SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Filed by a party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
DALRADA FINANCIAL CORPORATION
-----------------------------
Formerly
Imaging Technologies Corporation
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
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to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
6.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
1. Amount Previously Paid:
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4. Date Filed:
DALRADA FINANCIAL CORPORATION
9449 Balboa Avenue Suite 211 San Diego, California 92123
Telephone: (858) 277-5300 Fax: (858) 277-3446
April 9, 2004
Dear Stockholder:
It is a pleasure to send to you the attached notice and proxy materials with
regard to the Annual Meeting of Stockholders (the "Meeting") of Dalrada
Financial Corporation, formerly Imaging Technologies Corporation (the "Company")
scheduled to be held on May 10, 2004.
The matters to be considered at the Meeting include the following: election of
directors; approval of an increase in the number of authorized shares of the
Company's common stock (the "Common Stock"); approval of a stock option plan;
approval of an employee stock purchase plan; and approval of the Company's
accountants.
The Company's board of directors unanimously recommends that you vote FOR all of
the above-mentioned proposals.
I hope you will be able to attend the Meeting. However, whether or not you plan
to attend the Meeting, we request that you vote with the enclosed proxy card.
If you should have any questions in regard to any of the above-mentioned
proposals, please do not hesitate to call our Stockholder Relations Department
or me at (858) 277-5300.
Sincerely yours,
Brian Bonar
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT
----------------------
Whether or not you expect to attend in person, we urge you to vote your shares
by signing, dating, and returning the enclosed proxy card at your earliest
convenience. This will ensure the presence of a quorum at the meeting. Promptly
voting your shares will save the Company the expenses and extra work of
additional solicitation. An addressed envelope is enclosed if you wish to vote
your shares by mail. Submitting your proxy now will not prevent you from voting
your stock at the meeting if you desire to do so, as your vote by proxy is
revocable at your option.
DALRADA FINANCIAL CORPORATION
9449 Balboa Avenue Suite 211 San Diego, California 92123
Telephone: (858) 277-5300 Fax: (858) 277-3446
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 10, 2004
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of Stockholders (the
"Meeting") of DALRADA FINANCIAL CORPORATION, formerly Imaging Technologies
Corporation, a Delaware corporation (the "Company"), will be held at 9449 Balboa
Avenue, Suite 211, San Diego, California 92123, at 10 a.m., local time, to
consider and act upon the following:
1. The election of five persons named in the accompanying Proxy Statement to
serve as directors on the Company's board of directors (the "Board") and until
their successors are duly elected and qualified;
2. To approve an amendment to the Company's certificate of incorporation
(the "Certificate of Incorporation") to increase the number of the Common Stock,
authorized to be issued from 500,000,000 shares to 1,000,000,000 shares;
3. To ratify the appointment of Pohl, McNabola, Berg and Company, LLP, as
the Company's independent auditors for the fiscal year ending June 30, 2004; and
4. To consider and transact such other business as may properly come before
the Meeting or any adjournment(s) thereof.
A Proxy Statement, form of Proxy and the Annual Report to Stockholders of
the Company for the fiscal year ended June 30, 2003 are enclosed herewith. Only
holders of record of Common Stock at the close of business on March 31, 2004 are
entitled to receive notice of and to attend the Meeting and any adjournment(s)
thereof. The stock transfer books of the Company will remain open between the
record date and the date of the Meeting. At least 10 days prior to the Meeting,
a complete list of the stockholders entitled to vote will be available for
inspection by any stockholder, for any purpose germane to the Meeting, during
ordinary business hours, at the executive offices of the Company. Should you
receive more than one Proxy because your shares are registered in different
names and addresses, each Proxy should be signed and returned to assure that all
your shares will be voted. You may revoke your Proxy at any time prior to the
Meeting. If you attend the Meeting and vote by ballot, your Proxy will be
revoked automatically and only your vote at the Meeting will be counted. If you
do not expect to be present at the Meeting, you are requested to fill in, date
and sign the enclosed Proxy, which is solicited by the Board of the Company, and
to mail it promptly in the enclosed envelope.
In the event there are not sufficient votes for a quorum or to approve or
ratify any of the foregoing proposals at the time of the Meeting, the Meeting
may be adjourned by a vote of the majority of the votes cast by the stockholders
entitled to vote thereon. Whether or not you expect to attend the Meeting, to
assure that a quorum is present at the Meeting or an adjournment thereof, and
there are sufficient votes to vote on all of the foregoing proposals, please
sign, date and return promptly your Proxy (even after September 12, 2001, the
original Meeting date) in the stamp-addressed envelope provided.
By Order of the Board of Directors
Brian Bonar
Chief Executive Officer
Dated: April 9, 2004
IMPORTANT
The return of your signed Proxy as promptly as possible will greatly facilitate
arrangements for the Meeting. No postage is required if the Proxy is returned
in the envelope enclosed for your convenience and mailed in the United States.
DALRADA FINANCIAL CORPORATION
9449 Balboa Avenue Suite 211 San Diego, California 92123
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2004
This Proxy Statement is furnished in connection with the solicitation of
proxies by the board of directors (the "Board") of Dalrada Financial
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Corporation, formerly Imaging Technologies Corporation, a Delaware corporation
(the "Company"), to be voted at the Annual Meeting of Stockholders of the
-------
Company (the "Meeting") which will be held at 9449 Balboa Avenue, Suite 211, San
-------
Diego, California 92123 on May 10, 2004 at 10 a.m., local time, and any
adjournment(s) thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders and in this Proxy Statement.
The principal executive offices of the Company are located at 9449 Balboa
Avenue, Suite 211, San Diego, California 92123. The approximate date on which
this Proxy Statement and accompanying Proxy will first be sent or given to
stockholders is April 9, 2004.
VOTING SECURITIES
VOTING
The specific proposals to be considered and acted upon at the Meeting are
summarized in the accompanying Notice of Annual Meeting of Stockholders and are
described in more detail in this Proxy Statement. On March 31, 2004, the record
date for determination of stockholders entitled to notice of and to vote at the
Meeting, 482,277,766 shares of the Company's common stock, par value $.005 (the
"Common Stock") and 420.5 shares of 5% Convertible Preferred Stock, par value
$1,000 per share (the "5% Convertible Stock"), were issued and outstanding. Each
stockholder is entitled to one vote for each share of Common Stock and no vote
for each share of 5% Convertible Stock held by such stockholder on March 31,
2004.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding voting shares of Common Stock entitled to vote at the Meeting is
necessary to constitute a quorum. A vote of the holders of a majority of the
number of outstanding shares of Common Stock, present, in person or represented
by proxy at the Meeting and entitled to vote at the Meeting, will be required
for the approval of each of the amendments to the Company's certificate of
incorporation (the "Certificate of Incorporation"), the election of directors,
approval of the stock option and stock purchase plans, and election of the
Company's accountants.
Although the Company is a Delaware corporation, under Section 2115 of the
California Corporations Code, certain provisions of the California Corporation
Code apply to the Company because of the residence of the Company's stockholders
and the extent of its business operations and assets in California. The
provisions pertaining to certain requirements of cumulative voting apply to the
Company.
Stockholders have cumulative voting rights when voting for directors.
Accordingly, any stockholder may multiply the number of votes he or she is
entitled to vote by the number of directors to be elected and allocate votes
among the candidates in any manner. However, no voting stockholder may
cumulative votes unless the name(s) of the director candidate or candidates have
been placed in nomination prior to the voting and the stockholder, prior to the
voting, has given notice at the Meeting of its intention to cumulate its shares.
If any one stockholder has given a notice of its intention to cumulate votes
then all stockholders may cumulate their votes for director candidates in
nomination. Stockholders may exercise such cumulative voting rights, either in
person or by proxy after providing the proper notice. The five director
nominees receiving the highest number of votes will be elected.
The Board intends to vote proxies equally for the five nominees unless
otherwise instructed on the Proxy Card. If you do not wish your votes to be
voted for particular nominees, please identify the exceptions in the designated
place on the Proxy Card. If at the time of the Meeting one or more of the
nominees have become unavailable to serve, votes represented by Proxies will be
voted for the remaining nominees and for any substitute nominee or nominees
designated by the Board. Directors elected at the Meeting will hold office until
the next Annual Meeting of Stockholders or until their successors have been
elected and qualified.
All votes will be tabulated by the inspector of election appointed for the
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes are counted
as present for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions will be counted towards the tabulations
of votes cast on proposals presented to the stockholders and will have the same
effect as negative votes except in regard to the election of directors. Broker
non-votes will not be counted towards the tabulations of votes cast on proposals
presented to the stockholders.
PROXIES
If the enclosed form of Proxy is properly signed and returned, the shares
represented thereby will be voted at the Meeting in accordance with the
instructions specified thereon. If the Proxy does not specify how the shares
represented thereby are to be voted, the Proxy will be equally voted FOR the
election of the five directors proposed by the Board unless the authority to
vote for the election of such directors is withheld and, if no contrary
instructions are given, the Proxy will be voted FOR the approval of Proposals 1,
2, and 3, described in the accompanying Notice and Proxy Statement. You may
revoke or change your Proxy at any time before the Meeting by filing with the
Secretary of the Company at the Company's principal executive offices at 9449
Balboa Avenue, Suite 211, San Diego, California 92123, a notice of revocation or
another signed Proxy with a later date. You may also revoke your Proxy by
attending the Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the form of
Proxy and any additional solicitation materials furnished to the stockholders.
Copies of solicitation materials will be furnished to brokerage houses,
fiduciaries and custodians holding shares in their names that are beneficially
owned by others so that they may forward this solicitation material to such
beneficial owners. The Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. In addition to
the solicitation of Proxies by mail, Proxies may be solicited without extra
compensation paid by the Company by directors, officers and employees of the
Company by telephone, facsimile, telegraph or personal interview.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 2004 Annual Meeting of Stockholders must
be received by the Company at its executive offices not later than a reasonable
time before the Company begins to print and mail its proxy materials in order
that such proposals may be included in the Proxy Statement and form of Proxy
relating to such meeting.
MATTERS TO BE CONSIDERED AT THE MEETING
PROPOSAL 1
ELECTION OF THE BOARD
Nominees For Election as Directors
The persons named below are nominees for director to serve until the next
annual meeting of stockholders and until their successors have been elected and
qualified. Management has selected five nominees, all of whom are currently
directors of the Company. Each person nominated for election has agreed to serve
if elected, and management has no reason to believe that any nominee will be
unavailable to serve. Unless otherwise instructed, the Proxy holders will vote
the Proxies received by them for the nominees named below. The proxies received
by the Proxy holders cannot be voted for more than five directors, and, unless
otherwise instructed, the Proxy holders will vote such proxies for the nominees
named below. The five candidates receiving the highest number of affirmative
votes of the shares entitled to vote at the Meeting will be elected directors of
the Company.
If, however, any of those named are unable to serve, or for good cause
decline to serve at the time of the Meeting, the persons named in the enclosed
Proxy will exercise discretionary authority to vote for substitutes. The Board
is not aware of any circumstances that would render any nominee unavailable for
election.
The following table sets forth certain information regarding the nominees
for election as directors.
Director
Name. . . . . . . . Age Since Title
------------------- ------------ ----- -----------------------
Chairman and
Brian Bon 56 1995 Chief Executive Officer
Richard H. Green 67 2000 Director
Robert A. Dietrich. 58 2000 Director
Secretary and
Eric W. Gaer 55 2000 Director
Stephen J. Fryer 65 2000 Director
Brian Bonar has served as a director of the Company since August 1995 and
became the Company's Chairman of the Board in December 1999. From August 1992
through April 1994, Mr. Bonar served as the Company's Director of Technology
Sales and from April 1994 through September 1994 as the Company's Vice
President, Sales and Marketing. In September 1994, Mr. Bonar became the
Company's Executive Vice President and, in July 1997, was appointed as the
Company's President and Chief Operating Officer. In April 1998 Mr. Bonar assumed
the post of CEO. From 1991 to 1992, Mr. Bonar was Vice President of Worldwide
Sales and Marketing for Bezier Systems, Inc., a San Jose, California-based
manufacturer and marketer of laser printers. From 1990 to 1991, he was Worldwide
Sales Manager for Adaptec, Inc., a San Jose-based laser printer controller
developer. From 1988 to 1990, Mr. Bonar was Vice President of Sales and
Marketing for Rastek Corporation, a laser printer controller developed located
in Huntsville, Alabama. From 1984 to 1988, Mr. Bonar was employed as Executive
Director of Engineering at QMS, Inc., an Alabama-based developer and
manufacturer of high-performance color and monochrome printing solutions. Prior
to these positions, Mr. Bonar was employed by IBM, U.K. Ltd. for approximately
17 years. He also serves as Chairman of the Board of the Company's Quik Pix,
Inc. (OTC-QPIX), subsidiary.
Dr. Richard H. Green has served as a director since September 2000 and
serves on its Audit and Compensation Committees. He is currently the President
of International Power & Environmental Company (IPEC), a consulting company
located in San Diego, California. From 1993 through 1995, he served as Deputy
Secretary of the State of California Environmental Protection Agency (Cal/EPA).
From 1988 through 1993 Dr. Green served as Manager of Program Engineering and
Review Office in the Office of Technology and Applications at the Jet Propulsion
Laboratory (JPL) in Pasadena, California, where he had held various management
positions, including the Office of Planning, since 1967. In 1970, Dr. Green was
Principal Investigator for NASA's Apollo-12 Mission to the moon. From 1965
through 1967, he served as Senior Engineer for The Boeing Company, Space
Division. From 1983 through 1985, he held the Corwin D. Denny Chair as
Professor of Energy and Director of the Energy Institute at the University of
LaVerne, and from 1961 through 1964 served as Assistant Professor of Civil
Engineering (Environmental Sciences) at Washington State University. Dr. Green
was a member of the Governing Board of Pasadena City College for 29 years and a
member of the board of the California Community College Trustees for 10 years.
He completed his bachelor's degree at Whitman College in 1958, his Master of
Science at Washington State University in 1961, and his Ph.D. at Washington
State University, under a United States Public Health Services Career
Development Award, in 1965.
Robert A. Dietrich has served as a director of the Company since January
2000 and currently serves on the Audit Committee of the Board. He is also a
Director of Greenland Corporation, a subsidiary of the Company. For a period of
time during 2002 he served as Chief Accounting Officer and President of the
Company's SourceOne Group, Inc. subsidiary. He is currently a Director, Founder
and Chief Financial Officer of Modofood USA, Inc., a privately held food
technology enterprise. In 1998 he helped found Cyber Air Communications, Inc.
and served as a Director and President until 2002. Mr. Dietrich has been
performing investment banking and consulting services for clients since 1990.
Previously, he has served as CEO, COO or CFO of privately held middle market
companies. He is an accounting graduate from Notre Dame and possesses an MBA
from the University.of Detroit. He possesses a CPA certificate from Illinois.
Eric W. Gaer has served as a director since March 2000 and serves as
Secretary. He also is a member of the company's Compensation Committee. Since
1998, Mr. Gaer has been the President and CEO of Arroyo Development Corporation,
a privately-held, San Diego-based management consulting company. From 1996 to
1998, he was Chairman, President and CEO of Greenland Corporation. In 1995, he
was CEO of Ariel Systems, Inc., a privately-held engineering development company
in Vista, California. Over the past 30 years, Mr. Gaer has served in executive
management positions at a variety of high-technology companies, including ITEC,
Daybreak Technologies, Inc., Venture Software, Inc., and Merisel, Inc. In 1970,
he received a Bachelor of Arts degree in mass communications from California
State University, Northridge. In 2003, he received his Ph.D. in Business
ManagementHe also serves as Secretary for the Company's Quik Pix subsidiary.
Stephen J. Fryer has served as a director of the Company since March 2000
and is a member of its Audit Committee. He is the principal of Fryer &
Associates, a Southern California based investment banking and consulting firm,
which is affiliated with Grant Bettingen, Inc, and Irvine, California-based
broker dealer. From 1996 to 2001, He was Chairman and CEO of Pen Interconnect,
Inc., an Irvine based public company specialized in electronic circuit board
assembly and contract manufacturing. From 1989 to 1996 Mr. Fryer was a principal
of Ventana International, Ltd., an Irvine, California-based venture capital and
private investment banking firm. He is a graduate of the University of Southern
California with a Bachelor's degree in Mechanical Engineering and a minor in
Economics. He spent over 28 years in the computer business in the USA as well as
Asia and Europe. He was the founder, Chairman and CEO of World Comnet, Inc. (a
public company), and is presently, Chairman of Thermal Energy Development Group,
and a director of The Amanda Company, Inc., Quik Pix, Inc. and Rhino Enterprise
Group, all public companies.
The Board and Its Committees
The Board has met and discussed the governance practices followed by the
Company in order to assure that the Board will have the necessary authority to
review and evaluate the Company's business operations as needed and to make
decisions that are independent of the Company's management. These discussions
are intended to align the interests of directors and management with those of
the Company's shareholders. The nature of these discussions deal with the
practices the Board will follow with respect to board composition and selection,
board meetings and involvement of senior management, Chief Executive Officer
performance evaluation and succession planning, and board committees and
compensation. The Board is mindful of the changes in the rules of the Securities
and Exchange Commission and the implementation of the Sorbanes-Oxley Act of
2002. The Board has two committees: an Audit Committee and a Compensation
Committee. The entire Board acts in relation to corporate governance and
nominating.
The Board of Directors met eight times during the fiscal year ended June
30, 2003. All directors attended at least 90% of the Board meetings and meetings
of the committees on which they serviced during the fiscal year ended June 30,
2003.
The Company's audit committee (the "Audit Committee"), composed of Messrs.
Richard Green, Robert Dietrich and Stephen Fryer, met once during the fiscal
year ended June 30, 2003, to review the Company's financial statements and to
meet with the Company's independent auditors.
The Audit Committee assists the Board of Directors in its oversight of the
quality and integrity of the accounting, auditing, and reporting practices of
the Company. The Audit Committee's role includes discussing with management the
Company's processes to manage business and financial risk, and for compliance
with significant applicable legal, ethical, and regulatory requirements. The
Audit Committee is responsible for the appointment, replacement, compensation,
and oversight of the independent auditor engaged to prepare or issue audit
reports on the financial statements of the Company. The Audit Committee relies
on the expertise and knowledge of management, the internal auditors, and the
independent auditor in carrying out its oversight responsibilities. The Board of
Directors has determined that each Audit Committee member has sufficient
knowledge in financial and auditing matters to serve on the Committee.
The Company's compensation committee (the "Compensation Committee"),
composed of Mssrs. Eric Gaer, Stephen Fryer and Richard Green, met once during
the fiscal year ended June 30, 2003, to review executive compensation and the
status of the Company's employee stock option plans. The primary
responsibilities of the Compensation Committee are to (1) review and recommend
to the Board the compensation of the Chief Executive Officer and other officers
of the Company, (2) review executive bonus plan allocations, (3) oversee and
advise the Board on the adoption of policies that govern the Company's
compensation programs, (4) oversee the Company's administration of its
equity-based compensation and other benefit plans, and (5) approve grants of
stock options and stock awards to officers and employees of the Company under
its stock plan. The Compensation Committee's role includes producing the report
on executive compensation required by SEC rules and regulations.
The entire Board acts in relation to corporate governance and nominating,
with responsibilities including (1) determine the slate of director nominees for
election to the Company's Board of Directors, (2) identify and recommend
candidates to fill vacancies occurring between annual shareholder meetings, and
(3) review, evaluate, and recommend changes to the Company's corporate
governance, including periodic review of the compensation paid to non-employee
directors. The Board also meets to annual review the Chief Executive Officer's
performance. The Board of Directors will consider shareholder recommendations
for candidates to the Board. The name of any recommended candidate for director,
including the candidate's willingness to serve, if elected, should be sent to
the attention of the Secretary of the Company.
None of the members of the committees above was an officer or employee of
the Company at any time during the fiscal year ended June 30, 2003, or at any
other time with the exception of Eric Gaer, who was employed by the company in
the 1980's.
No current executive officer of the Company has ever served as a member of
the board of directors or compensation committee of any other entity that has or
has had one or more executive officers serving as a member of the Board or
Compensation Committee.
Director and Committee Compensation
Directors who are not employees of the Company or one of its subsidiaries
receive fees of $500 per meeting attended.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE ELECTION OF THE NOMINEES LISTED ABOVE.
PROPOSAL 2
APPROVAL OF AN AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE
THE AUTHORIZED COMMON STOCK
General
On September 3, 2003, the Board unanimously adopted a resolution proposing,
declaring advisable and recommending a proposal to amend the Certificate of
Incorporation to increase the number of shares of Common Stock which the Company
is authorized to issue from 500,000,000 to 1,000,000,000 shares. The Board
determined that such amendment is advisable and directed that the proposed
amendment be considered at the Meeting. The additional 500,000,000 shares of
Common Stock, if and when issued, will have the same rights and privileges as
the shares of Common Stock presently issued and outstanding. Each holder of
Common Stock is entitled to one vote per share on all matters submitted to a
vote of stockholders. The Common Stock does not have cumulative voting rights
except for those as may be required under California law. The holders of Common
Stock share ratably on a per share basis in any dividends when, as and if
declared by the Board out of funds legally available therefor and in all assets
remaining after the payment of liabilities in the event of the liquidation,
dissolution or winding up of the Company. There are no preemptive or other
subscription rights, conversion rights or redemption or sinking fund provisions
with respect to the Common Stock.
Reference is made to the proposed amendment to Article Fourth of the Certificate
of Incorporation which is attached hereto as Exhibit A to this Proxy
Statement.
The Certificate of Incorporation, as amended to date, authorizes the
Company to issue 500,000,000 shares of Common Stock, $.005 par value per share,
of which 482,277,766 shares were issued and outstanding as of March 31, 2004,
and 100,000 shares of the Company's preferred stock, par value $1,000.00 per
share (the "Preferred Stock"), of which 420.5 shares of 5% Convertible Stock
were outstanding on such date. In addition to the 482,277,766 shares of Common
Stock outstanding as of March 31, 2004, 16,887,976 shares of Common Stock are
reserved for possible future issuances as follows:
- options to purchase 7,539,661 shares at exercise prices between $.20 and
$0.56 per share;
- warrants to purchase 9,336,300 shares at exercise prices between $0.01 and
$11.40 per share; and
- 12,015 shares issuable upon conversion of 420.5 shares of 5% Convertible
Stock currently outstanding. The Company expects the remaining shares of 5%
Convertible Stock outstanding to be cancelled and replaced by cash or equity, or
a combination of both. The 5% Convertible Stock is convertible into Common
Stock at the discretion of the holders.
Purposes and Certain Possible Effects of Increasing the Number of Authorized
Shares of Common Stock
The Company has historically either publicly offered or privately placed
its capital stock to raise funds to finance its operations, and has issued
securities to management, non-management employees and consultants. The Company
expects to continue to make substantial expenditures for development and
marketing of products and services. The Company continues to actively explore
and negotiate additional financing that it requires. The Company may also seek
acquisitions of other companies, products and assets. These activities are
likely to require the Company to sell shares of Common Stock or securities
convertible into or exchangeable for Common Stock. The Company has, at times in
the past, sold shares or securities instruments exercisable or convertible into
shares at below the market price of its Common Stock at the date of issuance and
may be required to do so in the future in order to raise financing.
The Board acknowledges that the increase in the number of authorized shares
of Common Stock at this time will provide the Company with the ability to issue
the shares of Common Stock it is currently obligated to issue pursuant to the
exercise and conversion of outstanding convertible securities, and also provide
it with the flexibility of having an adequate number of authorized but unissued
shares of Common Stock available for future financing requirements, including
acquisitions and other corporate purposes (including issuances pursuant to the
2001 Stock Option Plan and 2001 Stock Purchase Plan) without the expense or
delay attendant in seeking stockholder approval at any special or other annual
meeting. The proposed amendment would provide additional authorized shares of
Common Stock that could be used from time to time, without further action or
authorization by the stockholders (except as may be required by law or by any
stock exchange or over-the-counter market on which the Company's securities may
then be listed).
Although it is not the purpose of the proposed amendment and the Board is
not aware of any pending or proposed effort to acquire control of the Company,
the authorized but unissued shares of Common Stock also could be used by the
Board to discourage, delay or make more difficult a change in control of the
Company.
This proposed amendment will not affect the rights of existing holders of
Common Stock except to the extent that further issuances of Common Stock will
reduce each existing stockholder's proportionate ownership. In the event that
stockholder approval of this proposed amendment of the Certificate of
Incorporation to increase the authorized Common Stock is not obtained, the
Company will be unable to satisfy its exercise and conversion obligations under
the terms of certain of its outstanding convertible securities and holders of
such convertible securities may commence legal proceedings against us.
STOCKHOLDER APPROVAL
In accordance with the Delaware General Corporation Law and the Certificate
of Incorporation, the affirmative vote of a majority of the shares represented
and voting at the Meeting is required to adopt this proposed amendment.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL 3
RATIFICATION OF INDEPENDENT AUDITORS
The accounting firm of Pohl, McNabola, Berg and Company, LLP Boros served
as the Company's independent public auditors during the fiscal year ended June
30, 2003. A representative of Pohl, McNabola, Berg and Company, LLP is
expected to be present at the Meeting, will have the opportunity to make a
statement if he or she desires to do so, and will be available to respond to
appropriate questions.
Approval by the stockholders of the appointment of independent auditors is
not required but the Board deems it desirable to submit this matter to the
stockholders. If a majority of the common stock present and entitled to vote at
the meeting should not approve the selection of Boros Pohl, McNabola, Berg and
Company, LLP, the Board shall reconsider the proposal.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS PROPOSAL.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Meeting. If any other matters properly come before the
Meeting, it is the intention of the persons named in the enclosed form of Proxy
to vote the shares they represent as the Board may recommend. Discretionary
authority with respect to such other matters is granted by the execution of the
enclosed Proxy.
OWNERSHIP OF SECURITIES
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of Common Stock as of March 31, 2004,
by (i) all persons who are beneficial owners of five percent (5%) or more of the
Common Stock, (ii) each director and nominee for director, (iii) the applicable
executive officers named in the Summary Compensation Table of the Executive
Compensation and Other Information section of this Proxy Statement and (iv) all
current directors and executive officers as a group. Unless otherwise indicated,
each of the stockholders has sole voting and investment power with respect to
the shares beneficially owned, subject to community property laws, where
applicable.
NAME . . . . . . . . . . . NO. SHARES PERCENT OF CLASS (1)
-------------------------- ---------- --------------------
Brian Bonar (2). . . . . . 12,007,500 2.49%
Robert A. Dietrich (3) . . 6,762,500 1.40%
Stephen J. Fryer . . . . . 2,578,250 0.53%
Eric W. Gaer (4) . . . . . 7,561,000 1.57%
Richard Green (4). . . . . 5,094,500 1.06%
All current directors and
executive officers
(group of 5) (5) . . . . . 34,003,750 7.05%
(1) Percentage of ownership is based on 482,277,766 shares of Common Stock
outstanding on March 31, 2004. Shares of Common Stock subject to stock options,
warrants and convertible securities, which are currently exercisable or
convertible or will become exercisable or convertible within 60 days after
Includes 14,250,000 shares issuable upon exercise of warrants that are currently
exercisable or will become exercisable within 60 days after March 31, 2004. are
deemed outstanding for computing the percentage of the person or group holding
such options, warrants or convertible securities but are not deemed outstanding
for computing the percentage of any other person or group.
(2) Includes 5,000,000 shares issuable upon exercise of warrants that are
currently exercisable or will become exercisable within 60 days after March 31,
2004.
(3) Includes 4,250,000 shares issuable upon exercise of warrants that are
currently exercisable or will become exercisable within 60 days after March 31,
2004.
(4) Includes 2,500,000 shares issuable upon exercise of warrants that are
currently exercisable or will become exercisable within 60 days after March 31,
2004.
(5) Includes 14,250,000 shares issuable upon exercise of warrants that are
currently exercisable or will become exercisable within 60 days after March 31,
2004.
EXECUTIVE OFFICERS
The executive officers of the Company as of March 31, 2004, are as follows:
Name. . . . Age Position
----------- --- --------------------------------------------------------------
Brian Bonar 56 Chairman of the Board of Directors and Chief Executive Officer
Brian Bonar has been nominated to serve as a director of the Company. See
"Proposal 1 - Election of the Board" for a discussion of Mr. Bonar's business
experience.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information concerning the
cash compensation and certain other compensation paid, awarded, or accrued, by
the Company to the Company's Chief Executive Officer and the two most highly
compensated executive officers who were serving at the end of the fiscal year
ended June 30, 2003 and two former executive officers who served the Company and
its subsidiaries for the fiscal years ended June 30, 2001, 2002 and 2003. The
listed individuals shall be hereinafter referred to as the "Named Officers."
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------- ------------- --------------------
FISCAL OTHER ANNUAL OPTIONS/
NAME AND PRINCIPAL POSITION. . . . YEAR SALARY BONUS COMPENSATION SARS (#) OTHER COMP
--------- -------------
Brian Bonar. . . . . . . . . . . . 2003 $ 275,000 $ -- $ 76,814 15,000,000 $ --
Chairman, Board of Directors,. . . 2002 $ 230,000 -- -- 1,750,000 --
President and C.E.O. . . . . . . . 2001 243,333 -- -- 31,250 --
Christopher W. McKee (1) 2002 $ 17,625 $ -- $ -- -- $ --
Senior Vice President. . . . . . . 2001 175,000 -- -- 20,763 --
Philip J. Englund (2) 2002 $ 135,000 $ -- $ -- -- $ --
Senior Vice President, General . . 2001 165,000 -- -- 18,000 --
Counsel and Secretary
James R. Downey, Jr. 2003 $ 79,000 $ -- $ -- 5,500,000 $ --
Chief Operating Officer and Chief
Accounting Officer
(1) Mr. McKee resigned effective August 3, 2001
(2) Mr. Englund resigned effective August 23, 2002.
(3) Mr. Downey joined the Company effective January 6, 2003. He resigned
effective December 31, 2003.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on Options/SARs granted in the
fiscal year ended June 30, 2003 to the Named Officers.
NUMBER OF PERCENT OF POTENTIAL REALIZABLE
SECURITIES TOTAL VALUE AT ASSUMED
UNDERLYING OPTIONS/SARS ANNUAL RATES OF
OPTIONS/SARS GRANTED TO EXERCISE OR STOCK PRICE
GRANTED (#) EMPLOYEES IN BASE PRICE EXPIRATION APPRECIATION FOR
NAME . . . . . . . . . . (4) FISCAL YEAR ($/SHARE) DATE OPTION TERM (5)
------------------------ ------------- ------------------
5% ($) 10% ($)
-------------
Brian Bonar. . . . . . . 15,000,000 73 $ 0.01 2/1/12 $ 675,000 $1,350,000
Christopher W. McKee (1) --- --- --- --- --- ---
Philip J. Englund (2). . 300,000 10 0.40 11/15/03 6,000 12,000
James R. Downey, Jr. (3) 5,500,000 24 0,01 2/1/12 247,500 495,000
(1) Mr. McKee resigned effective August 3, 2001
(2) Mr. Englund resigned effective August 23, 2002.
(3) Mr. Downey resigned effective December 31, 2003
(4) Warrants/options become exercisable monthly over a 3-year period from date
of grant. Adjusted for 1-for-20 reverse stock split at August 9, 2002.
(5) Calculated based on the closing price of the Company's common stock on
October 15, 2003 ($0.03).
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information on option exercises in the fiscal year
ended June 30, 2003 by the Named Officers and the value of such Named Officers'
unexercised options at June 30, 2003. Warrants to purchase Common Stock are
included as options. No stock appreciation rights were exercised by the Named
Officers during the fiscal year ended June 30, 2003, and no stock appreciation
rights were held by them at the end of the fiscal year ended June 30, 2003.
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SAR
NAME . . . . . . . . . . EXERCISE (#) REALIZED ($) OPTIONS/SARS AT FY-END (#) AT FISCAL YEAR END ($) (4)
------------------------
EXERCISABLE UNEXERCISABL EXERCISABLE UNEXERCISABL
------------
Brian Bonar 4,000,000 $ 40,000 19,007,500 --- $190,075
Christopher W. McKee (1) --- --- --- --- ---
Philip J. Englund (2) --- --- --- --- ---
James R. Downey, Jr. (3) --- --- 5,500,000 --- $ 55,000
NAME
------------------------
Brian Bonar ---
Christopher W. McKee (1) ---
Philip J. Englund (2) ---
James R. Downey, Jr. (3) ---
(1) Mr. McKee resigned effective August 3, 2001
(2) Mr. Englund resigned effective August 23, 2002.
(3) Mr. Downey joined the Company on January 6, 2003
(4) At the 2003 Fiscal Year end, the closing price of the Common Stock on that
date as quoted by the NASD Electronic Bulletin Board was $0.01.
Share amounts have been adjusted for the 1-for-20 reverse split at
August 9, 2002
BOARD AND COMMITTEE MEETINGS
The Board held nine (9) meetings during the fiscal year ended June 30,
2003.
The Company's audit committee (the "Audit Committee"), composed of Messrs.
Green and Fryer, met two (2) times during the fiscal year ended June 30, 2004,
to review the Company's financial statements and other matters, and to meet with
the Company's independent auditors.
The Company's compensation committee (the "Compensation Committee"),
composed of Mssrs. Gaer. Dietrich, and Green, met two (2) times during the
fiscal year ended June 30, 2003, to review executive compensation and the status
of the Company's employee stock option plans.
None of these individuals was an officer or employee of the Company at any
time during the fiscal year ended June 30, 2003.
No current executive officer of the Company has ever served as a member of
the board of directors or compensation committee of any other entity that has or
has had one or more executive officers serving as a member of the Board or
Compensation Committee.
DIRECTOR AND COMMITTEE COMPENSATION
Directors who are not employees of the Company or one of its subsidiaries
receive fees of $500 per meeting.
CERTAIN TRANSACTIONS
During the year ended June 30, 2003, the Company accrued consulting
expenses of $110,000 due Arroyo Development Corporation, owned by Mr. Eric Gaer,
a member of the Board of Directors. There was no officer or director
indebtedness to the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board, the executive officers of the Company and persons
who hold more than 10 percent (10%) of the Company's outstanding Common Stock
are subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934 which require them to file reports with respect to their
ownership of the Common Stock and their transactions in such Common Stock. Based
upon (i) the copies of Section 16(a) reports, which the Company received from
such persons for their transactions in the fiscal year ended June 30, 2003
relating to the Common Stock and their Common Stock holdings, the Company, to
the best of the Company's knowledge, believes that certain of the reporting
requirements under Section 16(a) for such fiscal year were met in a timely
manner by its directors, executive officers and greater than 10% beneficial
owners.
ANNUAL REPORT ON FORM 10-K
The Company filed an Annual Report on Form 10-K with the SEC on or about
November 12, 2003. A copy of the Form 10-K for the fiscal year ended June 30,
2003, has been mailed concurrently with this Proxy Statement to all stockholders
entitled to notice of and to vote at the Meeting. The Form 10-K is not
incorporated into this Proxy Statement and is not considered proxy solicitation
material.
Stockholders may obtain an additional copy of this report, without charge,
by writing to Eric W. Gaer, Secretary of the Company, at the Company's principal
executive offices located at 9449 Balboa Avenue, Suite 211, San Diego,
California 92123.
Exhibit A
---------
Proposed Form of Amendment to Certificate of Incorporation
Increasing the Number of Authorized Shares of Common Stock
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DALRADA FINANCIAL CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is Dalrada Financial Corporation.
2. The Certificate of Incorporation of the Corporation (hereinafter
called the "Certificate of Incorporation") is hereby further amended by deleting
the current first paragraph of the Fourth Article and replacing it with the
following:
"FOURTH: The aggregate number of shares of stock which the Corporation
------
shall have authority to issue is 1,000,100,000 shares divided into two classes;
1,000,000,000 shares of which shall be designated as Common Stock, $.005 par
value per share, and 100,000 shares of which shall be designated as Preferred
Stock, with $0.01 par value per share. There shall be no preemptive rights with
respect to any shares of capital stock of the Corporation."
3. The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Sections 228 and 242
of the General Corporation Law of the State of Delaware.
Dated: September 3, 2003
By:_________________________
Brian Bonar, President
ATTEST:
By:__________________________
Eric W. Gaer, Secretary
THE BOARD OF DIRECTORS OF
DALRADA FINANCIAL CORPORATION
Dated: April 9, 2004
DALRADA FINANCIAL CORPORATION PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brian Bonar as proxy, with full power of
substitution and resubstitution, to vote all shares of stock which the
undersigned is entitled to vote at the Annual Meeting of Stockholders (the
"Annual Meeting") of Dalrada Financial Corporation (the "Company") to be held at
---------- -------
9449 Balboa Avenue, Suite 211, San Diego, California 92123, on May 10, 2004, at
10 a.m., local time, or at any postponements or adjournments thereof, as
specified below, and to vote in his or her discretion on such other business as
may properly come before the Annual Meeting and any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
1. ELECTION OF DIRECTORS:
Nominees: Brian Bonar, Richard H. Green, Robert A. Dietrich, Eric W. Gaer, and
Stephen J. Fryer
[ ] VOTE FOR ALL NOMINEES ABOVE [ ] VOTE WITHHELD FROM ALL
NOMINEES
(Except as withheld in the space below)
Instruction: To withhold authority to vote for any individual nominee, check
the box "Vote FOR" and write the nominee's name on the line below.
______________
2. APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION INCREASING THE COMPANY'S AUTHORIZED COMMON STOCK:
To approve an amendment to the Company's certificate of incorporation to
increase the number of Common Stock authorized to be issued from 500,000,000
shares to 1,000,000,000 shares.
[ ] VOTE FOR [ ] VOTE AGAINST [ ] ABSTAIN
3. RATIFICATION OF ACCOUNTANTS:
Ratification and approval of the selection of Pohl, McNabola, Berg and Company,
LLP as independent auditors for the fiscal year ending June 30, 2004.
[ ] VOTE FOR [ ] VOTE AGAINST [ ] ABSTAIN
(PLEASE SIGN AND DATE ON REVERSE SIDE)
UNLESS OTHERWISE SPECIFIED BY THE UNDERSIGNED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2, AND 3, AND WILL BE VOTED BY THE PROXY HOLDERS AT THEIR
DISCRETION AS TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE ANNUAL MEETING OR
ANY ADJOURNMENT(S) THEREOF TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS JUST SIGN BELOW, NO BOXES NEED BE CHECKED.
DATED: ____________________, 2004
SIGNATURE OF STOCKHOLDER
PRINTED NAME OF STOCKHOLDER
TITLE (IF APPROPRIATE)
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. IF SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH, AND, IF
SIGNING FOR A CORPORATION, GIVE YOUR TITLE. WHEN SHARES ARE IN THE NAMES OF MORE
THAN ONE PERSON, EACH SHOULD SIGN.
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
DALRADA FINANCIAL CORPORATION
9449 Balboa Avenue Suite 211 San Diego, California 92123
Telephone: (858) 277-5300 Fax: (858) 277-3446