Unassociated Document
8600
TECHNOLOGY WAY
SUITE
118
RENO
NV 89521
Dear
Stockholder:
You
are
cordially invited to join us at the 2006 Annual Meeting of Stockholders of
Tornado Gold International Corp. This year’s meeting will be held at the Blue
Horizon Hotel, Vancouver, Canada, on Wednesday, January 24, 2007, starting
at
9:00 a.m. I hope you will be able to attend. At the meeting, we will
(i) elect directors, (ii) vote on the Agreement and Plan of Merger,
which is attached hereto, pursuant to which we will reincorporate from the
state
of Nevada to the state of Delaware, (iii) ratify the appointment of Jonathon
P.
Reuben as our independent auditor, and (iv) transact such other business as
may properly come before the meeting or any adjournment or adjournments
thereof.
It
is
important that your shares be voted whether or not you plan to be present at
the
meeting. You should specify your choices by marking the appropriate boxes on
the
proxy form on the reverse side, and date, sign, and return your proxy form
in
the enclosed, postage-paid return envelope as promptly as possible. If you
date,
sign, and return your proxy form without specifying your choices, your shares
will be voted in accordance with the recommendation of your
directors.
I
am
looking forward to seeing you at the meeting.
| |
Sincerely,
|
| |
Earl
W. Abbott
Chairman
of the Board, Chief Executive
Officer,
President, and Secretary
|
TORNADO
GOLD INTERNATIONAL CORP.
8600
Technology Way, Suite 118, Reno, Nevada, 89521
NOTICE
OF
2006 ANNUAL MEETING OF STOCKHOLDERS
To
the
Stockholders:
PLEASE
TAKE NOTICE that the 2006 Annual Meeting of Stockholders of TORNADO GOLD
INTERNATIONAL CORP. (“we,” “our,” or “us”) will be held at 9:00 a.m.,
Wednesday, January 24, 2007, at the Blue Horizon Hotel, Vancouver, Canada,
for
the following purposes:
1. To
elect
the Board of Directors (Proposal 1);
2. To
approve the Agreement and Plan of Merger, which is attached hereto, pursuant
to
which we will reincorporate from the state of Nevada to the state of Delaware
(Proposal 2);
3. To
ratify
the appointment of Jonathon P. Reuben to serve as our independent auditor for
the fiscal year that began on January 1, 2006 (Proposal 3);
and
4. To
transact such other business as may properly come before the meeting or any
adjournment or adjournments thereof.
Only
the
holders of Common Stock of record at the close of business on December 6, 2006
(the “Record Date”), are entitled to vote at the meeting. Each stockholder is
entitled to one vote for each share of Common Stock held on the Record Date,
except for the election of Directors, for which cumulative voting rights
apply.
| |
By
order of the Board of Directors,
|
| |
EARL
W. ABBOTT
Chairman
of the Board, Chief Executive
Officer,
President, and Secretary
|
|
December
21, 2006
Reno,
Nevada
|
|
The
presence in person and/or the representation by proxy of the holders of a
majority of the issued and outstanding shares of stock entitled to vote is
necessary and sufficient to constitute a quorum. Accordingly, if you do not
expect to be present at the meeting, you may vote your shares of stock by
executing the accompanying proxy and returning it promptly in the enclosed
envelope, which requires no postage if mailed in the United
States.
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
OF
TORNADO
GOLD INTERNATIONAL CORP.
8600
Technology Way, Suite 118, Reno, Nevada, 89521
TO
BE
HELD ON JANUARY 24, 2006
SOLICITATION
AND REVOCATION OF PROXY
The
accompanying proxy is being solicited by our Board of Directors for use at
the
forthcoming Annual Meeting of Stockholders. Each stockholder giving such a
proxy
has the power to revoke the same at any time before it is voted by so notifying
our Secretary in writing. We will bear all expenses in connection with this
solicitation. This Proxy Statement and the accompanying proxy are being mailed
to stockholders on or about December 21, 2006.
We
have
one class of securities outstanding and entitled to vote at the Annual Meeting
of Stockholders - our Common Stock. At the close of business on December 6,
2006, the record date for determining stockholders entitled to notice of, and
to
vote at, the meeting, we had issued and outstanding __________
shares
of
Common Stock. Each outstanding share of Common Stock is entitled to one vote
with respect to each matter to be voted on at the meeting, except for the
election of directors, for which cumulative voting rights apply.
The
representation in person or by proxy of a majority of the shares entitled to
vote shall constitute a quorum at the Annual Meeting of Stockholders. Directors
are elected by a plurality of the affirmative votes cast. The affirmative vote
of the holders of a majority of the outstanding shares present in person or
by
proxy and entitled to vote thereon is required to approve the Agreement and
Plan
of Merger, which is attached hereto, pursuant to which we will reincorporate
from the state of Nevada to the state of Delaware. The affirmative vote of
the
holders of a majority of the outstanding shares present in person or by proxy
and entitled to vote thereon is required to ratify the appointment of Jonathon
P. Reuben as our independent auditor. Under Nevada law, abstentions and
“non-votes” are counted as present in determining whether the quorum requirement
is satisfied. With regard to the election of directors, votes may be cast in
favor or withheld. Votes that are withheld will be excluded entirely from the
vote and will have no effect. Abstentions may be specified on any proposal
(other than the election of directors) and will have the effect of a negative
vote. Under applicable Nevada law, a non-vote will have no effect on the outcome
of any of the matters referred to in this Proxy Statement. A non-vote occurs
when a nominee holding shares for a beneficial owner votes on one proposal,
but
does not vote on another proposal because the nominee does not have
discretionary voting power and has not received instructions from the beneficial
owner.
We
will
receive the stockholders’ proxies, and the inspectors of election will tabulate
and certify the votes. All information included in proxies and ballots,
including any identifying information on the individual stockholders, will
be
available to our management and directors.
PROPOSAL 1
ELECTION
OF DIRECTORS
Properly
executed proxies will be voted as marked, and, if not marked, will be voted
in
favor of the election of the persons named below as directors to serve until
the
next Annual Meeting of Stockholders and until their successors are duly elected
and qualified. If any nominee does not remain a candidate at the time of the
meeting (a situation which management does not anticipate), proxies solicited
hereunder will be voted in favor of those nominees who do remain as candidates
and may be voted for substitute nominees designated by the Board of
Directors.
We
have
no formal policy with respect to the attendance of Directors at our annual
meetings. All members of the Board attended last year’s annual meeting of
stockholders.
On
December 4, 2006, the Board of Directors nominated the following Board of
Directors to stand for election or re-election, as applicable. All Board of
Directors seats are subject to election at the 2006 Annual Meeting of
Stockholders.
|
Name
|
|
Age*
|
|
Current
Position
|
|
Earl
W. Abbott
|
|
64
|
|
Chairman
of the Board, President, Chief Executive Officer, Secretary,
Director
|
|
George
Drazenovic
|
|
35
|
|
Chief
Financial Officer
|
|
Carl
Pescio
|
|
54
|
|
Director
|
*
As of
December 6, 2006
Dr.
Earl W. Abbott
was
appointed as our President, Chief Executive Officer, Chief Financial Officer,
Secretary, and Director in March 2004. He resigned as our Chief Financial
Officer in March 2006 when Mr. Drazenovic was appointed as Chief Financial
Officer. Dr. Abbott is a senior geologist and Qualified Person with 33 years
of
experience in mineral exploration for large and small companies in the western
United States, Alaska, Mexico, China, Africa, and Costa Rica. From 2003 to
December 1, 2006, Dr. Abbott was the president of Big Bar Gold Corp., a company
reporting on a Canadian exchange, and he continues to serve as a director;
from
2005 to December 1, 2006, Dr. Abbott served as president of AAA Minerals, which
later became AAA Energy, a company reporting on a U.S. exchange, and he
continues to serve as a director; and from 1999 to present, Dr. Abbott has
served as the president of King Midas Resources Ltd., a private Canadian company
he founded, which has acquired U.S. and Mexican gold properties. From 1982
to
the present, Dr. Abbott has been self-employed as a geological consultant,
in
which he manages metallic and industrial mineral projects and exploration
programs. From 1988 to 1997, Dr. Abbott was the Vice President and Director
the
Trio Gold Corp., where he managed gold exploration activities in the U.S.,
Ghana, and Costa Rica. From 1983 to 1984, he served as a regional geologist
for
U.S. Minerals Exploration Company, where he conducted a successful gold
exploration program in Nevada and Utah. From 1978 to 1982, he was a district
geologist for Energy Reserves Group, Inc., where he opened and managed the
Reno
District exploration office and managed more than twenty projects, which
included geologic mapping, geochemical surveys, and more than 70,000 feet of
rotary drilling, along with conducting uranium exploration in Nevada, Wyoming,
South Dakota, and Montana. From 1975 to 1978, Dr. Abbott was a senior geologist
with Urangesellschaft USA, Inc., where he conceived, managed, and conducted
uranium exploration programs in remote terrains in Alaska; and from 1971 to
1975, Dr. Abbott was a project geologist for Continental Oil Company, where
he
completed the oil and gas training program and supervised uranium exploration
rotary drilling programs in Wyoming.
Dr.
Abbott is a member of the American Institute of Professional Geologists and
a
past president of its Nevada section. He is also a Certified Professional
Geologist and a member of the Geological Society of Nevada (and its past
president). In addition, Dr. Abbott is a member of the Society of Mining
Engineers of American Institute of Mining, Metallurgical and Petroleum; the
Denver Region Exploration Geologists Society (and its past president); and
the
Nevada Petroleum Society (and its past president). Dr. Abbott earned his Ph.D.
in Geology in 1972 and his Master of Arts in Geology in 1971 from Rice
University, Houston, Texas. Dr. Abbott earned his Bachelor of Arts degree in
Geology in 1965 from San Jose State College, San Jose, California. Except as
otherwise stated, Dr. Abbott is not an officer or director of any other
reporting company.
Mr.
George Drazenovic
was
appointed as our Chief Financial Officer on March 28, 2006. From April 2005
until the present, Mr. Drazenovic has been the Chief Financial Officer of EPOD
International, Inc., a U.S. reporting company; and from 2001 to 2005, he was
a
Corporate Finance Manager with BC Hydro. Mr. Drazenovic earned his Bachelor
of
Arts in Economics from the University of British Columbia in 1991, a Diploma
in
Financial Management from the British Columbia Institute of Technology in 1993,
and a Masters of Business Administration in Finance from the University of
Notre
Dame in 2001. He also obtained licensing as a Certified General Accountant
in
1997 and is a CFA Charter holder (Chartered Financial Analyst) since 2001.
Mr.
Drazenovic is a member of the Certified General Accountants of British Columbia
and the Vancouver Society of Financial Analysts. Mr. Drazenovic is a citizen
of,
and resides in, Canada. Except as otherwise stated, Mr. Drazenovic is not an
officer or director of any other reporting company.
Mr.
Carl A. Pescio
has been
a director of ours since March 2004. Mr. Pescio is a geologist offering more
than 30 years of experience in the mining resource sector. In 1974, Mr. Pescio
graduated from the University of Nevada with a Bachelor of Science in Geology.
After graduating, Mr. Pescio joined Kennecott Copper Corp. as a geologist.
Since
1975, Mr. Pescio has worked for numerous other natural resource companies in
various positions, including: Geologist, Chief Geologist, Geological Engineer,
Mine Manager, and Vice President of Exploration. Mr. Pescio’s tenure with Alta
Gold between 1987 and 1991 as Vice-President of Mining and Exploration led
to
his interest and focus on exploration for precious metal deposits in the Nevada
gold trends. Since 1991, he has focused his efforts on acquiring properties
with
potential for deposits large enough to interest the major mining companies
in
the area. Currently (and for more than the past five years), Mr. Pescio is
the
President of Pescio Exploration, which owns approximately 55 properties,
covering more than 20,000 hectares in Nevada. More than half of Pescio
Exploration’s properties are under lease and being explored by others. Mr.
Pescio is also Vice-President of Exploration of, and a Director for, Mill City
International Corp. Except as otherwise stated, Mr. Pescio is not an officer
or
director of any other reporting company.
Stockholder
Approval Required.
Directors
shall be elected by a plurality of the affirmative votes cast at the 2006 Annual
Meeting of Stockholders. The holders of common stock have cumulative voting
rights for the election of directors; so each stockholder has a total number
of
votes equal to one vote per share multiplied by the number of directors to
be
elected. These votes may be cast among any number of nominees, including casting
all votes for one nominee.
Directors’
Meetings, Committees and Fees.
In
2005,
the Board of Directors held one (1) meeting. All incumbent directors attended
at
least 75% of the meetings of the Board of Directors. Because
we do not have the resources to expand our management at this time, we do
not
have
any standing committees of the Board of Directors. The entire Board of Directors
functions as the audit, nominating, and compensations committees. The Board
of
Directors does not have a written charter with respect to nominating
directors.
Our
stockholders may communicate (including submission of director nominations)
with
our Board of Directors or a director by sending a letter addressed to the Board
or a director, c/o Secretary, Tornado Gold International Corp.,
8600
Technology Way, Suite 118, Reno, Nevada 89521.
All
communications will be compiled by our secretary and forwarded to the Board
of
Directors or the director accordingly.
The
Board
of Directors regularly assesses the appropriate size of the Board of Directors
and whether any vacancies on the Board of Directors are expected due to
retirement or otherwise. In the event that vacancies are anticipated or
otherwise arise, the Board utilizes a variety of methods for identifying and
evaluating director candidates. Candidates may come to the attention of the
Board through current directors, professional search firms, stockholders, or
other persons. We may pay fees to third-parties relating to the search for
candidates.
Once
the
Board has identified a prospective nominee, the Board will evaluate the
prospective nominee in the context of the then-current composition of the Board
of Directors and will consider a variety of other factors, including the
prospective nominee’s business, technology, and industry; finance and financial
reporting experience; and other attributes that would be expected to be
contributed to the Board of Directors. The Board seeks to identify nominees
who
possess a diligent range of experience, skills, areas of expertise, industry
knowledge, and business judgment. Successful nominees should have a history
of
superior performance or accomplishments in their professional undertakings
and
should have the highest personal and professional ethics and values. Whether
a
nominee is recommended by a security holder or not, the manner in which the
Board of Directors evaluates the nominee remains the same.
Currently,
the Board of Directors does not have a formal policy with respect to the
consideration of stockholder nominations for directors or other stockholder
proposals. Historically, we have felt that such a policy is unnecessary given
our relatively small size; however, our Board of Directors may again consider
adopting such policies.
Executive
Officers.
The
following table sets forth certain information regarding our executive officers
as of December 6, 2006:
|
Name
|
|
Position
|
|
Earl
W. Abbott
|
|
Chairman
of the Board, Chief Executive Officer, President, and
Secretary
|
|
George
Drazenovic
|
|
Chief
Financial Officer
|
Earl
W. Abbott, Chairman of the Board, Chief Executive Officer, President, and
Secretary.
Information regarding Mr. Abbott is set forth under “Election of Directors,”
earlier in this Proxy Statement.
George
Drazenovic, Chief Financial Officer.
Information regarding Mr. Drazenovic is set forth under “Election of Directors,”
earlier in this Proxy Statement.
Security
Ownership of Certain Beneficial Owners and Management.
The
following table sets forth certain information regarding the shares of our
outstanding Common Stock beneficially owned as of December 6, 2006, by (i)
each
of our directors, nominees to the Board, and executive officers, (ii) all
directors and executive officers as a group, and (iii) each other person who
is
known by us to own beneficially more than 5% of our Common Stock based upon
23,881,526 issued common shares.
|
Title
of Class
|
|
Name
and Address (1) of
Beneficial
Owner
|
|
Amount
and Nature of
Beneficial
Ownership
|
|
Percent
of Class
|
|
|
Common
Stock
|
|
|
Earl
W. Abbott
|
|
3,600,000
shares
|
|
15.1%
|
|
|
Common
Stock
|
|
|
George
Drazenovic
|
|
0
shares
|
|
0.0%
|
|
|
Common
Stock
|
|
|
Stanley
B. Keith
|
|
1,800,000
shares
|
|
7.5%
|
|
|
Common
Stock
|
|
|
Carl
A. Pescio
|
|
1,800,000
shares
|
|
7.5%
|
|
|
Common
Stock
|
|
|
All
directors and named executive officers (4 persons) (2)
|
|
7,200,000
shares
|
|
30.1%
|
|
(1)
The
address of each person is 8600 Technology Way, Suite 118, Reno, NV
89521.
(2)
Following the 2006 Annual Meeting of Stockholders, if the nominees are elected,
all directors and officers as a group (3 persons) will beneficially own
5,400,000 shares, or 22.6%.
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. In accordance with Securities and Exchange Commission
rules, shares of our common stock that may be acquired upon exercise of stock
options or warrants that are currently exercisable or that become exercisable
within 60 days of the date of the table are deemed to be beneficially owned
by
the optionees. Subject to community property laws, where applicable, the persons
or entities named in the table above have sole voting and investment power
with
respect to all shares of our common stock indicated as beneficially owned by
them.
CHANGES
IN CONTROL. As of December 6, 2006, our management was not aware of any
arrangements which may result in “changes in control” as that term is defined by
the provisions of Item 403(c) of Regulation S-B.
Compensation
of Executive Officers.
Any
compensation received by our officers, directors, and management personnel
will
be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary
Compensation Table.
The
following table sets forth the total compensation earned by or paid to our
Chief
Executive Officer and our other most highly compensated executive officers
for
the fiscal years ended December 31, 2005 and 2004.
|
|
|
|
|
Annual Compensation
|
|
Long Term
Compensation
Awards
|
|
All Other
|
|
|
Name and Principal
Position
|
|
Year
|
|
Salary
|
Bonus
|
Other
Annual Compensation
|
|
Stock
|
Options
|
LTIP
Payouts
|
|
Compensation
|
|
|
|
|
|
|
($)
|
($)
|
($)
|
|
|
(#)
|
($)
|
|
|
|
|
Earl
W. Abbott, CEO, President, Secretary, Treasurer
|
|
2005
2004
|
|
None
None
|
None
None
|
None
None
|
|
None
None
|
None
None
|
None
None
|
|
$89,950
(1)
$36,268
(2)
|
|
|
Earl
T. Shannon, former president and secretary
|
|
2004
|
|
None
|
None
|
None
|
|
None
|
None
|
None
|
|
None
|
|
|
Steven
W. Hudson, former secretary
|
|
2004
|
|
None
|
None
|
None
|
|
None
|
None
|
None
|
|
None
|
|
|
Scott
W. Bodenweber, former CFO
|
|
2004
|
|
None
|
None
|
None
|
|
None
|
None
|
None
|
|
None
|
|
(1)
Dr.
Abbott received a total of $89,950 for consulting services during the year
ended
December 31, 2005, of which $61,775 related to mining exploration and the
remaining $21,875 related to general administrative services. In addition,
during 2005, Dr. Abbott was reimbursed $25,609 for travel and other
company-related expenses.
(2)
Dr.
Abbott received a total of $36,268 for consulting services during the year
ended
December 31, 2004, of which $17,482 relates to geological services and $18,786
relates to administrative services. In addition, during 2004, Dr. Abbott was
reimbursed $9,470 for travel and related expenses.
Mr.
Drazenovic was appointed Chief Financial Officer in March 2006 and will be
paid
a consulting fee of $2,500 per month. The terms of his consulting agreement
are
still being finalized.
Mr.
Pescio and Mr. Keith are also compensated for their mining exploration services,
administrative services, and travel expenses, as those services are rendered.
Those services are rendered to us on a contractor basis.
Stock
Options.
No
stock
options were granted in 2005.
Employment
Agreements.
There
are
no employment agreements between us and any named executive
officer.
Compensation
of Directors.
Our
directors do not receive any cash compensation, but are entitled to
reimbursement of their reasonable expenses incurred in attending directors’
meetings.
Certain
Relationships and Related Transactions.
As
discussed herein, we entered into agreements with a company owned by Mr. Carl
A.
Pescio, one of our directors, to acquire mining claims. Preliminary forms of
these agreements were entered into on May 31, 2004, and were finalized on April
5, 2005.
During
the year ended December 31, 2004, we incurred consulting fees for services
rendered by Dr. Earl W. Abbott, our President, totaling $36,268, of which
$17,482 related to mining exploration and the remaining $18,786 related to
general administrative activities.
Also
during the year-ended December 31, 2004, we incurred consulting fees for
services rendered by a company wholly owned by Mr. Keith totaling $5,007, of
which $3,361 related to mining exploration and the remaining $1,646 related
to
general administrative activities.
On
April
15, 2005, our officers and directors agreed to redeem 27,172,800 of their shares
for $7,906, or approximately $.0003 per share. This includes 13,586,400 shares
from Dr. Abbott and 6,793,200 shares each from Messrs. Pescio and Keith. Dr.
Abbott’s shares were redeemed for $3,954, and Messrs. Pescio and Keith each
received $1,976 for their shares. These amounts are the equivalent to the
pre-split prices they paid for their shares when they joined us in March
2004.
During
the year ended December 31, 2005, we had the following transactions with related
parties:
o
Pursuant to the 2004 agreements to acquire mining claims with a company owned
by
Mr. Pescio, we paid Mr. Pescio $140,000 related to these agreements. In
addition, we incurred $5,744 to Mr. Pescio in consulting services related to
mining exploration;
o
We
entered into an agreement with Dr. Abbott and Mr. Keith to explore the
feasibility and possible lease and acquisition of certain mining claims owned
jointly by Dr. Abbott and Mr. Keith;
o
We
incurred consulting fees for services rendered by Dr. Abbott totaling $89,950,
of which $61,775 related to mining exploration and the remaining $28,175 related
to general administrative activities. Also, we reimbursed Dr. Abbott $25,609
for
travel and other company-related expenses; and
o
We
incurred consulting fees for services rendered by Mr. Keith totaling $3,349,
of
which $1,389 related to mining exploration and the remaining $1,960 related
to
general administrative activities. Also, we reimbursed Mr. Keith $579 for travel
and other company related expenses.
During
the nine-months ended September 30, 2006, we had the following transactions
with
related parties:
o
We made
advance lease payments of $550,000 to Mr. Pescio on our mining
claims;
o
We paid
Mr. Pescio $1,020,000 relating to certain agreements to acquire mining claims
entered into between a company owned by Mr. Pescio and us;
o
We paid
Dr. Abbott and Mr. Keith $8,294 and $12,971, respectively, in relation to
certain agreements to acquire mining properties entered into between such
persons and us;
o
We
incurred consulting fees for services rendered by Dr. Abbott totaling $162,817,
of which $107,714 related to mining exploration and $55,103 related to general
administrative activities, and we reimbursed Dr. Abbott $9,209 for travel and
other related expenses; and
o
We paid
Mr. Drazenovic $35,000 for services rendered in his capacity as chief financial
officer.
With
regard to any future related-party transaction, we plan to disclose any and
all
related-party transactions fully when required, including, but not limited
to,
in prospectuses and in any and all filings with the Securities and Exchange
Commission. Furthermore, we intend to obtain, when required, disinterested
directors’ and stockholders’ consent.
Section
16(a) Beneficial Ownership Reporting Compliance.
Section
16(a) of the Securities Act of 1934 requires our directors, executive officers,
and any persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. SEC regulations require executive officers,
directors, and greater than 10% stockholders to furnish us with copies of all
Section 16(a) forms they file. Based solely on our review of the copies of
such
forms received by us, or written representations from certain reporting persons,
we believe that during the fiscal year ended December 31, 2005, and during
the
interim period ending December 6, 2006, all but one of our executive officers,
directors, and greater than 10% stockholders complied with all applicable filing
requirements. That one person was delinquent regarding a series of attempted
sales of our common stock early in our current fiscal year.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR
THE ELECTION OF THE NOMINEES TO THE BOARD OF
DIRECTORS.
PROPOSAL 2
APPROVAL
OF AGREEMENT AND PLAN OF MERGER
Our
Board
of Directors has approved, by written consent, an Agreement and Plan of Merger
pursuant to which we will reincorporate from the state of Nevada to the state
of
Delaware. As part of this reincorporation, we will merge with and into our
wholly-owned subsidiary, Tornado Gold International Corp., a Delaware
corporation (“Tornado Gold Delaware”), which will result in:
| |
·
|
your
right to receive one share of common stock, par value $0.001 per
share, of
Tornado Gold Delaware, for every one share of our common stock, par
value
$0.001 per share, owned by you as of the effective date of the
reincorporation;
|
| |
·
|
the
persons presently serving as our executive officers and directors
continuing to serve in such respective capacity with Tornado Gold
Delaware;
|
| |
·
|
the
adoption of a Certificate of Incorporation under the laws of the
state of
Delaware in the form attached hereto as Exhibit A, pursuant to which
our
authorized common stock will remain unchanged at 100,000,000 shares,
$0.001 par value per share; and
|
| |
·
|
the
adoption of new by-laws under the laws of the state of Delaware in
the
form attached hereto as Exhibit B.
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Our
common stock is currently quoted on the OTC Bulletin Board. We believe that
the
common stock of Tornado Gold Delaware will also be quoted on the OTC Bulletin
Board. We also believe that our reincorporation from the state of Nevada to
the
state of Delaware will facilitate our ability to list our common stock on the
TSX Venture Exchange (the “TSX Venture”); however, we can provide no assurance
that shares of common stock of Tornado Gold Delaware will be listed or will
commence trading on the TSX Venture or any other stock exchange.
REINCORPORATION
IN DELAWARE
Questions
and Answers
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Q:
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Why
are we reincorporating in Delaware?
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A:
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We
believe the reincorporation in Delaware will facilitate our ability
to be
publicly traded on the TSX Venture. However, we can provide no assurance
that the shares will be traded on the TSX Venture or any other stock
exchange. Regardless of whether the shares are ever traded on the
TSX
Venture, shares of Tornado Gold Delaware will be eligible to be quoted
on
the OTC Bulletin Board beginning on or about the effective date of
the
reincorporation, and we have every reason to believe the shares of
Tornado
Gold Delaware will be quoted on the OTC Bulletin
Board.
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| |
In
addition, because of Delaware’s prominence as a state of incorporation for
many corporations, the Delaware courts have developed considerable
expertise in dealing with corporate issues and a substantial body
of case
law has developed construing Delaware law. By reincorporating in
Delaware,
we hope to experience greater certainty with respect to our legal
affairs
and governance by our officers and
directors.
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|
Q:
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What
are the principal features of the reincorporation?
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A:
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The
reincorporation will be accomplished by merging with and into our
wholly-owned subsidiary, Tornado Gold Delaware. Our Articles of
Incorporation will become the Certificate of Incorporation of Tornado
Gold
Delaware. One (1) new share of Tornado Gold Delaware common stock
will be
issued in exchange for each outstanding share of our common stock
held by
our stockholders on the effective date of the reincorporation. Shares
of
Tornado Gold Delaware will be eligible to be quoted on the OTC Bulletin
Board beginning on or about the effective date of the
reincorporation.
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|
Q:
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What
are the differences between Nevada and Delaware
law?
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|
A:
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There
are some differences between the laws of the State of Nevada and
State of
Delaware that may impact your rights as a stockholder. For information
regarding the differences between the corporate laws of the State
of
Nevada and those of the State of Delaware, please see “Changes in
Stockholder Rights” included elsewhere in this proposal.
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|
Q:
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How
will the reincorporation affect your
ownership?
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A:
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Your
proportionate ownership interest will not be affected by the
reincorporation. In addition, your ability to vote the shares you
own and
receive dividends will not be affected. However, as more fully discussed
below, Tornado Gold Delaware’s Certificate of Incorporation will not
provide for cumulative voting.
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Q:
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Can
you require us to purchase your stock?
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A:
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Yes.
Under Nevada law, you are entitled to appraisal and purchase of your
stock
as a result of the reincorporation. See the section entitled “Dissenter’s
Right of Appraisal.”
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|
Q:
|
Will
you have to pay taxes on the shares of Tornado Gold
Delaware?
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|
A:
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We
believe the reincorporation is not a taxable event and that you will
be
entitled to the same tax basis in the shares of Tornado Gold Delaware
that
you had in your shares of our common stock. However, every stockholder’s
tax situation is different and you should consult with your personal
tax
advisor regarding the tax effect of the
reincorporation.
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|
Q:
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How
will the reincorporation affect our officers, directors, and
employees?
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|
A:
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Our
officers, directors, and employees will become the officers, directors,
and employees of Tornado Gold Delaware upon effectiveness of the
reincorporation.
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|
Q:
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What
do you do with your stock
certificates?
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|
A:
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Delivery
of your certificates issued prior to the effective date of the
reincorporation will constitute “good delivery” of shares in transactions
subsequent to the reincorporation. Certificates representing shares
of
Tornado Gold Delaware will be issued with respect to transfers occurring
after the reincorporation. New certificates will also be issued upon
the
request of any stockholder, subject to normal requirements as to
proper
endorsement, signature guarantee, if required, and payment of applicable
taxes. IT WILL NOT BE NECESSARY FOR OUR STOCKHOLDERS TO EXCHANGE
THEIR
EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF TORNADO GOLD DELAWARE.
OUTSTANDING STOCK CERTIFICATES OF THE COMPANY SHOULD NOT BE DESTROYED
OR
SENT TO US OR OUR TRANSFER AGENT.
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|
Q:
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What
if you have lost your certificate?
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|
A:
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If
you have lost your certificate, you can contact our transfer agent
to have
a new certificate issued. You may be required to post a bond or other
security to reimburse us for any damages or costs if the certificate
is
later delivered for sale of transfer. Our transfer agent may be reached
at:
|
Transfer
Online, Inc.
c/o
Mark
Knight
317
SW
Alder Street, 2nd Floor
Portland,
OR 97204
503-227-2950.
Background
of the Reincorporation
On
December 4, 2006, our Board of Directors approved the Agreement and Plan of
Merger, which, among other things, provides for our reincorporation from the
state of Nevada to the state of Delaware. The Agreement and Plan of Merger
is
attached hereto as Exhibit C and should be read in its entirety. The discussion
of the Agreement and Plan of Merger is qualified in its entirety by reference
to
Exhibit C.
Purpose
of the Reincorporation
We
believe the reincorporation from the state of Nevada to the state of Delaware
will facilitate our ability to list our common stock on the TSX Venture;
however, we can provide no assurance that the shares of common stock of Tornado
Gold Delaware will be listed or will commence trading on the TSX Venture or
any
other stock exchange. In addition, because of Delaware’s prominence as a state
of incorporation for many corporations, the Delaware courts have developed
considerable expertise in dealing with corporate issues and a substantial body
of case law has developed construing Delaware law. By reincorporating in
Delaware, we hope to experience greater certainty with respect to our legal
affairs and governance by our officers and directors.
Principal
Features of the Reincorporation
The
reincorporation will be accomplished by forming a wholly-owned subsidiary,
Tornado Gold Delaware, which we will merge with and into, pursuant to the
Agreement and Plan of Merger. Following the reincorporation merger, Tornado
Gold
Delaware will be the surviving entity and each outstanding share of our common
stock will automatically convert into one (1) share of common stock of Tornado
Gold Delaware. In addition, outstanding stock options and warrants to purchase
shares of our common stock will be converted automatically into stock options
and warrants to purchase the same number of shares of Tornado Gold Delaware
common stock with the same exercise price and terms.
It
will
not be necessary for stockholders to exchange their existing stock certificates
for stock certificates of Tornado Gold Delaware. Outstanding stock certificates
should not be destroyed or sent to us or our transfer agent. New certificates
will be issued upon the request of any stockholder, subject to normal
requirements as to proper endorsement, signature guarantee, if required, and
payment of applicable taxes.
Timing
of the Reincorporation
The
reincorporation will become effective when the proper forms are filed with
the
states of Nevada and Delaware. We anticipate filing those forms promptly after
the date of the 2006 Annual Meeting of Stockholders.
Consequences
of the Reincorporation
The
reincorporation will result in a change of our domicile from Nevada to Delaware.
The reincorporation will not, by itself, result in any changes to our business,
financial condition, or our results of operations. The persons presently serving
as our executive officers and directors will continue to serve in such
respective capacity with Tornado Gold Delaware. Our daily business operations
will continue at our principal executive offices at 3841 Amador Way, Reno,
Nevada, 89502.
Changes
Caused by the Reincorporation
Change
in Charter
Except
with regards to cumulative voting, which is discussed below, Tornado Gold
Delaware’s Certificate of Incorporation is substantially similar to our Articles
of Incorporation, as amended. Both sets of governing documents provide for
the
issuance of up to 100,000,000 shares of common stock with a par value of $0.001
and no shares of preferred stock. In addition, our Articles of Incorporation,
as
amended, and Tornado Gold Delaware’s Certificate of Incorporation provide that
officers and directors shall not be liable to the respective company for a
breach of fiduciary duty unless the act or omission involved intentional
misconduct, fraud, or a knowing violation of the law or the payment of dividends
in violation of state law.
Cumulative
voting for directors entitles stockholders to cast a number of votes that is
equal to the number of voting shares held multiplied by the number of directors
to be elected. Stockholders may cast all such votes either for one nominee
or
distribute such votes among up to as many candidates as there are positions
to
be filled. Cumulative voting may enable a minority stockholder or group of
stockholders to elect at least one representative to the board of directors
where such stockholders would not otherwise be able to elect any directors.
Our
Articles of Incorporation provide for cumulative voting. Tornado Gold Delaware’s
Certificate of Incorporation does not provide for cumulative voting. Thus,
after
the reincorporation is effective, stockholders will not be able to cast a number
of votes that is equal to the number of voting shares held multiplied by the
number of directors to be elected.
Tornado
Gold Delaware’s Certificate of Incorporation is attached hereto as Exhibit A.
The discussion of Tornado Gold Delaware’s Certificate of Incorporation is
qualified in its entirety by reference to Exhibit A.
Change
in Bylaws
Upon
effectiveness of the reincorporation, we will governed by the By-Laws of Tornado
Gold Delaware. While the By-Laws of Tornado Gold Delaware are substantially
similar to our existing Bylaws, there are differences that may affect your
rights as a stockholder. Tornado Gold Delaware’s By-Laws are attached hereto as
Exhibit B. The following discussion briefly summarizes the material differences
between our Bylaws and the By-Laws of Tornado Gold Delaware. The discussion
of
Tornado Gold Delaware’s By-laws is qualified in its entirety by reference to
Exhibit B.
Number
of Directors.
Under
our Bylaws, our Board of Directors is to consist of not less than one (1) and
not more than five (5) members.
Under
the
By-Laws of Tornado Gold Delaware, the number of directors shall be no less
than
one (1) but no more than fifteen (15).
Vacancies.
Pursuant to our Bylaws, except for a vacancy created by the removal of a
Director, a majority of the remaining Directors are to fill any vacancy. A
vacancy in the Board of Directors created by the removal of a Director may
only
be filled by the vote of a majority of the shares entitled to vote represented
at a duly held meeting at which a quorum is present or by the written consent
of
the holders of a majority of the outstanding shares.
The
By-Laws of Tornado Gold Delaware provide that all vacancies may be filled by
a
majority of the remaining Directors.
Annual
Meetings.
Our
Bylaws require that the annual meeting of stockholders take place at 10:00
A.M.
on May 1.
The
By-Laws of Tornado Gold Delaware require that the annual meeting of stockholders
be held within five (5) months of the end of the previous fiscal
year.
Amendments
to the Bylaws.
Our
Bylaws provide that the affirmative vote of a majority of stockholders entitled
to vote in the election of directors may adopt, alter, amend, or repeal the
Bylaws. Our Board of Directors may adopt, alter, amend, or repeal the Bylaws,
except for bylaws relating to quorum for meetings of stockholders or the Board
of Directors, or to change any provisions of the Bylaws with respect to the
removal of a director or filling of vacancies in the Board resulting from
removal by the stockholders.
The
By-Laws of Tornado Gold Delaware may be altered, amended, or repealed at a
special or annual meeting by the holders of a majority of the shares entitled
to
vote thereat, or by its Board of Directors.
Removal
of Directors.
Our
entire Board of Directors or any individual Director may be removed at any
special meeting of stockholders called for such purpose by vote of the holders
of two-thirds (2/3) of the shares entitled to elect directors. No Director
may
be removed (unless the entire Board is removed) when the votes cast against
removal or not consenting in writing to such removal would be sufficient to
elect such Director if voted cumulatively at an election at which the same
total
number of votes were cast (or, if such action is taken by written consent,
all
shares entitled to vote, were voted) and the entire number of Directors
authorized at the time of the Directors most recent election were then being
elected.
Pursuant
to the By-Laws of Tornado Gold Delaware, a Director may be removed for cause
or
without cause by the vote of the holders of a majority of the shares entitled
to
elect directors.
Special
Meetings.
Our
Bylaws provide that a special meeting of the stockholders may be called at
any
time by the Board of Directors, the Chairman of the Board, the President, or
stockholders holding at least 50% of the shares entitled to vote at such
meeting.
The
By-Laws of Tornado Gold Delaware provide that a special meeting of the
stockholders may be called by its President, the Board of Directors, or
stockholders holding at least one-third (1/3) of the shares entitled to vote
at
such meeting.
Committees.
Our
Bylaws provide the Board of Directors may appoint committees composed of two
or
more members of the Board of Directors and that any such committee shall have
the powers delegated to it by the Board of Directors, except for the powers
made
delegable by Nevada law.
The
By-Laws of Tornado Gold Delaware provide that its Board of Directors may appoint
committees composed of one or more members of its Board of Directors and that
any such committee shall have the powers delegated to it by the Board of
Directors, except for the power to: (i) fill a vacancy of the Board of
Directors; (ii) submit to the stockholders any action that needs stockholder
approval under the By-Laws or Delaware law; (iii) fix the compensation of the
directors serving on any committee thereof; or (iv) amend or repeal any
resolution of the Board of Directors that by its terms may not be so amendable
or repealable. In addition, the Board of Directors of Tornado Gold Delaware
may
create an executive committee, which shall have and may exercise, when the
Board
of Directors is not in session, all the powers of the Board of Directors in
the
management of the business and affairs of Tornado Gold Delaware.
Change
in Governing Law
We
are
incorporated under the laws of the State of Nevada, and Tornado Gold Delaware
is
incorporated under the laws of the State of Delaware. Our corporate affairs
are
currently governed by Nevada corporate law and our Articles of Incorporation
and
Bylaws, which were created pursuant to Nevada law. On the effective date of
the
reincorporation, issues of corporate governance and control will be controlled
by Delaware law and Tornado Gold Delaware’s Certificate of Incorporation and
By-Laws, which were created pursuant to Delaware law.
The
following discussion summarizes briefly some of the changes resulting from
certain material differences between Nevada corporate law and Delaware corporate
law. The following discussion does not purport to be a complete statement of
such laws. Stockholders should refer to Tornado Gold Delaware’s Certificate of
Incorporation, which is attached hereto as Exhibit A, Tornado Gold Delaware’s
By-Laws, which are attached hereto as Exhibit B, and the Delaware General
Corporation Law (“DGCL”) and the Nevada General Corporation Law (“NGCL”) to
understand how these laws apply to Tornado Gold Delaware and us,
respectively.
Fiduciary
Duties.
Both
the DGCL and the NGCL provide that the board of directors has the ultimate
responsibility for managing the business and affairs of a corporation. In
discharging this function, directors of Nevada and Delaware corporations owe
fiduciary duties of care and loyalty to the corporations they serve and the
stockholders of those corporations.
With
respect to fiduciary duties, NGCL may provide broader discretion, and increased
protection from liability, to directors in exercising their fiduciary duties.
The DGCL does not contain any statutory provision permitting directors to
consider the interests of any constituencies other than the corporation or
its
stockholders when discharging their duties. The NGCL, on the other hand,
provides that in discharging their duties, directors may exercise their
respective powers with a view to the interests of the corporation, employees,
suppliers, customers, or creditors of the corporation and the interests of
the
state of Nevada, the community, and society.
Classified
Board of Directors.
The
DGCL permits any Delaware corporation to classify its board of directors into
as
many as three classes as equally as possible with staggered terms of office.
The
NGCL also permits corporations to classify boards of directors provided that
at
least one-fourth of the total number of directors is elected annually. Neither
we nor Tornado Gold Delaware has a classified board.
Removal
of Directors.
With
respect to removal of directors, under the NGCL, any one or all of the directors
of a corporation may be removed by the holders of not less than two-thirds
of
the voting power of a corporation’s issued and outstanding stock. The NGCL
provides that the articles of incorporation may require the concurrence of
more
than two-thirds of the voting power entitled to vote in order to remove a
director. Under the DGCL law, directors of a corporation without a classified
board may be removed with or without cause by the holders of a majority of
shares then entitled to vote in an election of directors.
Dividend
Rights and Repurchase of Shares.
The
NGCL provides that no distribution (including dividends on, or redemption or
repurchases of, shares of capital stock) may be made if, after giving effect
to
such distribution, the corporation would not be able to pay its debts as they
become due in the usual course of business, or, except as specifically permitted
by the articles of incorporation, the corporation’s total assets would be less
than the sum of its total liabilities plus the amount that would be needed
at
the time of a dissolution to satisfy the preferential rights of preferred
stockholders.
Under
the
DGCL, a corporation may declare and pay dividends out of surplus, or if no
surplus exists, out of net profits for the fiscal year in which the dividends
are declared and/or for its preceding fiscal year. Dividends may not be paid
out
of net profits if the capital of the corporation is less than the amount of
capital represented by the issued and outstanding stock of all classes having
a
preference upon the distribution of assets. Generally, pursuant to the DGCL,
a
corporation may repurchase shares only if net assets are not and will not become
less than the corporation’s capital.
Indemnification
of Directors and Officers.
In
general, the NGCL and DGCL permit a corporation to indemnify officers,
directors, employees, and agents for actions taken in good faith and in a manner
they reasonably believe to be in, or not opposed to, the best interests of
the
corporation and, with respect to any criminal action, which they had no
reasonable cause to believe were unlawful. Both Tornado Gold Delaware and we
provide for such indemnifications under their respective charters and
bylaws.
Limitation
on Personal Liability of Directors.
A
Delaware corporation is permitted to adopt provisions in its certificate of
incorporation limiting or eliminating the liability of a director to a company
and its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such liability does not arise from certain proscribed
conduct, including breach of the duty of loyalty, acts or omissions not in
good
faith, or that involve intentional misconduct or a knowing violation of law
or
liability to the corporation based on unlawful dividends or distributions or
improper personal benefit. Tornado Gold Delaware’s Certificate of Incorporation
will limit the liability of directors to Tornado Gold Delaware to the fullest
extent permitted by law.
While
the
NGCL has a similar provision permitting the adoption of provisions in the
articles of incorporation limiting personal liability, the Nevada provision
differs in two respects. First, the Nevada provision applies to both directors
and officers. Second, while the Delaware provision exempts from its limitation
on liability a breach of the duty of loyalty, the Nevada counterpart does not
contain this exception. Thus, the Nevada provision expressly permits a
corporation to limit the liability of officers, as well as directors, and
permits limitation of liability arising from a breach of the duty of
loyalty.
Amendment
to Article/Certificate of Incorporation.
In
general, both the NGCL and DGCL require the approval of the holders of a
majority of all outstanding shares entitled to vote to approve proposed
amendments to a corporation’s articles/certificate of incorporation. Both
statutes also provide that in addition to the vote described above, the vote
of
a majority of the outstanding shares of a class may be required to amend the
articles/certificate of incorporation where a class will be adversely affected
by such amendment. Neither state requires stockholder approval for the board
of
directors of a corporation to fix the voting powers, designation, preferences,
limitations, restrictions, and rights of a class of stock provided that the
corporation’s organizational documents grant such power to its board of
directors.
Our
Articles of Incorporation and Tornado Gold Delaware’s Certificate of
Incorporation do not confer the power to amend the articles/certificate to
their
respective boards. Thus, a stockholder vote is necessary to amend the
articles/certificate.
Amendment
to Bylaws.
Under
the DGCL, bylaws may be adopted, amended or repealed by the stockholders
entitled to vote thereon. A corporation may, in its certificate of
incorporation, confer this power upon the directors, although the power vested
in the stockholders is not divested or limited where the board of directors
also
has such power.
The
NGCL
provides that the board of directors of a corporation may make the bylaws,
but
that such bylaws are subject to those adopted by the stockholders, if any.
Unless otherwise prohibited by any Bylaw adopted by the stockholders, the
directors may adopt, amend, or repeal any Bylaw, including any Bylaw adopted
by
the stockholders. The Articles of Incorporation may grant the authority to
adopt
Bylaws exclusively to the directors.
Actions
by Written Consent of Stockholders.
The
NGCL and DGCL each provide that, unless the articles of
incorporation/certificate of incorporation provide otherwise, any action
required or permitted to be taken at a meeting of the stockholders may be taken
without a meeting if the holders of outstanding stock having at least the
minimum number of votes that would be necessary to authorize or take such action
at a meeting consent to the action in writing. Our Articles of Incorporation
and
the Certificate of Incorporation of Tornado Gold Delaware allow for action
by
written consent pursuant to the statutory guidelines set forth
above.
Special
Meetings of Stockholders.
Under
the DGCL, a special meeting of stockholders may be called by the corporation’s
board of directors or by any person or persons as may be authorized by the
corporation’s articles/certificate of incorporation, as applicable, or bylaws.
The
NGCL
does not specifically address the manner in which stockholders may call a
special meeting. Our Bylaws provide that a special meeting of the stockholders
may be called at any time by the Board of Directors, the Chairman of the Board,
the President, or stockholders holding at least 50% of the shares entitled
to
vote at such meeting. The By-Laws of Tornado Gold Delaware provide that a
special meeting of the stockholders may be called by its President, the Board
of
Directors, or stockholders holding at least one-third (1/3) of the shares
entitled to vote at such meeting.
Restrictions
on Business Combinations.
Both
the DGCL and NGCL contain provisions restricting the ability of a corporation
to
engage in “business combinations” with an interested stockholder. As a Delaware
corporation, Tornado Gold Delaware is subject to Section 203 (“Section 203”) of
the DGCL. Under Section 203, certain business combinations between a Delaware
corporation whose stock is publicly traded or held of record by more than 2,000
stockholders and an “interested stockholder” are prohibited for a three-year
period following the date that such a stockholder became an interested
stockholder, unless (i) the corporation has elected in a manner permitted by
Section 203 not to be governed by Section 203, (ii) the transaction in which
the
stockholder became an interested stockholder or the business combination was
approved by the board of directors of the corporation before the other party
to
the business combination became an interested stockholder, (iii) upon
consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock
owned
by directors who are also officers or held in employee benefit plans in which
the employees do not have a right to determine confidentially whether shares
held by the plan will be tendered in a tender offer), or (iv) the business
combination was approved by the board of directors of the corporation and
ratified by 66 2/3% (and not by written consent) of the voting stock which
the
interested stockholder did not own. The term “business combination” is defined
generally to include mergers or consolidations between a Delaware corporation
and an “interested stockholder,” transactions with an “interested stockholder”
involving the assets or stock of the corporation or its majority-owned
subsidiaries, and transactions which increase an “interested stockholder’s”
percentage ownership of stock. The term “interested stockholder” is defined
generally as a stockholder who, together with affiliates and associates, owns
(or, within three years prior, did own) 15% or more of a Delaware corporation’s
voting stock.
The
NGCL
contains certain “anti-takeover” provisions that apply to a Nevada corporation,
unless the corporation elects not to be governed by such provisions in its
articles of incorporation or bylaws. The NGCL prohibits a corporation from
engaging in any “business combinations” with “interested stockholder” for a
period of three years following the time that such stockholder became an
interested stockholder. The term “interested stockholder” is defined generally
as a stockholder that owns, directly or indirectly, 10% or more of the
corporation’s voting stock. A business combination includes any merger,
consolidation, or sale of substantially all of a corporation’s assets. The
three-year waiting period does not apply, however, if the board of directors
of
the corporation approved either the business combination or the transaction
which resulted in such stockholder owning more than 10% of such stock before
the
stockholder obtained such ownership.
Neither
Tornado Gold Delaware nor we have opted out of the applicable statutes with
appropriate provisions in the respective Articles/Certificate of
Incorporation.
Material
Federal Income Tax Consequences of the Reincorporation
The
following is a discussion of certain federal income tax consequences to holders
of our common stock who receive shares of Tornado Gold Delaware common stock
in
exchange for their shares of our common stock as a result of the
reincorporation. The discussion is based on the Internal Revenue Code of 1986,
as amended (“Code”), and laws, regulations, rulings, and decisions in effect as
of the date of this Proxy Statement, all of which are subject to change,
possibly with retroactive effect, and to differing interpretations. No state,
local or foreign tax consequences are addressed herein.
This
discussion is for general information only and does not purport to be a complete
discussion or analysis of all potential tax consequences that may apply to
a
stockholder. In view of the varying nature of such tax consequences,
stockholders are urged to consult their own tax advisors as to the specific
tax
consequences to them of the reincorporation, including the applicability of
federal, state, local, or foreign tax laws.
The
reincorporation is intended to be tax-free to us and our stockholders under
the
Code. Accordingly, it is expected that no gain or loss will be recognized by
you
solely as a result of the reincorporation, and no gain or loss will be
recognized by us or Tornado Gold Delaware. Each former holder of shares of
our
common stock will have the same tax basis in Tornado Gold Delaware’s common
stock received by such holder pursuant to the reincorporation as such holder
has
in the shares of our common stock held by such holder at the effective time
of
the reincorporation. Each stockholder’s holding period with respect to Tornado
Gold Delaware’s common stock will include the period during which such holder
held the shares of our common stock, so long as the shares were held by such
holder as a capital asset at the effective time of the reincorporation. We
have
not obtained, and do not intend to obtain, a ruling from the Internal Revenue
Service with respect to the tax consequences of the
reincorporation.
Because
of the complexity of the capital gains and loss provisions of the Code and
the
uniqueness of each individual’s capital gain or loss situation, stockholders
contemplating exercising statutory dissenter’s rights should consult their own
tax advisors regarding the federal income tax consequences of exercising such
rights. Additionally, state, local, or foreign income tax consequences to
stockholders may vary from the federal income tax consequences described above,
and STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
CONSEQUENCES TO THEM OF THE REINCORPORATION UNDER ALL APPLICABLE TAX
LAWS.
Dissenter’s
Rights of Appraisal
Holders
of our common stock that follow the appropriate procedures will be entitled
to
dissent from the consummation of the reincorporation and receive payment of
the
fair value of their shares under Sections 92A.300 through 92A.500 of the Nevada
General Corporation Law. The following discussion summarizes the material
applicable provisions of the Nevada dissenter’s rights statute. You are urged to
read the full text of the Nevada dissenter’s rights statute, which is reprinted
in its entirety and attached hereto as Exhibit D to this Proxy Statement. A
person having a beneficial interest in shares of our common stock that are
held
of record in the name of another person, such as a bank, broker, or other
nominee, must act promptly to cause the record holder to follow the steps
summarized below properly and in a timely manner if such person wishes to
perfect any dissenter’s rights such person may have. This discussion and Exhibit
D should be reviewed carefully by you if you wish to exercise statutory
dissenter’s rights or wish to preserve the right to do so, because failure to
strictly comply with any of the procedural requirements of the Nevada
dissenter’s rights statute may result in a termination or waiver of dissenter’s
rights under the Nevada dissenter’s rights statute.
Under
the
Nevada dissenter’s rights statute, you have the right to dissent from the
reincorporation and demand payment of the fair value of your shares of our
common stock. If you elect to dissent, you must file with us a written notice
of
dissent stating that you intend to demand payment for your shares of our common
stock if the reincorporation is consummated (merely voting against proposal
is
not sufficient to satisfy notice requirements). Such written notice of dissent
must be filed with us before the date of the stockholders’ 2006 annual meeting
and must be sent to Tornado Gold, c/o Randy Katz, Bryan Cave LLP, 1900 Main
Street, Suite 700, Irvine, California, 92614. If you fail to comply with this
notice requirement, you will not be entitled to dissenter’s rights. You must not
vote your shares in favor of the proposed claim. Your failure to vote against
this proposal will not constitute a waiver of your appraisal rights. The “fair
value” of the shares as used in the Nevada dissenter’s rights statute is the
value of the shares immediately before the effectuation of the proposed
reincorporation, excluding any appreciation or depreciation in anticipation
of
the reincorporation unless exclusion would be inequitable.
If
you
satisfy the notice requirement discussed in the preceding paragraph, we will
send you a written dissenter’s notice within ten (10) days after the effective
time of the reincorporation. Such written dissenter’s notice will specify where
you must send your payment demand and where and when you must deposit your
stock
certificates, if any, among other information.
If
you
still wish to exercise your dissenter’s rights after you have received the
written dissenter’s notice, you must make a written demand on us for payment of
the fair value of your shares and deposit your stock certificates in accordance
with the written dissenter’s notice within thirty (30) days following the date
such written dissenter’s notice is delivered.
Within
thirty (30) days after the receipt of a properly executed payment demand, we
will pay each dissenter who complied with the required procedures the amount
we
estimate to be the fair value of the dissenter’s shares, plus accrued interest.
Any such payment will be accompanied by (i) our balance sheet as of the end
of
the fiscal year-ended not more than sixteen (16) months before the date of
payment, an income statement for that year, a statement of changes in
stockholders equity for that year, and the latest available interim financial
information, if any, (ii) a statement as to how we determined the fair value
of
the shares and how the interest was calculated, (iii) a statement of the
dissenter’s right to demand payment of fair value under Nevada law, and (iv) a
copy of the relevant provisions of Nevada law. A dissenting stockholder may,
within thirty (30) days following receipt of payment for the shares, send us
a
notice containing such stockholder’s own estimate of fair value and accrued
interest, and demand payment for that amount less the amount received pursuant
to our payment of fair value to such dissenting stockholder.
If
there
is still disagreement about the fair market value within sixty (60) days after
we received a dissenting stockholder’s demand, we will petition a court to
determine fair value and accrued interest. If we fail to commence an action
within sixty (60) days following the receipt of the dissenting stockholder’s
demand, we shall pay to the dissenting stockholder the amount demanded in such
dissenting stockholder’s notice containing the estimated fair value and accrued
interest.
We
will
pay the costs and expenses of the court proceeding, unless the court finds
that
the demand of any dissenting stockholder for payment was arbitrary, vexatious,
or otherwise not in good faith. If such a finding is made, the court may assess
costs, including reasonable fees of counsel and experts, against such
stockholder. In addition, reasonable fees and expenses of counsel and experts
may be assessed against us if the court finds that we did not substantially
comply with the requirements of the Nevada dissenter’s rights statute or that we
acted arbitrarily, vexatiously, or not in good faith with respect to the rights
granted to dissenters under Nevada law.
If
holders of more than five percent of our outstanding common stock exercise
their
appraisal rights, we have the right to terminate the Agreement and Plan of
Merger and remain a Nevada corporation.
IF
YOU WISH TO SEEK DISSENTER’S RIGHTS, YOU ARE URGED TO REVIEW THE APPLICABLE
NEVADA STATUTES ATTACHED TO THIS PROXY STATEMENT AS EXHIBIT
D.
IF
YOU
FAIL TO COMPLY STRICTLY WITH THE PROCEDURES DESCRIBED ABOVE, YOU WILL LOSE
YOUR
APPRAISAL RIGHTS. CONSEQUENTLY, IF YOU WISH TO EXERCISE YOUR APPRAISAL RIGHTS,
WE STRONGLY URGE YOU TO CONSULT A LEGAL ADVISOR BEFORE ATTEMPTING TO EXERCISE
YOUR APPRAISAL RIGHTS.
INTERESTS
OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED
UPON
No
officer or director has a substantial interest, direct or indirect, in the
proposed reincorporation.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR
THE AGREEMENT AND PLAN OF MERGER.
PROPOSAL
3
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITOR
Effective
May 27, 2004, our predecessor dismissed Stonefield
Josephson,
Inc.,
which audited our predecessor’s financial statements for the fiscal years-ended
December 31, 2003 and 2002, and replaced the auditor with Jonathon P. Reuben,
CPA, to act as our independent accountant. The reports of Stonefield Josephson,
Inc. for those fiscal years did not contain an adverse opinion or disclaimer
of
opinion and were not qualified or modified as to audit scope or accounting
principles except as described herein. The report of Stonefield Josephson,
Inc.
for those fiscal years was qualified with respect to uncertainty as to our
predecessor’s ability to continue as a going concern. During our predecessor’s
2004 fiscal year through May 27, 2004, the date of dismissal, there were no
disagreements with Stonefield Josephson, Inc. on any matter of accounting
principles or practices, financial statements disclosure, or auditing scope
or
procedures, which disagreements, if not resolved to the satisfaction of
Stonefield Josephson, Inc., would have caused it to make reference to such
disagreements in its reports.
Our
predecessor’s unaudited financial statements for the quarter-ended March 31,
2004, were reviewed by Mr. Reuben. Stonefield Josephson, Inc. was not involved
with the review of the unaudited financial statements for the quarter ended
March 31, 2004. Our predecessor had authorized Stonefield Josephson, Inc. to
discuss any matter relating to it and its operations with Mr.
Reuben.
The
change in our auditor was recommended and approved by our board of directors
since we do not have an audit committee.
During
the two most recent fiscal years and subsequent interim period, there has been
no disagreements with Mr. Reuben on any matter of accounting principles or
practices, financial statements disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of Mr. Reuben, would
have caused him to make reference to such disagreements in his reports.
Furthermore, during the stated period, we did not consult with Mr. Reuben
regarding the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the our financial statements, or any matter that was the subject
of
a disagreement or a reportable event as defined in the regulations of the
Securities and Exchange Commission.
Stonefield
Josephson has reviewed the disclosures contained in this Schedule 14A. We have
advised Stonefield Josephson that it has the opportunity to furnish us with
a
letter addressed to the Securities and Exchange Commission concerning any new
information, clarifying our disclosures herein, or stating any reason why
Stonefield Josephson does not agree with any of our statements made in this
Proxy Statement. Stonefield Josephson has advised us that nothing has come
to
its attention that would cause it to believe that any such letter was necessary.
Mr. Reuben has also reviewed the disclosures contained herein.
At
the
2006 Annual Meeting of Stockholders, the stockholders will vote on the
ratification of the Board of Director’s appointment of Jonathon P. Reuben,
certified public accountant, as independent auditor to audit our financial
statements for the fiscal year that began January 1, 2006. Neither Mr.
Reuben nor a representative of his will be present at the 2006 Annual Meeting
of
Stockholders; therefore, Mr. Reuben will not have an opportunity to make a
statement and will not be available to answer questions.
AUDIT
FEES. The aggregate fees billed in each of the fiscal years ended December
31,
2005 and 2004 for professional services rendered by the principal accountant
for
the audit of our annual financial statements and review of the financial
statements, or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years, were $12,400 and $16,500 respectively.
AUDIT-RELATED
FEES. There were no fees billed for services reasonably related to the
performance of the audit or review of the financial statements outside of those
fees disclosed above under “Audit Fees” for fiscal years 2005 and
2004.
TAX
FEES.
For the fiscal years ended December 31, 2005 and December 31, 2004, our
principal accountants did not render any services for tax compliance, tax
advice, and tax planning work.
ALL
OTHER
FEES. None.
PRE-APPROVAL
POLICIES AND PROCEDURES. Prior to engaging our accountants to perform a
particular service, our board of directors obtains an estimate for the service
to be performed. All of the services described above were approved by the board
of directors in accordance with its procedures.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF THE AUDITOR.
OTHER
MATTERS
So
far as
the Board of Directors is aware, only the aforementioned matters will be acted
upon at the 2006 Annual Meeting of Stockholders. If any other matters properly
come before the meeting, the accompanying proxy may be voted on such other
matters in accordance with the best judgment of the person or persons voting
said proxy.
STOCKHOLDER
PROPOSALS FOR 2007
Unless
the Board of Directors determines otherwise, next year’s annual meeting will be
held on May 31, 2007. Any stockholder proposal intended for inclusion in the
proxy materials for the 2007 annual meeting must be received by our Secretary
no
later than January 31, 2007. Stockholder proposals submitted outside of the
process described in Rule 14a-8 of the Securities Exchange Act of 1934, as
amended, will not be considered at any annual meeting of Stockholders. We will
not include in the Notice of Annual Meeting proposals not in compliance with
SEC
Rule 14a-8.
ANNUAL
REPORT
Our
amended Annual Report on Form 10-KSB/A for the fiscal year ended
December 31, 2005 (“Annual Report”) and our Quarterly Report for the period
ended September 30, 2006 (“Quarterly Report”) are included with the proxy
soliciting material and are being mailed to our stockholders together with
this
Proxy Statement. Additional copies of the Annual Report and/or the Quarterly
Report may be obtained by contacting us.
HOUSEHOLDING
As
permitted by the Securities Exchange Act of 1934, as amended, only one copy
of
this Proxy Statement is being delivered to stockholders residing at the same
address, unless such stockholders have notified us of their desire to receive
multiple copies of the Proxy Statement.
We
will
promptly deliver, upon oral or written request, a separate copy of the Proxy
Statement to any stockholder residing at an address to which only one copy
was
mailed. Requests for additional copies should be directed to Earl W. Abbott,
by
phone at 775-827-2324 or by mail to Tornado Gold International Corp., 3841
Amador Way, Reno, Nevada, 89502.
Stockholders
residing at the same address and currently receiving only one copy of the Proxy
Statement may contact Earl W. Abbott, by phone at 775-827-2324 or by mail to
Tornado Gold International Corp., 3841 Amador Way, Reno, Nevada, 89502, to
request multiple copies of the Proxy Statement in the future.
Stockholders
residing at the same address and currently receiving multiple copies of the
annual report or Proxy Statement may contact Earl W. Abbott, by phone at
775-827-2324 or by mail to Tornado Gold International Corp., 3841 Amador Way,
Reno, Nevada, 89502, to request that only a single copy of the annual report
and/or Proxy Statement be mailed in the future.
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For
the Board of Directors,
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EARL
W. ABBOTT
Chairman
of the Board, Chief Executive Officer,
President,
and Secretary
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December
21, 2006
Reno,
Nevada
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