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 SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 2004
To our Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders
(hereinafter, "the Special Meeting") of Lifestream Technologies, Inc.
(hereinafter, "the Company"), a Nevada corporation, which will be held at Red
Lion Templin's Resort located at 414 East First Avenue, Post Falls, Idaho, on
April 28, 2004, at 9:00 a.m., Pacific Time, or at any and all adjournments
thereof. The sole purpose of the Special Meeting is to approve an amendment (the
"Amendment") to the Articles of Incorporation to increase the number of
authorized shares of Common Stock from 250,000,000 shares to 750,000,000 shares.
This matter is more fully discussed in the Proxy Statement accompanying this
Notice. We believe the approval of this Amendment is imperative in view of the
Company's financial condition and operational needs and its consequent need for
additional authorized shares for the purpose of obtaining additional financing.
The Board of Directors of the Company has unanimously determined that the
proposed Amendment is advisable and in the best interests of the Company and
recommends that you vote FOR the Amendment.
The Board has fixed the close of business on March 04, 2004, as the record date
for determining those stockholders who will be entitled to notice of, and to
vote at, the Special Meeting. The stock transfer books will not be closed
between the record date and the date of the meeting.
Approval of the proposed Amendment requires the affirmative vote of at least a
majority of the outstanding shares of the Company's Common Stock, whether
present in person or represented by proxy. 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 THE
NECESSARY APPROVAL. 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.
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
March 18, 2004
STOCKHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT
CAREFULLY PRIOR TO RETURNING THEIR PROXIES
PROXY STATEMENT FOR A SPECIAL MEETING OF STOCKHOLDERS OF
LIFESTREAM TECHNOLOGIES, INC.
TO BE HELD APRIL 28, 2004
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 a
Special Meeting of Stockholders (hereinafter, "the Special Meeting") to be held
at Red Lion Templin's Resort located at 414 East First Avenue, Post Falls, Idaho
on April 28, 2004, at 9:00 a.m. Pacific Time or at any and all adjournments or
postponements thereof, for the purpose set forth in the accompanying Notice of
Special Meeting of Stockholders (hereinafter, "the Notice"). This Proxy
Statement and the proxy card will be first mailed to Stockholders on or about
April 2, 2004.
VOTING RIGHTS AND SOLICITATION
The close of business on March 04, 2004, was the record date for stockholders
entitled to notice of, and to vote at, the Special Meeting. As of that date,
154,675,276 shares of the Company's Common Stock, $0.001 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 Special Meeting, and stockholders of record entitled to
vote at the Special Meeting will have one vote for each share so held on the
matter to be voted upon.
There will not be any matters presented at the Special Meeting other than the
proposal set forth in this Proxy Statement and accompanying Notice. 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 Special Meeting and voting in person.
Approval of the proposed Amendment will require the affirmative vote of a
majority of the outstanding shares of Common Stock, cast by the Stockholders
entitled to vote, in person or by proxy. Broker non-votes and abstentions will
have the effect of a vote against the proposal being submitted for stockholder
approval.
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.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE SPECIAL MEETING
WHY ARE WE CALLING THIS SPECIAL MEETING?
To approve an amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of Common Stock from 250,000,000 to
750,000,000.
WHO IS ENTITLED TO VOTE AT THE MEETING?
Stockholders of record of Common Stock at the close of business on
March 4, 2004 may vote at the meeting. On March 04, 2004, 154,675,276 shares of
Common Stock were outstanding and eligible to vote.
WHAT IS THE DIFFERENCE BETWEEN A SHAREHOLDER OF RECORD AND
A "STREET NAME" HOLDER?
If your shares are registered directly in your name with Nevada Agency
& Trust Company, our transfer agent, you are considered the shareholder of
record of those shares.
If your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered the beneficial owner of these shares, and your
shares are held in "street name."
1
HOW DO I VOTE MY SHARES?
If you are a shareholder of record, you can give a proxy to be voted at
the meeting by mailing the enclosed proxy card.
If you hold your shares in "street name," you must vote your shares in
the manner prescribed by your broker or nominee. Your broker or nominee has
enclosed or provided a voting instruction card for you to use in directing the
broker or nominee how to vote your shares.
CAN I VOTE MY SHARES IN PERSON AT THE MEETING?
Yes. If you are a shareholder of record, you may vote your shares at
the meeting by completing a ballot at the meeting.
However, if you are a "street name" holder, you may vote your shares in
person only if you obtain a signed proxy from your broker or nominee giving you
the right to vote the shares.
Even if you currently plan to attend the meeting, we recommend that you
also submit your proxy as described above so that your vote will be counted if
you later decide not to attend the meeting.
WHAT IS THE RECOMMENDATION OF THE BOARD OF DIRECTORS?
The Board of Directors recommends a vote FOR the Amendment increasing
the authorized Common Stock.
WHY IS THE COMPANY SEEKING SHAREHOLDER APPROVAL FOR THE AMENDMENT?
Under Nevada law, we need shareholder approval to amend our Articles of
Incorporation to increase the number of authorized shares of Common Stock.
WILL THE COMPANY BE SUBJECT TO ANY IMMEDIATE ADVERSE EFFECTS IF THE AMENDMENT IS
NOT APPROVED?
We require additional authorized common shares to enable us to issue
our common stock (a) under our existing stock option plans, (b) upon full
exchange of certain outstanding debentures and the exercise of related stock
purchase warrants, (c) upon conversion of certain outstanding convertible
promissory notes, (d) in the event of exercise of an option to purchase $1.22 in
additional convertible debentures and the exercise of related stock purchase
warrants, and (e) as consideration in connection with future financings that we
may agree to. In the event that stockholders do not authorize the Amendment, we
will be unable to meet the foregoing contingencies, we may be in default of
certain contractual obligations, and, ultimately, we may be forced to curtail or
cease operations. Our Board of Directors believes that it is critical to our
continued viability that we authorize additional common stock for the foregoing
purposes and to continue to implement our current business and marketing
strategies.
WHAT IF I DO NOT SPECIFY HOW I WANT MY SHARES VOTED?
If you do not specify on your proxy card how you want to vote your
shares, we will vote them FOR the Amendment.
CAN I CHANGE MY VOTE?
Yes. You can revoke your proxy at any time before it is exercised in
any of three ways:
o By submitting written notice of revocation to our Secretary;
o By submitting another proxy by mail with a later date and, if by
mail, that is properly signed; or
o By voting in person at the meeting.
IS THE APPROVAL BY THE SHAREHOLDERS ALREADY ASSURED?
Our Board of Directors and officers as a group own or control
approximately 5.53% of our voting shares. While they have unanimously approved
and recommended the Amendment, there are no other agreements in place that would
assure shareholder approval of the Amendment.
ARE THERE ANY OTHER MATTERS TO BE ACTED UPON AT THE MEETING?
Under our bylaws, no other business besides that specified in the
Notice may be transacted at this Special Meeting.
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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 March 4, 2004 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 current director, (iii) each
executive officer, 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.
PERCENT OF
SHARES OUTSTANDING SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER (2) OWNED OWNED (3)
- ---------------------------------------- ------------ ------------------
DIRECTORS AND OFFICERS
- ----------------------
Christopher Maus (4) ................................... 3,467,367 2.23%
Michael Crane (5) ...................................... 3,125,391 2.02%
Robert Boyle (6) ....................................... 314,700 Less than 1%
William Gridley (7) .................................... 199,000 Less than 1%
Neil Luckianow ......................................... -0- Less than 1%
Edward Siemens (8) ..................................... 609,385 Less than 1%
Brett Sweezy (9) ....................................... 692,936 Less than 1%
Jackson Connolly (10) .................................. 251,706 Less than 1%
--------- ------------
ALL DIRECTORS AND OFFICERS AS A GROUP (8 PERSONS) (11).. 8,660,485 5.53%
--------- ------------
SHARES BENEFICIALLY PERCENT OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER (2) OWNED BENEFICIALLY OWNED (3)
- ---------------------------------------- ------------------- ----------------------
OTHER BENEFICIAL OWNERS:
- ------------------------
RAB Europe Fund Limited (12)............................ 15,950,000 9.99%
c/o RAB Capital Limited
Attn: Phillip Richards, Director
No. 1 Adam Street
London W2CN 6LE, United Kingdom
Mercer Management (13).................................. 11,194,661 7.09%
c/o Gordon Rock
5820 East Mercer Way
Seattle, WA 98040
- ----------
(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 is based upon 154,675,276 actual shares of Common
Stock outstanding on March 4, 2004. Shares of Common Stock subject to
stock options or warrants that are currently exercisable or will become
exercisable within 60 days after March 04, 2004, and shares of Common
Stock subject to convertible term notes that are currently convertible or
will become convertible within 60 days after March 04, 2004, 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.
3
(4) Includes 622,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
March 4, 2004.
(5) Includes 142,500 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
March 4, 2004. Excludes 101,590 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
March 4, 2004.
(7) Includes 72,000 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
March 4, 2004.
(8) Includes 408,500 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
March 4, 2004.
(9) Includes 393,297 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
March 4, 2004.
(10) Includes 146,739 shares issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days after
March 4, 2004.
(11) Includes 1,907,036 shares issuable upon exercise of options and warrants
that are currently exercisable or will become exercisable within 60 days
after March 4, 2004.
(12) RAB Europe Fund Ltd., as of March 04, 2004, owned convertible term notes
of ours that can be converted into 40,200,000 shares of our Common Stock.
RAB Europe Fund Ltd. does not have the right to convert any debt, to the
extent such conversion 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 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. The number of shares beneficially owned by
RAB Europe Fund Ltd., in the table above, reflects this limitation.
(13) Includes 799,500 shares issuable upon exercise of options and warrants
that are currently exercisable or will become exercisable within 60 days
after March 4, 2004. Also includes 2,440,000 shares issuable upon
conversion of convertible term notes that are currently convertible or
will become convertible within 60 days after March 4, 2004.
PROPOSAL 1
APPROVAL OF AN AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED CAPITALIZATION
Our Board of Directors (the "Board") has unanimously adopted a resolution
proposing and recommending stockholder approval of an amendment to the Company's
Articles of Incorporation which will increase the Company's authorized number of
shares of Common Stock from 250,000,000 shares, par value $0.001 per share, to
750,000,000 shares, par value $0.001 per share. The increase in the number of
authorized Common Stock would not affect the authorized number of shares of
preferred stock, which would remain at 15,000,000 shares, none of which have
been issued. As of March 04, 2004, the Company had 154,675,276 shares of Common
Stock outstanding.
Our Board believes it is imperative that the Company's authorized number of
shares of Common Stock be increased in order to provide sufficient authorized
but unissued Common Stock to permit the exercise of outstanding options and
warrants and the conversion of outstanding convertible debentures. The Board
also believes that the proposed amendment will provide equity for the future
financial and other needs of the Company and recommends such amendment to the
Shareholders for adoption. If the amendment is adopted, it will become effective
upon filing with the secretary of state of the State of Nevada.
BACKGROUND INFORMATION
As of June 30, 2003, we had 92,894,590 common shares issued and outstanding and
approximately 7,105,410 unissued shares available for issuance. In August 2003,
a debenture holder converted $700,000 of principal and accrued interest into 7
million common shares, leaving only 105,410 unissued shares. As discussed in our
Annual Report for the fiscal year ended June 30, 2003, and in the Management's
Discussion and Analysis sections of our Annual Report filed with the Securities
and Exchange Commission (the "SEC") for the fiscal year ended June 30, 2003 (see
"Substantial Doubt As To Our Ability to Continue As A Going Concern"), because
of our substantial accumulated operating and net losses and our negative
operating cash flows incurred by the Company since inception, our ability to
continue as a going concern has been dependent on our obtaining additional
equity infusions or alternative financing.
4
On September 15, 2003, our Board approved the sale and issuance of $3,350,000 of
8% convertible debentures, due September 2006, and Common Stock purchase
warrants. The debentures were convertible into 25,769,231 shares of Common Stock
at $0.13 a share, and the warrants were exercisable into 12,884,615 additional
shares of Common Stock. In accordance with the purchase agreement governing this
transaction, in December 2003 our shareholders approved an amendment to our
certificate of incorporation increasing the number of authorized common shares
from 100,000,000 to 250,000,000 authorized shares.
Due to the continued decline of the price of our Common Stock and our desire to
cause investors to convert their debentures, on January 13, 2004, the Company
entered into an Exchange Agreement with each holder of its convertible
debentures that were issued in September 2003. Under the Exchange Agreement,
each debenture holder agreed, subject to a 4.99% beneficial ownership
limitation, to exchange the principal amount of its debenture for shares of the
Company's Common Stock, at the rate of $0.09 of debenture principal per share of
Common Stock. Accrued but unpaid interest on each note was paid at the time of
the exchange by the issuance of additional shares of Common Stock at the rate of
$0.09 per share. Accordingly, in January 2004 the Company issued 34,655,011
shares of Common Stock upon exchange of debenture principal in the amount of
$2,975,624 and the payment of accrued but unpaid interest.
In December 2003, three debenture holders converted $1,279,241 of principal and
interest into 12,378,778 common shares and in February 2004 two investors
exercised previously issued Common Stock purchase warrants into 4,615,384 common
shares.
As a result of the above-described financings and other issuances of shares, we
issued approximately 62,000,000 shares of Common Stock during the period of
August 2003 through February 2004 resulting in 154,675,276 common shares
outstanding at March 4, 2004.
RECENT FINANCINGS
On February 19, 2004 we consummated the sale of $2,775,000 of convertible
debentures and Common Stock purchase warrants. In the event that the debentures
are converted at the stated conversion price of $.05 per share, we would be
required to issue approximately 55,500,000 shares of Common Stock. In the event
that the warrants are converted at the $.065 per share exercise price, we would
be required to issue an additional approximately 16,650,000. The conversion
price is subject to adjustment upon the occurrence of certain events including
stock dividends, subdivisions, combinations and reclassifications of the
Company's Common Stock. In addition, we are required to register 125% of the
number of shares issuable upon conversion of the debentures and exercise of the
warrants. This registration requirement obligates the Company to register and
reserve for issuance a total of 90,187,500 shares upon conversion of the
debentures and exercise of the warrants. In connection with the debenture
purchase agreement, the Company agreed to seek shareholder approval to increase
the number of authorized common shares to 500,000,000.
Subject to obtaining shareholder approval to increase the number of authorized
common shares, investors in the February 19, 2004 financing have been granted
the option to purchase up to an additional $1.22 million in convertible
debentures and warrants with terms and conditions substantially identical to
those applicable to the February 19, 2004 transaction. If these debentures are
sold and converted and the related warrants are issued and exercised, we will be
required to issue an additional 42,864,865 shares of Common Stock.
In March 2004, we issued an additional $122,000 of convertible debentures from
which we received $100,000 in net proceeds after an original issue discount of
$22,000. We also issued 732,000 of detachable stock purchase warrants in
connection with this transaction. The convertible debentures and common stock
purchase warrants have identical terms and conditions to those issued on
February 19, 2004 and could be converted into 3,172,000 shares.
5
SUMMARY OF POSSIBLE ISSUANCE OF SHARES FOR EXISTING INSTRUMENTS
As of March 4, 2004, we had 154,675,276 shares of Common Stock outstanding, and
we could be required to issue up to an additional 197,020,560 shares, as
follows:
---------------------------------------------------------------------------------------------------
Shares issuable upon exercise of outstanding stock options 5,619,748
---------------------------------------------------------------------------------------------------
Shares issuable under the Company's stock option plans upon exercise
of stock options not yet granted 3,698,926
---------------------------------------------------------------------------------------------------
Shares issuable upon exchange of remaining debentures and exercise of
warrants issued in September 2003 10,484,521
---------------------------------------------------------------------------------------------------
Shares issuable upon conversion of RAB Europe Fund Limited convertible
notes 40,200,000
---------------------------------------------------------------------------------------------------
Shares issuable upon conversion of debentures and exercise of warrants
issued in February and March 2004 75,322,000
---------------------------------------------------------------------------------------------------
Additional shares to be registered in connection with the February
and March 2004 financing to cause 125% registration coverage 18,830,500
---------------------------------------------------------------------------------------------------
Shares issuable in the event of exercise of option to purchase
$1.22 million in debentures and warrants, and the conversion and
exercise
thereof 42,864,865
----------
---------------------------------------------------------------------------------------------------
TOTAL SHARES ISSUABLE 197,020,560
===========
---------------------------------------------------------------------------------------------------
We currently are unable to repay our convertible debentures, which are due
commencing February 2006 and continuing to December 2006, and are payable in
cash. Our currently authorized shares will permit the conversion of only a
portion of these instruments. If we do not authorize additional common shares
and we do not have cash to repay the debentures at maturity, we will be in
default of the debentures, and will be subject to claims for damages. In the
absence of additional authorized shares, we are also unable to comply with the
terms of a recent financing requiring us to register 125% of the common shares
underlying the debentures and warrants issued in our February and March 2004
financings, and we will have insufficient authorized shares to permit us to
complete the additional $1.22 million in convertible debentures and warrants
which the investors in the February 19, 2004 have been granted the option to
purchase. Moreover, there is not sufficient equity available to fund any
additional equity financing for the Company.
REQUIREMENT FOR ADDITIONAL AUTHORIZED SHARES
Although the financings we have consummated provided funds necessary for the
Company to continue as a going concern and provided minimal working capital, we
continue to need substantial additional capital, either through substantial
capital infusions, periodic, smaller capital infusions or alternative
traditional financings, both to fund current operating needs pending our ability
to generate positive cash flow from operations, and to fund production of our
product and additional marketing efforts which we believe are critical to our
plan for achieving such positive cash flow from operations.
While we have issued a substantial number of shares in equity financing
transactions at a discount to the then current market price for our shares, the
capital infusion provided by such financings was not available to us from other
sources, and the capital that was provided enabled us to fund our ongoing
operational needs, our planned inventory purchases and to partially fund the
on-going marketing campaign we began in October 2003. Without that funding, we
would likely have been forced to curtail, and possibly cease, operations.
The approval of the Amendment by our stockholders cannot assure that we will be
able to raise additional funds through the issuance of stock or convertible
notes, or otherwise. However, following approval of the Amendment, and the
improvement to our financial statements and position that the recent financings
provide, we believe we will be in a position to obtain the additional financing
necessary to continue to implement our business plan. In addition to such
increased authorized stock being available for additional financing, our Board
would have the flexibility to use the additional authorized stock for any
reasonable business and financial purposes, including providing equity
incentives to consultants, employees, officers or directors, establishing
strategic relationships with other companies and expanding the Company's
business or product lines through the acquisition of other businesses or
products. Except as set forth above, the Company has not identified particular
financings or other specific purposes for which the newly authorized shares will
be issued.
6
EFFECT ON EXISTING STOCKHOLDERS
The additional Common Stock to be authorized will have rights identical to the
currently outstanding Common Stock of the Company. Adoption of the proposed
Amendment and issuance of the Common Stock will not affect the rights of the
holders of currently outstanding Common Stock of the Company, except for the
dilutive effects incidental to issuing additional shares of Common Stock and
increasing the number of shares of Common Stock outstanding. The issuance of
additional Common Stock will have a significant dilutive effect on the ownership
interests of the Company's existing Stockholders such as dilution to any future
net income per share and any future payment of dividends per share, if and when
the Company becomes profitable, dilution to the voting rights of current holders
of Common Stock and by potentially decreasing the market value of the Common
Stock to the extent shares are sold for a price less than the current market
value of the stock. Furthermore, the increase in the number of shares of Common
Stock 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.
Because listing maintenance requirements on both the OTC-BB and Pink Sheets
require timely public filings of financial and other information, but do not
require shareholder approval for issuing additional shares, even if the
transactions involve the issuance of a substantial percentage of shares and such
shares are deemed to be issued at less than market price, the issuance of our
shares in connection with additional financings will generally be solely within
the discretion of the Board of Directors except in situations where Nevada
corporate law requires stockholder approval such as the issuance of stock in a
merger. Shares may be issued, in the discretion of the Board of Directors, in
connection with normal corporate financing and similar transactions without any
prior notice to Stockholders.
Holders of the Company's Common Stock have no preemptive rights to purchase
additional shares upon issuance of additional shares by the Company. Under
Nevada law, the Company's Stockholders are not entitled to appraisal rights with
respect to the proposed increase in the number of authorized shares.
ADDITIONAL AUTHORIZED SHARES ARE NOT SOUGHT FOR ANTI-TAKEOVER PURPOSES
Increasing the number of authorized shares of the Company's Common Stock is not
motivated by takeover concerns and is not intended by the Board to be an
anti-takeover measure. The proposed amendment is not in response to any known
effort on the part of any party to accumulate material amounts of stock to
acquire control of us or to change our management. However, the availability of
additional authorized but unissued shares of Common Stock could enable the Board
to make it more difficult for a person or group of persons to obtain control of
the Company by a proxy or tender offer, by issuing shares in a defensive manner.
Our existing Articles of Incorporation do provide for a staggered Board of
Directors, which also may have material anti-takeover effects, however, the
proposed amendment is not part of any plan by management or the Board of
Directors to impede a takeover effort and there are no plans by management to
recommend further measures to the Board of Directors or Stockholders to
discourage tender offers or takeover attempts.
BOARD RECOMMENDATION
Our Board believes it is advisable and in the Company's best interests to amend
our Articles of Incorporation to authorize 500,000,000 additional shares of
Common Stock which will be available to meet our current obligations under
outstanding options, warrants, convertible notes and debentures, for obtaining
additional financing and for other corporate purposes. We continue to
periodically experience a negative working capital position, which we primarily
attribute to our continued inability to finance sufficient additional inventory
to meet increased demand for our product and to fund more extensive marketing
activities to further increase the demand for our product. These were the
primary factors which our Board considered in determining the need for
additional shares of stock to enable us to acquire this necessary financing.
Although the issuance of additional shares will be dilutive to existing
Stockholders, our ability to finance our short and long-term business plans is
believed to be critical to our continued operations and, hopefully, our future
success. Accordingly, the Board recommends that you vote FOR the proposed
amendment to our Articles of Incorporation.
VOTE REQUIRED
Approval of the amendment to the Company's Articles of Incorporation to increase
the number of the Company's authorized shares of Common Stock requires the
affirmative vote of a majority of our issued and outstanding shares of Common
Stock. Abstentions and broker non-votes will have the effect of a vote against
the Amendment.
7
OTHER MATTERS
Only the Proposal set forth in the Notice for this Special Meeting of
Stockholders may be presented for vote at this meeting. Stockholder proposals
for the 2004 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
15, 2004, for inclusion in the Proxy Statement and Proxy relating to the 2004
Annual Meeting of Stockholders.
REQUEST FOR VOTE
It is important that your shares be represented at the Special 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 Special 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
March 18, 2004
Post Falls, Idaho
8
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
LIFESTREAM TECHNOLOGIES, INC.
PROXY - SPECIAL MEETING OF STOCKHOLDERS - APRIL 28, 2004
The undersigned stockholder of Lifestream Technologies, Inc. hereby appoints
Messrs. Christopher Maus and Robert Boyle of Lifestream Technologies, Inc., and
either of them, with full power of substitution to each, to act as
attorneys-in-fact and proxies to represent the undersigned at the Special
Meeting of Stockholders, to be held at the RED LION TEMPLIN'S RESORT LOCATED AT
414 EAST FIRST AVENUE, POST FALLS, IDAHO, ON APRIL 28, 2004, AT 9:00 a.m., local
time, and at any and all adjournments thereof, and to vote all of the shares of
Common Stock of Lifestream Technologies, Inc. which the undersigned is entitled
to vote as fully as if the undersigned were present in person, in the manner
indicated below. Receipt of the Notice of Meeting and the accompanying Proxy
Statement is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THIS PROXY CARD. IF NO SPECIFICATION IS MADE, A VOTE FOR THE PROPOSAL WILL BE
ENTERED.
Should the undersigned be present and elect to vote in person at the Special
Meeting or at any adjournment thereof, upon notification to the Secretary of
Lifestream Technologies, Inc. at the Meeting of the Stockholder's decision to
terminate the proxy, this power of attorney and proxy shall be deemed terminated
and of no further force and effect.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS, WHICH
RECOMMENDS A VOTE FOR THE PROPOSALS. PLEASE REFER TO THE
PROXY STATEMENT FOR A DISCUSSION OF EACH OF THESE MATTERS.
1. Proposal to amend the Lifestream Technologies, Inc., Articles of
Incorporation to increase the number of authorized shares of Common Stock
from 250,000,000 shares to 750,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby revokes any and all prior proxies and acknowledges
receipt from the Company prior to the execution of this proxy of Notice of
Meeting, the Proxy Statement dated March 18, 2004.
Please sign exactly as your name appears. When signing as attorney, executor,
administrator, trustee, or guardian, please give your full name. If shares are
held jointly, each holder should sign. Please fill in the date the proxy is
signed.
Signature ______________ Signature if held jointly ______________ Dated ________
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
SELF-ADDRESSED POSTAGE-PREPAID ENVELOPE.