INFORMATION STATEMENT PURSUANT TO
SECTION 14(c) OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2)
[X] Definitive Information Statement
URANIUM ENERGY CORP.
-------------------------
(Name of Registrant as Specified in its Charter)
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1
URANIUM ENERGY CORP.
Austin Centre
701 Brazos, Suite 500 PMB#1
Austin, Texas 78701
INFORMATION STATEMENT
Dated
January 9, 2006
GENERAL
This Information Statement is being circulated to the shareholders of
Uranium Energy Corp., a Nevada corporation (the "Company"), in connection with
the taking of corporate action without a meeting upon the written consent (the
"Written Consent") of the holders of a majority of the outstanding shares of the
Company's $0.001 par value common stock (the "Common Stock"). The names of the
shareholders who will be signing the Written Consent and their respective equity
ownership of the Company are as follows: (i) Isaiah Capital Trust holding of
record 1,823,333 shares of Common Stock (13.37%); (ii) Golden West Investments
holding of record 3,750,000 shares of Common Stock (27.49%); (iii) Amir Adnani
holding of record 1,135,334 shares of Common Stock (12.01%); (iv) Alan Lindsay
holding of record 870,858 shares of Common Stock (6.38%); (v) Ethny Lindsay
holding of record 950,000 shares of Common Stock (6.96%); (vi) Randall Reneau
holding of record 1,000,000 shares of Common Stock (7.33%); and (vii) James
Davidson holding of record 727,667 shares of Common Stock (5.33%).
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
As more completely described below, the matters upon which action is
proposed to be taken are: (i) to adopt an amendment (the "Amendment") to the
Company's Articles of Incorporation, as amended (the "Articles"), to increase
the authorized capital from 75,000,000 shares of Common stock to 750,000,000
shares of Common Stock; and (ii) to ratify the adoption of the 2005 stock option
plan for key personnel of the Company, which includes the non-qualified stock
option plan (the "Stock Option Plan"), and to ratify the grant of stock options
pursuant to a stock option plan agreement and the grant of incentive stock
options pursuant to an incentive stock option plan agreement.
The date, time and place at which action is to be taken by written consent
on the matters to be acted upon, and at which consents are to be submitted, is
February 1, 2006 at 10:00 a.m. (Central Time) at Austin Centre, 701 Brazos,
Suite 500 PMB#1, Austin, Texas 78701.
This information statement is being first sent or given to security holders
on approximately January 12, 2006.
2
VOTING SECURITIES AND VOTE REQUIRED
On December 19, 2005, the Board of Directors authorized and approved,
subject to shareholder approval, the corporate action, which the Board of
Directors deemed to be in the best interests of the Company and its
shareholders. The Board of Directors further authorized the preparation and
circulation of this information statement and a shareholders' consent to the
holders of a majority of the outstanding shares of the Company's Common Stock.
There are currently 13,640,722 shares of the Company's Common Stock
outstanding, and each share of Common Stock is entitled to one vote. The Written
Consent of ten (10) or less shareholders of the Company holding at least
6,820,362 shares of the Common Stock issued and outstanding is necessary to
approve the matters being considered. The record date for determining
shareholders entitled to vote or give Written Consent is December 23, 2005 (the
"Record Date"). Except for the Common Stock there is no other class of voting
securities outstanding at this date.
The matters upon which action is proposed to be taken are: (i) the approval
of the Amendment to the Company's Articles to increase the authorized capital
from 75,000,000 shares of Common stock to 750,000,000 shares of Common Stock;
and (ii) to ratify the adoption of the Stock Option Plan, and to ratify the
grant of stock options pursuant to a stock option plan agreement and the grant
of incentive stock options pursuant to an incentive stock option plan agreement.
The cost of this Information Statement, consisting of printing, handling
and mailing of the Information Statement and related material, and the actual
expense incurred by brokerage houses, custodians, nominees and fiduciaries in
forwarding the Information Statement to the beneficial owners of the shares of
Common Stock, will be paid by the Company.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
CURRENT OFFICERS AND DIRECTORS
As of the date of this Information Statement, the directors and executive
officers of the Company are as follows:
Name Age Position with the Company
---- --- -----------------------------
Amir Adnani 27 President/Chief Executive
Officer and Director
Grant Atkins 45 Treasurer/Chief Financial
Officer, and Director
Randall Reneau 57 Chief Exploration Officer,
and Director
Johnathan Lindsay 29 Secretary
D. Bruce Horton 61 Director
Steve Jewett 67 Director
Alan Lindsay 55 Director
3
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience
of each director, executive officer and key employee during at least the past
five years, indicating each person's principal occupation during the period, and
the name and principal business of the organization by which he or she was
employed.
Amir Adnani has been the Company's Chief Executive Officer, President and
Director since January 24, 2005. Mr. Adnani is an entrepreneur with an extensive
background in business development and marketing. He founded and has been, for
the last five years, president of Blender Media Inc., a Vancouver based company
that provides strategic marketing and financial communications services to
public companies and investors in mineral exploration, mining, and energy
sectors. He has many contacts throughout the minerals exploration and financial
communities. Mr. Adnani holds a Bachelor of Science degree from the University
of British Columbia.
Grant Atkins has been the Company's Chief Financial Officer and a Director
since January 24, 2005. Mr. Atkins is also the chief executive officer,
president, and a director of Lexington Resources, Inc. For the past ten years,
Mr. Atkins has been self-employed and has acted as a financial and project
coordination consultant to clients in government and private industry. He has
extensive multi-industry experience in the fields of finance, administration and
business development. Mr. Atkins received a Bachelor of Commerce degree from the
University of British Columbia.
Randall Reneau has been the Company's Chief Exploration Officer since
January 24, 2005. Mr. Reneau is registered as a Certified Professional Geologist
with over thirty years of experience in mineral exploration and project
management in the United States, Mexico, Brazil and West Africa. Mr. Reneau has
significant experience exploring for uranium in the United States, specifically
in Texas, Arizona, New Mexico and Wyoming, the states known to hold the largest
uranium reserves. He extensively explored these states while employed in a
senior position for Conoco Uranium, a subsidiary of Conoco Ltd., and World
Nuclear Corporation, a privately-held company. For the past ten years, he has
been an independent contractor, performing geology services for mining and
exploration companies internationally. He obtained his M.S. in Environmental
Engineering from Kennedy-Western University, Boise, Idaho, and a B.A. in Geology
from Central Washington University.
Johnathan Lindsay has been the Company's Secretary to Uranium Energy Corp.
since its inception (formerly Carlin Gold Inc.), where he was responsible for
organizing initial financing. In 1997, Mr. Lindsay worked with the Investor
Relations Group and for National Media, two North American public sector
marketing firms. While there, he developed relationships with key personnel in
the resource and finance sectors. Following his position with National Media, he
studied marketing from 1998-99 at the British Columbia Institute of Technology.
From 1999 to 2004, Mr. Lindsay was employed by Alan Lindsay and Associates as
vice president marketing and corporate secretary. Since 2004, Mr. Lindsay is
currently the president of Ocean Tower Productions, a privately-held film
production company. Ocean Tower currently has films in various stages of
production.
Steve Jewett has been a director of the Company and member of the Audit
Committee since January 24, 2005. Since 1978, Mr. Jewett has been the owner of
Stephen Jewett - Chartered Accountants. During his career, Mr. Jewett was
auditor of several public companies. Mr. Jewett received his degree as a
Chartered Accountant from the Institute of Chartered Accountants of British
Columbia and is the Audit Committee's financial expert.
4
D. Bruce Horton has been a director of the Company and member of our Audit
Committee since January 24, 2005. During the past five years, Mr. Horton has
been active in the financial arena in both the private and public sectors as an
accountant and financial management consultant with an emphasis on corporate
financial reporting, financing and tax planning. Mr. Horton has specialized in
corporate management, re-organization, merger and acquisition, international tax
structuring, and public and private financing for over thirty years. From 1972
through 1986, Mr. Horton was a partner in a public accounting firm. In 1986, Mr.
Horton co-founded the Clearly Canadian Beverage Corporation, of which he was a
director and chief financial officer until 1997.
Alan Lindsay has been a director of the Company since May 16, 2003. Mr.
Lindsay has extensive experience and expertise in the mining and biomedical
fields. From 2000 to the present, he has been the chairman, president and chief
executive officer of MIV Therapeutics Inc., a publicly-listed biomedical company
focused on biocompatible coating technology for stents and medical devices, and
was also a co-founder of GeneMax Pharmaceuticals, a biotech company with a novel
cancer treatment technology discovered at the University of British Columbia.
Mr. Lindsay was the founder of AZCO Mining Inc. and served as chairman,
president and chief executive officer of AZCO Mining Inc. from 1992 to 2000.
During his term, AZCO Mining Inc. obtained listings on both the Toronto and
American Stock Exchanges. AZCO Mining Inc. developed the Sanchez copper deposit
and Piedras Verdes copper deposits with a combined SX-EW oxide copper resource
of 3.25 billion pounds of copper. Mr. Lindsay negotiated a business transaction
with Phelps Dodge Corporation that led to the sale of the Sanchez deposit for
$55 million and a joint venture on the Piedras Verdes deposit.
Amir Adnani, Grant Atkins, Alan Lindsay, Johnathan Lindsay, Randall Reneau,
Golden West Investments, and the Isaiah Capital Trust may be deemed to be
organizers of the Company based upon their activities in founding and organizing
the business of the Company.
FAMILY RELATIONSHIPS
The Secretary of the Company, Johnathan Lindsay, is the son of Alan
Lindsay, a director of the Company. Otherwise, there are no other family
relationships among our directors or officers.
AUDIT COMMITTEE
As of the date of this Information Statement, the Company has created an
Audit Committee, adopted an audit committee charter, and appointed members to
the Audit Committee effective January 25, 2005. The Audit Committee is comprised
of Messrs. Stephen Jewett and D. Bruce Horton, who are disinterested members.
The Audit Committee's primary function is to provide advice with respect to the
Company's financial matters and to assist the Board of Directors in fulfilling
its oversight responsibilities regarding finance, accounting, tax and legal
compliance. The Audit Committee's primary duties and responsibilities are: (i)
to serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; (ii) to review and
appraise the audit efforts of the Company's independent accountants; (iii) to
evaluate the Company's quarterly financial performance as well as its compliance
with laws and regulations; (iv) to oversee management's establishment and
enforcement of financial policies and business practices; and (v) to provide an
open avenue of communication among the independent accountants, management and
the Board of Directors.
5
EXECUTIVE COMPENSATION
During the last fiscal year, none of the directors of the Company were
compensated for their roles as directors. Directors of the Company may be
reimbursed for any out-of-pocket expenses incurred by them on behalf of the
Company. Certain officers are paid for services provided to the Company as
indicated below. We presently have no pension, health, annuity, insurance,
profit sharing or similar benefit plans.
From June 30, 2004 and as formalized in a letter agreement dated December
1, 2004, Randall Reneau has had a services agreement with the Company whereby he
may perform geological consulting services for the Company in exchange for $350
per diem plus expenses. In the year ended December 31, 2004, Mr. Reneau has
invoiced the Company and has been compensated in the amount of $12,506. Mr.
Reneau has received compensation in the approximate amount of $62,461 for the
nine month period ended September 30, 2005.
Mr. Amir Adnani, the Company's President, has accrued compensation in the
amount of $4,000 for fiscal year 2004 and $38,000 during the nine month period
ended September 30, 2005.
Mr. Johnathan Lindsay, the Company's Secretary, has accrued compensation in
the amount of $25,171 for fiscal year 2004 and approximately $20,833 during the
nine month period ended September 30, 2005.
The Company does not have formal employment agreements with Mr. Adnani, Mr.
Lindsay, or Mr. Atkins. Executive compensation is subject to change concurrent
with the Company's compensation policy.
Summary Compensation Table
None of our executive officers received an annual salary and bonus that
exceeded $100,000 during the fiscal year ending December 31, 2004. The following
table sets forth the compensation received by officers and directors of the
Company during 2004.
--------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM
COMPENSATION
NAME AND FISCAL SALARY OTHER SECURITIES
PRINCIPAL POSITION YEAR UNDERLYING
OPTIONS
--------------------------------------------------------------------------------
Amir Adnani 2004 $4,000 0 0
President/CEO
Grant Atkins 2004 0 0 0
CFO
Randall Reneau 2004 0 $12,506 0
Chief Exploration
Officer
Johnathan Lindsay 2004 $25,171 0 0
Secretary
--------------------------------------------------------------------------------
6
STOCK OPTION PLAN
On December 19, 2005, the Board of Directors of the Company authorized and
approved the adoption of the 2005 stock option plan effective December 19, 2005
(the "Stock Option Plan").
The purpose of the Stock Option Plan is to enhance the long-term
stockholder value of the Company by offering opportunities to directors,
officers, employees and eligible consultants of the Company to acquire and
maintain stock ownership in the Company in order to give these persons the
opportunity to participate in the Company's growth and success, and to encourage
them to remain in the service of the Company.
The Stock Option Plan is to be administered by the Board of Directors of
the Company or a committee appointed by and consisting of two or more members of
the Board of Directors, which shall determine (i) the persons to be granted
Stock Options under the Stock Option Plan; (ii) the number of shares subject to
each option, the exercise price of each Stock Option; and (iii) whether the
Stock Option shall be exercisable at any time during the option period of ten
(10) years or whether the Stock Option shall be exercisable in installments or
by vesting only. The Stock Option Plan provides authorization to the Board of
Directors to grant Stock Options to purchase a total number of shares of Common
Stock of the Company, not to exceed 3,500,000 shares as at the date of adoption
by the Board of Directors of the Stock Option Plan. At the time a Stock Option
is granted under the Stock Option Plan, the Board of Directors shall fix and
determine the exercise price at which shares of Common Stock of the Company may
be acquired.
In the event an optionee ceases to be employed by or to provide services to
the Company for reasons other than cause, retirement, disability or death, any
Stock Option that is vested and held by such optionee generally may be
exercisable within up to ninety (90) calendar days after the effective date that
his position ceases, and after such 90-day period any unexercised Stock Option
shall expire. In the event an optionee ceases to be employed by or to provide
services to the Company for reasons of retirement, disability or death, any
Stock Option that is vested and held by such optionee generally may be
exercisable within up to one-year after the effective date that his position
ceases, and after such one-year period any unexercised Stock Option shall
expire.
No Stock Options granted under the Stock Option Plan will be transferable
by the optionee, and each Stock Option will be exercisable during the lifetime
of the optionee subject to the option period of ten (10) years or limitations
described above. Any Stock Option held by an optionee at the time of his death
may be exercised by his estate within one (1) year of his death or such longer
period as the Board of Directors may determine.
The exercise price of a Stock Option granted pursuant to the Stock Option
Plan shall be paid in full to the Company by delivery of consideration equal to
the product of the Stock Option in accordance with the requirements of the
Nevada Revised Statutes. Any Stock Option settlement, including payment
deferrals or payments deemed made by way of settlement of pre-existing
indebtedness from the Company may be subject to such conditions, restrictions
and contingencies as may be determined.
7
Incentive Stock Options
The Stock Option Plan further provides that, subject to the provisions of
the Stock Option Plan and prior shareholder approval, the Board of Directors may
grant to any key individuals who are employees of the Company eligible to
receive options one or more incentive stock options to purchase the number of
shares of common stock allotted by the Board of Directors (the "Incentive Stock
Options"). The option price per share of common stock deliverable upon the
exercise of an Incentive Stock Option shall be at least 100% of the fair market
value of the common shares of the Company, and in the case of an Incentive Stock
Option granted to an optionee who owns more than 10% of the total combined
voting power of all classes of the stock of the Company, shall not be less than
100% of the fair market value of the common shares of the Company. The option
term of each Incentive Stock Option shall be determined by the Board of
Directors, which shall not commence sooner than from the date of grant and shall
terminate no later than ten (10) years from the date of grant of the Incentive
Stock Option, subject to possible early termination as described above.
On December 20, 2005, the Board of Directors authorized and approved the
grant of an aggregate 3,150,000 Stock Options to key consultants, directors and
officers under the Stock Option Plan. The following table represents those Stock
Options granted to executive officers and directors of the Company:
Options/SAR Grants Table
--------------------------------------------------------------------------------
Name Number of Exercise Price Date of
Securities Underlying Expiration
Options
--------------------------------------------------------------------------------
Alan Lindsay 400,000 $0.50 12/20/15
John Lindsay 200,000 0.50 12/20/15
Amir Adnani 135,000 0.50 12/20/15
Randall Reneau 135,000 0.50 12/20/15
Bruce Horton 50,000 0.50 12/20/15
Steve Jewett 50,000 0.50 12/20/15
Grant Atkins 200,000 0.50 12/20/15
Total 1,170,000
--------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date
concerning: (i) each person who is known by the Company to own beneficially more
than five percent (5%) of the Company's outstanding Common Stock; (ii) each of
the Company's executive officers, directors and key employees; and (iii) all
executive officers and directors as a group. Common Stock not outstanding but
deemed beneficially owned by virtue of the right of an individual to acquire
shares within 60 days is treated as outstanding only when determining the amount
and percentage of Common Stock owned by such individual. Except as noted, each
person or entity has sole voting and sole investment power with respect to the
shares shown.
8
(1)
Name and Address of Beneficial Number of Nature Percentage
Owner Shares Owned of Ownership Ownership
--------------------------------- ------------- -------------- ---------------
(2)
Amir Adnani 1,270,334 Direct 9.22%
2302-930 Cambie Street
Vancouver, B.C. V6B 5X6
--------------------------------- ------------- -------------- ---------------
(3)
Randall Reneau 1,135,000 Direct 8.24%
9302 Mystic Oak Trail
Austin, TX 78750
--------------------------------- ------------- -------------- --------------
(4)
D. Bruce Horton 83,334 Direct 0.61%
2443 Alder Street
Vancouver, B.C. V6H 4A4
--------------------------------- ------------- -------------- ---------------
(5)
Alan Lindsay 1,270,858 Direct 9.05%
2701-1500 Hornby Street
Vancouver, B.C. V6Z 2R1
--------------------------------- ------------- -------------- ---------------
(6)
Isaiah Capital Trust 1,823,333 Direct 13.37%
28-30 The Parade
St. Heller, Jersey
Channel Islands JE4 8XY
--------------------------------- ------------- -------------- ---------------
(7)
Golden West Investments 3,750,000 Direct 27.49%
P.O. Box 97 Leeward Highway
Provenciales Turks &
Caicos Islands, BWI
--------------------------------- ------------- -------------- ---------------
Ethny Lindsay 950,000 Direct 6.96%
201 Villa Pax, Ocean Way,
Umhlanga Rocks, Republic
of South Africa, 4320
--------------------------------- ------------- -------------- ---------------
James Davidson 727,667 Direct 5.33%
455 Barstow Road,
Prince Frederick, Maryland,
USA, 20678
--------------------------------- ------------- -------------- ---------------
(8)
Johnathan Lindsay 465,574 Direct 3.36%
T13-1501 Howe Street
Vancouver, B.C. V6Z 2P8
--------------------------------- ------------- -------------- ---------------
(9)
Grant Atkins 200,000 Direct 1.45%
7473 West Lake Mead Rd.
Las Vegas, Nevada 89128
-------------------------------- ------------- -------------- ----------------
(10)
Steve Jewett 50,000 Direct 0.41%
#1201-1633 West 8th Avenue
Vancouver, B.C. V6J 5H7
------------------------------ -------------- -------------- -----------------
9
------------------------------ -------------- -------------- -----------------
(11)
All officers/directors as a 5,202,767 35.13%
group (7 persons)
--------------------------------- ------------- -------------- ---------------
(1) These are restricted shares of Common Stock.
(2) This figure includes: (i) 1,135,334 shares of restricted Common Stock; and
(ii) the assumption of the exercise of 135,000 Stock Options into 135,000
shares of Common Stock at $0.50 per share.
(3) This figure includes: (i) 1,000,000 shares of restricted Common Stock; and
(ii) the assumption of the exercise of 135,000 Stock Options into 135,000
shares of Common Stock at $0.50 per share.
(4) This figure includes: (i) 33,334 shares of restricted Common Stock; and
(ii) the assumption of the exercise of 50,000 Stock Options into 50,000
shares of Common Stock at $0.50 per share.
(5) This figure includes: (i) 870,858 share of restricted Common Stock; and
(ii) the assumption of the exercise of 400,000 Stock Options into 400,000
shares of Common Stock at $0.50 per share.
(6) Isaiah Capital Trust account is a trust account held for the benefit of
various beneficiaries and is managed by Equity Trust. The trustees of
Equity Trust (Jersey Limited), a trust formed pursuant to the laws of
Jersey, Channel Islands, have sole voting and dispositive power over the
shares of the Company registered in the name of Isaiah Capital Trust. None
of the beneficiaries of Isaiah Capital Trust are affiliates, underwriters
nor associates of an affiliate or an underwriter of the Company.
(7) Golden West Investments is controlled by Barry Dempsey for Cockburn
Directors Ltd. and its sole shareholder is Canopus Limited for Meridian
Trust.
(8) This figure includes: (i) 265,574 shares of restricted Common Stock; and
(ii) the assumption of the exercise of 200,000 Stock Options into 200,000
shares of Common Stock at $0.50 per share.
(9) This figure consists of the assumption of the exercise of 200,000 Stock
Options into 200,000 shares of Common Stock at $0.50 per share.
(10) This figure consists of the assumption of the exercise of 50,000 Stock
Option into 50,000 shares of Common Stock at $0.50 per share.
(11) This figure includes: (i) 4,032,767 shares of restricted Common Stock; and
(ii) the assumption of the exercise of 1,170,000 Stock Options into
1,170,000 shares of Common Stock at $0.50 per share.
10
CERTAIN TRANSACTIONS
As of the date of this Information Statement, and with the exception of the
consulting agreements disclosed above, the Company has not entered into any
contractual arrangements currently in effect with related parties that exceed
$60,000. There are not any currently proposed transactions, or series of the
same to which the Company is a party, in which the amount involved exceeds
$60,000 and in which, to the knowledge of the Company, any director, executive
officer five percent (5%) shareholder or any member of the immediate family of
the foregoing persons, have or will have a direct or indirect material interest.
The officers and directors of the Company are engaged in other businesses,
either individually or through partnerships and corporations in which they may
have an interest, hold an office or serve on the boards of directors. The
directors of the Company may have other business interests to which they may
devote a major or significant portion of their time. Certain conflicts of
interest, therefore, may arise between the Company and its directors. Such
conflicts are intended to be resolved through the exercise by the directors of
judgment consistent with their fiduciary duties to the Company. The officers and
directors of the Company intend to resolve such conflicts in the best interests
of the Company. The officers and directors will devote their time to the affairs
of the Company as necessary.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and the persons who beneficially own more than ten percent (10%) of
the Common Stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Copies of all filed
reports are required to be furnished to the Company pursuant to Rule 16a-3
promulgated under the Exchange Act. Based solely on the reports received by the
Company and on the representations of the reporting persons, the Company
believes that these persons have complied with all applicable filing
requirements as of the date of this Information Statement.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO
MATTERS TO BE ACTED UPON
With the exception of the current director of the Company, and as of the
date of this Information Statement, there are no persons identified by
management of the Company who have an interest in the matters to be acted upon
nor who are in opposition to the matters to be acted upon.
As of the date of this Information Statement there are no persons who have
been a director or officer of the Company since the beginning of the last fiscal
year or are currently a director or officer of the Company that oppose any
action to be taken by the Company.
11
APPROVAL OF AN AMENDMENT (THE "AMENDMENT") TO THE
COMPANY'S ARTICLES OF INCORPORATION, AS AMENDED (THE "ARTICLES"),
TO INCREASE THE AUTHORIZED CAPITAL FROM 75,000,000 SHARES OF
COMMON STOCK TO 750,000,000 SHARES OF COMMON STOCK
The Board of Directors of the Company, at a special meeting, authorized and
approved, subject to shareholder approval, the increase in the authorized number
of shares of Common Stock to enable the Company to honor exercises of all
currently existing stock options or other rights to acquire shares of Common
Stock and to make available additional shares for issuance for general corporate
purposes, including financing activities, without the requirement of further
action by the shareholders of the Company. The Board of Directors considered
potential uses of the additional authorized shares of Common Stock, which may
include seeking of additional equity financing through public or private
offerings, establishing additional employee or director equity compensation
plans or arrangements, or for other general corporate purposes. Increasing the
authorized number of share of the Common Stock of the Company will provide the
Company with greater flexibility and allow the issuance of additional shares of
Common Stock in most cases without the expense or delay of seeking approval from
the shareholders. The Company is at all times investigating additional sources
of financing which the Board of Directors believes will be in the Company's best
interests and in the best interests of the shareholder of the Company. The
shares of Common Stock do not carry any pre-emptive rights to purchase
additional shares. The adoption of the Amendment to the Articles of
Incorporation will not of itself cause any changes in the Company's capital
accounts.
Purpose of the Amendment to the Articles of Incorporation
Under the Company's Articles of Incorporation as presently in effect, the
Company has 75,000,000 shares of authorized Common Stock. As of the mailing date
of this Information Statement, 13,640,722 shares of the Company's Common Stock
were issued and outstanding. There are approximately 3,150,000 Stock Options
outstanding that are exercisable for an aggregate of 3,150,000 shares of Common
Stock for which shares have not been reserved. The immediate purpose of the
Amendment to increase the shares of authorized Common Stock is to make available
a sufficient number of shares of Common Stock to permit the Company further
latitude to negotiate and arrange larger scale funding initiatives under
consideration.
The Company may also in the future enter into strategic joint ventures or
other collaborative business arrangements with joint ventures, licensees,
suppliers, distributors and other parties with whom the Company may do business.
Such transactions may involve an equity investment in the Company or the
issuance of stock options or other securities convertible into or exercisable or
exchangeable for shares of Common Stock. The Company may undertake additional
equity financing through a public offering or private placement of Common Stock
or other securities, including debt securities, convertible into or exercisable
or exchangeable for shares of Common Stock. The authorization of additional
shares of Common Stock pursuant to the Amendment will permit the Company to seek
such additional equity financing when and if market conditions are advantageous
without the delay and uncertain inherent risk in obtaining future shareholder
approval for the authorization of additional shares of Common Stock in order to
permit such financing. For example, the cost, prior notice requirements and
delay involved in obtaining shareholder approval at the time that a transaction
may become desirable could make it difficult or impossible to effect the
transaction. The additional shares of Common Stock, together with other
authorized and unissued shares, generally would be available for issuance
without any requirement for further shareholder approval, unless shareholder
action is required by applicable law or by the rules of the stock exchange on
which the Company's securities may then be listed.
12
Effect of Amendment to Articles of Incorporation
The increase in the authorized shares of Common Stock will not have any
immediate effect on the rights of existing shareholders. However, the Board of
Directors will have the authority to issue authorized shares of Common Stock
without requiring future approval from the shareholders of such issuances,
except as may be required by applicable law or exchange regulations. To the
extent that additional authorized shares of Common Stock are issued in the
future, they will decrease the existing shareholders' percentage equity
ownership interest and, depending upon the price at which such shares of Common
Stock are issued, could be dilutive to the existing shareholders. Any such
issuance of additional shares of Common Stock could have the effect of diluting
the earnings per share and book value per share of outstanding shares of Common
Stock.
One of the effects of the Amendment, if adopted, however, may be to enable
the Board of Directors to render it more difficult to or discourage an attempt
to obtain control of the Company by means of a merger, tender offer, proxy
contest or otherwise, and thereby protect the continuity of present management.
The Board of Directors would, unless prohibited by applicable law, have
additional shares of Common Stock available to effect transactions (including
private placements) in which the number of the Company's outstanding shares
would be increased and would thereby dilute the interest of any party attempting
to gain control of the Company. Such action, however, could discourage an
acquisition of the Company which the shareholders of the Company might view as
desirable. In addition, since the Company's shareholder have no pre-emptive
rights to purchase additional shares of Common Stock issued, the issuance of
such shares could dilute the interests of current shareholders of the Company.
The proposed Articles of Amendment to the Articles of Incorporation,
attached hereto as Appendix A, will become effective when they are filed with
the Nevada Secretary of State. The Company anticipates that such filing will
occur after the increase in authorized capital is approved by the shareholders.
BOARD APPROVAL
Based upon review of a wide variety of factors considered in connection
with its evaluation of the Amendment, the Board of Directors of the Company
believes that it would be in the best interests of the Company and its
shareholders to effectuate the Amendment. The Board of Directors recommends
approval of the Amendment to the Articles to increase the authorized capital
structure from 75,000,000 shares of Common Stock to 750,000,000 shares of Common
Stock.
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APPROVAL OF THE STOCK OPTION PLAN FOR KEY PERSONNEL
OF THE COMPANY AND THE GRANT OF OPTIONS PURSUANT TO THE
STOCK OPTION PLAN AGREEMENT AND THE GRANT OF INCENTIVE STOCK
OPTIONS PURSUANT TO THE INCENTIVE STOCK OPTION PLAN AGREEMENT
On December 19, 2005, the Board of Directors of the Company unanimously
approved and adopted a 2005 stock option plan (the "Stock Option Plan"), which
is attached hereto as Exhibit B. The purpose of the Stock Option Plan and its
pertinent aspects is described above within this Information Statement. As of
the date of this Information Statement, 3,150,000 Stock Options have been
granted.
BOARD APPROVAL
Based upon review of a wide variety of factors considered in connection
with its evaluation of the provisions and terms of the Stock Option Plan, the
Board of Directors of the Company believes that it would be in the best
interests of the Company and its shareholders to adopt the Stock Option Plan.
The Board of Directors recommends approval of the Stock Option Plan, the grant
of stock options under the Stock Option Plan Agreement, the grant of incentive
stock options under the Incentive Stock Option Plan Agreement, and approval of
each of the resolutions with respect thereto set forth in Exhibit B hereto.
PROPOSALS BY SECURITY HOLDERS
The Board of Directors does not know of any matters that are to be
presented to the shareholders for their approval and consent pursuant to the
Written Consent of Shareholders other than those referred to in this Information
Statement. If any shareholder of the Company entitled to vote by written
authorization or consent has submitted to the Company a reasonable time before
the Information Statement is to be transmitted to shareholders a proposal, other
than elections to offices, such proposal must be received at the Company's
offices, located at Austin Centre, 701 Brazo, Suite 500 PMB#, Austin, Texas
78701, Attention: President, not later than January 6, 2006.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS
SHARING AN ADDRESS
One Information Statement will be delivered to multiple shareholders
sharing an address unless the Company receives contrary instructions from one or
more of the shareholders. Upon receipt of such notice, the Company will
undertake to deliver promptly a separate copy of the Information Statement to
the shareholder at a shared address to which a single copy of the documents was
delivered and provide instructions as to how the shareholder can notify the
Company that the shareholder wishes to receive a separate copy of the
registration statement of SB-2 or the Information Statement. In the event a
shareholder desires to provide such notice to the Company, such notice may be
given verbally by telephoning the Company's offices at (360) 332-7734 or by mail
to Austin Centre, 701 Brazo, Suite 500 PMB#, Austin, Texas 78701.
By Order of the Board of Directors
Amir Adnani, President
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