NOTICE
OF CHANGE IN THE MAJORITY OF THE BOARD OF DIRECTORS
_______________________________________________
NO
VOTE OR OTHER ACTION OF THE SECURITY HOLDERS IS REQUIRED IN CONNECTION WITH THIS
INFORMATION STATEMENT. NO PROXIES ARE BEING SOLICITED AND YOU ARE REQUESTED NOT
TO SEND THE COMPANY A PROXY.
INTRODUCTION
This
Information Statement is being mailed on or about March 31, 2010 to holders of
record on March 23, 2009 of shares of common stock, par value $0.00l per share
(“Common Stock”), of Infrared Systems International, a Nevada corporation (the
“Company”), in accordance with the requirements of Section 14(f) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
Rule l4f-l promulgated thereunder. This Information Statement is being
delivered in connection with a change in a majority of the Board of Directors of
the Company (the “Board”) pursuant to the terms of the sale of shares of the
Company’s common stock described below. The appointment will become effective
upon the closing of the transactions described below, but not sooner than April11, 2010, following the expiration of the ten-day period from the date of
mailing of this Information Statement under Rule l4f-l and closing of the
sale (the “Sale”) of 11,557,217 shares or authorized and unissued shares of
common stock of the Company, representing 89.9% of the total outstanding shares
of the Company’s common stock immediately after the sale, for a purchase price
of $200,000, consisting of $30,000 cash and a promissory note for $170,000, to
Take Flight Equities, Inc., a Washington corporation (“TFI”) wholly owned by
William M. Wright III, resulting in a change of control of the
Company.
As of
March 23, 2010, the Company had 1,167,279 shares of Common Stock issued and
outstanding, which is the Company’s only class of voting securities that would
be entitled to vote for directors at a stockholders meeting if one were to be
held, each share being entitled to one vote.
Please
read this Information Statement carefully. It describes the terms of certain
transactions that will be consummated at a closing on or after April 11, 2010
(the “Closing Date”) that will result in a change of control of the Company, and
contains certain biographical and other information concerning the executive
officers and directors of the Company before and after the Closing Date of the
Transactions.
THE
SALE
On March24, 2010, a Share Purchase Agreement (the “Share Purchase Agreement”) was
entered into by the Company, TFE, William M. Wright III, Propalms, Inc. a Nevada
corporation (“Propalms”), and Gary E. Ball, pursuant to which the Company agreed
to sell 11,557,217 shares of authorized and previously unissued shares of Common
Stock (the “Shares”) to TFE for a purchase price of $200,000, consisting of
$30,000 cash and a promissory note for $170,000. TFE has advised the
Company that the source of the initial payment is general corporate funds, and
that the source of the future payments is expected to be general corporate
funds.
Prior to
the closing of the Sale, the Company will transfer all of its current assets and
liabilities, including the purchase price for the Shares, to a wholly-owned
subsidiary of the Company that will be managed by Gary Ball, the current CEO of
the Company. Within 15 months after the closing, either the stock of
the subsidiary or the net proceeds from the sale of the subsidiary’s assets will
be distributed to the stockholders of record of the Company on March 23
2010. Until such distribution, the subsidiary will be solely managed
by Gary Ball pursuant to a Management and Distribution Agreement.
1
The Share
Purchase Agreement provides that the Shares and the stock of the subsidiary will
be placed in escrow at the closing. As payments are made on the note
for the purchase price, a portion of the Shares will be released from
escrow. In the event of a default that is not timely cured, the
unpaid portion of the note, the Shares relating thereto, and the stock of the
subsidiary will be transferred to Gary Ball, who will assume the obligation to
pay the note and will remain responsible for the subsidiary
distribution. In such an event, control of the Company may change to
Mr. Ball, depending on the number of shares of Company Common Stock then
outstanding.
Propalms has agreed to pay one half of
the then-outstanding note in the event that TFE fails to make a payment on the
note when due or within the grace period specified in the note, as provided in a
Guaranty Agreement to be executed by Propalms at the closing.
As a
result of the Sale, TFE will become the majority owner of the outstanding shares
of the Company.
At the
closing for the Sale, which will occur at least ten days after the mailing of
this Information Statement, the Company’s existing directors and executive
officers will resign, and Wright and Tracy D. Bushnell will be appointed as
directors of the Company. The new Board of Directors will appoint new
officers of the Company. TFE anticipates that Wright will be
appointed Chairman, President and CEO of the Company at that time.
VOTING SECURITIES
As of the
date of this Information Statement, there were 1,167,279 shares of the Company’s
Common Stock outstanding. Immediately after the completion of the
Sale, there will be 12,724,496 shares of the Company’s Common Stock outstanding.
The Company currently has no preferred stock outstanding.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Current
Ownership
The
following table sets forth certain information regarding beneficial ownership of
Common Stock as of March 23, 2010 (1) by each person who is known by us to
beneficially own more than 5% of Common Stock, (2) by each of the officers
and directors; and (3) by all of the officers and directors as a
group.Each person
has sole voting and investment power with respect to the shares shown, except as
noted.
Name
of Beneficial Owner (1)
Amount
of Beneficial Ownership
Percentage
of Class
Gary
E. Ball
140,951
(2)
12.1%
(2)
Wendy
S. Ball
211,864
(3)(4)
18.1%
(4)
Gary
L. Bane
19,653
1.7%
James
Watson
1,532
0.1%
All
directors and executive officers as a group (4 persons)
373,990(3)
32.0%
(1)
The business address for such persons is c/o Infrared Systems
International, 15 N. Longspur Drive, The Woodlands, TX77380.
(2)
Does not include 211,864 shares owned by Wendy S. Ball, the spouse of Gary
E. Ball, as to which Gary E. Ball disclaims any beneficial
ownership.
(3)
Includes 70,903 shares held in the IRA of Wendy S.
Ball.
(4)
Does not include 140,951 shares owned by Gary E. Ball, the spouse of Wendy
S. Ball, as to which Wendy S. Ball disclaims any beneficial
ownership.
2
Ownership After
Sale
The
following table sets forth certain information regarding beneficial ownership of
Common Stock immediately after the effectiveness of the Sale (1) by each person
who is known by us to beneficially own more than 5% of Common Stock, (2) by
each of the officers and directors; and (3) by all of the officers and
directors as a group.Each person has sole
voting and investment power with respect to the shares shown, except as
noted.
Name
of Proposed Beneficial Owner (1)
Amount
of Beneficial Ownership
Percentage
of Class
Take
Flight Equities, Inc.
11,557,217
89.9%
William
M. Wright III
11,557,217
(2)
89.9%
(2)
Tracy
D. Bushnell
0
0%
All
directors and executive officers as a group (2 persons)
11,557,217
89.9%
(1)The
business address for such persons is 4550 NW Newberry Hill Road, Suite
202, Silverdale, WA98383.
(2) Represents
beneficial ownership of the shares to be owned by Take Flight Equities,
Inc. by virtue of Mr. Wright’s ownership of 100% of the outstanding stock
of Take Flight Equities, Inc.
DIRECTORS
AND OFFICERS
Current Directors And
Officers
The
following table sets forth the names, positions and ages of our current
executive officers and directors.
Gary E.
Ball has been the Company’s Chief Executive Officer,
President, Secretary-Treasurer, and a director since its formation in April
2006. For more than fifteen years until the closing of the merger in July 2007,
Mr. Ball was CEO, President and a director of the Company’s predecessor, Advance
Technologies, Inc. Prior thereto, Mr. Ball specialized in product
design, development, and management for North American Aviation; was a Technical
Manager for the Pave Tack program for Ford Aerospace; was Program Manager for
Northrop Electro-Mechanical in charge of business development on several
classified Department of Defense programs; was Program Manager for Hughes
Aircraft, where he developed their infrared enhanced vision system; and was a
member of the NATO NIAG study group on aircraft integration. Mr. Ball has
authored several articles for trade publications, and during the last nine years
he has provided consulting services to several U.S. and foreign corporations in
the field of infrared technology. Mr. Ball attended California State
University at Long Beach, where he graduated with a BSEE and MSEE, and later
took additional graduate studies at the University of Southern
California. In September 2009, Mr. Ball was replaced as
Secretary.
3
Gary L.
Bane has been a director of the Company since its formation in April
2006. Mr. Bane has been employed as an independent consultant for the last five
years.
James R. Watson
has been a director of the Company since its formation in April
2006. Mr. Watson is a sales, marketing and general management
executive with over twenty-five years of experience in managing a wider range of
marketing, sales and operations functions designed to create or expand domestic
and international sales opportunities. Since 2001, he has been the
Vice President of Operations for California Manufacturing Technology Consulting
in Gardena, California, where he is responsible for marketing, sales, consulting
services, and the development of delivery tools and services. Prior
thereto, his duties have included establishing aerospace and defense and
distribution industry teams. Mr. Watson also has served as a Vice
President of Sales and General Manager, Europe, for Anchor Audio, Inc. in Los
Angeles, California, where he was responsible for domestic sales planning, field
sales, and government and OEM sales, and Vice President – Passenger & Cargo
Sales for Western Airlines, where he was responsible for managing over 1,100
people in sales programs, field sales, reservations and advertising, with a
budget in excess of $150 million.
Wendy S.
Ball was a director of the Company’s earliest predecessor, SeaCrest
Industries Inc., from 1995 until its merger with Advance Technologies Inc. in
2001. In September 2009, Ms. Ball was elected by the Board to fill a vacancy
created by increasing the size of the Board from three to four and was elected
Secretary of the Company. Ms. Ball was employed by Christian Lacroix
as US National Sales Manager until February 2006. Since then she has
worked as a part time Fashion Consultant for Brad Hughes & Associates as
well as a "personal shopper" for individual clients. Ms. Ball is the wife
of Gary Ball.
Each director serves until his or her
successor is elected. There are no arrangements or understandings between any
director and any other person pursuant to which he or she was selected as a
director or nominee.
Each officer serves until he or she is
replaced by the Board of Directors. There are no arrangements or
understandings between any officer of the Company and any other person pursuant
to which he or she was selected as an officer.
Director
Independence
Messrs.
Bane and Watson each is an “independent director” as such term is defined in
Section 4200(a) (15) of the NASDAQ Marketplace Rules.
Meetings of
Directors
The
Company’s Board of Directors held three formal meetings during the most recently
completed fiscal year. James Watson was unable to attend one of
the three meetings. In addition, several proceedings of the Board of
Directors were conducted by resolutions consented to in writing by the directors
and filed with the minutes of the proceedings of the directors. Such
resolutions consented to in writing by the directors entitled to vote on that
resolution at a meeting of the directors are, according to the corporate laws of
Nevada and our bylaws, as valid and effective as if they had been passed at a
meeting of the directors duly called and held.
Committees of the Board of
Directors
Currently,
we do not have any committees of the Board of Directors. Our Board of Directors
has determined that none of our directors is an audit committee financial
expert.
4
Family
Relationships
Gary E.
Ball and Wendy S. Ball are husband and wife.
Related Party
Transactions
We
utilize office space and storage provided by Gary E. Ball, for which we pay Mr.
Ball $900 per month. We also pay for a leased car for Mr. Ball,
$464.84 per month to Ford Credit. Both payments are made pursuant to
authorization by the Board of Directors.
The
Taiwanese corporation for whom we currently are conducting services also has
engaged Mr. Ball to provide personal assistance to it. Mr. Ball’s
fees for the assistance will be determined when the effort is
complete. Until the final resolution of the R&D assistance,
Mr. Ball’s fees will be deducted from the UIS payment of $112,000 allocated to
purchase detectors. The debit of funds for compensating Mr. Ball will
have the effect of reducing the number of detectors
purchased. For FY 2008 & 2009 a total of $45,421.87 has
been billed to the UIS account. The cost to complete is estimated to
be approximately $23,800.
We pay
Mr. Ball a management fee for his services on behalf of the Company, as
described under “Compensation of Directors and Officers.”
Pursuant
to the Share Purchase Agreement and the related Management and Distribution
Agreement to be executed at the closing for the Sale, Mr. Ball will be solely
responsible for the management of the Company’s subsidiary, and in the event of
a nonpayment of the note or an event of default under the note, the unpaid
portion of the note, the Shares then held in escrow, and the stock of the
subsidiary will be transferred to Mr. Ball, who will assume responsibility for
the payment of the note and a subsidiary distribution.
At the
present time, the Company does not have an established policy and procedure for
the review, approval, or ratification of any transaction with a related person.
New
Directors
The
following table sets forth the names, expected positions and ages of the
proposed new directors of the Company after the Closing of the
Sale.
Name
Age
Expected
Position with the Company
William
M. Wright III
44
Chairman,
Chief Executive Officer, and President
Tracy
D. Bushnell
44
Director
William M. Wright
III has been the President and CEO of Focus Systems, Inc., a Washington
corporation, since its formation in 2008. Focus Systems, Inc.
provides Desktop Virtualization which can perform all of the networking
functions that can be utilized on standard in-house networks at a fraction of
costs, and also Voice over Internet Protocol phone service to its customer
base. Mr. Wright also is the President and sole shareholder of TFE,
From July 2006 to July 2007, Mr. Wright was the Chief Operating Officer and a
Director of Gottaplay Interactive, Inc., a Nevada corporation involved in the
internet connectivity business and the video game subscription and rental
business. Mr. Wright has over 20 years of experience and knowledge in financial
management and business operations. His experience includes the start up of
DONOBi, Inc., an internet Service Provider that specialized in the acquisition
and rollup of numerous rural service providers, and the eventual taking of the
company public in 2004. Mr. Wright served as both Chief Executive Officer and
Chairman of the Board during his six year tenure with DONOBi, leading to the
merger with Gottaplay in 2006. Prior to his work in the technology field, Mr.
Wright was a Real Estate Broker in both California and Washington, and including
the position of President and minority owner of a local property management
company. Mr. Wright received his Bachelors of Science in Business Administration
with an emphasis in Financial Services from San Diego State
University.
Tracy D.
Bushnell has been President and Chief Executive Officer of the Bushnell
Group, which provides construction related services and consulting services, for
the past nine years.
5
Each director serves until his or her
successor is elected. There are no arrangements or understandings between any
prospective director and any other person pursuant to which he or she was
selected as a prospective director.
Each prospective officer will serve
until he or she is replaced by the Board of Directors. There are no
arrangements or understandings between any officer of the Company and any other
person pursuant to which he or she was selected as a prospective officer.
Director
Independence
TFE has
advised the Company that Tracy D. Bushnell will be an “independent director” as
such term is defined in Section 4200(a) (15) of the NASDAQ Marketplace
Rules.
Committees of the Board of
Directors
TFE has
advised the Company that no separate audit, compensation or other committees of
the Board of Directors currently is contemplated after the closing.
Family
Relationships
There is
no family relationship between Mr. Wright and Mr. Bushnell.
Related Party
Transactions
None of the prospective directors has
engaged in any transactions with the Company, nor has the Company engaged in any
transactions in which any of such individuals has or will have a direct or
indirect material interest, other than the interest of Mr. Wright in the
Purchase Agreement and the transactions contemplated thereby as described in
“The Sale.”
COMPENSATION
OF DIRECTORS AND OFFICERS
Current Directors And
Officers
General
At the
present time, we do not pay any compensation to our directors or officers, other
than a management fee paid to our President and Chief Financial Officer, Gary E.
Ball, equal to 15% of certain incurred costs of the Company. Mr. Ball is also a
director, and participated in the deliberations of the Board in determining his
executive officer compensation. There is no separate compensation committee of
the Board. At the present time, No pension benefits are provided to officer or
director of the Company.
Summary Compensation
Table
The
following table sets forth compensation information for services rendered to us
by certain executive officers in all capacities, other than as directors, during
the last two fiscal years. No executive officer’s salary and bonus
exceeded $100,000 in any of the applicable years. The following
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted, and certain other compensation, if any, whether paid
or deferred.
Name
and
Principal
Position
Fiscal
Year
Salary
Bonus
Stock
Awards
Option
Awards
Non-Equity
Incentive
Plan
Compensation
All
Other
Compensation
Total
Gary
E. Ball
Chief
Executive Officer
2009
0
0
0
0
0
$25,911(1)(2)
$20,413(2)
2008
0
0
0
0
0
$ 930(1)(2)
$ 930(2)
Footnotes on following
page
6
(1) Consists
of (i) a management fee the Company paid to Mr. Ball in 2009 equal to 15% of
certain incurred costs of the Company, which totaled $20,413, and (ii) a leased
car provided to Mr. Ball since August 2008, which costs $464.84 per
month.
(2) Does
not include rent paid to Mr. Ball for space provided to him for the Company’s
use. Such rent was $400 per month during fiscal years 2008 and became
$900 per month in fiscal 2009 due to increased space being utilized by the
Company. See “Certain Relationships and Related Transactions.”
Compensation Discussion and
Analysis
As
indicated in the Summary Compensation Table, the only compensation paid to an
officer is the management fee payable to Gary E. Ball, our President and
Treasurer, which commenced in fiscal 2009. Such fee is equal to 15%
of certain third party fees incurred by the Company, and is intended to provide
at least minimal compensation to Mr. Ball for his substantial time and effort
overseeing the work performed by third parties on behalf of the Company,
especially considering the fact that Mr. Ball receives no other compensation
from the Company for his services as an officer and sole employee of the
Company. The total management fee paid to Mr. Ball in fiscal 2009 was
$20,413.
Employment
Agreements
We do not
have a written employment agreement with Gary E. Ball or Wendy S. Ball, our sole
executive officers.
Equity Incentive
Plan
No stock
options or similar instruments have been granted to any of our officers or
directors.
Lack of Compensation
Committee
We do not
have a separate compensation committee due to the fact that there is currently
only one employee of the Company and since no compensation currently is paid to
directors of the Company. The entire Board of Directors participates
in the consideration of executive officer and director
compensation.
Prospective Directors And
Officers
The individuals who are to become
directors and/or executive officers of the Company at the Closing will receive
no compensation from the Company prior to the Closing, and have not received any
compensation from TFE during the past three years. TFE has advised
the Company that no compensation for directors of the Company is contemplated at
this time. TFE also has advised the Company that Mr. Wright is expected to
receive a salary of $60,000 per year for serving as President and CEO of the
Company after the Closing, plus any bonus determined by the Board of Directors,
and that the Company will provide medical, dental and vision insurance for Mr.
Wright.
INDEMNIFICATION
AND LIMITATION ON LIABILITY OF DIRECTORS
Our
Articles of Incorporation eliminate the liability of our directors for monetary
damages to the fullest extent permissible under Nevada law. Under the
Nevada Revised Statutes, director immunity from liability to a company or its
stockholders for monetary liabilities applies automatically unless it is
specifically limited by a company’s Articles of Incorporation. Excepted from
that immunity are: (a) a willful failure to deal fairly with the company or its
stockholders in connection with a matter in which the director has a material
conflict of interest; (b) a violation of criminal law, unless the director had
reasonable cause to believe that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was unlawful; (c) a transaction from
which the director derived an improper personal profit; and (d) willful
misconduct.
7
Our
bylaws provide that we will indemnify our directors and officers to the fullest
extent not prohibited by Nevada law; provided, however, that we may modify the
extent of such indemnification by individual contracts with our directors and
officers; and, provided, further, that we shall not be required to indemnify any
director or officer in connection with any proceeding, or part thereof,
initiated by such person unless such indemnification: (a) is expressly required
to be made by law, (b) the proceeding was authorized by our board of directors,
(c) is provided by us, in our sole discretion, pursuant to the powers vested in
us under Nevada law or (d) is required to be made pursuant to the bylaws.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.
CODE
OF ETHICS
The
Company does not have a written code of ethics applicable to its executive
officers. The Board of Directors has not adopted a written code of
ethics since the Company has only two officers who are both directors of the
Company and due to the small size and limited funds of the Company.
INVOLVEMENT
IN CERTAIN LEGAL PROCEEDINGS
To the
best of our knowledge, during the past five years, none of the following
occurred with respect to a present or proposed director of the Company: (1) any
bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time; (2) any conviction in a criminal proceeding
or being subject to a pending criminal proceeding (excluding traffic violations
and other minor offenses); (3) being subject to any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his or her involvement in any type of business, securities or
banking activities; and (4) being found by a court of competent jurisdiction (in
a civil action), the SEC or the Commodities Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated.
Each of
Gary E. Ball, Gary L. Bane, Wendy S. Ball, and James Watson failed to file his
or her report on Form 3 on a timely basis during the fiscal year ended September30, 2009. Each such report on Form 3 was filed
subsequently. There are no other known failures to file reports
required by Section 16(a) of the Exchange Act.
SECURITY
HOLDER COMUNICATIONS WITH THE BOARD OF DIRECTORS
We do not have any separate process for
communicating with the Board of Directors. The current Board of
Directors believes it has been appropriate not to have such a process in light
of the limited activities and resources of the Company and the lack of
communications from security holders in the past. Communications to
the Board of Directors may be directed to the Company at the address as set
forth in this Information Statement, or as provided in future filings of the
Company after the closing of the Sale.
8
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
The
Company is subject to the information and reporting requirements of the Exchange
Act and, in accordance with that act, files periodic reports, documents and
other information with the Commission relating to its business, financial
statements and other matters. These reports and other information may be
inspected and are available for copying at the offices of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 and are available on the SEC’s
website at www.sec.gov .
