UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14a
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
The Securities Exchange Act of 1934
Filed by the Registrant X
Proxy Statement
BLUETORCH, INC.
---------------
(Name of Registrant as Specified in its Charter)
Payment of filing fee (check the appropriate box):
X No fee required.
BLUETORCH, INC.
A Nevada Corporation
EXECUTIVE OFFICES
12607 Hiddencreek Way, Suite S
Cerritos, California 90703
(562) 623-4040
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 20, 2004 AT 3:00 P.M.
TO THE STOCKHOLDERS OF BLUETORCH, INC.
The Annual Meeting of Stockholders (the "Meeting") of Bluetorch, Inc., a Nevada
Corporation (the "Company"), will be held at the Marriott Hotel, 13111 Sycamore
Drive, Norwalk, California 90650 on August 20, 2004, at 3:00 P.M., local time,
to consider - and vote on the following proposals:
PURPOSE OF MEETING
1) To elect to the Board of Directors three (3) directors, to serve until the
next Annual Meeting of Stockholders of the Company or until their successors are
elected and qualify, subject to their prior death, resignation or removal.
2) To ratify the adoption by the Company's Board of Directors of the 2004
Non-Qualified Stock Option Plan (the "2004 Stock Option Plan") and to reserve up
to 25,000,000 shares of the Company's Common Stock for issuance under the Option
Plan.
3) To ratify the appointment of independent public accountants for the Company
for the year ending December 31, 2004.
4) To ratify the adoption of a resolution by the Company's Board of Directors
which allows the Company to issue shares of common stock at below net asset
value.
5) To transact such other business as may properly come before the Meeting and
any adjournments thereof.
ONLY STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JUNE 23, 2004 (THE
"RECORD DATE") ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE MEETING.
PLEASE FILL IN, SIGN, DATE, AND RETURN THE ENCLOSED PROXY TO SIGNATURE STOCK
TRANSFER, INC. 2301 OHIO DRIVE, SUITE 100, PLANO, TEXAS 75093 WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE.
BLUETORCH, INC.
By: /S/ Bruce Macgregor
-----------------------------
Bruce MacGregor
President
Cerritos, California
Dated: July 7, 2004
BLUETORCH, INC.
A Nevada Corporation
EXECUTIVE OFFICES
12607 Hiddencreek Way, Suite S
Cerritos, California 90703
(562) 623-4040
PROXY STATEMENT
This proxy statement is furnished to the stockholders of Bluetorch, Inc., a
Nevada corporation (the "Company"), in connection with the Annual Meeting of
Stockholders (the "Meeting") to be held at Marriott Hotel, 13111 Sycamore Drive,
Norwalk, California 90650 on August 20, 2004 at 3:00 p.m., local time.
The Meeting will be held to consider and vote on the following proposals:
PURPOSE OF MEETING
1) To elect to the Board of Directors three (3) directors, to serve until the
next Annual Meeting of Stockholders of the Company or until their successors are
elected and qualify, subject to their prior death, resignation or removal.
2) To ratify the adoption by the Company's board of directors of the 2004
Non-Qualified Stock Option Plan (the "2004 Stock Option Plan") and to reserve up
to 25,000,000 shares of the Company's Common Stock for issuance under the Option
Plan.
3) To ratify the appointment of independent public accountants for the Company
for the year ending December 31, 2004.
4) To ratify the adoption of a resolution by the Company's Board of Directors
which allows the Company to issue shares of common stock at below net asset
value.
5) To transact such other business as may properly come before the Meeting and
any adjournments thereof.
The list of all stockholders of record on June 23, 2004, will be available at
the Meeting and at the offices of the Company at 12607 Hiddencreek Way, Suite S,
Cerritos, California 90703, (562) 623-4040.
INCORPORATION BY REFERENCE
Bluetorch, Inc., a Nevada corporation (the "Company") is currently subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and, in accordance therewith, filed reports, proxy and
Proxy Statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and Proxy Statements and
other information may be inspected and copied at the public reference facilities
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549; at its New York Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048; and at its Chicago Regional Office, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and copies of
such materials can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
In addition, such materials may be accessed electronically at the Commission's
site on the World Wide Web, located at http:/www.sec.gov. The Company intends to
furnish its stockholders with annual reports containing audited financial
statements and such other periodic reports as the Company may determine to be
appropriate or as may be required by law.
The Company's Annual Report on Form 10-K for the year ended December 31, 2003
filed on April 14, 2004, as amended on June 14, 2004 and the Company's Form 10Q
filed on May 17, 2004 are incorporated by reference in this Proxy Statement.
As part of this Proxy Statement, the Company also incorporates by reference a
copy of the following documents filed herewith as exhibits to this Proxy
Statement.
1. Appendix A - 2004 Stock Option Plan
Upon written request, the Company will provide, without charge: (i) a copy of
the exhibits to this Proxy Statement, and (ii) a copy of its Annual Report on
Form 10-K, for the year ended December 31, 2003, to any stockholder of record or
any stockholder who owned Common stock listed in the name of a bank or broker,
as nominee, at the close of business on June 23, 2004.
Requests should be addressed to the Company, to the attention of Bluetorch,
Inc., Scott Battenburg at 12607 Hiddencreek Way, Suite S, Cerritos, California
90703, (562) 623-4040.
INFORMATION CONCERNING SOLICITATION AND VOTING
The following information is provided to stockholders to explain the use of this
Proxy Statement for this Meeting:
Only stockholders of record at the close of business on June 23, 2004 are
entitled to vote at the Meeting. The Company's Common Stock is its only class of
voting securities. As of June 23, 2004, the Company had issued and outstanding
243,085,657 shares of Common Stock of record.
REVOCABILITY OF PROXIES
A PROXY FOR USE AT THE MEETING IS ENCLOSED. ANY STOCKHOLDER WHO EXECUTES AND
DELIVERS A PROXY HAS THE RIGHT TO REVOKE IT AT ANY TIME BEFORE ITS EXERCISE BY
FILING WITH THE SECRETARY OF THE COMPANY AN INSTRUMENT REVOKING IT OR A DULY
EXECUTED PROXY BEARING A LATGER DATE. IN ADDITION, A STOCKHOLDER MAY REVOKE A
PROXY PREVIOUSLY EXECUTED BY HIM BY ATTENDING THE MEETING AND ELECTING TO VOTE
IN PERSON.
VOTING AND SOLICITATION
Proxies are being solicited by the Board of Directors of the Company. The cost
of this solicitation will be borne by the Company. Solicitation will be
primarily by mail, but may also be made by telephone, fax transmission or
personal contact by certain officers and directors of the Company, who will not
receive any compensation therefore. Shares of Common Stock represented by
properly executed proxies will, unless such proxies have been previously
revoked, be voted in accordance with the instructions indicated thereon. IN THE
ABSENCE OF SPECIFIC INSTRUCTIONS TO THE CONTRARY, PROPERTY EXECUTED PROXIES WILL
BE VOTED FOR EACH OF THE PROPOSALS DESCRIBED ABOVE. No business other than that
set forth in the accompanying Notice of Annual Meeting of Stockholders is
expected to come before the Meeting. Should any other matter requiring a vote of
stockholders properly arise, the persons named in the enclosed form of proxy
will vote such proxy in accordance with the recommendation of the Board of
Directors.
Each share of Common Stock is entitled to one vote for each share held as of
record, and there are no preemptive rights. The Company's current Certificate of
Incorporation (the "Certificate of Incorporation") and Bylaws do not provide for
cumulative voting for the election of directors or any other purpose.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Shares representing more than 50% of the voting power of the shares of Common
Stock outstanding on the Record Date, which have voting rights, must be
represented at the Meeting to constitute a quorum for conducting business. In
the absence of a quorum, the stockholders present in person or by proxy, by
majority vote and without further notice, may adjourn the meeting from time to
time until a quorum is attained. At any reconvened meeting following such
adjournment at which a quorum shall be present, any business may be transacted
which might have been transacted at the Meeting as originally notified.
The required quorum for the transaction of business at the Meeting is a majority
of the votes eligible to be cast by holders of shares of Common Stock issued and
outstanding on the Record Date. Shares that are voted "FOR" or "AGAINST" a
matter are treated as being present at the Meeting for purposes of establishing
a quorum and are also treated as shares entitled to vote at the Meeting (the
"Votes Cast") with respect to such matter.
The Company will count abstentions for purposes of determining both: (i) the
presence or absence of a quorum for the transaction of business, and (ii) the
total number of Votes Cast with respect to a proposal (other than the election
of directors). Accordingly, abstentions will have the same effect as a vote
against the proposal.
Further, the Company intends to count broker non-votes for the purpose of
determining the presence or absence of a quorum for the transaction of business,
although broker non-votes will not be counted for purposes of determining the
number of Votes Cast with respect to the particular proposal on which the broker
has expressly not voted. Thus, a broker non-vote will not affect the outcome of
the voting on a proposal.
This Proxy Statement and the form of proxy were just mailed to stockholders on
or about July 7, 2004.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented by
such stockholders at the Company's next Annual Meeting of Stockholders for the
fiscal year ending December 31, 2005, must be received by the Company no later
than July 31, 2005, in order to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
DIRECTORS AND EXECUTIVE OFFICERS
The directors of the Company currently have terms which will end at the next
annual meeting of the stockholders of the Company hereby noticed, or until their
successors are elected and qualify, subject tot heir prior death, resignation or
removal. Officers serve at the discretion of the Board of Directors. There are
no family relationships among any of the Company's directors and executive
officers.
The following sets forth certain biographical information concerning the
following persons, whom have been nominated by the Board of Directors to be
directors of the Company:
BRUCE MACGREGOR: PRESIDENT/CEO
- --------------------------------
Mr. MacGregor, age 45, brings over 20 years of sporting goods experience in both
the apparel/footwear and action sports segments including both high growth and
start-up entities. Mr. MacGregor's experience includes, during the period
commencing more than five years ago, Avia where as part of the original
management team (VP of Marketing) he helped grow the brand from $3.0 million in
revenue to $200 million within five years. As President/COO of L.A. Gear, he is
credited with restructuring the company to allow for the successful sale of the
business. At Razor USA LLC, Mr. MacGregor, as COO, led the scooter company from
$15 million to $200 million in revenue from June 2000 through December 2001.
SHANE H. TRAVELLER: DIRECTOR
- -------------------------------
Mr. Traveller, age 37, brings an extensive background in service to public
companies both as an independent auditor, then later as an officer and director.
He is a licensed CPA and sits on the board of directors of three public
companies where he serves as chairman of the audit committee. From 1998 through
2001, Mr. Traveller served the Chief Financial Officer of Trimedyne, Inc., a
NASDAQ NMS-listed medical device company. In 2002, he was named President and
COO where he oversaw all operations, product development and manufacturing in
addition to financial reporting, investor relations, and information systems for
all aspects of the company. During his tenure, sales increased 33%, productivity
increased 45%, staffing decreased 42% and the company achieved cash flow break
even for the first time in ten years. Mr. Traveller left Trimedyne to become
President of Javelin Holdings, Inc., a corporate finance and consulting company,
a position he still enjoys. With a company he co-founded prior to joining
Trimedyne, Mr. Traveller established supply channels in Eastern Europe,
negotiated a letter of intent and subsequently joint venture agreement with a
Russian supplier, and oversaw the market release of five new products. He raised
seed capital and set up the production facility, and internal accounting
controls. As a consultant and independent auditor, Mr. Traveller has been
closely involved in the development and implementation of internal controls,
management staff, preparation and filing of countless financial statements and
SEC filings. He has led clients through IPOs and secondary offerings,
private-placements, mergers and acquisitions. Mr. Traveller is a graduate of
Brigham Young University, where he has a degree in Accounting.
READ WORTH: DIRECTOR
- ----------------------
Mr. Read Worth, age 48, comes to the Company from RLX Polo Sport where he served
as Senior Vice President/GMM. Mr. Worth brings over 15 years of apparel
merchandising experience to the Company. This includes time with such venerable
brand as Nike, Patagonia and Polo. Mr. Worth also spent three years as Senior
Vice President at Champs (Foot Locker division) where he built their private
label business from zero to $485 million from early 1996 until mid 1999
..
COMMITTEES
Each member of the Board of Directors other than Bruce MacGregor, President and
CEO, also serves on the Audit Committee of the Board of Directors. The Audit
Committee recommends the engagement of the Company's independent accountants. In
addition, the Audit Committee reviews comments made by the independent
accountants with respect to internal controls and considers any corrective
action to be taken by management; reviews internal accounting procedures and
controls within the Company's financial and accounting staff; and reviews the
need for any non-audit services to be provided by the independent accounts.
(The Audit Committee operates under a written charter.)
Shane H. Traveller has been designated as the "Audit Committee" financial expert
as that term is defined in Item 401 (h)(2) of Regulation S-K.
The Company does not have any employment contracts with its officers or its
employee director. The Company does not have a compensation committee or a
nominating committee because of the Company's size, revenues and number of
employees.
On June 15, 2004, the Company's Board of Directors approved the dismissal of
Stonefield Josephson, Inc. ("Stonefield") as the independent auditors for the
Company, effective immediately. Stonefield's reports on the Company's financial
statements for the last two years did not contain an adverse opinion or
disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles. However, Stonefield's opinion in its
report on the Company's financial statements for last two years ended December
31, 2003 and 2002 included an explanatory paragraph which expressed substantial
doubt with respect to the Company's ability to continue as a going conern.
Further, there have not been any disagreements with Stonefield on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Stonefield, would have caused them to make reference to the subject matter of
the disagreement in connection with their audit report.
This report is submitted by the Audit Committee of the Board, which reviews with
the independent auditors and management the annual financial statements and
independent auditors' opinion, reviews the results of the audit of the Company's
annual financial statements and the results of the reviews of the quarterly
financial statements for each of the first three quarters in the fiscal year
with the independent auditors, and periodically reviews the Company's accounting
policies and internal accounting and financial controls for the fiscal year
ended December 31, 2003. Messrs. Worth and Traveller served on the Audit
Committee for the fiscal year ended December 31, 2003. None of Messrs. Worth and
Traveller are officers or employees of the Company, and aside from being
directors of the Company, each is otherwise independent of the Company (as
independence is defined pursuant to Rule 4200(a)(15) of the National Association
of Securities Dealers' listing standards).
The Audit Committee has reviewed the audited balance sheets of the Company as of
December 31, 2003 and 2002, and the audited statements of operations,
stockholders' equity and cash flows for each of the two years ended December 31,
2003, and has discussed them with both management and Stonefield, the then
independent auditors of the Company. The Audit Committee has also discussed with
the independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees), as currently
in effect. The Audit Committee has received the written disclosures and the
letter from the independent auditors required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), as currently in
effect, and has discussed with Stonefield, the then independent auditors of the
Company, that firms' independence. Based on its review of the financial
statements and these discussions, the Audit Committee concluded that it would be
reasonable to recommend, and on that basis did recommend, to the Board of
Directors that the audited financial statements be included in the Company'[s
Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed
with the Securities and Exchange Commission on April 14, 2004, as amended.
Respectfully submitted by the Audit Committee this 15th day of June 2004:
Shane H. Traveller
Read Worth
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
No compensation in excess of $100,000 was awarded to, earned by, or paid to any
executive officer of the Company during the fiscal years 2002 and 2003. The
following table provides summary information for the years 2002 and 2003
concerning cash and non-cash compensation paid or accrued by the Company to or
on behalf of the Company's chief executive officers.
Name and Principal Position Year Salary (US$) Bonus ($) Other Comp
- --------------------------- ---- ------------- --------- ----------
Bruce MacGregor . . . . . . 2003 $ 91,100 NONE NONE
President
Bruce MacGregor . . . . . . 2002 $ 58,000 NONE NONE
OPTION/SAR GRANTS
No stock options were granted to the Company's executive officers, nor were any
options exercised during the year ended December 31, 2003.
NON-QUALIFIED OPTION PLAN
On June 15, 2004, the Company adopted the Company's 2004 Non-Qualified Stock
Option Plan for key employees, officers, directors and consultants, and reserved
up to 25,000,000 options to be granted thereunder. The only individuals not
eligible to participate in the Plan are non-employee directors (2 persons).The
option exercise price is not less than 100% of the current market value on the
date granted; granted options vest at such times as is determined by the Board
of Directors.
No options may be exercised more than ten (10) years after grant, options are
not transferable (other than at death), and in the event of complete termination
"for cause" (other than death or disability) all "unvested" options
automatically terminate. If employment is terminated other than for cause,
outstanding options may be exercised until the end of their term provided the
optionee had six months of continuous employment with the Company from the date
of option grant. In the event of death, the option may be exercised up to its
date of expiration or within one year of death, whichever is the longer period.
As of the record date, June 23, 2004, the market value per share of the
Company's common stock was $0.027 per share.
TEMINATION OF EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Company has no compensatory plans or arrangements which relate to the
resignation, retirement or any other termination of an executive officer or key
employee with the Company, a change in control of the Company or a change in
such executive officer's or key employee's responsibilities following a change
in control.
AUDIT COMMITTEE
The Board's Audit Committee consists of Shane Traveller and Read Worth.
COMPENSATION OF DIRECTORS
The Company currently compensate its Directors at the rate of $1,500.00 per
month in the case of Shane Traveller and $300.00 per month in the case of Read
Worth.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires the Company's directors and executive officers and beneficial
holders of more than 10% of the Company's Common Stock to file with the
Commission initial reports of ownership and reports of changes in ownership and
reports of changes in ownership of such equity securities of the Company. As of
the date of this Proxy Statement, the Company believes that all reports which
needed to be filed have been filed in a timely manner for the year ended
December 31, 2003.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table reflects, as of June 23, 2004, the beneficial Common Stock
ownership of: (a) each director of the Company, (b) each Named Executive (See
"Compensation of Executive Officer and Directors"), (c) each person known by the
Company to be a beneficial holder of five percent (5%) or more of its Common
Stock, and (d) all executive officers and directors of the Company as a group as
of June 23, 2004.
CLASS OF STOCK NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIALLY OWNED (1)
(1)
Executive Officers and Directors
Common Stock . . . . . . . . . . Bruce MacGregor 16,585,718 7.30%
12607 Hiddencreek Way
Suite A
Cerritos, Ca. 90703
Common Stock . . . . . . . . . . Read Worth 582,143 Less than 1%
12607 Hiddencreek Way
Suite A
Cerritos, Ca. 90703
Common Stock . . . . . . . . . . Scott Battenburg 66,250 Less than 1%
12607 Hiddencreek Way
Suite A
Cerritos, Ca. 90703
Common Stock . . . . . . . . . . Shane H. Traveller -0- -0-
12607 Hiddencreek Way
Suite A
Cerritos, Ca. 90703
ALL EXECUTIVE OFFICERS & DIRECTORS AS A GROUP 17,224,111
(1) The number of shares and percentages of class beneficially owned by the
entities above is determined under rules promulgated by the SEC and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares as to which
the individuals has sole or shared voting power or investment power and also any
shares as to which the individual has the right to acquire within 60 days
through the exercise of any stock option or other right. The inclusion herein of
such shares, however, does not constitute an admission that the named
stockholder is a direct or indirect beneficial owner of such shares. Unless
otherwise indicated, each person or entity named in the table has sole voting
power and investment power (or shares such power with his or her spouse) with
respect to all shares of capital stock listed as owned by such person or entity.
MATTERS FOR CONSIDERATION BY STOCKHOLDERS
PROPOSAL 1. ELECTION OF DIRECTORS.
Three (3) directors will be elected at the Annual Meeting, each to hold
office until the next Annual Meeting of the Stockholders of the Company or until
their successors are elected and qualify, subject to their prior death,
resignation or removal. Officers serve at the discretion of the Board of
Directors. There are no family relationships among any of the Company's
directors and executive officers. In the absence of instructions to the
contrary, shares of Common Stock represented by properly executed proxies will
be voted for the three (3) nominees listed herein below, all of whom are
recommended by management of the Company and who have consented to be named and
to serve if elected.
In the event that any management nominee is unable or declines to serve as a
director at the time of the Meeting, the proxies will be voted for any nominee
who is designated by the present Board of Directors to fill the vacancy. It is
not expected that any nominee will be unable or will decline to serve as a
director.
The Board of Directors met or adopted actions by unanimous written consent
approximately fifteen (15) times during the year ended December 31, 2003.
The Board knows of no reason why any of the nominees will be unavailable or
decline to serve as a director.
The affirmative vote of a majority of the combined Votes Cast at the Meeting is
required to elect the directors nominated below.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF THE NOMINEES
LISTED BELOW.
NOMINEES FOR ELECTION AS DIRECTOR
The following persons have been recommended by management of the Company and
have consented to be named and to serve as members of the Company's Board of
Directors if elected. Biographies of all such persons may be reviewed in the
section of this Proxy Statement entitled "Directors and Executive Officers."
Bruce MacGregor
Shane H. Traveller
Read Worth
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
PROPOSAL 2. APPROVAL OF 2004 NON-QUALIFIED STOCK OPTION PLAN
General
The Board of Directors adopted the Non-Qualified Stock Option Plan, effective as
of June 15, 2004, and is now asking the stockholders to ratify the Plan.
The following description of the Non-Qualified Stock Option Plan is a summary of
the principal provisions of the Non-Qualified Stock Option Plan and is qualified
in its entirety by reference to the Non-Qualified Stock Option Plan, a copy of
which has been filed as an exhibit to this Proxy Statement.
2004 NON-QUALIFIED STOCK OPTION PLAN
PURPOSE OF THE PLAN. The purpose of the 2004 Non-Qualified Stock Option Plan
(the "Plan") is to enable the Company to attract, retain, and motivate the
employees, officers, directors, consultants and advisers of the Company and to
create a long-term mutuality of interest between such persons and the Company's
stockholders by granting options to purchase Common Stock ("Options").
ADMINISTRATION. The 2004 Stock Option Plan will be administered by a committee
(the "Committee") of the Board of Directors of the Company (the "Board"),
appointed from time to time by the Board. The Committee is intended to consist
of two or more directors. If no Committee exists which has the authority to
administer the Plan, the functions of the Committee will be exercised by the
Board. The Committee has full authority to interpret the Plan and decide any
questions under the Plan and to make such rules and regulations and establish
such processes for administration of the Plan as it deems appropriate subject to
the provisions of the Plan.
AVAILABLE SHARES. The Plan authorizes the issuance of up to 25,000,000 shares of
Common Stock upon the exercise of non-qualified stock options granted to
employees, officers, directors, consultants and advisers of the Company. In
general, if Options are for any reason canceled, or expire or terminate
unexercised, the shares covered by such Options will again be available for the
grant of Options.
The Plan provides that appropriate adjustments will be made in the number and
kind of securities receivable upon the exercise of Options in the event of a
stock split, stock dividend, merger, consolidation or reorganization.
ELIGIBILITY. All employees, officers, directors, consultants and advisers of the
Company, except non-employee directors, are eligible to be granted Options under
the Plan.
The purchase price per share ("Purchase Price") deliverable upon the exercise of
an Option shall be not less than 100% of the current market value of such Shares
at the time of grant.
VESTING OF OPTIONS. 25% of the Options granted under the Plan vest immediately
upon grant and become exercisable upon six months' continuous service. The
remainder of the Options vest 25% each year thereafter commencing on the date of
employment or consultancy and become exercisable six months after vesting.
Options that are exercisable upon an optionee's termination for any reason
except death, cause (as defined in the Plan), prior to the complete exercise of
an Option (or deemed exercise thereof), will remain exercisable following such
termination until the remaining term of the Option.
Options that are exercisable upon an optionee's termination for death will
remain exercisable by the optionee's estate or by the person given authority to
exercise such Options by his or her will or by operation of law, until the later
of (i) the first anniversary of the optionee's death or (ii) the remaining term
of the Option. Options that are exercisable upon an optionee's termination for
cause are terminated on the date the optionee is terminated.
AMENDMENTS. The Board of Directors may amend the Plan as it may deem advisable,
except that the Board of Directors may not, without further approval of the
stockholders of the Company, (a) increase the total number of shares which may
be made the subject of Options granted under the Plan, either in the aggregate
or to any individual Employee, except as provided herein; (b) change the manner
of determining the Option Price set forth herein; (c) extend the maximum period
during which Options may be granted or exercised; or (d) change the criteria for
determining eligibility under the Plan. Notwithstanding the foregoing, neither
the Board of Directors nor the Committee may amend, without the consent of the
Optionee, the terms of any Option in any manner which would adversely affect any
such previously granted Option. The Board of Directors may, in its discretion,
terminate this Plan at any time. Termination of the Plan does not affect the
rights of Optionees or their Successors under any Options outstanding and not
exercised in full on the date of termination.
U.S. FEDERAL INCOME TAX CONSEQUENCES. The following discussion of the principal
U.S. federal income tax consequences with respect to Options under the Plan is
based on statutory authority and judicial and administrative interpretations as
of the date of this Proxy Statement, which are subject to change at any time
(possibly with retroactive effect) and may vary in individual circumstances.
Therefore, the following is designed to provide only a general understanding of
the federal income tax consequences (state and local income tax and estate tax
consequences are not addressed below). This discussion is limited to the U.S.
federal income tax consequences to individuals who are citizens or residents of
the U.S., other than those individuals who are taxes on a residence basis in a
foreign country.
In general, an optionee will realize no taxable income upon the grant of
non-qualified stock options and the Company will not receive a deduction at the
time of such grant, unless the option has a readily ascertainable fair market
value (as determined under applicable tax law) at the time of grant. Upon
exercise of a non-qualified stock option, an optionee generally will recognize
ordinary income in an amount equal to the excess of the fair market value of the
stock on the date of exercise over the exercise price, but such amount will not
be subject to federal wage withholding or employment taxes. Upon a subsequent
sale of the stock by the optionee, the optionee will recognize short-term or
long-term capital gain or loss, depending upon his holding period for the stock.
The Company will generally be allowed a deduction equal to the amount recognized
by the optionee as ordinary income. There are no tax consequences to the
Copmany upon the grant of options to the optionee.
The Plan is not subject to any of the requirements of the Employee Retirement
Income Security Act of 1974, as amended. The Plan is not, nor is it intended to
be, qualified under Section 401(a) or 421 of the Code.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Ratification of the 2004 Stock Option Plan requires the affirmative vote of a
majority of the combined Votes Cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT.
The Board of Directors of the Company has appointed the accounting firm of
Squar, Milner, Reehl & Williamson, LLP as independent certified public
accountants for the Company for the year ending December 31, 2004, subject to
stockholder approval. The Company has been advised that neither that firm nor
any of its partners has any material relationship with the Company or any
affiliate of the Company.
(a) Audit Fees: For the fiscal year ended December 31, 2003, Stonefield
Josephson, Inc., the Company's former auditors, billed the Company $40,397.00
for the audit of the Company's annual financial statements for the year then
ended. Pre-filng reviews were conducted by the auditors for all Form(s) 10-Q for
that fiscal year.
(b) Audit-Related Fees: NONE
(c) Tax Fees: NONE
(d) All Other Fees: NONE
(e) A representative of Squar, Milner, Reehl & Williamson LLP is expected to be
present at the Meeting to make a statement, if he or she desires to do so, and
to be available to respond to appropriate questions at the Meeting. In the event
that the stockholders disapprove the appointment of independent public
accountants for the Company the Board of Directors will review its selection.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the appointment of Squar, Milner, Reehl & Williamson LLP,
independent certified public accountants for the Company for the year ending
December 31, 2004, requires the affirmative vote of a majority of the combined
Votes Cast.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE
YEAR ENDING DECEMBER 31, 2004.
PROPOSAL 4. To ratify the adoption of a resolution by the Company's Board of
Directors which allows the Company to issue shares of common stock at below net
asset value.
APPROVE THE COMPANY'S SALE OF COMMON STOCK AT PRICES BELOW NET ASSET VALUE PER
SHARE
The Company's Board of Directors has unanimously adopted a resolution
authorizing the Company to sell its common stock at prices below net asset
value. The Board of Directors believes that this is in the Company's best
interest as it may be necessary, at some point in the future, to sell stock
below its net asset value in order to raise capital for acquisitions or to
finance operations. Shareholder approval is being sought to allow the Company to
sell stock in the event the stock price falls below the net asset value per
share.
There is no immediate effect of this action. The Company's stock price is
presently trading significantly higher that the Company's net asset value
(calculated as total assets less total liabilities), and the Company has no
immediate plans to sell stock at prices below net asset value. In the event the
Company's net asset value per share should increase such that the stock price of
the Company is less than or equal to the net asset value, the Board of Directors
would be authorized to sell stock at a price below net asset value per share.
Such sales could depress the market value of the Company's common stock. If
such action were taken, the result would be immediate dilution to existing
shareholders and the further erosion on the net asset value per share. If such
sales are made, current shareholders may be subsidizing new shareholders who
purchase shares at prices below net asset value.
Sales below net asset value may only be made within one (1) year of the date of
shareholder approval. The Company and Board of Directors have determined that
sales below net asset value is in the best interest of the Company and its
shareholders. However, if any such sales are made below net asset value, such
sales will be made at a price which closely approximates the market value of
such securities.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the resolution of the Board of Directors allowing the issuance of
shares below net asset value requires the affirmative vote of a majority of the
combined Votes Cast.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
RESOLUTION OF THE BOARD OF DIRECTORS ALLOWING THE ISSUANCE OF SHARES BELOW NET
ASSET VALUE.
No Dissenters Rights: The holders of the Company's common stock are not entitle
to dissenters' rights in connection with any of the matters to be acted upon at
the annual meeting. Furthermore, the Company does not intend to independently
provide those shareholders with any such rights.
The Company knows of no other matters to be submitted at the Meeting. If any
other matters properly come before the Meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
By Order of the Board of Directors of
BLUETORCH, INC.
By: /s/ Bruce MacGregor
------------------------------------------
Bruce MacGregor
Chief Executive Officer
Cerritos, California
Dated: July 7, 2004
BLUETORCH, INC.
NON-QUALIFIED STOCK OPTION PLAN
1. DEFINITIONS
(A) "Employee" shall mean a key person employed by Bluetorch, Inc. (hereinafter
the "Company) as an "Employee" or as an "Independent Consultant", on a full or
part time basis, (including a director or officer), or a subsidiary on a full
time or part time basis, at the time of a grant and who is compensated for such
employment or services.
(B) "Fair Market Value" shall mean the last sales price of the Common Stock on
any Exchange or in any market in which it trades, or if it does not trade, at
its estimated fair market value as set by the Board of Directors on the date of
grant of an Option.
(C) The "Company" shall mean Bluetorch, Inc., a corporation organized and
existing under the laws of the State of Nevada, and any successor, or successors
thereto.
(D) "Option" shall mean a right to purchase shares of Common Stock granted by
the Company pursuant to the Plan.
(E) "Optionee" shall mean an eligible person, as described herein, to whom an
Option is granted pursuant to the Plan.
(F) "Option Price" shall mean the per share price to be paid for the shares of
Common Stock being purchased pursuant to this Stock Option Agreement.
(G) "Option Period" shall mean the period from the date of grant of an Option to
the date which such Option may no longer be exercised. Nothing in this Plan
shall be construed to extend the termination date of any Option Period beyond
the termination date of such Option Period set for the in the Stock Option
Agreement.
(H) "Plan" shall mean Bluetorch, Inc. 2004 Non-Qualified Stock Option Plan, as
amended from time to time.
(I) "Stock Option Agreement" shall mean the written agreement between the
Company and the Optionee confirming the grant of the Option and setting forth
the terms and conditions upon which it may be exercised.
(J) "Subsidiary" shall mean any corporation in which the Company owns directly
or indirectly through Subsidiaries, at least 50% of the total combined voting
power of all classes of stock.
2. PURPOSES
The purposes of the Plan are to promote the growth and profitability of the
Company and its Subsidiaries by enabling the Company to attract and retain the
best available personnel for positions of substantial responsibility, and to
provide Employees with an opportunity for investment in the Common Stock and to
give them an additional incentive to increase their efforts on behalf of the
Company and its Subsidiaries.
3. EFFECTIVE DATE AND TERMINATION
The effective date of the Plan is June 15, 2004, the date on which the Plan was
made effective by the Board of Directors. No Options may be granted under the
Plan after June 15, 2014.
4. ADMINISTRATION
The Plan shall be administered by the Committee, which shall consist of not less
than two directors of the Company. Committee members shall be appointed by the
Board of Directors, shall serve at the Pleasure of the Board of Directors and
any vacancies occurring in the membership of the Committee shall be filled by
appointment by the Board of Directors. A majority of the Committee shall
constitute a quorum at any meeting thereof and the Acts of a majority of members
present at any meeting of the Committee at which a quorum is present, or acts
unanimously approved in writing by the entire Committee, shall be the acts of
the Committee. The Board of Directors shall appoint the Chairman of the
Committee.
The Committee shall have a plenary authority in its discretion, but subject to
the express provisions of the Plan:
(a) To determine which of the eligible Employees of the Company and its
Subsidiaries shall be granted Option s and the number to be granted to each. In
making such determination, the Committee shall consider the position and
responsibilities of the Employees being considered, the nature and value to the
Company or a Subsidiary of his services and accomplishments, his present and
potential contribution to the success of the Company or a Subsidiary and such
other factors as the Committee may deem relevant;
(b) To determine the dates of grant of Options;
(c) To prescribe the form of the instruments evidencing the Options granted
under the Plan (which forms need not be identical and may be evidenced by a
single instrument);
(d) To adopt, amend, and rescind rules and regulations for the administration of
the Plan and for its own acts and proceedings; and
(e) To decide all questions and settle all controversies and disputes of general
applicability which may arise in connection with the Plan.
All decisions, determinations and interpretations with respect to the foregoing
matters shall be made by the Committee and shall be final and binding upon all
persons. The Committee may designate any officers or other employees of the
Company to assist the Committee in the administration of the Plan and may grant
authority to such persons to execute instruments evidencing options or other
documents on behalf of the Committee.
The Committee may , in its discretion and with the consent of Optionee, adjust
or reduce the Option Price for shares of Common Stock subject to such Optionee's
Option, whether by way of cancellation of an outstanding Option and the
substitution therefore of a new Option at a lower Option Price, or by
modification, extension or renewal of the outstanding Option. The Committee may
grant to an Optionee an additional option exercisable at an Option Price lower
than the Option Price called for by the outstanding Option.
5. ELIGIBILITY
Options may be granted (only to Employees and Consultants.)
6. NUMBER OF SHARES SUBJECT TO OPTION
Under the Plan, the maximum number and kind of shares as to which options may be
granted, subject to adjustment in accordance with the provisions of this
Agreement, is 25,000,000 shares of Common Stock. The Common Stock to be offered
under the Plan may be either authorized and unissued shares or issued shares.
The Board of Directors has reserved for the purpose of the Plan a total of
25,000,000 of the authorized shares of Common Stock, subject to adjustment in
accordance with this Agreement. If any shares as to which an Option granted
under the Plan shall remain unexercised at the expiration thereof or if the
Option shall be terminated unexercised, such shares may be the subject of the
grant of a further Option or Options.
7. TERM OF OPTIONS
The grant of each Option shall be confirmed by Stock Option Agreement (in the
form prescribed by the Committee) which shall be executed by the Company and
delivered to the Optionee as promptly as practicable after such grant. Each such
agreement shall expressly state or incorporate by reference the provisions of
this Plan.
A. Option Price:
The Option Price shall be determined by the Committee at the time the Option is
granted, subject to adjustment; provided, however, that in no event shall the
Option Price be less than the per share par or stated value of the Common Stock
on the date of the grant, nor shall it be less than 100% of the current market
value of the underlying shares on the date of grant.
B. Option Periods:
The term of each Option granted under this Plan shall be for such period as the
Committee shall determine, but not more than ten years from the date of adoption
of this Plan and subject to earlier termination as hereinafter provided herein.
C. Exercise of Options:
Each Option granted under this Plan shall be exercisable on such date or dates
during the Option Period for such number of shares of Common Stock as shall be
determined by the Committee as evidenced by the provisions of the Stock Option
Agreement evidencing such Option, subject, however, to the provisions of this
Agreement.
(1) An Option may be exercised by the Optionee or a Successor only by written
notice to the Company specifying the extent to which such Option is to be
exercised.
(2) The Committee in its discretion may, at any time prior to the date of
exercise of an Option, determine whether the Option Price of some or all of the
shares subject to the Option shall, (a) be paid in full in cash or by check at
the time of exercise, or (b) subject to any applicable restrictions imposed by
law, be paid in such installments, and upon such terms and conditions, including
provision for securing the payment of the same, as the - Committee, in its
discretion, shall provide. In no event, however, shall the Committee provide for
the installment payment of any Option Price unless at the time of exercise of
the Option to which such Option Price relates the Optionee pays in cash or by
certified or official bank check an amount equal to not less than the aggregate
par or stated value of the shares being acquired.
(3) As soon as practicable after receipt by the Company of notice of exercise
and of payment, as required by this Agreement, the Option Price for all shares
with respect to which an Option has been exercised, a certificate or
certificates representing such shares shall be registered in the name or names
of the Optionee or his Successor and shall be delivered to the Optionee or his
Successor at the Optionee's address as it appears in the payroll records of the
Company or its Subsidiary or such other address as may be designated by the
Optionee.
D. Vesting of Options:
The Options shall vest as follows:
(1) 25% of the Option shall vest immediately upon the granting thereof;
(2) The remaining Options shall vest 25% each year, commencing on the date of
employment or consultancy.
E. Termination of Employment or Consulting Agreement:
The effect of termination of an optionee's employment or consulting arrangement
with the Company or a Subsidiary shall be as follows:
(1) Termination Other Than for Cause.
If the employment or consulting arrangement of an Optionee is terminated other
than for cause (as hereinafter define), any outstanding Option held by such
Optionee may be exercised at any time prior to the expiration of the Option,
provided that such Optionee shall have been an Employee or Consultant for a
continuous period of 6 months from the date of grant of the Option and any such
Option shall only be exercisable to the extent exercisable on the date the
relevant employment or consulting arrangement shall have terminated.
(2) Death.
If an Optionee shall die while he is an Employee or Consultant, any outstanding
Option may be exercised to the extent exercisable on the date of death, by the
person or persons entitled to do so under the Optionee's will or, if the
Optionee shall have failed to make testamentary disposition of such Option or
shall have died intestate, by the Optionee's legal representative or
representatives, in either case at any time prior to the expiration date of the
Option or within one year of the date of the Optionee's death, whichever shall
be the longer period, provided that such Optionee, at the time of death, shall
have been an Employee or Consultant for a continuous period of 6 months from the
date of grant of the Option. Such person, persons, representative or
representatives are hereinbefore and hereinafter referred to as the
(3) Termination for Cause.
If the employment or consulting arrangement of an individual holding an Option
shall be terminated for Cause, his right under any then outstanding Option shall
terminate at the time of such termination of employment or consulting
arrangement.
(4) Cause.
As used herein, in the case of any Employee or Consultant not subject to a
written employment or consulting agreement, "Cause" shall mean any willful or
intentional act having the effect of injuring the reputation, business or
business relationships or the Company, or any of its Subsidiaries, or any
repeated or continuous failure, neglect or refusal to perform in a satisfactory
manner duties assigned to such Employee. In the case of an Employee or
Consultant subject to a written employment or consulting agreement, "Cause"
shall mean any action giving the Company the right to terminate such person's
employment or consulting agreement for cause.
F. Non-Transferability of Option:
Each Option granted under the Plan shall, by its terms, be nontransferable
except by will or the laws of descent and distribution, and each Option shall be
exercisable during the holder's lifetime only by him.
G. Agreement to Continue Employment:
The granting of an Option shall not be construed as conferring upon any holder
the right to remain in the employ of the Company or any "Subsidiary".
H. Other Terms.
Options granted pursuant to the Plan shall contain such other terms, provisions
and conditions not inconsistent herewith as shall be determined by the
Committee.
8. ADJUSTMENTS
If there is any change in the Common Stock by reason of the declaration of a
stock dividend or a subdivision, combination or reclassification of shares, the
number of shares available for the grant of options and the number of shares
subject to outstanding options will be appropriately adjusted by the Committee.
If there is any change in the Common Stock by reason of any reorganization,
liquidation, merger, consolidation or sale of assets of the Company, each Option
shall be converted into an Option for the same number and kind of Common Stock
or other property as the Optionee would have been entitle to receive had he
exercised his Option immediately prior to the record date of the meeting of
stockholders called to consider such event. The exercise price of the Option
will be appropriately adjusted so that the total consideration upon exercise of
the Option will remain constant. No adjustment provided for in this Section
shall require the Company to sell or issue a fractional share of Common Stock,
and the total substitution or adjustment with respect to each outstanding Option
shall be limited accordingly.
Upon any adjustment made pursuant to this Section, the Company will, upon
request, deliver to the Optionee, or his Successor or Successors, a certificate
of the Company's Secretary or an Assistant Secretary setting forth the Option
Price thereafter in effect and the number and kind of shares, other securities
or other property thereafter purchasable on the exercise of such Option.
REVOCABLE PROXY
BLUETORCH, INC.
Proxy for the Annual Meeting of Stockholders
To be held August 20, 2004
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Scott Battenburg, proxy, with full power of
substitution, to vote all shares of stock of Bluetorch, Inc. (the "Company")
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of the Company to be held on Friday, August 20, 2004, at 3:00 p.m., local time,
at the Company's offices located at Marriott Hotel, 13111 Sycamore Drive,
Norwalk, California 90650 July 7, 2004, a copy of which has been received by the
undersigned. Execution of a proxy will not in any way affect a stockholder's
right to attend the meeting and vote in person. The proxies are further
authorized to vote, in their discretion, upon such other business as may
properly come before the meeting or any adjournments thereof, and upon which the
persons named as attorneys in the proxies may exercise discretion under
applicable law.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED "FOR" PROPOSALS 1 THROUGH 4
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. To elect three (3) members to the Board of Directors for the specified term
or until his successor is elected and qualified:
Bruce MacGregor FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Shane H. Traveller FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Read Worth FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To ratify the Company's 2004 Non-Qualified Stock Option Plan and to reserve
up to 25,000,000 shares of common stock for issuance under the Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the appointment of independent public accountants for the Company
for the year ending December 31, 2004.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To ratify the adoption of a resolution by the Company's Board of Directors
which allows the Company to issue shares below net asset value.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. To transact such other business as may properly come before the meeting or
any adjournments thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
If signing as attorney, executor, trustee or guardian, please give your full
title as such. If stock is held jointly, each owner should sign.
Signature
Date
[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW