DRDF Form 14A Definitive
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:
[
] Preliminary
Proxy Statement
[
] Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive
Proxy Statement
[
] Definitive
Additional Materials
[
] Soliciting
Material Pursuant to §240.14a-11(c) or §240.14a-12
DALRADA
FINANCIAL 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:
3. Per
unit
price or other underlying value of transaction computed pursuant to Exchange
Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and state
how it
was determined):
4. Proposed
maximum aggregate value of transaction:
5. Total
fee
paid:
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:
2. Form,
Schedule or Registration Statement No.:
3. Filing
Party:
4. Date
Filed:
DALRADA
FINANCIAL CORPORATION
9449
Balboa Avenue w
Suite
210 w
San
Diego, California 92123
Telephone:
(858) 277-5300 w
Fax:
(858) 277-3446
April
19,
2006
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 25, 2006 for the following purposes:
1. Elect
a
Board of five directors.
2. Approval
of a reverse split.
3. Ratify
the
appointment of our independent 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,
/S/
Brian
Bonar
____________
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 w
Suite
210 w
San
Diego, California 92123
Telephone:
(858) 277-5300 w
Fax:
(858) 277-3446
NOTICE
OF
ANNUAL MEETING OF STOCKHOLDERS
To
be
held May 25, 2006
NOTICE
IS
HEREBY GIVEN that the 2005 Annual Meeting of Stockholders (the "Meeting") of
DALRADA FINANCIAL CORPORATION, a Delaware corporation (the "Company"), will
be
held at 9449 Balboa Avenue, San Diego, California 92123, at 9:00 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 Certificate of Incorporation in order to effect
a
stock combination (reverse split) of the Common Stock in an exchange ratio
of
one newly issued share for each two hundred outstanding shares of Common
Stock;
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, 2006; 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, 2005 are enclosed herewith. Only holders
of
record of Common Stock at the close of business on March 16, 2006 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 May 25, 2006, the original Meeting
date) in the stamp-addressed envelope provided.
By
Order
of the Board of Directors
/s/
Brian
Bonar
________________________
Brian
Bonar
Chief
Executive Officer
Dated:
April 19, 2006
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 w
Suite
210 w
San
Diego, California 92123
Proxy
Statement
Annual
Meeting of Stockholders
May
25, 2006
This
Proxy Statement is furnished in connection with the solicitation of proxies
by
the board of directors (the "Board")
of
Dalrada Financial 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 210, San Diego, California 92123
on
May 25, 2006 at 9:00 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 210, 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 19, 2006.
VOTING
SECURITIES
Voting
of Proxy
A
form of
proxy for use at the annual meeting and a return envelope for the proxy are
enclosed. A shareholder may revoke the authority granted by his or her execution
of a proxy at any time before the effective exercise of such proxy by filing
with the Secretary of the Company a written notice of revocation or a duly
executed proxy bearing a later date, or by voting in person at the annual
meeting. The Company’s Common Shares represented by executed and unrevoked
proxies will be voted in accordance with the choice or instructions specified
thereon. If no specifications are given, the shares represented thereby will
be
voted in favor of the matters as set forth in this proxy statement and the
accompanying Notice of Annual Meeting of Shareholders, and in accordance with
the best judgment of the Board of Directors on any other matters which may
properly come before the annual meeting.
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 16, 2006, the record date
for
determination of stockholders entitled to notice of and to vote at the Meeting,
977,175,933 shares of the Company's common stock, par value $.005 (the "Common
Stock"). Each stockholder is entitled to one vote for each share of Common
Stock.
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,
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.
Revocability
of Proxy
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 as
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 210, 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.
Dissenter’s
Right of Appraisal
The
General Corporate Law of Delaware does not provide for dissenter’s rights of
appraisal in connection with the proposed actions.
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 2005 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 of which three 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.
|
Name
|
Age
|
Since
|
Director
Title
|
|
Brian
Bonar
|
58
|
1995
|
Chairman
and CEO
|
|
Richard
H. Green
|
69
|
2000
|
Director
|
|
Eric
W. Gaer
|
57
|
2000
|
Secretary
and Director
|
|
David
P. Lieberman
|
61
|
2006
|
Director
|
|
Stanley
A. Hirschman
|
61
|
2006
|
Director
|
BRIAN
BONAR Chairman of the Board of Directors Chief Executive Officer of the Company.
Mr. 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.
DR.
RICHARD H. GREEN has served as a director since September 2000. 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 since 1967. From 1965 through 1967, Dr. Green
served as Senior Engineer for The Boeing Company, Space Division. From 1983
through 1985, Dr. Green 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 currently is a member of
the
Governing Board of Pasadena City College. Dr. Green 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.
ERIC
W.
GAER has served as a director since March 2000. 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, a publicly-held company in San
Diego, California. 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 Imaging Technologies Corporation, Daybreak
Technologies, Inc., Venture Software, Inc., and Merisel, Inc. He is also a
licensed insurance and real estate broker in California. In 1970, he received
a
Bachelor of Arts degree in mass communications from California State University,
Northridge.
DAVID
LIEBERMAN has been the Chief Financial Officer for John Goyak & Associates,
Inc., an aerospace consulting firm located in Las Vegas, NV since 2003.
Previously, Mr. Lieberman was the President of Lieberman Associates from 2000
to
2003 where he acted as the Chief Financial Officer for various public and
non-public companies located in NV and CA. Mr. Lieberman has over thirty years
of financial experience beginning with five years as an accountant with Price
Waterhouse from 1967 through 1972
STANLEY
HIRSCHMAN has
been
President of CPointe Associates, a Plano, Texas based executive management
and
consulting firm since 1997. CPointe specializes in business solutions for
companies with emerging technologies and is well-versed in the challenges of
regulated corporate governance. He is also Chairman of the Board of Bravo Foods
International, a director of Bronco Energy Fund, Energy & Engine Technology,
GoldSpring, and 5 G Wireless Corporation and is a former chairman of Mustang
Software, Inc. While at Mustang, Mr. Hirschman took a hands-on role in the
planning and execution of the strategic initiative to increase shareholder
value
resulting in the successful acquisition of the company by Quintus Corporation.
Prior to establishing CPointe Associates, he was Vice President Operations,
Software Etc., Inc., a 396 retail store software chain, from 1989 until 1996.
He
also held senior executive management positions with T.J. Maxx, Gap Stores
and
Banana Republic. Stan is a member of the National Association of Corporate
Directors and participates regularly in the KMPG Audit Committee Roundtable.
He
is active in community affairs and serves on the Advisory Board of the Salvation
Army Adult Rehabilitation Centers.
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 ten times during the fiscal year ended June 30, 2005. 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,
2005.
The
Company's audit committee (the "Audit
Committee"),
composed of Messrs. Richard Green and Robert Dietrich, met twice during the
fiscal year ended June 30, 2005, to review the Company's financial statements
and to meet with the Company's independent auditors. The Audit Committee
currently consists of Mssrs. Richard Green and Stanley Hirschman.
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
Messrs. Eric Gaer, and Richard Green, met once during the fiscal year ended
June
30, 2005, 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, 2005, 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 with the exception of Brian Bonar who also serves as
the
CEO and Chairman of Warning Management Services, Inc. (“WMNI”).
Code
of Ethics
The
Board
adopted on October 12, 2004, a Code of Business Conduct and Ethics that applies
to each of the Company’s directors, officers and employees. The Code of Business
Conduct and Ethics sets forth the Company’s policies and expectations on a
number of topics, including: Compliance with laws, rules and regulations;
Conflicts of Interest; Insider Trading; Corporate Opportunities; Competition
and
Fair Dealing; Discrimination and Harassment; Health and Safety; Record-Keeping;
Confidentiality; Protection and Proper Use of Company Assets; Prohibitions
Against Payments to Government Personnel; Waivers of the Code of Business
Conduct of Ethics; Amendments; Reporting any Illegal or Unethical Behavior;
and
Compliance Procedures.
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 AFFECT A REVERSE SPLIT
OF
THE COMMON STOCK
General
The
Board
has unanimously adopted resolutions proposing, declaring advisable and
recommending that stockholders authorize an amendment to the Certificate of
Incorporation to: (i) effect a stock combination (reverse split) of the
Company's Common Stock in an exchange ratio of one (1) newly issued share for
each two hundred (200) outstanding shares of Common Stock (the "Reverse
Split");
and
(ii) provide that no fractional shares or scrip representing fractions of a
share shall be issued, but in lieu thereof, each fraction of a share that any
stockholder would otherwise be entitled to receive shall be rounded up to the
nearest whole share. There will be no change in the number of the Company's
authorized shares of Common Stock and no change in the par value of a share
of
Common Stock.
If
the
Reverse Split is approved, the Board will have authority, without further
stockholder approval, to effect the Reverse Split pursuant to which the
Company's outstanding shares (the "Old
Shares")
of
Common Stock would be exchanged for new shares (the "New
Shares")
of
Common Stock, in an exchange ratio of one (1) New Share for each two hundred
(200) Old Shares. The number of Old Shares for which each New Share is to be
exchanged is referred to as the "Exchange
Number".
The
Exchange Number may, within such range, be a whole number or a whole number
and
fraction of a whole number.
In
addition, the Board will have the authority to determine the exact timing of
the
effective date and time of the Reverse Split, which may be any time prior to
the
filing of the Form 10-K for the year ending June 30, 2006, without further
stockholder approval. Such timing and Exchange Number will be determined, in
the
judgment of the Board, with the intention to raise financing, to issue shares
of
Common Stock pursuant to outstanding contractual obligations, and for other
intended benefits as the Company finds appropriate. See "-- Purposes of the
Reverse Split," below. The text of this proposed amendment (subject to inserting
the effective time of the Reverse Split and the Exchange Number) is set forth
in
Exhibit A to this Proxy Statement.
The
Board
also reserves the right, notwithstanding stockholder approval and without
further action by stockholders, to not proceed with the Reverse Split if, at
any
time prior to filing this amendment with the Secretary of State of the State
of
Delaware, the Board, in its sole discretion, determines that the Reverse Split
is no longer in the best interests of the Company and its stockholders. The
Board may consider a variety of factors in determining whether or not to
implement the Reverse Split and in determining the Exchange Number including,
but not limited to, overall trends in the stock market, recent changes and
anticipated trends in the per share market price of the Common Stock, business
and transactional developments, and the Company's actual and projected financial
performance.
Purposes
of the Reverse Split
The
purpose of the Reverse Split also would be to increase the market price of
the
Common Stock in order to make the Common Stock more attractive to raise
financing (and, therefore, both raise cash to support the Company's operations
and increase the Company's net tangible assets, and as a possible currency
for
acquisitions and other transactions. The Common Stock traded on the OTC from
approximately $0.002 to approximately $0.0075 from July 1, 2004 through March
31, 2006. This has reduced the attractiveness of using the Common Stock or
instruments convertible or exercisable into Common Stock in order to raise
financing to support the Company's operations and to increase the Company's
net
worth and as consideration for potential acquisitions (which, when coupled
with
the Company's need to deploy its available cash for operations, has rendered
acquisitions difficult to negotiate).
THERE
CAN
BE NO ASSURANCE, HOWEVER, THAT, EVEN AFTER CONSUMMATING THE REVERSE SPLIT,
THE
COMPANY WILL BE ABLE TO MAINTAIN ITS MARKET PRICE PER SHARE AND THUS UTILIZE
ITS
COMMON STOCK IN ORDER TO EFFECTUATE FINANCING OR ACQUISITION
TRANSACTIONS.
Furthermore,
the Company is contractually obligated to issue approximately 2.8 billion shares
of Common Stock, which exceeds the amount of shares of Common Stock the Company
is currently authorized to issue. Accordingly, the Company would be in violation
of certain of its contractual violations as it would be unable to issue any
shares of Common Stock pursuant to the exercise of options or warrants or the
conversion of its 15% Convertible Stock if any such issuance would cause the
Company to issue more than the current number of authorized shares of Common
Stock. A
reverse
split would reduce the number of the shares outstanding thus providing more
shares to be available for the conversion of our convertible debt.
Giving
the Board authority to implement the Reverse Split will help avoid the necessity
of calling a special meeting of stockholders under time constraints to authorize
a reverse split should it become necessary in order to seek to effectuate a
financing or acquisition transaction.
The
Reverse Split will not change the proportionate equity interests of the
Company's stockholders at the time of the split, nor will the respective voting
rights and other rights of stockholders be altered, except for possible
immaterial changes due to rounding up to eliminate fractional shares. However,
shares issued in connection with the conversion of remaining debt, or for
working capital, or acquisitions, would most likely dilute the value of shares
held by individual shareholders. There are no anti-dilution protections for
the
debt holders. The Common Stock issued pursuant to the Reverse Split will remain
fully paid and non--assessable. The Company will continue to be subject to
the
periodic reporting requirements of the Securi-ties Exchange Act of 1934, as
amended.
Certain
Effects of the Reverse Split
The
following table illustrates the principal effects of the Reverse Split to the
977,175,933 shares of Common Stock outstanding as of April 5, 2006:
| |
|
|
|
Prior
to
|
|
After
1-for-200
|
| |
|
|
|
Reverse
Stock
|
|
Reverse
Stock
|
| |
|
|
|
Split
|
|
Split
|
|
Number
of Shares
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Common
Stock Authorized
|
|
|
|
1,000,000,000
|
|
1,000,000,000
|
| |
|
|
|
|
|
|
|
Common
Stock Outstanding (1)
|
|
|
|
977,175,933
|
|
4,885,880
|
| |
|
|
|
|
|
|
|
Available
for future sale
|
|
|
|
22,824,067
|
|
995,114,120
|
| |
|
|
|
|
|
|
|
Less
Conversion of Convertible Debentures
|
Principal
|
|
|
|
|
|
Longview
Fund LP
|
|
$3,761,707
|
|
1,319,897,193
|
(2)
|
6,599,486
|
|
Longview
Equity Fund LP
|
|
$1,005,000
|
|
352,631,578
|
(2)
|
1,763,158
|
|
Longview
Int'l Equity Fund LP
|
|
$495,000
|
|
173,684,210
|
(2)
|
868,421
|
|
Alpha
Capital Aktiengesellschaft
|
|
$602,426
|
|
211,377,543
|
(2)
|
1,056,888
|
|
Balmore
S.A.
|
|
$1,380,960
|
|
484,547,368
|
(2)
|
2,422,737
|
|
Balmore
S.A.
|
|
$117,075
|
|
52,980,973
|
(3)
|
264,905
|
|
Howard
Schraub
|
|
$300,000
|
|
105,263,157
|
(2)
|
526,316
|
| |
|
|
|
|
|
|
|
Sub-Total
|
|
$7,662,168
|
|
2,700,382,026
|
|
13,501,910
|
| |
|
|
|
|
|
|
|
Shares
available for future issuance
|
|
|
|
(2,677,557,959)
|
|
981,612,210
|
(1)
Gives
effect to the Reverse Split, excluding New Shares to be issued in lieu of
fractional shares. Stockholders should recognize that, the Reverse Split will
reduce the number of shares they own by a number equal to the number of shares
owned immediately prior to the filing of the amendment regarding the Reverse
Split divided by the Exchange Number (i.e. divide by 200 if the reverse is
two
hundred to one, as adjusted to include New Shares to be issued in lieu of
fractional shares).
While
a
Reverse Split may result in an increase in the market price of the Common Stock,
there can be no assurance that the Reverse Split will increase the market price
of the Common Stock by a multiple equal to the Exchange Number or result in
a
permanent increase in the market price (which is dependent upon many factors,
including the Company's performance and prospects). Also, should the market
price of the Company's Common Stock decline after the Reverse Split, the
percentage decline may be greater than would be the case in the absence of
the
Reverse Split.
The
possibility exists that liquidity in the market price of the Common Stock could
be adversely affected by the reduced number of shares that would be out-standing
after the Reverse Split. In addition, the Reverse Split will increase the number
of stockholders of the Company who own odd-lots (less than 200 shares).
Stock-holders who hold odd-lots typically will experience an increase in the
cost of selling their shares, as well as greater difficulty in effecting such
sales. Consequently, there can be no assurance that the Reverse Split will
achieve the desired results that have been outlined above.
A
large
number of shares underlying the convertible debentures are available for future
sale and the issuance and sale of these shares may depress the market price
of
our common stock and may cause immediate and substantial dilution to our
existing stockholders.
Furthermore,
the
number of shares of common stock issuable upon conversion of the convertible
debentures may increase if the market price of our stock declines
and the
sale of the increased number of shares may further adversely affect the market
price of our common stock.
(2)
The
conversion price is seventy-five
percent (75%) of the average of the five lowest volume weighted average prices
of the common stock as reported by Bloomberg L.P. for the principal market
for
the twenty trading days preceding the conversion date. Therefore assuming a
market price of $0.0038 would yield a conversion price of $0.0038 x 75% =
$.00285. There is $7,545,093 in notes convertible at $.00285 or approximately
2,647,401,053 shares.
(3)
The
conversion price is fixed at $0.00226. There a $119,737 note convertible at
$0.00226 or 52,980,973 approximate shares,
Procedure
for Effecting Reverse Split and Exchange of Stock
Certificates
If
this
amendment is approved by the Company's stockholders, and if the Board still
believes that the Reverse Split is in the best interests of the Company and
its
stockholders, the Company will file the amendment with the Secretary of State
of
the State of Delaware at such time as the Board has determined the appropriate
Exchange Number and the appropriate effective time for such split. The Board
may
delay effecting the Reverse Split until as late as December 31, 2006 without
resoliciting stockholder approval. The Reverse Split will become effective
on
the date of filing the amendment at the time specified in the amendment (the
"Effective
Time").
Beginning at the Effective Time, each certificate representing Old Shares will
be deemed for all corporate purposes to evidence ownership of New Shares.
As
soon
as practicable after the Effective Time, stockholders will be notified that
the
Reverse Split has been effected and of the exact Exchange Number. The Company
expects that its transfer agent will act as exchange agent (the "Exchange
Agent")
for
purposes of implementing the exchange of stock certificates. Holders of Old
Shares will be asked to surrender to the Exchange Agent certifi-cates
representing Old Shares in exchange for certificates representing New Shares
in
accor-dance with the procedures to be set forth in a letter of transmittal
to be
sent by the Exchange Agent. No new certificates will be issued to a stockholder
until such stockholder has surren-dered such stockholder's outstanding
certificate(s) together with the properly completed and executed letter of
transmittal to the Exchange Agent. Any Old Shares submitted for transfer,
whether pursuant to a sale or other disposition, or otherwise, will
automatically be exchanged for New Shares at the exchange ratio. Stockholders
should not destroy any stock certificate and should not submit any certificate
until requested to do so by the Company or the Exchange
Agent.
Fractional
Shares
No
scrip
or fractional certificates will be issued in connection with the Reverse Split.
Any fraction of a share that any stockholders of record otherwise would be
entitled to receive shall be rounded up to the nearest whole share.
No
Dissenter's Rights
Under
Delaware law, stockholders are not entitled to dissenter's rights with respect
to the proposed amendment.
Federal
Income Tax Consequences of the Reverse Split
The
following is a summary of certain material U.S. federal income tax consequences
of the Reverse Split and does not purport to be complete. It does not discuss
any state, local, foreign or minimum income or other U.S. federal tax
consequences. Also, it does not address the tax consequences to holders that
are
subject to special tax rules, such as banks, insurance companies, regulated
investment companies, personal holding companies, foreign entities, nonresident
alien individuals, broker-dealers and tax-exempt entities. The discussion is
based on the provisions of the U.S. federal income tax law as of the date
hereof, which is subject to change retroactively as well as prospectively.
This
summary also assumes that the Old Shares were, and the New Shares will be,
held
as a "capital asset," as defined in the Code (generally, property held for
investment). The tax treatment of a stockholder may vary depending upon the
particular facts and circumstances of such stockholder. Each
stockholder should consult with such stockholder's own tax advisor with respect
to the consequences of the Reverse Split.
The
Reverse Split is an isolated transaction and is not part of a plan to
periodically increase any stockholder's proportionate interest in the assets
or
earnings and profits of the Company. As a result, no gain or loss should be
recognized by a stockholder of the Company upon such stockholder's exchange
of
Old Shares for New Shares pursuant to the Reverse Split. The aggregate tax
basis
of the New Shares received in the Reverse Split will be the same as the
stockholder's aggregate tax basis in the Old Shares exchanged therefor. The
stockholder's holding period for the New Shares will include the period during
which the stockholder held the Old Shares surrendered in the Reverse Split.
Required
Vote
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. As a result,
any shares not voted (whether by abstention, broker non-vote or otherwise)
will
have the same effect as a vote against the proposal.
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,
2005.
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 Pohl, McNabola, Berg and Company, LLP, the Board
shall reconsider the proposal.
Audit
and Related Fees
The
Company paid or accrued the following fees in each of the prior two fiscal
years
to its independent certified public auditors, Pohl, McNabola Berg & Company,
LLP
| |
For
the Year Ended June 30,
|
| |
2005
|
2004
|
|
Audit
Fees
|
$110,000
|
$65,000
|
|
Audit-Related
Fees
|
$95,033
|
$22,085
|
|
Tax
Fees
|
$0.00
|
$-
|
|
All
Other Fees
|
$0.00
|
$7,848
|
|
Total
Fees
|
$205,033
|
$94,933
|
"Audit
Fees" consisted of fees billed for services rendered for the audit of the
Company’s annual financial statements and audit related fees are for review of
the financial statements included in the Company’s quarterly reports on Form
10-QSB.
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.
BENEFICIAL
OWNERSHIP
OF SECURITIES
The
following table sets forth certain information known to the Company with respect
to the beneficial ownership of the Company’s common stock as of April 5, 2006 by
(i) each person who is known by the Company to own beneficially more than 5%
of
the Company's common stock, (ii) each of the Company’s directors and executive
officers, and (iii) all officers and directors of the Company as a group. Except
as otherwise listed below, the address of each person is c/o Dalrada Financial
Corporation., 9449 Balboa Avenue, Suite 210, San Diego, CA 92123
|
Name
and Address
|
|
Number
of Shares
|
|
Percent
|
|
of
Beneficial Owner (1)
|
|
Beneficially
Owned
|
|
of
Class (2)
|
| |
|
|
|
|
|
Longview
Fund, LP (3)
|
|
1,993,954,870
(14)
|
|
67.11%
|
|
600
Montgomery Street 44th floor
|
|
|
|
|
San
Francisco, CA 94111
|
|
|
|
|
| |
|
|
|
|
|
Longview
Equity Fund, LP (4)
|
532,716,833
(15)
|
|
35.28%
|
|
600
Montgomery Street 44th floor
|
|
|
|
|
San
Francisco, CA 94111
|
|
|
|
|
| |
|
|
|
|
|
Longview
Int’l Equity Fund, LP (5)
|
262,382,918
(16)
|
|
21.17%
|
|
600
Montgomery Street 44th floor
|
|
|
|
|
San
Francisco, CA 94111
|
|
|
|
|
| |
|
|
|
|
|
Alpha
Capital Aktiengesellschaft (6)
|
319,285,842
(17)
|
|
24.63%
|
|
Pradafant
|
|
|
|
|
|
9490
Furstentums
|
|
|
|
|
|
Vaduz,
Liechtenstein
|
|
|
|
|
| |
|
|
|
|
|
Balmore
S.A. (7)
|
|
646,295,598
(18)
|
|
39.81%
|
|
P.O.
Box 146, Road Town
|
|
|
|
|
|
Tortola,
BVI
|
|
|
|
|
| |
|
|
|
|
|
Howard
Schraub (8)
|
|
159,019,950
(19)
|
|
14.00%
|
|
c/o
Howard Associates, Inc.
|
|
|
|
|
525
East 72nd Street
|
|
|
|
|
|
New
York, NY 10021
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and Officers
|
|
|
|
|
| |
|
|
|
|
|
Brian
Bonar (9)
|
|
90,000,000
|
|
8.43%
|
|
Robert
A. Dietrich (10) (20)
|
|
23,875,000
|
|
2.38%
|
|
Stephen
J. Fryer (11) (21)
|
|
18,875,000
|
|
1.89%
|
|
Eric
W. Gaer (12)
|
|
24,285,000
|
|
2.42%
|
|
Richard
Green (13)
|
|
25,875,000
|
|
2.58%
|
| |
|
|
|
|
|
All
current directors and
|
|
|
|
|
|
Executive
Officers
|
|
|
|
|
|
(Group
of 5)
|
|
182,921,000
|
|
17.72%
|
(1)
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. Shares of common stock subject to options
or
warrants currently exercisable or convertible, or exercisable or convertible
within 60 days of August 31, 2005 are deemed outstanding for computing the
percentage of the person holding such option or warrant but are not deemed
outstanding for computing the percentage of any other person. Except as pursuant
to applicable community property laws, the persons named in the table have
sole
voting and investment power with respect to all shares of common stock
beneficially owned.
(2)
Percentage based on 977,175,933 shares of common stock outstanding as of April
5, 2006, plus shares underlying each shareholder,s convertible note and
warrants.
(3)
Longview Fund, LP is a private investment fund that is in the business of
investing publicly-traded securities for their own accounts and is structured
as
a limited liability company whose members are the investors in the fund. The
General Partner of the fund is Viking Asset Management, LLC, a California
limited liability company which manages the operations of the fund. Peter T.
Benz is the managing member of Viking Asset Management, LLC. As the control
person of the shares owned by Longview Fund, LP, Mr. Benz may be viewed as
the
beneficial owner of such shares pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934.
(4)
Longview Equity Fund, LP is a private investment fund that is in the business
of
investing publicly-traded securities for their own accounts and is structured
as
a limited liability company whose members are the investors in the fund. The
General Partner of the fund is Viking Asset Management, LLC, a California
limited liability company which manages the operations of the fund. Peter T.
Benz is the managing member of Viking Asset Management, LLC. As the control
person of the shares owned by Longview Equity Fund, LP, Wayne Coleson may be
viewed as the beneficial owner of such shares pursuant to Rule 13d-3 under
the
Securities Exchange Act of 1934.
(5)
Longview International Equity Fund, LP is a private investment fund that is
in
the business of investing publicly-traded securities for their own accounts
and
is structured as a limited liability company whose members are the investors
in
the fund. The General Partner of the fund is Viking Asset Management, LLC,
a
California limited liability company which manages the operations of the fund.
Peter T. Benz is the managing member of Viking Asset Management, LLC. As the
control person of the shares owned by Longview International Equity Fund, LP,
Wayne Coleson may be viewed as the beneficial owner of such shares pursuant
to
Rule 13d-3 under the Securities Exchange Act of 1934.
(6)
Alpha
Capital Aktiengesellschaft: In accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, Konard Ackerman may be deemed the control person of the
shares owned by such entity. ALPHA Capital AG is a private investment fund
that
is owned by all its investors and managed by Mr. Ackerman. Mr. Ackerman
disclaims beneficial ownership of the shares of common stock being registered
hereto.
(7)
Balmore S.A.: In accordance with Rule 13d-3 under the Securities Exchange Act
of
1934, F. Morax may be deemed the control person of the shares owned by such
entity. Balmore S.A. is a private investment fund that is owned by all its
investors and managed by Mr. Morax. Mr. Morax disclaims beneficial ownership
of
the shares of common stock being registered hereto.
(8)
Howard Schraub is an individual.
(9)
Includes 19,007,500 shares issuable upon exercise of warrants that are currently
exercisable or will become exercisable within 60 days after April 5, 2006.
(10)
Includes 11,384,500
shares
issuable upon exercise of warrants that are currently exercisable or will become
exercisable within 60 days after April 5, 2006.
(11)
Includes 7,453,250
shares
issuable upon exercise of warrants that are currently exercisable or will become
exercisable within 60 days after April 5, 2006.
(12)
Includes 9,936,000
shares
issuable upon exercise of warrants that are currently exercisable or will become
exercisable within 60 days after April 5, 2006.
(13)
Includes 9,969,500
shares
issuable upon exercise of warrants that are currently exercisable or will become
exercisable within 60 days after April 5, 2006.
(14)
Concerning Longview Fund, LP: Assuming $3,761,707 of Convertible Debentures
converted at $0.00285 plus 674,057,677 warrants.
(15)
Concerning Longview Equity Fund, LP: Assuming $1,005,000 of Convertible
Debentures converted at $0.00285 plus 180,085,255 warrants.
(16)
Concerning Longview International Equity Fund, LP: Assuming $495,000 of
Convertible Debentures converted at $0.00285 plus 88,698,708
warrants.
(17)
Concerning Alpha Capital Aktiengesellschaft: Assuming $602,425 of Convertible
Debentures converted at $0.00285 plus 107,948,299 warrants.
(18)
Concerning Balmore S.A.: Assuming $1,380,969 of Convertible Debentures converted
at $0.00285 and $119,737 converted at $0.00226 plus 247,453,268
warrants.
(19)
Concerning Howard Schraub: Assuming $300,000 of Convertible Debentures converted
at $0.00285 plus 53,756,793 warrants.
(20)
Robert
A.
Dietrich resigned as a Director effective March 1, 2006 for personal reasons.
(21)
Stephen J. Fryer resigned as a Director effective March 1, 2006 for personal
reasons.
EXECUTIVE
OFFICERS
The
executive officers of the Company as of December 31, 2005, are as follows:
|
Name
|
Age
|
Position
|
| |
|
|
|
Brian
Bonar
|
58
|
Chairman
of the Board of Directors and Chief Executive Officer
|
|
Randall
Jones
|
51
|
Chief
Financial 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.
RANDALL
JONES became the CFO for Dalrada in January of 2005. Mr. Jones is also the
CFO
for Kaire Holdings Incorporated and Warning Management Services, Inc. Prior
to
that, Mr. Jones was CEO of South Coast Corporate Development since 1981. Mr.
Jones has over twenty-five years experience as a financial executive. He has
consulted to companies in a variety of industries, from aerospace,
manufacturing, retail, employee staffing to banking. His area of specialty
is
consulting to companies that either want to enter the public marketplace or
are
already publicly held and need assistance in the reorganization of their
accounting operations and public reporting.
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, 2005 and two former executive officers who served the Company
and
its subsidiaries for the fiscal years ended June 30, 2003, 2004 and 2005. The
listed individuals shall be hereinafter referred to as the "Named
Officers."
| |
|
Annual
Compensation
|
Long
Term
Compensation
Awards
|
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
|
Other
|
Options/
SARS
(#)
|
| |
|
|
|
|
|
Brian
Bonar
|
2005
|
$282,000
|
$0
|
0
|
|
Chairman,
Board of Directors,
|
2004
|
$
150,000
|
$
0
|
0
|
|
President
and C.E.O.
|
2003
|
$
76,814
|
$0
|
15,000,000
|
| |
|
|
|
|
|
James
R. Downey, Jr.(1)
|
2004
|
$100,000
|
$20,000
|
-
|
|
Former
Chief Operating Officer and Chief
|
2003
|
$79,000
|
|
9,500,000
|
|
Accounting
Officer
|
|
|
|
|
|
|
|
|
|
|
|
Randall
Jones
|
2005
|
120,000
|
40,000
|
|
|
Chief
Financial Officer
|
|
|
|
|
(1)
Mr.
Downey joined the Company effective January 6, 2003 and resigned effective
January 31, 2004.
The
following table provides information on Options/SARs granted in the 2004 Fiscal
Year to the Named Officers.
|
|
|
|
|
|
|
|
Name
|
Number
of
Securities
Underlying
Options/SARs
Granted
(#)
|
Percent
of
Total
Options/SARs
Granted
to
Employees
in
Fiscal
Year
|
Exercise
or
Base
Price
($/share)
|
Expiration
Date
|
Potential
Realizable
Value
at Assumed
Annual
Rates of
Stock
Price
Appreciation
for
Option
Term (4)
|
|
5%
($)
|
10%
($)
|
|
Brian
Bonar
|
7,000,000
|
23.7%
|
$0.015
|
12/1/05
|
5,250
|
10,500
|
|
James
R. Downey, Jr. (1)
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Mr.
Downey resigned effective January 30, 2004
2005
Fiscal Year - N/A
Aggregated
Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
The
following table provides information on option exercises in the 2004 Fiscal
Year
by the Named Officers and the value of such Named Officers' unexercised options
at June 30, 2004. Warrants to purchase Common Stock are included as options.
No
stock appreciation rights were held by them at the end of the 2004 Fiscal
Year.
|
|
|
|
|
|
|
Name
|
Shares
Acquired
on
Exercise
(#)
|
Value
Realized
($)
|
Number
of Securities
Underlying
Unexercised
Options/SAR’s
at FY-end (#)
|
Value
of Unexercised
In-the-money
Options/SAR
At
Fiscal Year End ($) (2)
|
| |
|
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|
Brian
Bonar
|
---
|
|
8,000,000
|
---
|
$0
|
---
|
|
James
R. Downey, Jr. (1)
|
---
|
--
|
9,500,000
|
---
|
$0
|
---
|
(1)
Mr.
Downey resigned effective January 30, 2004
2005
Fiscal Year - NA
BOARD
AND COMMITTEE MEETINGS
The
Board
held ten (10) meetings during the fiscal year ended June 30, 2005.
The
Company's audit committee (the "Audit
Committee"),
composed of Messrs. Green and Dietrich, met two (2) times during the fiscal
year
ended June 30, 2005, 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. and Green, met one (1) time during the fiscal year
ended June 30, 2005, 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, 2005.
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 with the exception of Brian Bonar who served as the
CRO
and CHairman of Warning Management Services, Inc. (“WNMI”).
COMPLIANCE
WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers, and persons who own more than 10% of a registered class
of the Company’s equity securities to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership
of
Common Stock and other Company equity securities. Officers, directors and
greater than 10% shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To
the
Company’s knowledge, based solely on its review of the copies of such reports
furnished to the company and written representations that no other reports
were
required during the fiscal year ended June 30, 2005, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
BUSINESS
ETHICS CONFLICTS OF INTERESTS POLICY
The
Company has adopted a Policy Statement on Business Ethics and Conflicts of
Interest, which was approved by the Board of Directors, applicable to all
employees.
DIRECTOR
AND COMMITTEE COMPENSATION
Directors
who are not employees of the Company or one of its subsidiaries receive fees
of
$500 per meeting attended.
CERTAIN
TRANSACTIONS
Transactions
with a Director of the Company
A
director of the Company is a majority shareholder in a consulting firm that
provides management and public relations services to the Company. The Company
accrued consulting fees and expenses to this consulting firm in the amount
of
approximately $0 and $120 for the years ended June 30, 2005 and 2004,
respectively.
Transactions
with Officers and Key Executives
During
the year ended June 30, 2005 there were no transaction with officers and key
executives.
On
March
10, 2006, the Company issued 50,000,000 shares of common stock to the Company’s
CEO as payment fro accrued expenses in the aggregate of $25K or $0.005 per
share.
Transactions
with a Related Party
In
April
2004, the Company had a PEO services client whose Chairman of the Board is
the
Company's current CEO and Chairman. The Company received fees of $7K during
the
year ended June 30, 2004. The transaction is at fair value.
Warning
Management Services, Inc.
The
Company's CEO and Chairman, Mr. Brian Bonar, is also the CEO and Chairman of
Warning Management Services, Inc. In addition, the Company's CFO, Mr. Randall
A.
Jones, is also the CFO of Warning Management Services, Inc. Warning a public
company, located in Southern California. Warning's operations consist of a
modeling agency and providing temporary staffing services to government agencies
and private companies.
As
of
September 8, 2004, Warning Management Services, Inc. ("Warning") purchased
all
of the issued and outstanding shares of Employment Systems, Inc. ("ESI") for
$1,500K. The purchase was $750K cash paid at the closing and a $750K note
payable. In connection with this transaction, the Company agreed to be a
guarantor of the $750K note payable. As inducement to enter into this guarantee,
the Company was given a non-cancelable 2-year payroll processing contract with
ESI. Management has evaluated this contingent liability and has determined
that
no loss is anticipated as a result of this guarantee.
Warning
leases offices for its ESI subsidiary, on a month-to-month basis from the
Company that started in October 2004. Monthly rental expense will be
approximately $3K per month.
In
April
2004, the Company entered into an Agreement to provide PEO services for Warning.
The Company receives from Warning a monthly administrative fee. During the
year
ended June 30, 2005, the Company has invoiced Warning $390K for management
services and $45 for reimbursement of costs. Warning also paid expenses of
$38K
on behalf of the Company. As of June 30, 2005, the Company has an amount due
to
Warning of $194K that is included in current liabilities.
Kaire
Holdings, Inc.
The
Company's Source One subsidiary processes the payroll for Effective Health,
Inc.
which is a wholly-owned subsidiary of Kaire Holdings, Inc. The Company's CFO,
Mr. Randall A. Jones, is also the CFO of Kaire Holding, Inc.
ANNUAL
REPORT ON FORM 10-KSB
The
Company filed an Annual Report on Form 10-KSB with the SEC on or about October
14, 2005. A copy of the Form 10-KSB for the fiscal year ended June 30, 2005,
has
been mailed concurrently with this Proxy Statement to all stockholders entitled
to notice of and to vote at the Meeting. The Form 10-KSB 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 210, San Diego, California 92123.
Exhibit
A
Proposed
Form of Amendment to Certificate of Incorporation
Effecting
a Reverse Split
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 1,000,000,000 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.
Effective
12:01 a.m. on December 31, 2006 (the "Effective Time"), each two hundred (200)
shares of Common Stock then issued shall be automatically combined into one
(1)
share of Common Stock of the Corporation. No fractional shares or scrip
representing fractions of a share shall be issued, but in lieu thereof, each
fraction of a share that any stockholder would otherwise be entitled to receive
shall be rounded up to the nearest whole share. The par value will remain at
$.005 per share.
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:
May12, 2006
By:_____________________________________
Brian
Bonar, Chief Executive Officer
ATTEST:
By:__________________________
Eric
W.
Gaer, Secretary
THE
BOARD
OF DIRECTORS OF
DALRADA
FINANCIAL CORPORATION
Dated:
April 19, 2006
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 210, San Diego, California 92123, on May
25,
2006, at 9:00 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, Eric W. Gaer, David P. Lieberman and Stanley
A.
Hirschman.
[
] 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
IN ORDER TO EFFECT A REVERSE SPLIT OF COMMON STOCK
To
approve an amendment to the Certificate of Incorporation in order to effect
a
stock combination (reverse split) of the Common Stock in an exchange ratio
of
one (1) newly issued share for each two hundred (200) outstanding shares of
Common Stock with the par value staying at $.005 per share;
[
] VOTE
FOR [
] VOTE
AGAINST [
]
ABSTAIN
3. RATIFICATION
OF AUDITORS:
Ratification
and approval of the selection of Pohl, McNabola, Berg and Company, LLP as
independent auditors for the fiscal year ending June 30, 2006.
[
] 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:
____________________, 2006
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 w
Suite
210 w
San
Diego, California 92123
Telephone:
(858) 277-5300 w
Fax:
(858) 277-3446