UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 15, 2006
TRACEGUARD TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Nevada 000-50329 98-0370398
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification Number)
330 Madison Avenue, 9th Floor, New York, New York 10017
(Address of principal offices) (zip code)
(972) 545 331 221
(Registrant's telephone number, including area code)
Copies to:
Gregory Sichenzia, Esq.
Yoel Goldfeder, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On February 15, 2006, TraceGuard Technologies Ltd., a wholly owned
subsidiary of TraceGuard Technologies, Inc. (the "Company" or "TraceGuard")
entered into a License Agreement (the "Agreement") with Tracetrack Technology
Ltd. ("Tracetrack"). Pursuant to the Agreement, the Company, under certain terms
and conditions as set forth in exhibit 10.1 annexed hereto, acquired an
exclusive, worldwide, perpetual license to the patents and related know-how
owned by Tracetrack, which involves technology being developed to be used for
the collection of explosive traces. In consideration for the license granted to
the Company, Tracetrack will receive royalty payments of 3% of net sales until
the earlier of: five years from the first commercial sale of a product, or an
aggregate total royalty payment of $2,500,000. This is in addition to a previous
payment of $100,000 made as a down payment for the license.
On February 15, 2006, the Company entered into a Consulting Agreement with
M.S. Materials Ltd. to provide the Company with consulting and advisory
services, through its employee Dr. Fredy Ornath, to assist in the development,
manufacture and production of equipment in the field of homeland security. In
consideration for the services to be provided, the Company has agreed to pay the
Consultant a monthly fee of $12,000 and has granted M.S. Materials Ltd. the
right to receive options to purchase up to an aggregate of 5,100,000 shares of
the common stock of the Registrant, upon the Registrant reaching certain
milestones.
BUSINESS OF TRACEGUARD
Organizational History
TraceGuard was incorporated in the state of Nevada on March 20, 2002,
under the name IBHAS Technologies Inc. ("IBHAS"), for the purpose of developing
and marketing an internet based computer software program. On June 29, 2005, a
group of individual investors acquired approximately 76.6% of IBHAS's
outstanding shares. On August 15, 2005 a letter of intent was signed between
IBHAS and Tracetrack regarding the licensing of certain patents owned by
Tracetrack. As a result, IBHAS determined to focus its business operations on
the development and marketing of products for the homeland security market.
Effective September 12, 2005 the Registrant changed its name from IBHAS
Technologies Inc. to TraceGuard Technologies, Inc.
Overview of Business
TraceGuard is a technology development company engaged in the development
of explosive trace collection technologies which can increase the accuracy of
current explosive detection products and reduce the amount of time required to
inspect suspicious luggage and packages. While TraceGuard has not yet begun
production and distribution, it intends to utilize its technology to produce
explosive trace collection products, which it plans to introduce to the security
marketplace through sales, integration with products through original equipment
manufacturer licenses and through joint ventures and strategic partnerships with
other companies involved in the production of products for the security market.
Features and Benefits of TraceGuard's Products
TraceGuard utilizes technology that is capable of extracting particle
residue from external and internal surfaces of luggage or packages, thereby
increasing the ability to detect traces of explosives or potentially other forms
of illegal contraband being smuggled. While current chemical analyzers, used to
check for explosives at security checkpoints, require an individual to swab the
external surfaces of pieces of luggage or packages to gather particles for
analysis, the technology being developed by TraceGuard will be capable to
automatically gather particles for analysis of inspected items.
TraceGuard will use the proprietary technology it has licensed from
Tracetrack to design a flexible enclosure in which a suspect package or piece of
luggage can be placed. Once placed in the enclosure, the flexible material
enables decompression and agitation of the air surrounding the package in order
to release particles and vapors from the pieces of luggage or packages. This
process should provide current chemical analyzers with additional particles to
be analyzed, thus expected to provide a more accurate analysis of the contents
of the package.
1
TraceGuard's Products
The products being developed by TraceGuard are intended to be utilized
regardless of the individual operators skill, experience or motivation, and will
work independently without the requirement of an individual to swab across a
suspicious package. In addition, the following products may be utilized in
various settings for the collection of explosive traces, drugs, biological
weapons (i.e. anthrax) or even contaminated food and drugs.
CarrySafe
The initial product which TraceGuard intends to introduce will be called
"CarrySafe." CarrySafe is intended to be used at airport gates, at entrances to
secured areas and buildings or other similarly restricted locations, for
screening of carry-on luggage used by passengers. This product is being designed
to be used along with current standard chemical analyzers, which are already
being used in airport security systems. Questionable carry-on luggage would be
placed inside the CarrySafe chamber in order to be manipulated so that the air
particles from the luggage will be released. Once released and collected, the
particles would then be analyzed by standard chemical analyzers.
HoldSafe
TraceGuard is planning on developing an additional product called
"HoldSafe". HoldSafe will be designed to be deployed in conjunction with
existing X-Ray systems and Computer Tomography (CT) based Explosive Detection
Systems, currently being used in luggage screening systems in airports. The
HoldSafe is intended for use to screening larger packages and luggage which
would normally be checked-in. It will use a similar automated explosive trace
collection process as CarrySafe.
CargoSafe
Similar to TraceGuard's CarrySafe and HoldSafe products, CargoSafe will be
designed to deliver a more efficient method of screening air-born cargo.
Currently, only a small percentage of air-born cargo delivered is checked for
suspicious materials.
Suppliers and Production Process
TraceGuard's products are currently in the development stage, so it has no
contracts or arrangements for the production of its products or for the
provision of raw goods and supplies necessary for the manufacture of its
products.
Distribution
TraceGuard does not have any mechanism for the distribution of its
products. However, TraceGuard's current strategy is to work closely with
regulators responsible for airport security, both in the U.S. and elsewhere in
order to develop and tailor its products to meet their specific requirements and
needs. In addition, TraceGuard plans on joining with suppliers of other
screening equipment and analyzer suppliers, with a view towards incorporating
its technology into the products currently being offered by such suppliers.
Intellectual Property
TraceGuard has obtained an exclusive, worldwide, perpetual license for the
following pending patents, which have been filed by Tracetrack in the USA and
Western Europe:
o PCT/IL03/00041, covering the usage of a conformal flexible enclosure
coupled with mechanical agitation to enhance the efficiency of
collecting traces of substances, therefore increasing the
probability of detection of illicit substances when used with
suitable chemical analyzers.
o PCT/IL2004/000011, covering additional aspects of trace collection
using the conformal flexible enclosure taking advantage of
additional enhancements for increasing the efficiency of trace
collection, in view of detection using suitable chemical analyzers.
2
In addition, TraceGuard is planning on filing patent applications for
additional technologies which it has developed and is planning to develop, in
the United States and other countries. These additional technologies pertain to
the use of its licensed proprietary technology in conjunction with its future
products for the security market.
Competition
To date, TraceGuard has not commenced commercial production or sale of its
products. TraceGuard's future proprietary collection products will be highly
specialized and sufficiently novel, so that they are not currently believed by
TraceGuard to compete directly with other products. Therefore the selection of
TraceGuard's products over alternative methods will be dependent on the
acceptance by the security industry. In addition, the Company will be relying on
other companies, such as L3, Smith Detection, Thermo or GE, to integrate
TraceGuard's technology with the products they currently provide for security
screening. The Company will be approaching authorities, such as the U.S.
Transportation Security Administration ("TSA"), to include TraceGuard's products
in their current procedures when screening packages and luggage.
Government Regulation
In the U.S., the TSA is responsible for screening all commercial airline
passengers and baggage for weapons, explosives, and other hazardous or dangerous
items. Senior Homeland Security executives have publicly stated that the top
concern of the TSA is to stop explosives at checkpoints in over 450 U.S.
commercial airports.
The TSA has established a framework for assessing all relevant
technologies, for certifying products and for awarding contracts. TraceGuard is
planning to seek regulatory approval, and is planning on working with the
regulators, such as TSA in the U.S. and other government agencies in other
jurisdictions, to insure that its products meet their specific requirements.
Employees
As of February 15, 2006 TraceGuard employs 7 individuals and several
consultants. TraceGuard has not experienced any work stoppages and TraceGuard
considers relations with its employees to be good. TraceGuard anticipates hiring
additional employees as it increases production and distribution of its
products.
Description of Property
TraceGuard's principal office is located at 330 Madison Avenue, 9th floor,
New York, NY 10017. This office consists of approximately 100 square feet which
is rented on a monthly basis for $2,000.00. In addition, TraceGuard maintains an
office at 2011 Crystal Drive, Arlington, VA, which consists of 100 square feet
with a monthly rent of $1,000.00. TraceGuard's research and development facility
is located at #6 Ravnitzki St., Segula Industrial Park, Petach Tikva 42799,
Israel. This facility consists of 6,500 square feet with a monthly rent of
$3,400.00.
The Company believes that these properties are adequate for its current
and immediately foreseeable operating needs. The Company does not have any
policies regarding investments in real estate, securities or other forms of
property.
Legal Proceedings
From time to time, TraceGuard may become involved in various lawsuits and
legal proceedings, which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business.
TraceGuard is currently not aware of any such legal proceedings or claims that
it believes will have, individually or in the aggregate, a material adverse
affect on its business, financial condition or operating results.
3
RISK FACTORS
TraceGuard is a Development Stage Company with a Non-Commercialized Technology
and Little Experience in the Operation of its Business. There is a Risk that
TraceGuard's Business May Fail.
To date, TraceGuard has been involved primarily in research, testing and
product development. TraceGuard has only a limited operating history and no
experience in producing and bringing to market its products. TraceGuard may
experience in the future many of the problems, delays and expenses encountered
by any early stage business, many of which are beyond its control. These
problems include, but are not limited to:
o substantial delays and expenses related to testing, development, and
production of TraceGuard's products,
o unanticipated difficulties relating to the production and marketing
of a new product in the marketplace,
o competition from larger and more established companies
o lack of market acceptance of TraceGuard's new products and
technologies.
TraceGuard has only a limited operating history upon which to base any
projection of the likelihood it will prove successful, and thus TraceGuard
cannot assure that it will achieve profitable operations or even generate any
operating revenues.
In addition, TraceGuard's patent pending licensed technology is a new
approach to collecting explosive traces from concealed enclosures such as
luggage, cargo and vehicles and the unproven aspects of its technology may never
prove commercially viable. There is the potential that TraceGuard may not be
able to produce on a sustainable basis. It is also possible that TraceGuard's
proposed products will not meet certain regulatory requirements of the US
Transportation Security Administration and other government agencies and it may
not be able to manufacture or successfully market its proposed products at a
reasonable cost.
TraceGuard's Rights to its Explosive Collection Technologies and Proposed
Products are Subject to a License Agreement. No Assurance Can Be Given That
TraceGuard Will Comply With the Terms of Such Agreement.
The rights that TraceGuard has to its explosive trace collection
technologies and proposed products are derived from the license agreement
entered into with Tracetrack. This agreement has terms and conditions that must
be met in order for TraceGuard to remain as the exclusive, worldwide licensee of
the patent. These terms and conditions relate to yearly sales and to royalty
payment obligations. If, for any reason whatsoever, the license agreement was
terminated or if TraceGuard were to lose its rights thereunder, TraceGuard would
lose all rights it currently has to its explosive trace collection technologies
and proposed products. Such a development would have a material adverse effect
on TraceGuard's business, financial condition and prospects.
TraceGuard Licenses its Technology From a Third Party and Such Technology May
Not be Adequately Protected From Unauthorized Use by Others or Infringement on
Other's Proprietary Technologies By TraceGuard, Which Could Increase
TraceGuard's Litigation Costs and Delay the Introduction of its Products to the
Marketplace.
TraceGuard licenses its technology from a third party, Tracetrack. The
success of TraceGuard will depend in part on the ability to maintain and enforce
patent protection for this technology and to preserve its trade secrets, and to
operate without infringing upon the proprietary rights of third parties.
TraceGuard has obtained an exclusive, worldwide, perpetual license to the
patents and related know-how owned by Tracetrack, which involves technology
being developed to be used for the collection of explosive traces. There can be
no assurance that the patent underlying TraceGuard's license will provide
proprietary protection or a competitive advantage to TraceGuard.
TraceGuard cannot be certain that the creators of Tracetrack's technology
were the first inventors of inventions covered by Tracetrack's patents or that
they were the first to file. Accordingly, there can be no assurance that patents
will be valid or will afford TraceGuard's license protection against competitors
with similar technology. The failure to maintain patent protection on the
technologies underlying TraceGuard's proposed products may have a material
adverse effect on TraceGuard's competitive position and business prospects.
4
It is also possible that Tracetrack's technologies may infringe on patents
or other rights owned by others. TraceGuard may have to alter its products or
processes, pay further licensing fees, defend an infringement action or
challenge the validity of the patents in court, or cease activities altogether
because of patent rights of third parties, thereby causing additional unexpected
costs and delays to TraceGuard. There can be no assurance that a further license
will be available to TraceGuard, if at all, upon terms and conditions acceptable
to TraceGuard or that TraceGuard will prevail in any patent litigation. Patent
litigation is costly and time consuming, and there can be no assurance that
TraceGuard will have sufficient resources to pursue such litigation. If
TraceGuard does not obtain a further license under such patents, is found liable
for infringement or is not able to have such patents declared invalid,
TraceGuard may be liable for significant money damages and may encounter
significant delays in bringing products and services to market. There can be no
assurance that TraceGuard or Tracetrack has identified United States and foreign
patents that pose a risk of infringement.
TraceGuard May Experience Difficulties in the Introduction of Its Products that
Could Result in TraceGuard Having to Incur Significant Unexpected Expenses or
Delay the Launch of New Products.
TraceGuard's products have not yet been fully developed or distributed.
These development stage products may not be completed in time to allow
production or marketing due to the inherent risks of new product and technology
development, limitations on financing, competition, obsolescence, loss of key
personnel and other factors. Unanticipated technical obstacles can arise at any
time and result in lengthy and costly delays or in a determination that further
development is not feasible. Therefore, there can be no assurance of timely
completion and introduction of improved products on a cost-effective basis, or
that such products, if introduced, will achieve market acceptance such that they
will sustain TraceGuard to achieve profitable operations.
TraceGuard currently does not have any mechanism for the distribution of
its products being developed for the collection of explosive traces. If
TraceGuard is unable to obtain or develop a sufficient method for the
distribution of its explosive detection products, it will be unable to develop
the commercial use of Tracetrack's intellectual property.
TraceGuard May Need to Raise Capital to Fund its Operations, and its Failure to
Obtain Funding When Needed may Force TraceGuard to Delay, Reduce or Eliminate
its Product Development Efforts.
If in the future TraceGuard is not capable of generating sufficient
revenues from operations and its capital resources are insufficient to meet
future requirements, TraceGuard may have to raise funds to continue the
development, commercialization, marketing and sale of its licensed technologies.
TraceGuard cannot be certain that funding will be available on acceptable
terms, or at all. To the extent that TraceGuard raises additional funds by
issuing equity securities, its stockholders may experience significant dilution.
Any debt financing, if available, may involve restrictive covenants that impact
TraceGuard's ability to conduct its business. If TraceGuard is unable to raise
additional capital if required or on acceptable terms, it may have to
significantly delay, scale back or discontinue the development and/or
commercialization of one or more of its product candidates, restrict its
operations or obtain funds by entering into agreements on unattractive terms.
TraceGuard is Dependent Upon Key Personnel.
TraceGuard's success is heavily dependent on the continued active
participation of its current Chairman, Dr. Ehud Ganani, its President & Chief
Executive Officer, Mr. Meir Zucker, and its subsidiary's Chief Scientist, Dr.
Freddy Ornath. Loss of the services of one or more of these individuals could
have a material adverse effect upon TraceGuard's business, financial condition
or results of operations. None of these individuals currently have any plans to
retire or leave TraceGuard in the near future. TraceGuard does not maintain any
key life insurance policies for any of these individuals or other personnel. The
loss of any of TraceGuard's senior personnel could significantly impact its
business until adequate replacements can be identified and put in place.
5
There is a Risk that Products Developed by Competitors Will Reduce TraceGuard's
Profits or Force It Out of Business.
TraceGuard may face competition from companies that are developing
products similar to those it is developing. The security industry has spawned a
large number of efforts to create technologies that help to detect explosives in
concealed enclosures such as luggage, cargo and vehicles. These companies may
have significantly greater marketing, financial and managerial resources than
TraceGuard. TraceGuard cannot assure investors that its competitors will not
succeed in developing and distributing products that will render TraceGuard's
proposed products obsolete or noncompetitive. Generally, such competition could
potentially force TraceGuard out of business.
TraceGuard May Be Subject to Government Approvals and Regulations that Reduce
its Ability to Commercialize its Products, Increase TraceGuard's Costs of
Operations and Decrease its Ability To Generate Income.
TraceGuard's ability to develop and commercialize its products is
dependent upon approval from certain governmental security organizations, such
as the US Transportation Security Agency and the Israeli Security Agency.
There can be no assurance that TraceGuard will obtain regulatory approvals
and certifications for its products. Even if TraceGuard is granted such
regulatory approvals and certifications, it may be subject to limitations
imposed on the use of its products. In the future, TraceGuard may be required to
comply with certain restrictive regulations, or potential future regulations,
rules, or directives. TraceGuard cannot guarantee that restrictive regulations
will not, in the future, be imposed. Such potential regulatory conditions or
compliance with such regulations may increase TraceGuard's cost of operations or
decrease its ability to generate income.
TraceGuard May Have Difficulties Managing Growth Which Could Lead to Higher
Losses.
While TraceGuard has not yet achieved any revenues through the production
and sale of its products, should certain events occur, it might be in a position
to rapidly commercialize its products. Rapid growth would strain TraceGuard's
human and capital resources, potentially leading to higher operating losses.
TraceGuard's ability to manage operations and control growth will be dependent
upon its ability to raise and spend capital to improve its operational,
financial and management controls, reporting systems and procedures, and to
attract and retain adequate numbers of qualified employees. Should TraceGuard be
unable to successfully create improvements to its internal procedures and
controls in an efficient and timely manner, management may receive inadequate
information necessary to manage TraceGuard's operations, possibly causing
additional expenditures and inefficient use of existing human and capital
resources.
TraceGuard's Principal Research and Development Facility is Located in Israel,
Which Has Historically Experienced Military and Political Unrest.
TraceGuard's principal Research and Development facility is located in
Israel. As a result, TraceGuard is directly influenced by the political,
economic and military conditions affecting Israel. Any major hostilities
involving Israel, or the interruption or curtailment of trade between Israel and
its present trading partners, could significantly harm TraceGuard's business,
operating results and financial condition.
In addition, certain of TraceGuard's officers and employees may be
obligated to perform annual reserve duty in the Israel defense forces and are
subject to being called up for active military duty at any time. All Israeli
male citizens who have served in the army are subject to an obligation to
perform reserve duty until they are between 40 and 54 years old, depending upon
the nature of their military service.
Because Some of TraceGuard's Officers and Directors are Located in Non-U.S.
Jurisdictions, You May Have No Effective Recourse Against the Management for
Misconduct and May Not Be Able to Enforce Judgment and Civil Liabilities Against
TraceGuard's Officers, Directors, Experts and Agents.
All of TraceGuard's directors and officers are nationals and/or residents
of countries other than the United States, and all or a substantial portion of
their assets are located outside the United States. As a result, it may be
difficult for investors to enforce within the United States any judgments
obtained against TraceGuard's officers or directors, including judgments
predicated upon the civil liability provisions of the securities laws of the
United States or any U.S. state.
6
MANAGEMENT
Executive Officers and Directors
Below are the names and certain information regarding the Company's
executive officers and directors.
Name Age Position
- --------------------------------------------------------------------------------
Dr. Ehud Ganani 54 Chairman
- --------------------------------------------------------------------------------
Meir Zucker 49 President & Chief Executive Officer
- --------------------------------------------------------------------------------
Dr. Fredy Ornath 57 Chief Scientist
- --------------------------------------------------------------------------------
David Ben-Yair 35 Chief Financial Officer
- --------------------------------------------------------------------------------
Gil Perlberg 46 Vice President Product Management & Engineering
- --------------------------------------------------------------------------------
Jacob Eluz 49 Director
- --------------------------------------------------------------------------------
Jack Hornstein 60 Director
- --------------------------------------------------------------------------------
Officers are elected annually by the Board of Directors (subject to the
terms of any employment agreement), at our annual meeting, to hold such office
until an officer's successor has been duly appointed and qualified, unless an
officer sooner dies, resigns or is removed by the Board. There are no family
relationships among any of the Company's directors and executive officers.
Background of Executive Officers and Directors
Dr. Ehud Ganani, Chairman. Dr. Ganani recently resigned as the Chief
Executive Officer of IMI (Israeli Military Industries), after holding this
position for 3 years. IMI is an Israeli government owned company, employing over
3,000 people. During these 3 years, he managed a turnaround of the company,
increasing sales by 30% to $450 million, doubled sales backlog and improved the
company's profitability. Prior to that, Dr. Ganani worked for 28 years with
RAFAEL, an Israeli military technology company. During his tenure with RAFAEL,
Dr. Ganani assumed positions as Vice President of Marketing & Business
Development and as the representative of RAFAEL in Washington, D.C. for 5 years.
During his term in Washington, Dr. Ganani oversaw contracts with U.S. Defense
contractors and various government agencies. Dr. Ganani completed his MSc and
DSc in Chemical Engineering at Washington University in St. Louis, Missouri.
Prior to that, Dr. Ganani completed his BSc degree (with honors) in Chemical
Engineering at the Technion, a technical university in Israel. Dr. Ganani was
also a visiting professor and a research fellow at the University of California
at Davis.
Meir Zucker, President & Chief Executive Officer. Mr. Zucker has over 20
years of experience in sales, marketing, business development and general
management. Amongst the companies he has worked for are; Orbotech (Nasdaq:
ORBK), Teradyne (Nasdaq: TER), Verint Systems (Nasdaq: VRNT) where is served as
Vice President International Operations and Fundtech (Nasdaq: FNDT) where he
served as Senior Vice President International Sales & Marketing. Since September
2000 through November 2001, he was the CEO of Modelity Technologies Ltd. and
from November 2001 to present he served as the General Manager of M.S. Savyonim
Ltd. Mr. Zucker graduated from Tel Aviv University with a BSc degree in
Electrical Engineering. He later received his MBA degree from Massachusetts
Institute Technology, in Boston, Massachusetts. Before launching his career in
the technology arena, Mr. Zucker graduated as a fighter pilot from the Israeli
Air Force Academy. During his military service, he reached the rank of major,
after serving 7 years at the Air Force.
Dr. Fredy Ornath, Chief Scientist. Dr. Ornath career evolves in the fields
of welding and materials engineering, failure analysis and inspection. From 1986
until recently, Dr. Ornath has headed Material Systems Limited, a consulting
firm whose clients including many of the largest metalworking and construction
companies in Israel. During that time he has served on several industry bodies
and headed development projects. Between 1981 and 1986 he was with Urdan
Industries as Chief Metallurgist and Deputy Director of R&D, specializing in
ballistics. Between 1974 and 1981 he served in the Israel Defense Force,
becoming Chief Welding Engineer at a military plant responsible for production
of the Merkavah Battle Tank. Dr. Ornath obtained his Engineering degree at the
Technion Institute of Technology in Israel. He later received, from the same
institute his MSc. Degree and PhD in Material Sciences. He as also served as a
faculty member.
7
David Ben-Yair, Chief Financial Officer. Mr. Ben-Yair was a controller for
Talia, a medical devices development & production company located in Lod, Israel
from October 2004 to November 2005. Between January 2004 and September 2004, Mr.
Ben-Yair was an entrepreneur, developing an exclusive wine trading business.
Between February 2002 and December 2003 Mr. Ben-Yair was a Group Controller at
Robo Group, an international company traded both at the TASE (Tel-Aviv Stock
Exchange) and at NASDAQ (under the symbol ROBO). Prior to that, between November
2000 and February 2002, he served as the CFO at MADACOM, a telecommunication
company. Mr. Ben Yair is a Certified Public Accountant (Israel), member of the
Israeli Institute of Certified Public Accountants since 2000. He completed his
Bachelor degree in Economy & Accounting at Ben-Gurion University in Be'er-Sheba,
Israel at 1998. He joined the office of Briteman-Almagor, the Israeli branch of
Deloitte & Touche as an interim for two years and served as a senior accountant
during the third year. In 2002 he completed his Master degree in Law (L.L.M.) at
Bar-Ilan University in Israel. Mr. Ben-Yair served for 3 years in the Israeli
Navy on board of a missile craft.
Gil Perlberg, Vice President of Product Management and Engineering. Mr.
Perlberg has over 18 years of experience in high tech equipment and process
development and marketing. Prior to joining TraceGuard, Mr. Perlberg worked for
Shellcase Ltd., as Vice President of Engineering and R&D and later on as Vice
President of IP. Prior to that, from 1990 to 2003 Mr. Perlberg worked at Kulicke
and Soffa (Nasdaq: KLIC) for over 12 years in various engineering, R&D and
marketing management positions. His last position at Kulicke and Soffa was
Director of Product Development and R&D at Micro-Swiss, Israel. From 1999 to
2000, he worked at ASC-Tech80 (Nasdaq: ACSEF) as Vice President of Sales and
Marketing. Mr. Perlberg holds a MBA from New York University, M.Sc. degrees in
Electrical and Mechanical Engineering from Drexel University in Philadelphia,
PA. and a B.Sc. in Mechanical Engineering from the Israel Institute of
Technology in Haifa. During his military service, he reached the rank of major,
in the IDF armored corps.
Jacob Eluz, Director. From 2003 to 2005, Mr. Eluz worked as an independent
sub-contractor for several companies including among others Broadlight Inc.,
CivCom Inc., PolyCom Inc, GoNetwork Inc., and Logtel Ltd. During this period he
specialized in the design of the 10Gbps high-speed optical communications. From
2000 to 2003, Mr. Eluz worked as a manager for Xlight Photonics Inc., overseeing
the optical core of a Tera-bit optical network router. Prior to Joining Xlight
Photonics Inc., Mr. Eluz worked for the Jerusalem Design Center Intel Corp,
previously owned by Digital Equipment Corp., specializing in high-speed system
design for Giga-bits Ethernet home networking cable modem projects. Jacob Eluz
received his Bachelor of Science in 1985 in Electrical Engineering at Ben-Gurion
University. Mr. Eluz obtained a Master in Business Administration in Finance in
2005 at the Hebrew University in Jerusalem.
Jack Hornstein, Director. From 1997 until 2004, Mr. Hornstein worked for
Bombardier Aerospace Inc., as a Stress Section Chief, supervising a group of
stress engineers responsible for all aspects of the structural strength of the
Dash 8 aircraft and the preparation of strength certification reports for the
Bombardier RJ900 fuselage. Since 2004, Mr. Hornstein's title has been Senior
Engineering Specialist mainly providing consulting in aircraft structure stress
and design. Mr. Hornstein received a Bachelor of Science in aeronautical
sciences from the Engineering Institute Technion, Haifa, Israel, in 1972.
Executive Compensation
The following table sets forth all compensation paid in respect of the
Company's Chief Executive Officer and those individuals who received
compensation in excess of $100,000 per year (collectively, the "Named Executive
Officers") for our last three completed fiscal years.
8
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------------------------------------
Other
Name and Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
----------------------------- ------ -------------- ------------ ---------------------
Meir Zucker, President & 2005 -0- -0- -0-
Chief Executive Officer
Jacob Eluz, 2005 -0- -0- -0-
Former Chief Executive
Officer
The Company is in the process of finalizing employment & consulting agreements
with all individuals employed by the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TraceGuard has entered into a License Agreement with Tracetrack, a company
in which Dr. Fredy Ornath has an ownership interest, pursuant to which the
Company was granted an exclusive, perpetual, world-wide license to certain
technologies in exchange for the payment of royalty fees.
TraceGuard has entered into a Consulting Agreement with M.S. Materials
Ltd., a company in which Dr. Fredy Ornath has an ownership interest, pursuant to
which Dr. Ornath will provide the Company with consulting services.
Jack Hornstein is the brother of Dr. Fredy Ornath.
TraceGuard believes that the terms of all of the above transactions are
commercially reasonable and no less favorable to us than we could have obtained
from an unaffiliated third party on an arm's length basis. TraceGuard's policy
requires that all related parties rescue themselves from negotiating and voting
on behalf of it in connection with related party transactions.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 15,
2006 with respect to the beneficial ownership of the outstanding common stock by
(i) any holder of more than five (5%) percent; (ii) each of the Company's
executive officers and directors; and (iii) the Company's directors and
executive officers as a group. Except as otherwise indicated, each of the
stockholders listed below has sole voting and investment power over the shares
beneficially owned.
Common Stock Percentage of
Name of Beneficial Owner (1) Beneficially Owned Common Stock (2)
- ------------------------------ ---------------------- ---------------------
Dr. Ehud Ganani -0- 0%
Meir Zucker -0- 0%
David Ben-Yair -0- 0%
- ------------------------------ ---------------------- ---------------------
Jacob Eluz -0- 0%
- ------------------------------ ---------------------- ---------------------
Jack Hornstein -0- 0%
- ------------------------------ ---------------------- ---------------------
Gil Perlberg -0- 0%
- ------------------------------ ---------------------- ---------------------
Dr. Fredy Ornath 9,609,990 42.6%
- ------------------------------ ---------------------- ---------------------
All officers and directors as a group 9,609,990 42.6%
(7 persons)
- ------------------------------ ---------------------- ---------------------
9
(1) Except as otherwise indicated, the address of each beneficial owner is c/o
TraceGuard Technologies, Inc. 330 Madison Avenue, 9th Floor, New York, New
York 10017.
(2) Applicable percentage ownership is based on 22,578,860 shares of common
stock outstanding as of February 15, 2006, together with securities
exercisable or convertible into shares of common stock within 60 days of
February 15, 2006 for each stockholder. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Shares of common stock that are currently exercisable or exercisable
within 60 days of February 15, 2006 are deemed to be beneficially owned by
the person holding such securities for the purpose of computing the
percentage of ownership of such person, but are not treated as outstanding
for the purpose of computing the percentage ownership of any other person.
o No Director, executive officer, affiliate or any owner of record or
beneficial owner of more than 5% of any class of voting securities
of the Company is a party adverse to the Company or has a material
interest adverse to the Company.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 150,000,000 shares of
common stock at a par value of $0.001 per share. As of February 15, 2006, there
were 22,578,860 shares of the Company's common stock issued and outstanding that
are held by approximately 114 stockholders of record and no shares of preferred
stock outstanding.
Holders of the Company's common stock are entitled to one vote for each
share on all matters submitted to a stockholder vote. Holders of common stock do
not have cumulative voting rights. Therefore, holders of a majority of the
shares of common stock voting for the election of directors can elect all of the
directors. Holders of the Company's common stock representing a majority of the
voting power of the Company's capital stock issued, outstanding and entitled to
vote, represented in person or by proxy, are necessary to constitute a quorum at
any meeting of stockholders. A vote by the holders of a majority of the
Company's outstanding shares is required to effectuate certain fundamental
corporate changes such as liquidation, merger or an amendment to the Company's
articles of incorporation.
Holders of the Company's common stock are entitled to share in all
dividends that the board of directors, in its discretion, declares from legally
available funds. In the event of a liquidation, dissolution or winding up, each
outstanding share entitles its holder to participate pro rata in all assets that
remain after payment of liabilities and after providing for each class of stock,
if any, having preference over the common stock. The Company's common stock has
no pre-emptive rights, no conversion rights and there are no redemption
provisions applicable to the Company's common stock.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the OTC Bulletin Board,
referred to herein as the OTCBB, under the symbol "TCGD.ob." The common stock
was initially approved for quotation on March 22, 2005 under the symbol
"IBHS.ob," but there was no market for the Company's common stock. The following
table sets forth the high and low bid prices of its Common Stock, as reported by
the OTCBB for each quarter since September 12, 2005. The quotations set forth
below reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions.
2005
---------------------
High* Low*
---------------------
4th Quarter 4.59 0.70
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As of February 15, 2005, there were approximately 114 holders of record of
the Company's common stock.
Dividends
The Company has never declared or paid any cash dividends on its common
stock. The Company currently intends to retain future earnings, if any, to
finance the expansion of its business. As a result, the Company does not
anticipate paying any cash dividends in the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table shows information with respect to each equity
compensation plan under which the Company's common stock is authorized for
issuance as of the fiscal year ended March 31, 2005.
EQUITY COMPENSATION PLAN INFORMATION
Plan category Number of securities Weighted average Number of securities
to be issued upon exercise price of remaining available for
exercise of outstanding options, future issuance under
outstanding options, warrants and rights equity compensation plans
warrants and rights (excluding securities
reflected in column (a)
- ----------------------------------------------------------------------------------------------------------------
(a) (b) (c)
- ----------------------------------------------------------------------------------------------------------------
Equity compensation plans approved -0- -0- -0-
by security holders
- ----------------------------------------------------------------------------------------------------------------
Equity compensation plans not -0- -0- -0-
approved by security holders
- ----------------------------------------------------------------------------------------------------------------
Total -0- -0- -0-
- ----------------------------------------------------------------------------------------------------------------
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's directors and executive officers are indemnified as provided
by the Nevada Revised Statutes and the Company's Bylaws. These provisions state
that the Company's directors may cause the Company to indemnify a director or
former director against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, actually and reasonably incurred
by him as a result of him acting as a director. The indemnification of costs can
include an amount paid to settle an action or satisfy a judgment. Such
indemnification is at the discretion of the Company's board of directors and is
subject to the Securities and Exchange Commission's policy regarding
indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
Item 2.01 Completion of Acquisition or Disposition of Assets.
See Item 1.01.
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Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.
To be filed by amendment no later than 71 calendar days after February 15,
2006.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits
Exhibit
Number Description
- ------- -----------------------------------------------------------------------
10.1 License Agreement, dated as of February 15, 2006, by and between
TraceGuard Technologies Ltd. and Tracetrack Technology Ltd.
10.2 Consulting Agreement, dated as of February 15, 2006, by and between
TraceGuard Technologies Ltd. and M.S. Materials Ltd.
99.1 Press Release, dated February 16, 2006, issued by TraceGuard
Technologies, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRACEGUARD TECHNOLOGIES, INC.
Dated: February 16, 2006 By: /s/ Meir Zucker
----------------------------------------
Name: Meir Zucker
Title: President & Chief Executive Officer
13