2000
pursuant to a Board-approved compensation package providing him with an
initial annual salary of $110,000, an initial grant of 200,000 stock
options with an exercise price of $3.00 per common share and a $15,000
relocation allowance. The stock options, which were formally granted on
October 4, 2000, vest and become exercisable, as follows: 25,000
immediately, 6,250 on October 4, 2001, 30,000 on December 31, 2001,
6,250 on October 4, 2002, 30,000 on December 31, 2002, 6,250 on October
4, 2003, 30,000 on December 31, 2003, 6,250 on October 4, 2004, 30,000
on December 31, 2004, and 30,000 on December 31, 2005, with any
unexercised options to expire on October 4, 2010. On May 1, 2001, the
Board, acting upon the recommendation of its Compensation Committee,
(i) increased Mr. Robinson's annual salary to $138,000 for the fiscal
year ending June 30, 2002 and (ii) granted Mr. Robinson 40,000
additional stock options with an exercise price of $1.50 per common
share that vest, and become exercisable, as follows: 10,000
immediately, 10,000 on December 31, 2001, 10,000 on December 31, 2002
and 10,000 on December 31, 2003, with any unexercised options to expire
on May 1, 2011. On December 24, 2001, the Board, acting upon the
recommendation of its Compensation Committee, granted Mr. Robinson
20,000 additional stock options with an exercise price of $1.50 per
common share that vest, and become exercisable, as follows: 4,000
immediately, 4,000 on December 24, 2002, 4,000 on December 24, 2003,
4,000 on December 24, 2004 and 4,000 on December 31, 2005, with any
unexercised options to expire on December 24, 2011. On June 18, 2002,
Mr. Robinson's employment with the Company was terminated by mutual
agreement, pursuant to which he (i) received severance equal to four
weeks of salary and (ii) was granted twelve months during which to
exercise his vested stock options. All of Mr. Robinson's unvested
options were immediately cancelled.
STOCK OPTIONS
1993 INCENTIVE STOCK OPTION PLAN. The Company has reserved 600,000 shares of its
Common Stock for issuance upon the exercise of options granted or available for
grant under its 1993 Incentive Stock Option Plan (hereinafter, "the 1993 Plan").
The 1993 Plan is administered by either the Board or its Compensation Committee,
which determines, without limitation, the selection of the persons who will be
granted options under the 1993 Plan, the number of optioned shares and the
option exercise price per share. Options granted under the 1993 Plan fall within
the meaning of, and conform to, Section 422 of the Internal Revenue Code of
1986, as amended. Under the terms of the 1993 Plan, all officers, employees,
consultants, and advisors of the Company are eligible for incentive stock
options. The Board, or its Compensation Committee, determines at its discretion
which persons receive incentive stock options, the applicable vesting
provisions, and the exercise terms thereof. The terms and conditions of each
option grant may differ and will be set forth in the optionee's individual
incentive stock option agreement. As of October 18, 2002, the Company had not
granted any options under the 1993 Plan.
1998 EMPLOYEE STOCK OPTION PLAN. The Company has reserved 2,000,000 shares of
its Common Stock for issuance pursuant to stock options or stock appreciation
rights granted under its 1998 Employee Stock Option Plan (hereinafter, "the 1998
Plan"). The 1998 Plan is administered by either the Board or its Compensation
Committee, which determines, without limitation, the selection of the persons
who will be granted options under the 1998 Plan, the type of options to be
granted, the number of optioned shares and the option exercise price per share.
The terms and conditions of each option grant may differ and will be set forth
in the optionee's individual stock option agreement. Officers, directors, key
13
employees and consultants of the Company and its subsidiaries are eligible to
receive non-qualified stock options under the 1998 Plan. Only officers,
directors and employees of the Company or its subsidiaries are eligible to
receive incentive stock options. As of October 18, 2002, the Company had issued
1,035,731 incentive stock options under the 1998 Plan, with 312,682 of those
options being vested and exercisable.
2002 EMPLOYEE STOCK OPTION PLAN. On June 10, 2002, the Company's shareholders
approved the adoption of the 2002 Stock Option Plan (hereinafter, "the 2002
Plan"), thereby reserving 2,000,000 shares of the Company's Common Stock for
issuance pursuant to stock options or stock appreciation rights. The 2002 Plan
is administered by either the Board, or its Compensation Committee, which
determines, without limitation, the selection of the persons who will be granted
options under the 2002 Plan, the type of options to be granted, the number of
optioned shares and the option exercise price per share. The terms and
conditions of each option grant may differ and will be set forth in the
optionee's individual stock option agreement. Officers, directors, key employees
and consultants of the Company and its subsidiaries are eligible to receive
non-qualified stock options under the 2002 Plan. Only officers, directors and
employees of the Company or its subsidiaries are eligible to receive incentive
stock options. As of October 18, 2002, the Company had not issued any options
under the 2002 Plan.
EQUITY COMPENSATION PLAN INFORMATION
AS OF JUNE 30, 2002
NUMBER OF NUMBER OF
SECURITIES TO BE SECURITIES
ISSUED UPON REMAINING AVAILABLE
EXERCISE OF WEIGHTED-AVERAGE FOR FUTURE ISSUANCE
OUTSTANDING EXERCISE PRICE OF UNDER EQUITY
PLAN CATEGORY OPTIONS, WARRANTS OUTSTANDING OPTIONS, COMPENSATION
AND RIGHTS WARRANTS AND RIGHTS PLANS
- --------------------------------- ------------------- ---------------------- ---------------------
EQUITY COMPENSATION PLANS APPROVED
BY SECURITY HOLDERS:
o 1993 Incentive Stock
Option Plan - - 600,000
o 1998 Employee Stock
Option Plan 1,035,731 $2.54 964,269
o 2002 Employee Stock
Option Plan - - 2,000,000
EQUITY COMPENSATION PLANS NOT
APPROVED BY SECURITY HOLDERS:
o Restricted Stock Grant
Agreements (1) 2,513,122 $1.92 -
------------------- ---------------------- ---------------------
TOTAL 3,548,853 $2.10 3,564,269
=================== ====================== =====================
(1) The Company has granted, from time to time, to management and other
"key" employees non-qualified options outside of our stock option plans
to purchase an aggregate of 2,513,122 restricted shares of our Common
Stock. Options granted to the Named Executive Officers are as follows:
Christopher Maus was granted options to purchase a total of 1,450,000
shares at prices ranging from $1.20 to $5.00 per share. Edward Siemens
was granted options to purchase a total of 195,000 shares at prices
ranging from $1.50 to $3.00 per share. Paul Beatty was granted options
to purchase a total of 155,000 shares at prices ranging from $1.50 to
$3.00 per share. Brian Packard was granted options to purchase a total
of 110,000 shares at prices ranging from $1.50 to $3.00 per share.
14
Brett Sweezy was granted options to purchase a total of 160,000 shares
at prices ranging from $1.25 to $3.00 per share. Doug Robinson was
granted options to purchase a total of 55,250 shares at prices ranging
from $1.50 to $3.00 per share. The remaining employees were granted
options to purchase a total of 387,872 shares at prices ranging from
$1.25 to $3.00 per share. These options have been granted to attract,
retain and provide additional incentive to certain employees and have
been approved by our Board, upon the recommendation of its Compensation
Committee. The exercise prices of these granted options have ranged
from $1.25 per share to $3.00 per share, with such exercise prices
being at or above the market price of our Company Stock on the date of
grant. These options vest as follows: (i) 20% immediately upon grant
and (ii) 20% on each subsequent annual anniversary date of the grant,
provided that the optionee remains employed by us. An optionee has six
month from his or her employment termination date to exercise any
vested options. Any unvested options are immediately cancelled as of
the employment termination date. As of June 30, 2002, 1,204,622 options
were fully vested and exercisable.
The following table contains information concerning stock options granted to the
Named Executive Officers during the most recently completed fiscal year ended
June 30, 2002. All grants were made under the Company's 1998 Employee Stock
Option Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
NAME OPTION/SARS EMPLOYEES IN BASE PRICE EXPIRATION DATE
GRANTED (#) FISCAL YEAR (%) ($/SHARE)
- ------------------------------------ ---------------- ------------------- ---------------- ----------------
Christopher Maus.................. - - - -
Edward Siemens (1).............. 35,000 8.86% $1.50 12/24/11
Paul Beatty (2).................... 30,000 7.59% $1.50 12/24/11
Brett Sweezy (3)............... 30,000 7.59% $1.50 12/24/11
Brian Packard (4)............... 20,000 5.06% $1.50 12/24/11
Doug Robinson (5)................ 20,000 5.06% $1.50 12/24/11
- -------------------------
(1) On December 24, 2001, the Board, acting upon the recommendation of its
Compensation Committee, granted Mr. Siemens 35,000 additional stock
options with an exercise price of $1.50 per common share that vest, and
become exercisable, as follows: 7,000 immediately, 7,000 on December
24, 2002, 7,000 on December 24, 2003, 7,000 on December 24, 2004 and
7,000 on December 31, 2005, with any unexercised options to expire on
December 24, 2011.
(2) On December 24, 2001, the Board, acting upon the recommendation of its
Compensation Committee, granted Mr. Beatty 30,000 additional stock
options with an exercise price of $1.50 per common share that vest, and
become exercisable, as follows: 6,000 immediately, 6,000 on December
24, 2002, 6,000 on December 24, 2003, 6,000 on December 24, 2004 and
6,000 on December 31, 2005, with any unexercised options to expire on
December 24, 2011.
15
(3) On December 24, 2001, the Board, acting upon the recommendation of its
Compensation Committee, granted Mr. Sweezy 30,000 additional stock
options with an exercise price of $1.50 per common share that vest, and
become exercisable, as follows: 6,000 immediately, 6,000 on December
24, 2002, 6,000 on December 24, 2003, 6,000 on December 24, 2004 and
6,000 on December 31, 2005, with any unexercised options to expire on
December 24, 2011.
(4) On December 24, 2001, the Board, acting upon the recommendation of its
Compensation Committee, granted Mr. Packard 20,000 additional stock
options with an exercise price of $1.50 per common share that vest, and
become exercisable, as follows: 4,000 immediately, 4,000 on December
24, 2002, 4,000 on December 24, 2003, 4,000 on December 24, 2004 and
4,000 on December 31, 2005, with any unexercised options to expire on
December 24, 2011. On September 30, 2002, Mr. Packard's employment with
the Company was terminated by mutual agreement, pursuant to which he
was granted twelve months during which to exercise his vested stock
options. All of Mr. Packard's unvested options were immediately
cancelled.
(5) On December 24, 2001, the Board, acting upon the recommendation of its
Compensation Committee, granted Mr. Robinson 20,000 additional stock
options with an exercise price of $1.50 per common share that vest, and
become exercisable, as follows: 4,000 immediately, 4,000 on December
24, 2002, 4,000 on December 24, 2003, 4,000 on December 24, 2004 and
4,000 on December 31, 2005, with any unexercised options to expire on
December 24, 2011. On June 18, 2002, Mr. Robinson's employment with the
Company was terminated by mutual agreement, pursuant to which he was
granted twelve months during which to exercise his vested stock
options. All of Mr. Robinson's unvested options were immediately
cancelled.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named
Executive Officers regarding exercises of options/SARs during the most recently
completed fiscal year ended June 30, 2002 and unexercised options/SARs held as
of June 30, 2002.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
- -------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED FY-END (#) FY-END (#)
ON VALUE
NAME EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
(#) ($) UNEXERCISABLE UNEXERCISABLE (1)
- --------------------------- ------------ ------------- --------------------------- ------------------------
Christopher Maus...... - - 622,000/900,000 -
Edward Siemens....... - - 152,000/243,000 -
Paul Beatty............. - - 122,250/207,750 -
Brett Sweezy............ - - 146,578/149,392 -
Brian Packard.......... - - 91,500/168,500 -
Doug Robinson........ - - 85,250/174,750 -
- --------------------------
(1) Based upon the market price of $0.90 per share on June 30, 2002,
determined on the basis of the closing selling price per share of the
Company's Common Stock on the American Stock Exchange, less the option
exercise price payable per share.
16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In recent years, the Board has periodically approved the advancement of funds to
Christopher Maus, the Company's President, Chief Executive Officer and Chairman
of the Board. The last such advances were during fiscal 2001 and totaled
$87,136. Mr. Maus made principal repayments totaling $61,621 and $5,623 during
fiscal 2002 and 2001, respectively. The fiscal 2002 repayment reflects the
application of a $60,000 bonus awarded by the Board to Mr. Maus for his fiscal
2002 performance. The underlying promissory note, which had outstanding
principal balances of $38,728 and $100,349 at June 30, 2002 and June 30, 2001,
respectively, is unsecured, has a stated interest rate of 8.75% and requires
bi-weekly repayments of principal and interest through May 23, 2014. However, on
May 1, 2002, the Board, upon the recommendation of the compensation committee,
indefinitely suspended the bi-weekly servicing requirement.
During June 2001, the Company commenced a private offering of convertible notes
with detachable stock purchase warrants from which it had received proceeds of
$3,225,000 as of June 30, 2001. The Company subsequently received additional
proceeds of $4,422,500 through December 31, 2001. The notes are unsecured,
accrue interest at the prime rate plus two percent (6.75% at June 30, 2002), and
mature on various dates during calendar years 2003 and 2006, as specified. The
notes are immediately convertible at the option of the holders into common stock
of the Company at a rate of $1.00 per share. The Company has the right to force
conversion of the notes if the market price of its common stock exceeds $3.00
per share for 20 consecutive trading days. For every two dollars of note
principal, the holder received a detachable stock purchase warrant allowing for
the purchase of a share of the Company's common stock at $2.50 per share. RAB
Europe Fund Limited and RAB Europe Partners collectively purchased notes, having
an aggregate principal face amount of $5,470,000 at June 30, 2002, that
exclusively contain an anti-dilution provision providing for a formula-driven,
currently indeterminable downward adjustment of their conversion rate should the
Company subsequently issue common shares at a price below the then stated
conversion rate.
In connection with the immediately preceding offering of convertible notes, the
Company agreed to pay certain individuals and entities, including RAB Europe
Fund Limited and RAB Europe Partners, each a commission, payable in common
shares, equal to five percent of the offering proceeds they procured. RAB Europe
Fund Limited and RAB Europe Partners earned and received commissions of $100,000
and $20,000, respectively, in fiscal 2002.
During fiscal 2001, the Company obtained $140,000 in unsecured loans from
Michael Crane, a principal shareholder and member of the Board. Each loan had a
stated interest rate of 20% and a term of 90 days. During fiscal 2001, the
Company also executed an agreement with Mr. Crane whereby he established a
$500,000 personal line of credit with a financial institution for use by the
Company. Borrowings under the agreement were unsecured, accrued interest at the
financial institution's prevailing prime rate plus two percent, and required the
repayment of all outstanding principal and interest on or before September 13,
2001. During August 2001, the Company executed an agreement with Mr. Crane
whereby the Company repaid $200,000 in outstanding principal and accrued
interest against the preceding obligations and issued Mr. Crane an unsecured
convertible note for the remaining $469,984 aggregate principal balance. The
note accrues interest at the prime rate plus two percent (6.75% at June 30,
2002), is immediately convertible at Mr. Crane's option into common stock of the
Company at a rate of $1.00 per share, and matures on August 1, 2003. In
connection with this agreement, the Company issued Mr. Crane 40,000 common
shares and warrants allowing him to purchase 134,000 additional common shares at
$1.00 per share. The agreement further stipulates that for every subsequent
quarter the note remains outstanding that the Company will issue Mr. Crane
additional warrants for the purchase of 23,500 common shares at $1.00 per share.
The aggregate fair value assigned to the common shares and warrants of $322,159
was recognized as a financing cost in fiscal 2002.
17
In March 2001, the Company obtained a $1.0 million 90-day loan from Mercer
Management, a principal shareholder, that accrued interest at the prime rate
plus two percent and was secured by all the Company's unencumbered assets other
than accounts receivable. In June 2001, the Company and Mercer Management agreed
to convert the above loan into a similarly secured convertible note with a
stated interest rate of prime plus two percent (6.75% at June 30, 2002) and a
maturity date of March 5, 2003. The note is immediately convertible at the
option of Mercer Management into common stock of the Company at a rate of $1.00
per share. In connection with the initial loan and subsequent refinancing, the
Company issued Mercer Management warrants allowing them to purchase 200,000
shares of the Company's common stock at $1.00 per share for which the Company
recognized the aggregate assigned fair value of $138,444 as a financing cost in
fiscal 2001. The note further stipulates that for every subsequent quarter the
note remains outstanding that the Company will issue Mercer Management
additional warrants for the purchase of 37,500 common shares at $1.00 per share.
The aggregate fair value assigned to these additional warrants of $200,765 was
recognized as a financing cost in fiscal 2002. The Company repaid $250,000 of
the outstanding note balance during fiscal 2002.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file with the United States Securities and Exchange
Commission (hereinafter "the SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely upon a review of the copies of such reports furnished to
the Company during and subsequent to the most recently completed fiscal year
ended June 30, 2002 by such persons, the Company believes that there was
compliance for the fiscal year ended June 30, 2002 with all Section 16(a) filing
requirements applicable to the Company's directors, executive officers and
greater than ten percent shareholders.
18
PROPOSAL 2
APPROVAL OF THE ISSUANCE OF UP TO TEN MILLION
NEWLY ISSUED SHARES OF COMMON STOCK
BACKGROUND INFORMATION
The Board has approved the offer, sale and issuance of up to ten million
additional shares of the Company's Common Stock in order to provide us with the
additional capital necessary to fund (i) our current accounts payable balance, a
significant portion of which is overdue, (ii) our ongoing operational needs,
which although recently streamlined, remain significant and (iii) our planned
inventory building and marketing initiatives designed to rapidly accelerate
sales of our recently introduced second-generation total cholesterol monitor for
consumers (hereinafter, "our consumer monitor") which we believe, if broadly
marketed, has significant revenue potential for us. The Company currently has
100,000,000 shares of Common Stock authorized, of which, as of October 18, 2002,
24,986,747 shares were issued and outstanding and 34,673,250 shares were
reserved for issuance pursuant to our stock option plans and outstanding stock
purchase warrants. This leaves 40,340,003 authorized and unissued shares as of
October 18, 2002. The Company currently desires to raise approximately
$5,000,000 by offering up to 10,000,000 shares of its Common Stock, or
equivalents, in a contemplated private placement to a limited number of private
investors. The Company's Amended and Restated Articles of Incorporation do not
provide for preemptive rights, however participants in a prior private placement
of the Company's Common Stock that closed on March 8, 2002 did receive certain
limited rights of first refusal on any other financings during the subsequent
one year period. We believe, as does our Board, that this financing is critical
in order for us to meet our aforementioned funding needs, and thereby,
efficiently and effectively produce and market our consumer monitor and achieve
net profitability and positive operating cash flow.
The Company's common shares are traded on the American Stock Exchange
(hereinafter, "the AMEX"), and under the AMEX rules, shareholder approval is
required for the sale, issuance or potential issuance by the Company of common
stock or securities convertible into common stock equal to 20% or more of the
presently outstanding stock if such issuance is for a price less than the
greater of the book or market value of the stock. Our proposed terms for the
anticipated offering, which may ultimately take the form of an offering of
Common Stock or may involve the issuance of convertible stock or debt, would
anticipate pricing the offering at a per share amount in excess of our current
book value and market price per common share. However, our market price per
common share has been quite volatile and, depending on trends in the market
price of our Common Stock during the offering period, the price at which the
shares of Common Stock are sold in the anticipated private placement could be
less than our market price per common share at the time the private placement is
closed and the shares are listed on the AMEX. This could trigger the AMEX's
shareholder approval requirement and, in order to prepare for that eventuality
and make sure our closing of the anticipated financing is not delayed, the Board
is seeking shareholder approval in advance for the potential issuance of up to
ten million additional common shares in case such approval is required.
The issuance of additional common shares will have a significant dilutive effect
on the ownership interests of the Company's existing shareholders. Furthermore,
the increase in the number of common shares available for sale in the market,
particularly if we agree to register such shares for public resale, could
represent an overhang on the market and could depress the market price of our
Common Stock.
There can be no assurances that the Company will be successful in finding
investors willing to provide the necessary capital on terms that the Board
believes are in the Company's best interests. In addition, the Company
anticipates that additional funds may be needed in the future to fund further
development and expansion of our cholesterol monitor and personal health smart
card business, and there can be no assurance that the Company will be able to
obtain any such necessary additional funds on terms that are acceptable to the
Company. Depending on the terms of any issuance of shares, the Company may not
be required to have shareholder approval in order to issue additional shares.
19
BOARD RECOMMENDATION
Our Board believes it is in the Company's best interest to acquire additional
capital funding. As noted in our most recent Form 10-KSB for the fiscal year
ended June 30, 2002, as filed with the SEC on September 30, 2002 and enclosed
herein, we currently have a negative working capital position which we primarily
attribute to our continued inability to fund more extensive marketing activities
and product production. Our independent public accountants have expressed
substantial doubt about our ability to continue as a going concern unless we are
able to raise sufficient additional capital. Although we have recently
introduced our second-generation total cholesterol monitor for consumers to the
marketplace and although we have continued to undertake certain measures to
reduce our operating expenses and cash needs, our ability to continue our
operations and develop the market for our product, particularly the
aforementioned monitor, depends on our ability to obtain additional capital.
Accordingly, the Board recommends that you vote FOR an approval of the issuance
of up to an additional ten million shares of the Company's Common Stock.
VOTE REQUIRED FOR APPROVAL
The favorable vote of a majority of the votes cast regarding the proposal is
required to ratify the approval to issue up to ten million newly issued common
shares under certain terms. Accordingly, abstentions or broker non-votes will
not affect the outcome of the vote on the proposal. Unless instructed to the
contrary in the Proxy, the shares represented by the proxies will be voted FOR
the proposal.
THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF
THE TRANSACTION IN WHICH THE NOTES AND
WARRANTS WERE ISSUED.
20
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of BDO Seidman, LLP has served as independent public accountants for
the Company since fiscal 1997. The Board, acting upon the recommendation of its
Audit Committee, has appointed BDO Seidman, LLP to serve in the same capacity
for the fiscal year ending June 30, 2003 and is asking stockholders to ratify
such appointment through the required affirmative vote of a majority of the
shares presented and voting at the Annual Meeting. In the event that
stockholders fail to ratify the appointment of BDO Seidman, LLP, the Board will
reconsider such appointment. The Board reserves the right, even after
stockholder approval, to subsequently replace BDO Seidman, LLP as the Company's
independent public accountants for the fiscal year ending June 30, 2003 should
it deem such replacement to be in the best interest of the Company.
AUDIT AND REVIEW FEES: The aggregate fees billed for professional audit and
review services rendered by BDO Seidman, LLP for services performed related to
the fiscal year ended June 30, 2002 were $89,071. Such fees included (i) $71,768
for audit services performed for the annual consolidated financial statements of
the Company for the fiscal year ended June 30, 2002, review services for the
interim condensed consolidated financial statements of the Company for the
fiscal quarters ended September 30, 2001, December 31, 2001, March 31, 2002 and
June 30, 2002, and reviews of the related Forms 10-QSB, Form 10-KSB and Proxy
Statement as filed with the SEC and (ii) $17,303 for review services performed
during the Company's fiscal year ended June 30, 2002 in connection with a public
registration statement and a private placement offering memorandum.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES: BDO Seidman, LLP
did not provide the Company any financial information systems design and
implementation services during the fiscal year ended June 30, 2002.
ALL OTHER FEES: The aggregate fees billed for all other services rendered BDO
Seidman, LLP during the fiscal year ended June 30, 2002 were $2,955. The Audit
Committee believes the provision of these services is compatible with
maintaining the independence of BDO Seidman LLP.
A representative of BDO Seidman, LLP is expected to attend the Annual Meeting.
The representative will have the opportunity to make a statement if he desires
to do so and will be available to respond to appropriate questions from
stockholders.
THE COMPANY'S BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING JUNE 30, 2003.
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
Management is not aware of any substantial interest, direct or indirect, by
securities holdings or otherwise of any director, officer or their associates in
any matter to be acted on, as described herein, other than the proposed nominees
for election to the Company's Board.
21
OTHER MATTERS
Management does not know of any matters to be presented at this Annual Meeting
other than those set forth herein and in the Notice accompanying this Proxy
Statement. If any other matters properly come before the Annual Meeting, it is
the intention of the persons named in the enclosed form of proxy to vote the
shares they represent as the Board may recommend. Discretionary authority with
respect to such matters is granted by the execution of the enclosed proxy.
STOCKHOLDERS' PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended to be presented at the 2003 Annual Meeting of
Stockholders of the Company must be received by the Company at its principal
executive offices at 510 Clearwater Loop, Suite 101, Post Falls, Idaho 83854,
Attn: Chief Financial Officer not later than July 10, 2003 for inclusion in the
Proxy Statement and Proxy relating to the 2003 Annual Meeting of Stockholders.
AVAILABILITY OF COMPANY'S ANNUAL REPORT ON FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2002 accompanies this Proxy Statement, but is exclusive of certain
related exhibits filed with the SEC. These exhibits are available, without
charge, to stockholders upon request to Brett Sweezy, Chief Financial Officer.
The financial statements included in the Form 10-KSB are incorporated by
reference into this Proxy Statement.
It is important that your shares be represented at the Annual Meeting,
regardless of the number of shares that you hold. YOU ARE URGED TO PROMPTLY
EXECUTE AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE THAT HAS BEEN ENCLOSED
FOR YOUR CONVENIENCE. Stockholders who are present at the Annual Meeting may
revoke their proxies and vote in person or, if they prefer, may abstain from
voting in person and allow their proxies to be voted.
By Order of the Board of Directors,
/s/ Christopher Maus
-----------------------------------
Christopher Maus
Chairman of the Board of Directors,
President and Chief Executive Officer
October 28, 2002
Post Falls, Idaho
22
<page>
This Proxy is solicited by and on behalf of the Board of Directors
LIFESTREAM TECHNOLOGIES, INC.
Proxy - Annual Meeting of Stockholders - December 20, 2002
The undersigned shareholder, revoking all previous proxies, hereby appoints
Christopher Maus as Proxy, with full power of substitution, to represent and to
vote all Common Stock of Lifestream Technologies, Inc. owned by the undersigned
at the Annual Meeting of Stockholders to be held at the West Coast Templin's
Resort located at 414 East First Avenue, Post Falls, Idaho, on December 20, 2002
at 8:30 a.m, Pacific Time, and at any and all adjournments thereof, with respect
to the election of Directors and other proposals set forth in the Notice of
Annual Meeting and Proxy Statement. No business other than the matters described
below is expected to come before the meeting, but should any other matter
requiring a vote of stockholders arise, the Proxy named herein will vote thereon
in accordance with his best judgment. All powers may be exercised by said Proxy.
Receipt of the Notice of Annual Meeting and Proxy Statement is hereby
acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
1. Election of Directors
Nominees: Class I: Christopher Maus, Michael Crane
Class II: Robert Boyle, William Gridley
Class III: Ronald Kiima
(Instructions: To withhold authority to vote for any individual
nominee, please draw a line through that nominee's name) WITHOLDING
AUTHORITY to vote for all nominees listed above
2. To approve, in accordance with applicable requirements of the American Stock
Exchange, the potential issuance of up to ten million newly issued shares of the
Company's outstanding Common Stock, at a possible below market price
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To ratify the appointment of BDO Seidman, LLP as the Company's independent
public accountants for the fiscal year ending June 30, 2003
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In his (their) discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting.
The shares represented by this proxy will be voted as directed. IF NO SPECIFIC
DIRECTION IS GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
NOMINEES NAMED IN PROPOSAL 1 AND "FOR" ON PROPOSAL 2 AND PROPOSAL 3. An
affirmative vote of a majority of the holders of the Common Stock present, in
person or by proxy, at the Meeting is required for the approval of the
PROPOSALS.
<page>
The undersigned stockholder hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement and hereby revokes any proxy or proxies heretofore
given. This proxy may be revoked at any time prior to the Annual Meeting by
means of a written revocation delivered to the Secretary of the Company. If you
received more than one proxy card, please date, sign an return all cards in the
accompanying envelope.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in the corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: ______________________________, 2002
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Signature
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Signature if held jointly
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(Please print name)
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(Number of shares subject to proxy)
PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE