SCHEDULE 14A/A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Checkthe appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[ ] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EAGLE BROADBAND, INC.
---------------------
(Name of Registrant as Specified in Its Charter)
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 transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
1
EAGLE BROADBAND, INC.
101 Courageous Drive
League City, Texas 77573
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September 7, 2005
To Our Shareholders:
We are pleased to announce that we have successfully completed a
private placement financing that will provide Eagle Broadband with additional
funds to support our working capital needs and allow us to further invest in our
core businesses. To complete the financing, we are requesting your approval of
the issuance and sale of 14,875,000 shares of our common stock.
In August 2005, we entered into a purchase agreement with certain
accredited investors to sell up to 30,000,000 shares of our common stock at
$0.135 per share to raise gross proceeds of up to $4,050,000, of which we have
sold 15,125,000 shares for gross proceeds of $2,041,875. However, in order to
complete the financing, the American Stock Exchange is now requiring us to
obtain shareholder approval in order to permit us to issue and sell the
remaining 14,875,000 shares which will allow us to raise additional gross
proceeds of $2,008,125.
Because the American Stock Exchange notified us that shareholder
approval would be required for the additional 14,875,000 shares after we had
mailed the original Proxy Statement to you on August 8, 2005, we are sending
this Proxy Statement Supplement with information regarding this additional
proposal (Proposal 4). The Proxy Statement sent to you on August 8, 2005,
included three proposals that we asked you to vote on. We are asking you to
review the information on this additional proposal contained in this Proxy
Statement Supplement, complete the enclosed revised proxy card, which may be
used to vote on all four proposals, indicating your vote and mail it as soon as
possible. (For more information, please see the Reasons for Shareholder Approval
on page 3 of the attached Proxy Statement Supplement.) The attached Proxy
Statement Supplement and Amended Notice of Meeting should be read in conjunction
with the original Proxy Statement and Annual Report, which we previously mailed
to you.
The date and place for the Annual Meeting of Shareholders of Eagle
Broadband, Inc., which will be held on September 20, 2005, beginning at 1:30
p.m., Central Time, at the South Shore Harbour Resort & Conference Center, 2500
South Shore Blvd., League City, Texas 77573, has not changed. However, the board
of directors of the Company may decide to recommend the shareholders adjourn
this annual meeting on September 20, 2005, for up to thirty days in order to
provide all shareholders adequate notice and time to vote on the additional
proposal described in this Proxy Statement Supplement.
PLEASE NOTE THAT WE HAVE ENCLOSED A REVISED PROXY CARD.
The Revised Proxy Card includes the three proposals included on the
original proxy card previously sent to you (i.e. Proposals 1-3) and the
additional proposal described in this Proxy Statement Supplement (Proposal 4).
In order to vote on Proposal 4 to approve the issuance and sale of the
additional shares to complete the August 2005 financing, you must sign and
return the enclosed Revised Proxy Card or attend the meeting and vote in person.
Your vote on Proposal 4 is very important therefore we request that you
complete the attached Revised Proxy Card with your vote on Proposals 1-4,
regardless of whether or not you have previously returned the original proxy
card previously sent to you. If you already completed and returned the original
proxy card, completing, signing and mailing the enclosed Revised Proxy Card will
replace the original proxy card in its entirety and only your vote as indicated
on the Revised Proxy Card will be counted.
Your Eagle Broadband shareholder vote is very important. Each share of
Eagle Broadband stock that you own represents one vote. If you do not vote your
shares, you will not have a say in the important issues to be voted on at the
Annual Meeting. Whether or not you plan to attend the meeting, please vote as
soon as possible, regardless of the number of shares you own.
2
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING AND ENSURE THAT YOUR VOTE
IS RECORDED PROMPTLY, YOU ARE REQUESTED TO COMPLETE, SIGN, AND DATE THE
ENCLOSED REVISED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS
POSSIBLE, EVEN IF YOU PLAN TO ATTEND THE MEETING.
Because the sale and issuance of the 14,875,000 share of our common
stock pursuant to the August 2005 financing is considered a "non-routine"
matter, a bank or brokerage firm holding your shares cannot vote on your behalf
unless it receives specific voting instructions from you. Therefore, to ensure
that your vote is properly recorded, it is very important that you complete,
sign, date and mail in your Revised Proxy Card as soon as possible.
The Board of Directors has determined that the approval of the sale of
14,875,000 shares of our common stock issuable pursuant to the August 2005
financing is in the best interest of the Company. The Board recommends you vote
to approve the sale and issuance of 14,875,000 shares of our common stock
pursuant to the August 2005 financing.
The annual shareholder meeting is for Eagle Broadband shareholders.
Only shareholders of record or their designated proxy are entitled to attend the
meeting. All shareholders who attend the meeting will be required to show proof
of ownership of Eagle Broadband stock such as a brokerage account statement and
valid photo identification such as a current driver's license or passport.
If you should have any questions concerning the Annual Meeting or the
matters to be voted on, please contact Eagle Broadband Investor Relations at
(281) 538-6000 or send an email to investors@eaglebroadband.com.
Sincerely yours,
/S/ C.J. REINHARTSEN
C. J. Reinhartsen
Chairman
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3
EAGLE BROADBAND, INC.
101 COURAGEOUS DRIVE, HOUSTON, TEXAS 77573
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AMENDED NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-----------------------------------------
The Annual Meeting of Shareholders of Eagle Broadband, Inc. will be
held at the South Shore Harbour Resort & Conference Center, 2500 South Shore
Blvd., League City, Texas 77573, at 1:30 p.m., Central Time, September 20, 2005.
However, the board of directors of the Company may decide to recommend the
shareholders adjourn this annual meeting on September 20, 2005, for thirty days
in order to provide all shareholders adequate notice and time to vote on the
additional proposal described in this Proxy Statement Supplement. The annual
meeting, or any adjournment or postponement thereof, will be convened for the
following purposes:
1) To elect seven directors to the Board of Directors to serve until our
next annual meeting of shareholders, or until their respective
successors have been elected or appointed.
2) To approve our 2005 Employee Stock Option Plan.
3) To ratify the appointment of Lopez, Blevins, Bork & Associates, LLP,
as our auditors for the fiscal year ending August 31, 2005.
4) To approve the sale of 14,875,000 shares of our common stock pursuant
to the August 2005 financing.
5) To act upon such other matters, if any, as may properly come before
the meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement previously provided and in the enclosed Proxy Statement Supplement
accompanying this Amended Notice.
All Eagle Broadband shareholders are invited to attend the Annual
Meeting. Only shareholders of record at the close of business on July 26, 2005
will be entitled to notice of and to vote at this meeting or any adjournments,
or postponements that may take place.
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING AND ENSURE THAT YOUR VOTE
IS RECORDED PROMPTLY, YOU ARE REQUESTED TO COMPLETE, SIGN, AND DATE THE
ENCLOSED REVISED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS
POSSIBLE, EVEN IF YOU PLAN TO ATTEND THE MEETING.
In order to vote on Proposal No. 4, you must sign and return the
Revised Proxy Card enclosed with this Proxy Statement Supplement or attend the
meeting and vote in person.
If you already completed and returned the original proxy card
previously sent to you and also complete and return the enclosed Revised Proxy
Card, the signed Revised Proxy Card will replace the original proxy card in its
entirety and only your vote as indicated on the Revised Proxy Card will be
counted. If you have already completed and returned the original proxy card
previously sent to you and you do not complete and return a signed Revised Proxy
Card, your vote for Proposals 1-3 as indicated on the original proxy card will
be voted at the meeting, but will not include a vote on Proposal 4.
Your stock will be voted in accordance with your instructions. Any
shareholder attending the meeting may vote in person even if he or she has
previously returned a proxy. Please note, however, that if your shares of record
are held by a broker, bank or other nominee and you wish to attend and vote in
person at the meeting, you must obtain a proxy issued in your name from the
record holder.
By Order of the Board of Directors,
C. J. Reinhartsen
Chairman
Dated: September 7, 2005
4
EAGLE BROADBAND, INC.
PROXY STATEMENT SUPPLEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 20, 2005
================================================================================
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Company's Board of
Directors for use at the Annual Meeting of Shareholders to be held on September
20, 2005, at 1:30 p.m., Central Time (the "Annual Meeting"), or at any
adjournment or postponement of this meeting, for the purposes set forth in this
Proxy Statement Supplement and the Proxy Statement, previously mailed to you,
and in the accompanying Amended Notice of Annual Meeting of Shareholders. The
Annual Meeting will be held at South Shore Harbour Resort & Conference Center,
2500 South Shore Blvd., League City, Texas 77573. However, the board of
directors of the Company may decide to recommend that shareholders adjourn this
annual meeting on September 20, 2005, for up to thirty days in order to provide
all shareholders adequate notice and time to vote on the additional proposal
described in this Proxy Statement Supplement. We intend to mail this Proxy
Statement Supplement and accompanying proxy cards to shareholders on or about
September 7, 2005. The Board of Directors of Eagle Broadband, Inc., a Texas
corporation, prepared this Proxy Statement Supplement for the purpose of
soliciting proxies for our Annual Meeting of Shareholders. When you see the term
"we," "our," the "Company" or "Eagle," it refers to Eagle Broadband, Inc., and
its subsidiaries.
This Proxy Statement Supplement is furnished to provide information
regarding Proposal 4, an additional matter to be voted on at the Annual Meeting,
and to provide information on recent Company financing activities.
This Proxy Statement Supplement does not provide all of the information
about the Company that is important to your decisions with respect to matters to
be voted on at the Annual Meeting. Additional information is contained in the
Proxy Statement for the Annual Meeting previously distributed to our
shareholders on August 8, 2005. This Proxy Statement Supplement is intended to
be read in conjunction with the Proxy Statement previously sent to you.
Method of Voting
Shareholders can vote by proxy or by attending the Annual Meeting and
voting in person. The Company has enclosed a Revised Proxy Card for your vote on
Proposals 1-4. All proxy cards must be completed, signed and dated by you or
your authorized representative.
In order to vote on Proposal No. 4, you must sign and return the
Revised Proxy Card or attend the meeting and vote in person.
If you already completed and returned the original proxy card
previously sent to you and also complete and return the enclosed Revised Proxy
Card, the signed Revised Proxy Card will replace the original proxy card in its
entirety and only your vote as indicated on the Revised Proxy Card will be
counted. If you have already completed and returned the original proxy card
previously sent to you and you do not complete and return a signed Revised Proxy
Card, your vote for Proposals 1-3 as indicated on the original proxy card will
be voted at the meeting, but will not include a vote on Proposal 4.
A properly signed, dated and returned Revised Proxy Card will revoke
and replace any previously returned proxy cards, including the original proxy
card sent to shareholders in the original Proxy Statement mailed on August 8,
2005. A Revised Proxy Card that is properly signed, dated and returned will be
voted at the Annual Meeting in accordance with the shareholder's instructions
indicated on the proxy. If no instructions are indicated on the Revised Proxy
Card, the proxy will be voted "FOR" the election of the Board's nominees, "FOR"
the ratification of Lopez, Blevins, Bork & Associates, LLP, as our auditors for
the fiscal year ending August 31, 2005, "FOR" the approval of the 2005 Employee
Stock Option Plan, "FOR" approval of the sale and issuance of 14,875,000 shares
of our common stock pursuant to the August 2005 financing and in accordance with
the recommendations of the Board as to any other matter that may be properly be
brought before the Annual Meeting or any adjournment or postponement thereof.
5
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company's
Secretary, at the address of the Company's executive offices noted above,
written notice of revocation or a duly executed proxy, concerning the same
proposal or proposals, bearing a later date or by attending the Annual Meeting
and voting in person. Attendance at the Annual Meeting will not, by itself,
revoke a proxy. Please note, however, that if your shares of record are held by
a broker, bank or other nominee and you wish to attend and vote in person at the
Annual Meeting, you must obtain a proxy issued in your name from the record
holder.
Votes Required To Adopt Proposal
Proposal 4. Approval of the sale and issuance of 14,875,000 shares of
our common stock pursuant to the August 2005 financing requires the approval of
a majority of the outstanding shares of stock represented in person or proxy at
the Annual Meeting. Abstentions for Proposal 4 will have the same effect as
votes against the proposal. Broker non-votes for Proposal 4, however, will be
deemed shares not entitled to vote on the proposal, will not be counted as votes
for or against, and will not be included in calculating the number of votes
necessary for approval of the proposal.
PROPOSAL 4 - ISSUANCE AND SALE OF 14,875,000 SHARES OF COMMON STOCK
Background Information
On January 21, 2005, the Company filed a registration statement ("Shelf
Registration") with the Securities and Exchange Commission ("SEC")to offer and
sell, from time to time, up to an aggregate of 30,000,000 shares of common
stock, in one or more offerings and at prices and on terms to be determined at
the time of the offering. The Shelf Registration was declared effective by the
SEC on February 2, 2005.
On February 14, 2005, the Company entered into a purchase agreement
with certain accredited investors, including, but not limited to, Frorer
Partners, L.P. ("Frorer"), David S. Callan ("Callan"), and W. Anthony Hitschler
("Hitschler"), for the sale of 20 million shares of its common stock ("February
Offering"). The shares issued in the February Offering were registered pursuant
to the Shelf Registration, at a price of $0.41 per share, for total gross
proceeds of $8,200,000, on which date the market price for our common stock was
$0.47 per share or a 13% discount to market. The Keystone Equities Group
("Keystone") acted as placement agent for the Company and received a cash fee of
$656,000 for services rendered in connection with the February Offering.
On April 15, 2005, the Company entered into a purchase agreement with
an accredited investor, Frorer, for the sale of 10 million shares of its common
stock ("April Offering"). The shares issued in connection with April Offering
were registered pursuant to the Shelf Registration, at a price of $0.2035 per
share, for total gross proceeds of $2,035,000, on which date the market price
for our common stock was $0.23 per share or a 12% discount to market. Keystone
acted as placement agent for the Company and received a cash fee of $100,000 for
services rendered in connection with the April Offering.
On August 12, 2005, the Company entered into a purchase agreement with
certain accredited investors, Frederick C. Applegate Trust, Callan, Frorer,
Hitschler, and Robert Evans, for the sale of up to 30 million shares of its
common stock, pursuant to Regulation D of the Securities Act of 1933 ("August
Private Placement"). The shares issued or issuable in connection with the August
Private Placement are to be sold at a price per share of $0.135, for total gross
proceeds of up to $4,050,000, on which date the market price for our common
stock was $0.18 per share or a 25% discount to market. The Company has sold
15,125,000 shares of its common stock pursuant to the August Private Placement,
for total gross proceeds of $2,041,875, as a result of which Frorer owns 3.9% of
the outstanding common stock. The Company has a commitment for the sale of the
remaining 14,875,000 shares, and upon shareholder approval of the sale and
issuance of these shares and American Stock Exchange approval of listing of
these shares, the Company shall issue the 14,875,000 shares for the remaining
gross proceeds of $2,008,125, as a result of which Frorer will own 7.3% of the
outstanding common stock. Keystone acted as placement agent for the Company, and
the Company has agreed to pay Keystone a cash fee of 7% of the gross dollar
proceeds of the sale of the shares in this placement and issue such agent a five
year warrant to purchase a number of shares of Company common stock equal to 5%
of the gross proceeds of the offering, divided by $0.24, at an exercise price of
$0.24 per share.
6
Pursuant to the August Private Placement, the Company made standard
representations and warranties customary for private placement transactions of
this type. In addition, the Company filed a registration statement with the SEC
on August 26, 2005 in order to register the resale of the shares of common stock
to be issued to the investors and the shares issuable to the placement agent
upon exercise of its warrant.
Reasons for August Private Placement
The purpose for the August Private Placement was to raise working
capital in order to implement our business plan and fund our current working
capital requirements. Our Board of Directors and management reviewed and
considered financing alternatives to the August Private Placement. The Board of
Directors unanimously approved the August Private Placement and resolved that it
is in the best interests of the Company and our shareholders. In so doing, the
Board considered a number of factors, including:
o The Company's need for working capital.
o The unavailability of alternatives to the August Private Placement
that could be consummated in a timely manner.
o Lack of credit facilities available with financial institutions or
other third parties and historical reliance on best efforts
third-party funding.
Reasons for Shareholder Approval
The Company's common stock is listed on the American Stock Exchange.
The American Stock Exchange has determined that, in order to meet the Exchange's
rules, we will need shareholder approval to list, issue and sell the additional
14,875,000 shares of Common Stock from the August Private Placement because the
shares issued in the August Private Placement, together with the shares issued
in the April Offering and February Offering involve the issuance or potential
issuance of more than 20% of the Company's then outstanding common stock. The
American Stock Exchange has approved the listing of the issuance of 15,125,000
shares in the August Private Placement, and we believe the American Stock
Exchange will approve the listing of the remaining 14,875,000 shares once we
obtain shareholder approval.
If we fail to obtain shareholder approval to issue and sale the
14,875,000 shares, we will not receive the approval from the American Stock
Exchange to list the 14,875,000 shares of the common stock issuable pursuant to
the August Private Placement and we will not receive the gross proceeds of up to
$2,008,125 upon the sale of such shares. Therefore, although we already have
binding agreements from the accredited investors to purchase the remaining
14,875,000 shares, we will not be able to sell the 14,875,000 shares and will
not receive the additional gross proceeds of $2,008,125. We will have to reduce
pro rata the number of shares that each accredited investor has agreed to
purchase
Effects of the August Private Placement on Existing Shareholders
Advantages. Prior to voting, each shareholder should consider that the
issuance of the 14,875,000 shares issuable pursuant to the August Private
Placement will provide additional capital which will be key to the Company's
efforts to fund working capital requirements and implement our business plan. In
addition to helping us fund our operations, the additional capital will enable
us to further invest in our core businesses including hiring additional staff,
accelerating product development, and increasing marketing efforts. The ability
to make additional investments will enable us to better serve customers and grow
our business.
Disadvantages. The aggregate issuance of the 45,125,000 shares of our
common stock issued in the August Private Placement, the April Offering and
February Offering had a dilutive effect on our shareholders, and the issuance of
the 14,875,000 shares of our common stock issued pursuant to the August Private
Placement will dilute the shareholders further. This means that our shareholders
will own a smaller percentage interest in the Company as a result of these
financings. In addition, the discount on the market received by the investors in
the April Offering, the February Offering and the August Private Placement,
including the sale and issuance of the 14,875,000 shares, has a dilutive effect
on the value of the Company's common stock. Further, any sales of our common
stock in the public market, or the anticipation of the possibility of such
sales, represents an overhang on the market and could cause the market price of
our common stock to decline.
Effect on Liquidity. The Company will utilize the $4,050,000 of gross
proceeds along with its cash and cash equivalents to fund operations. We may
need to raise additional capital to meet working capital requirements in the
third quarter of fiscal 2006, ending May 2006. If shareholder approval for the
issuance of the 14,875,000 shares is not obtained, we will only receive gross
proceeds of $2,041,875, and we may need to raise additional capital to meet
working capital requirements in the second quarter of fiscal 2006, ending
February 2006.
7
Vote Required
Ratification of the transactions described in this Proposal 4 requires
the affirmative vote of a majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote at the Annual Meeting. Abstentions will have the same effect as votes
against the proposal and broker non-votes will have no effect. The Board of
Directors recommends a vote "FOR" approval of Proposal 4.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE APPROVAL OF THE
SALE AND ISSUANCE OF 14,875,000 SHARES OF OUR COMMON STOCK PURSUANT TO THE
AUGUST PRIVATE PLACEMENT.
8
FORM OF PROXY (REVISED)
EAGLE BROADBAND, INC.
ANNUAL MEETING OF SHAREHOLDERS
September 20, 2005
EAGLE BROADBAND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Eagle Broadband, Inc., (the "Company")
hereby acknowledges receipt of the Amended Notice of Annual Meeting of
Shareholders and appoints C. J. Reinhartsen or David Micek and each of them,
with full power of substitution, as Proxy or Proxies to vote as specified in
this Proxy all the shares of common stock of the Company of the undersigned at
the Annual Meeting of Shareholders of the Company to the held at South Shore
Hotel, 2500 South Shore Blvd., League City, Texas, 77575 on September 20, 2005,
1:30 p.m., Central Time, and any and all adjournments or postponements thereof.
Either of such Proxies or substitutes shall have and may exercise all of the
powers of said Proxies hereunder. The undersigned shareholder hereby revokes any
proxy or proxies heretofore executed for such matters.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER AS DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES UNDER PROPOSAL ONE, VOTED FOR THE
ADOPTION OF THE 2005 EMPLOYEE STOCK OPTION PLAN UNDER PROPOSAL TWO, VOTED FOR
THE RATIFICATION OF LOPEZ, BLEVINS, BORK & ASSOCIATES, LLP AS OUR AUTDITORS
UNDER PROPOSAL THREE, VOTED FOR THE APPROVAL OF THE SALE AND ISSUANCE OF
14,875,000 SHARES OF OUR COMMON STOCK PURSUANT TO THE AUGUST PRIVATE PLACEMENT
UNDER PROPOSAL FOUR AND IN THE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING. THE UNDERSIGNED SHAREHOLDER MAY
REVOKE THIS PROXY AT ANY TIME BEFORE IT IS VOTED BY DELIVERING TO THE SECRETARY
OF THE COMPANY EITHER A WRITTEN REVOCATION OF THE PROXY OR A DULY EXECUTED PROXY
BEARING A LATER DATE, OR BY APPEARING AT THE ANNUAL MEETING AND VOTING IN
PERSON.
9
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTORS' NOMINEES UNDER
PROPOSAL ONE, A VOTE "FOR" THE ADOPTION OF THE 2005 EMPLOYEE STOCK OPTION PLAN
UNDER PROPOSAL TWO, A VOTE "FOR" THE RATIFICATION OF LOPEZ, BLEVINS, BORK &
ASSOCIATES, LLP AS OUR AUTDITORS UNDER PROPOSAL THREE, AND A VOTE "FOR" THE
APPROVAL OF THE SALE AND ISSUANCE OF 14,875,000 SHARES OF OUR COMMON STOCK
PURSUANT TO THE AUGUST PRIVATE PLACEMENT UNDER PROPOSAL FOUR. PLEASE MARK, SIGN,
DATE, AND RETURN THIS PROXY CARD USING THE ENCLOSED RETURN ENVELOPE AS SOON AS
POSSIBLE.
1. To elect directors out of the seven persons nominated to hold office
until the 2006 Annual Meeting of Shareholders:
You may check some or all of the seven nominees.
For Against Abstain
-------------------------------------------------------------------
Robert Bach [ ] [ ] [ ]
H.D. Cubley [ ] [ ] [ ]
Glenn Goerke [ ] [ ] [ ]
David Micek [ ] [ ] [ ]
Lorne E. Persons, Jr. [ ] [ ] [ ]
C. J. (Jim) Reinhartsen [ ] [ ] [ ]
James D. Yarbrough [ ] [ ] [ ]
2. To adopt our 2005 Employee Stock Option Plan.
[ ] [ ] [ ]
3. To ratify Lopez, Blevins, Bork & Associates, LLP, as our independent
auditors.
[ ] [ ] [ ]
4. To approve the sale and issuance of 14,875,000 shares of our common
stock.
[ ] [ ] [ ]
DATED:
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[Signature]
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[Signature if jointly held]
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[Printed Name]