UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
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
Rule14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
PROFILE TECHNOLOGIES, INC.
--------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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1. Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] 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
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Profile Technologies, Inc.
2 Park Avenue, Suite 201
Manhasset, New York 11030
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------------------
The Annual Meeting of Shareholders of Profile Technologies, Inc. (the
"Company") will be held at 11:00 a.m, local time, on Monday, December 13, 2004,
at R.F. Lafferty & Co., Inc., 80 Broad Street, 26th floor, New York, New York,
10004, for the following purposes:
1. To elect a Board of Directors consisting of four persons to serve a
term of one year (until the next Annual Meeting of the Shareholders)
or until their respective successors are elected and have been
qualified.
2. To approve an amendment to the Company's Certificate of Incorporation
to increase the number of authorized common shares from 15,000,000 to
25,000,000.
3. To transact such other business as may properly come before the Annual
Meeting and any postponement or adjournment thereof.
The Board of Directors has fixed October 25, 2004 as the record date for
determining the shareholders of the Company entitled to notice of, and to vote
at, the Annual Meeting and any adjournment of the Annual Meeting. The transfer
books of the Company will not be closed, but only shareholders of the Company of
record on such date will be entitled to notice of, and to vote at, the Annual
Meeting or adjournment of the Annual Meeting.
Shareholders are cordially invited to attend the meeting in person. Whether
or not you plan to attend the meeting in person, please complete, sign and date
the accompanying proxy as promptly as possible in the enclosed envelope. No
additional postage is required if the envelope is mailed in the United States.
The giving of a proxy will not affect your right to vote in person if you attend
the meeting and will assure that your shares are voted if you are unable to
attend.
By Order of the Board of Directors
/s/ Henry E. Gemino
-------------------
Henry E. Gemino
Chief Executive Officer
November 4, 2004
PROFILE TECHNOLOGIES, INC.
2 Park Avenue, Suite 201
Manhasset, New York 11030
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
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INTRODUCTION
The enclosed proxy is solicited by and on behalf of the Board of Directors
(the "Board") of Profile Technologies, Inc., a Delaware corporation (the
"Company"), to be voted at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held at R.F. Lafferty & Co., Inc., 80 Broad Street, 26th floor,
New York, New York, 10004, at 11:00 a.m. local time on Monday, December 13,
2004, and at any and all adjournments of the Annual Meeting.
The enclosed materials were mailed to the shareholders of the Company
("Shareholders") on or about November 8, 2004.
The Company anticipates that the Shareholders will consider and vote upon
the following matters at the Annual Meeting:
1. To elect a Board consisting of four persons to serve a term of one
year (until the next Annual Meeting) or until their respective
successors are elected and have been qualified.
2. To approve an amendment to the Company's Certificate of Incorporation
to increase the number of authorized common shares from 15,000,000 to
25,000,000.
3. To transact such other business as may properly come before the Annual
Meeting and any postponement or adjournment of the Annual Meeting.
VOTING OF PROXIES
Shares represented by proxies properly signed and returned, unless
subsequently revoked, will be voted at the Annual Meeting in accordance with the
instructions marked on the proxy. If a proxy is signed and returned without
indicating any voting instructions, the shares represented by the proxy will be
voted FOR approval of the proposals stated in this proxy statement, and in the
discretion of the holders of the proxies, on other matters that may properly
come before the Annual Meeting.
If you have executed and delivered a proxy, you may revoke such proxy at
any time before it is voted by attending the Annual Meeting and voting in
person, by giving written notice of revocation of the proxy, or by submitting a
signed proxy bearing a later date. To revoke the prior proxy, the notice of
revocation or later proxy, must be received by the Company's Transfer Agent
before the vote of Shareholders at the Annual Meeting. Unless you vote at the
meeting or take other action, your attendance at the Annual Meeting will not
revoke your proxy.
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VOTING PROCEDURES
The Company's state of incorporation is Delaware. Under Delaware law and
the Company's bylaws, the holders of a majority of the outstanding shares of the
common stock of the Company entitled to vote constitute a quorum at any meeting
of the shareholders. Votes cast by proxy or in person at the Annual Meeting will
be counted by the inspector of elections appointed by the Company. The inspector
of elections will treat shares of the Company's common stock represented by
proxies that reflect abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum. Under Delaware law and the
Company's bylaws, directors are elected by a plurality of the votes cast by the
holders of shares entitled to vote at a meeting at which a quorum is present.
Other matters are approved if affirmative votes cast by the holders of the
shares entitled to vote at a meeting at which a quorum is present exceed the
number of votes opposing the action, unless Delaware law or the Company's
Certificate of Incorporation or bylaws require a greater number of affirmative
votes or voting by classes. Therefore, abstentions and broker non-votes have no
effect and will be disregarded.
All of the officers and directors have informed the Company that they
intend to vote in favor of the nominees for directors included in this proxy
statement.
VOTING SECURITIES
The Board has fixed the close of business on October 25, 2004 as the record
date (the "Record Date") for determining the Shareholders entitled to receive
notice of, and to vote at, the Annual Meeting. At the close of business on the
Record Date, there were 5,555,705 issued and outstanding shares of the Company's
common stock, $.001 par value, entitled to vote at the Annual Meeting, held by
approximately 940 Shareholders. As of the Record Date, the only outstanding
voting securities of the Company were shares of the Company's common stock. As a
Shareholder of the Company's common stock as of the Record Date, you are
entitled to one vote for each share held on each matter properly submitted at
the Annual Meeting.
PROPOSAL 1
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ELECTION OF DIRECTORS
Four directors are to be elected to hold office until the next annual
meeting of Shareholders is held and their successors are elected. All of the
nominees are current directors standing for re-election and were previously
elected by the Shareholders. If one or more of the nominees is unable to serve,
or for good cause will not serve at the time of the Annual Meeting, the shares
represented by the proxies solicited by the Board will be voted for the other
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nominees and for any substitute nominee(s) designated by the Board. As of the
date of this proxy statement, the Board has no reason to believe that any of the
nominees named will be unable or unwilling to serve. In the election of
directors, those nominees receiving the greatest number of votes shall be
elected, even if such votes do not constitute a majority. Certain information
regarding each nominee follows. Each nominee has consented to being named in the
proxy statement and to serve if elected.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES.
The directors nominated for election at the Annual Meeting are as follows:
DIRECTOR
NAME AND AGE AGE PRINCIPAL OCCUPATION SINCE
------------ --- -------------------- -----
Henry E. Gemino 53 Chief Executive Officer, Chief Financial Officer, 1988
Profile Technologies, Inc.
Murphy Evans 72 President, Profile Technologies, Inc. 1995
Charles Christenson 74 Professor Emeritus 1999
Harvard Graduate School of Business Administration
William A. Krivsky 76 Partner in Kellogg, Krivsky & Buttler (a mergers and 2000
acquisitions consulting firm)
Henry E. Gemino. Since 1988, Mr. Gemino has been co-founder and served as a
director and the Chief Financial Officer of the Company. From 1988 through
October 2000, he served as Executive Vice President and Chief Operating Officer
of the Company. Since October, 2000, he has served as Chief Executive Officer of
the Company.
Murphy Evans. Since 1995, Mr. Evans has served as President and a director
of the Company. Mr. Evans also serves as the President of L & S Holding Co., a
family-owned holding company that is engaged in several different businesses.
Mr. Evans received an AB degree in history from Princeton University in 1954 and
an MBA degree from the Harvard Graduate School of Business Administration in
1958.
William A. Krivsky. Mr. Krivsky holds a Doctorate of Science from MIT and
was previously President of Velcro Industries N.V., Executive Vice President of
Bird Corporation, President of Compo Industries and Group Vice President of
Certaineed Corporation (now part of Paris-based St. Gobain Industries). He
currently serves as President of Kellogg, Krivsky & Buttler Inc., a mergers and
acquisition consulting firm, as President of Keyson Enterprises Inc., and as
President of the Keyson Co. Inc. (privately held diversified businesses). He is
also director of Cognex Corporation and Hitchiner Manufacturing Company, Inc.
Charles Christenson. Professor Christenson has been a director of the
Company since 1999. He is the Royal Little Professor of Business Administration,
Emeritus, at the Graduate School of Business Administration at Harvard
University and served as faculty chairman of both the MBA and Doctoral Programs.
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He received his B.Sc. degree in Industrial and Labor Relations from Cornell
University in 1952, his MBA degree with high distinction from Harvard University
in 1954 and his DBA degree in Managerial Economics from Harvard University in
1961. While on leave of absence from the Harvard University faculty, he also
served as Deputy to the Assistant Secretary of the Air Force (Financial
Management) during the Kennedy Administration. He is a member of the American
Association for the Advancement of Science. Professor Christenson has also
authored or co-authored a number of books and articles on quantitative methods,
management control and philosophy of science. He also serves as a director of
Boston Baroque, Inc. (a not-for-profit corporation).
There are no family relationships among the directors. There are no
arrangements or understandings between any director and any other person,
pursuant to which any director was elected.
DIRECTOR COMPENSATION
The Company pays to all non-employee directors a director's fee in the
amount of $1,000 per month. Directors are entitled to participate in, and have
been issued options under, the Company's 1999 Stock Plan. The Company also
reimburses directors for any actual expenses incurred to attend meetings of the
Board.
Due to the Company's critical need for cash, the Company has deferred all
payments owed to the directors for directors' fees until the Company has
sufficient resources to pay such fees. As of June 30, 2004, the Company owed
$56,000 in deferred directors' fees. On March 18, 2002, the Board approved a
conversion right on all directors' fees deferred as of March 18, 2002. Pursuant
to this conversion right, directors may elect to convert $1.00 of directors'
fees owed to them as of March 18, 2002 for an option to purchase two shares of
the Company's common stock, at an exercise price of $1.00 per share for a term
of five years. As of March 18, 2002, the Company owed its directors $9,000 in
deferred fees. As of November 4, 2004, no directors have elected to convert.
BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended June 30, 2004, the Board held a total of four
meetings. All members of the Board attended at least 75% of all meetings of the
Board and all meetings held by all committees of the Board on which he served.
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Audit Committee
The Board maintains an Audit Committee composed of William Krivsky and
Charles Christenson. The principal functions of the Audit Committee are to
monitor the Company's financial reporting process and internal control system,
to review and appraise the audit efforts of the Company's independent
accountants and the internal audit function, to provide a means of communication
among the independent accountants, financial and senior management, the internal
audit function, and the Board, and to communicate with the Company's independent
accountants outside of the presence of management, when necessary. The Audit
Committee is also responsible for all matters set forth in its written charter,
a copy of which is attached to this proxy statement as Appendix B. The Audit
Committee held four meetings during the fiscal year ended June 30, 2004.
The Board has determined that based on his experience and knowledge in
financial and auditing matters Mr. Christenson in an "audit committee financial
expert" as defined by Securities and Exchange Commission ("SEC") rules. Mr.
Christenson meets the standards of independence under the applicable National
Association of Securities Dealers ("NASD") listing standards.
Under the Company's Audit Committee Charter, the Audit Committee is
required to pre-approve all auditing services and permissible non-audit
services, including related fees and terms, to be performed for the Company by
its independent auditor, subject to the de minimus exceptions for non-audit
services described under the Securities Exchange Act of 1934 (the "Exchange
Act") which are approved by the Audit Committee prior to the completion of the
audit.
Compensation Committee
The Board has a Compensation Committee composed of Murphy Evans and William
Krivsky. The principle functions of the Compensation Committee are to establish
overall compensation policies for the Company and to review the recommendations
submitted by the Company's management. The Compensation Committee did not hold
any meetings during the year ended June 30, 2004.
Nominating Committee
The Board does not have a standing nominating committee. Director nominees
are recommended, reviewed and approved by the entire Board. The Board believes
that this process is appropriate due to the relatively small number of directors
on the Board and the opportunity to benefit from a variety of opinions and
perspectives in determining director nominees by involving the full Board.
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Shareholder Communications to the Board
The Board has established a process for shareholders to communicate with
members of the Board. If you would like to contact the Board you can do so by
forwarding your concern, question or complaint to the Company's Chief Executive
Officer, Henry E. Gemino, 2 Park Avenue, Suite 201, Manhasset, New York, 11030.
AUDIT COMMITTEE REPORT
In discharging its responsibility, the Audit Committee has reviewed and
discussed the Company's audited financial statements with management. The Audit
Committee has discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Audit Committee has received the written disclosures and letter
from the Company's independent auditors as required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), and has discussed with the independent
auditors their independence.
Based on the foregoing review and discussions, the Audit Committee
recommended to the Board that the audited financial statements be included in
the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
2004 for filing with the Securities and Exchange Commission.
Audit Committee
William Krivsky
Charles Christenson
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 25, 2004
by (i) all persons who are known to the Company to beneficially own more than 5%
of the outstanding shares of the Company's common stock, and (ii) by each
director, director nominee, and executive officer and by all executive officers
and directors as a group:
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Amount and Nature of Percent of Class
Name and Address Positions and Beneficial Common Stock Based on Beneficial
Of Beneficial Owner Offices Held Ownership(1) Ownership((1))
------------------- ------------ ------------ --------------
Henry E. Gemino Chief Executive 913,665(2) 16.45%
5 Strickland Place Officer, Chief
Manhasset, NY 11030 Financial Officer,
Director
Murphy Evans President, 499,168(3) 8.98%
204 Railroad Street Director
P.O. Box 688
Laurinburg, NC 28532
Philip L. Jones Chief Operating Officer 107,572(4) 1.94%
203 Beaver Road Executive Vice President
Sewickley, PA 15143
Charles Christenson Director 145,666(5) 2.62%
1 Chauncy Lane
Cambridge, MA 02238
William A. Krivsky Director 65,000(6) 1.17%
117 Perimeter Road
Nashua, NH 06063
Gale D. Burnett Shareholder 688,000(7) 12.38%
9191 Northwood Rd.
Lynden, WA 98264
Frank Goodhart, Jr. Shareholder 600,000(8) 10.80%
1069 Old Forge Crossing
Lancaster, PA 17601
All Directors and Officers 1,731,071(9) 31.16%
as a Group (5 persons)
(1) Calculated pursuant to rule 13d-3(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Unless otherwise stated below, each
such person has sole voting and investment power with respect to all such
shares. Under Rule 13d-3(d) of the Exchange Act, shares not outstanding
which are subject to options, warrants, rights or conversion privileges
exercisable within 60 days are deemed outstanding for the purpose of
calculating the number and percentage owned by such person, but are not
deemed outstanding for the purpose of calculating the percentage owned by
each other person listed.
(2) Includes warrants to purchase 403,332 shares of the Company's common stock
and options to purchase 30,000 shares of the Company's common stock.
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(3) Includes 30,000 shares held by the wife of Mr. Evans, 86,667 shares held in
the name of Falco Enterprises, Inc., a company controlled by Mr. Evans,
15,500 held by L&S Holding Co., a company controlled by Mr. Evans, and
5,000 shares held in a trust to which Mr. Evans is trustee with sole voting
and investment power over the shares. Also includes warrants to purchase
265,834 shares of the Company's common stock, 41,667 of which are held in
the name of Falco Enterprises, Inc., and options to purchase 50,000 shares
of the Company's common stock.
(4) Includes warrants to purchase 14,286 shares of the Company's common stock
and options to purchase 70,000 shares of the Company's common stock.
(5) Includes warrants to purchase 70,833 shares of the Company's common stock
and options to purchase 50,000 shares of the Company's common stock.
(6) Consists entirely of options to purchase the Company's common stock.
(7) Includes 578,000 shares held by the wife of Mr. Burnett. Also includes
warrants to purchase 110,000 shares of the Company's common stock.
(8) Includes 250,000 shares held by the wife of Mr. Goodhart. Also includes
warrants to purchase 200,000 shares of the Company's common stock.
(9) Assumes exercise of all warrants and options owned by all officers and
directors.
EXECUTIVE OFFICERS OF THE COMPANY
Certain information regarding the executive officers of the Company
follows:
Name Age Position Held With Company
---- --- --------------------------
Henry E. Gemino 53 Chief Executive Officer,
Chief Financial Officer
Murphy Evans 72 Chairman and President
Philip L. Jones 62 Executive Vice President and
Chief Operating Officer
Philip L. Jones has been serving as Executive Vice President and Chief
Operating Officer since September, 2001. For one year previous to his employment
by the Company, he provided energy consulting services to certain utility
companies. Prior to that, Mr. Jones served in various capacities with
Consolidated Natural Gas Company, a large integrated energy company, for more
than 30 years, including six years as Vice President for Marketing with CNG's
exploration and production subsidiary, CNG Producing Company. He received his
law degree from West Virginia College of Law in 1967 and his B.A. from Princeton
University in 1964. Mr. Jones was a Captain in the U.S. Army, 142nd JAG
Detachment.
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There are no family relationships among the executive officers. There are
no arrangements or understandings between any officers and any other person,
pursuant to which any officer was selected.
EXECUTIVE COMPENSATION
Employment Contracts.
---------------------
None of the executive officers of the Company are employed pursuant to
employment contracts.
Cash Compensation.
------------------
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer and the highest paid executive officers of
the Company as of the end of the Company's last fiscal year whose salary and
bonus for such period in all capacities in which the executive officer served
exceeded $100,000.
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards
------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted Options/ LTIP All Other
Name and Principal Bonus Compen- Stock SARs Payouts Compen-
position Year Salary($) ($) sation($) Award(s) $ (#) ($) sation($)
-------- ---- --------- --- --------- ---------- --- --- ---------
Henry E. Gemino, 2004 $120,000(1),(2) 0 0 0 20,000 0 0
Chief Executive Officer 2003 $120,000(1),(2) 0 0 0 10,000 0 0
and Chief Financial 2002 $120,000(1),(2) 0 0 0 0 0 0
Officer
Joseph Galbraith 2004 $123,200(3) 0 0 0 20,000 0 0
Vice President Field 2003 $123,200(3) 0 0 0 0 0 0
Operations 2002 $123,200(3) 0 0 0 15,000 0 0
(1) Due to the Company's need for cash, the Company has deferred compensation
owed to certain officers of the Company. Such amounts will continue to be
deferred until the Company has sufficient resources to pay such amounts
owed. On March 18, 2002, the Board approved a conversion right on all
compensation owed to officers as of March 18, 2002. Pursuant to this
conversion right, officers may elect to convert $1.00 of compensation owed
to them as of March 18, 2002 for an option to purchase two shares of the
Company's common stock, at an exercise price of $1.00 per share, for a term
of five years. As of March 18, 2002, the Company owed Mr. Gemino $11,500
under the terms of this conversion right. As of November 4, 2004, Mr.
Gemino had not elected to convert.
(2) During each of the three fiscal years ended June 30, 2004, 2003, and 2002,
the Company deferred payments of $66,000, $23,000, and $11,500,
respectively, of the $120,000 base salary owed to Henry E. Gemino. As of
June 30, 2004 total deferred compensation owed to Mr. Gemino was $100,500.
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(3) During each of the three fiscal years ended June 30, 2004, 2003, and 2002,
the Company deferred payments of $13,970, $5,133, and $0, respectively, of
the $123,200 base salary owed to Joseph Galbraith. Mr. Galbraith resigned
from the Company on February 11, 2004. As of June 30, 2004 total deferred
compensation owed to Mr. Galbraith was $19,103.
Option Grants in the Last Fiscal Year
-------------------------------------
The following table sets forth information regarding stock options granted
during the fiscal year ended June 30, 2004 to each of the named executive
officers.
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Number Of Percent Of Total
Securities Options Granted Exercise Of Market Price
Name Underlying Options To Employees In Base Price Base Expiration
And Position Granted Fiscal Year ($/Share) ($/Share)(1) Date
(a) (b) (c) (d-1) (d-2) (e)
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Henry E. Gemino, Chief Executive 20,000 16.7% $0.70 $0.25 12-15-08
Officer and Chief Financial
Officer
-----------------------------------------------------------------------------------------------------------------------
Murphy Evans, President 20,000 16.7% $0.70 $0.25 12-15-08
-----------------------------------------------------------------------------------------------------------------------
Philip L. Jones 20,000 16.7% $0.70 $0.25 12-15-08
Executive Vice President and
Chief Operating Officer
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(1) The market price is based on the market value ($0.25) of the Company's
common stock as of the close of business on December 15, 2003, the date of
the grant.
Option Exercises and Holdings
-----------------------------
The following table sets forth information regarding stock options
exercised during the fiscal year ended June 30, 2004 by each of the named
executive officers and the value of the unexercised options held by these
individuals as of June 30, 2004, based on the per share market value ($0.50) of
the Company's common stock on June 17, 2004, the last day during the fiscal year
ended June 30, 2004 that trades in the Company's common stock were reported on
the OTC Bulletin Board.
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Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Options/SAR Values:
(a) (b) (c) (d) (e) (1)
Number of Number of Securities Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired On Value at Fiscal Year-End at Fiscal Year-End ($)
Name Exercise Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
----- -------- ------------ ------------------------- -------------------------
Henry E. Gemino --- --- 30,000/0(2) 0/0
Murphy Evans --- --- 50,000/0(3) 0/0
Philip L. Jones --- --- 70,000/0(4) 0/0
(1) The value calculations are based on $0.50 per share, the fair market value
of the underlying shares of the Company's common stock at year-end (June
17, 2004, the last day of the fiscal year on which the Company's stock was
traded) less the exercise price for the shares. As of June 30, 2004, there
were no unexercised options that were in-the-money.
(2) Consists of the following options: (A) 10,000 options at $0.55 per share,
expiring in December 2007, and (B) 20,000 options at $0.70 per share,
expiring in December 2008.
(3) Consists of the following options: (A) 20,000 options at $1.00 per share,
expiring in November 2006, (B) 10,000 options at $0.55 per share, expiring
in December 2007, and (C) 20,000 options at $0.70 per share, expiring in
December 2008.
(4) Consists of the following options: (A) 35,000 options at $4.00 per share,
expiring in October 2005, (B) 15,000 options at $1.00 per share, expiring
in November 2006, and (C) 20,000 options at $0.70 per share, expiring in
December 2008.
PROPOSAL TWO
------------
AMENDMENT TO CERTIFICATE OF INCORPORATION
The Board is proposing an amendment to Paragraph 4 of the Company's
Certificate of Incorporation to increase the number of authorized shares of
stock of the Company from 15,000,000 shares of common stock to 25,000,000 shares
of common stock (the "Amendment") for approval by the Shareholders. A copy of
the form of the Amendment is attached to this proxy statement as Appendix A.
The Board believes that the flexibility provided by the increase in the
authorized shares of common stock, which will permit the Board, in its
discretion, to issue or reserve additional shares of common stock without the
delay or expense of a meeting of shareholders, is in the best interests of the
Company and the Shareholders. Shares of common stock may be used for general
corporate purposes, including possible financing activities. Possible financing
activities might include raising additional capital funds through offerings of
shares of the common stock. The Board has no current plan, understanding or
arrangement to issue any of the additional shares of common stock.
12
The issuance of any additional shares of common stock may have the effect
of diluting the percentage of stock ownership, book value and voting rights of
the present holders of the common stock. The increase in the authorized common
stock of the Company also may have the effect of discouraging attempts to take
over control of the Company, as additional shares of common stock could be
issued to dilute the stock ownership and voting power of, or increase the cost
to, a party seeking to obtain control of the Company. The Amendment is not being
proposed in response to any known effort or threat to acquire control of the
Company and is not part of a plan by management to adopt a series of amendments
to the Company's Certificate of Incorporation and Bylaws having an anti-takeover
effect.
The Board adopted the Amendment on September 17, 2004 and is seeking
approval by the Shareholders through this proxy solicitation.
THE BOARD RECOMMENDS THE SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE
AMENDMENT.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September, 1988, at the time Gale D. Burnett, a beneficial shareholder
of more than 10% of the Company's common stock, first transferred certain
technology, know-how and patent rights to the Company, a royalty interest of 4%
of all pre-tax profits derived from the technology and know-how transferred was
granted to Northwood Enterprises, Inc., a family-owned company controlled by Mr.
Burnett. Northwoods Enterprises subsequently assigned such royalty interest back
to Mr. Burnett. On April 8, 1996, Mr. Burnett assigned 2% of this royalty
interest to certain shareholders of the Company, 1 1/4% of which was assigned to
Henry Gemino, currently the Chief Executive Officer and Chief Financial Officer,
and a director of the Company. This royalty arrangement also applies to all
future patent rights and technology developed by Mr. Burnett and assigned to the
Company. To date, no royalty payments have been made or earned under the above
described arrangement.
OTHER MATTERS TO BE VOTED UPON
As of the date of this proxy statement, the Board does not know of or
anticipate that any other matters will be brought before the Company's
shareholders at the Annual Meeting. If, however, any other matters not mentioned
in the proxy statement are properly brought before the Company's shareholders at
the Annual Meeting, the persons appointed as proxies will have the discretion to
vote or act in accordance with their best judgment.
SECTION 16(a)
BENEFICIAL OWNERHSIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Exchange Act of 1934, the executive
officers and directors of the Company in addition to any person who owns more
than 10% of the common stock of the Company are required to report their
ownership of the common stock of the Company and changes to such ownership with
the SEC. Based on a review of such reports and information provided to the
Company, the Company believes that during the most recent fiscal year the
executive officers and directors of the Company have complied with applicable
filing requirements under Section 16(a) except that each of Messrs. Evans,
Krivsky, Christenson, Gemino and Jones failed to file in a timely manner one
report in connection with one transaction during 2004 and one report in
connection with one transaction during 2003.
13
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has selected KPMG LLP ("KPMG") as the independent certified
public accountants to audit the financial statements of the Company for its
fiscal year ended June 30, 2004. To the knowledge of management, neither such
firm nor any of its members has any direct or material indirect financial
interest in the Company nor any connection with the Company in any capacity
otherwise than as independent accountants.
Audit Fees. The Company incurred aggregate fees of $62,300 payable to KPMG
LLP during the fiscal year ended June 30, 2004 and $56,500 during the fiscal
year ended June 30, 2003 for professional services rendered by KPMG for the
audit of the Company's annual financial statements and the review of financial
statements included in the Company's Forms 10-QSB.
Audit-Related Fees. The Company did not incur any fees during the fiscal
years ended June 30, 2004 or 2003 for professional services rendered by KPMG
that are reasonably related to the performance of the audit or review of the
Company's financial statements that are not reported under the caption "Audit
Fees."
Tax Fees. The Company did not incur any fees during the fiscal years ended
June 30, 2004 or 2003 for professional services rendered by KPMG for tax
compliance, advice and planning.
All Other Fees. The Company did not incur any other fees during fiscal
years ended June 30, 2004 or 2003 for other products or services provided by
KPMG other than the fees described above.
14
STOCKHOLDER PROPOSALS
Shareholders who wish to include a proposal in the Company's proxy
statement for the 2005 Annual Meeting of Shareholders must deliver a written
copy of their proposal to the Company's principal executive offices no later
than June 30, 2005. Proposals must comply with the SEC proxy rules relating to
shareholder proposals to be included in the Company's proxy materials. Except
for shareholder proposals to be included in the Company's proxy statement, the
deadline for nominations for director or other proposals made by a shareholder
is five days before the date of the 2005 Annual Meeting. Proposals should be
directed to Henry E. Gemino, Chief Executive Officer, Profile Technologies,
Inc., 2 Park Avenue, Suite 201, Manhasset, New York 11030.
ANNUAL REPORT ON FORM 10-KSB;
DELIVERY TO SHAREHOLDERS SHARING ADDRESS
The Company is providing a copy of its Form 10-KSB to Shareholders for the
fiscal year ended June 30, 2004 simultaneously with delivery of this proxy
statement. You may obtain additional copies of the Annual Report by writing to
Henry E. Gemino, Chief Executive Officer, Profile Technologies, Inc., 2 Park
Avenue, Suite 201, Manhasset, New York 11030.
The Company is delivering only one proxy statement and Annual Report to
multiple shareholders sharing an address unless the Company has received
contrary instructions from one or more of the shareholders. The Company will
promptly deliver upon written or oral request a separate copy of this proxy
statement or the Annual Report to a shareholder at a shared address to which a
single copy was sent. If you are a shareholder residing at a shared address and
would like to request an additional copy of the proxy statement or Annual Report
now or with respect to future mailings (or to request to receive only one copy
of the proxy statement or Annual Report if you are currently receiving multiple
copies), please send your request to Henry E. Gemino at the address noted above.
COST OF SOLICITATION
The Company will bear the cost of solicitation of proxies, including
expenses in connection with the preparation and mailing of this proxy statement.
The Company will solicit primarily through the mail, and the Company's officers,
directors, and employees may solicit by personal interview, telephone,
facsimile, or e-mail proxies. These people will not receive additional
compensation for such solicitations, but the Company may reimburse them for
their reasonable out-of-pocket expenses.
Holders of the Company's common stock are requested to complete, sign, and
date the accompanying proxy card and promptly return it to the Company's
Transfer Agent, in the enclosed addressed, postage paid envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Henry E. Gemino
-------------------
Henry E. Gemino
Chief Executive Officer
November 4, 2004
15
APPENDIX A
----------
AMENDMENT TO CERTIFICATE OF INCORPORATION OF
PROFILE TECHNOLOGIES, INC. INCREASING NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
Profile Technologies, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Profile Technologies,
Inc. resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of the Corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of the Corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that Paragraph 4 of the Company's Certificate of Incorporation
shall be deleted in its entirety and replaced with the following:
The total number of shares of stock which the corporation
shall have the authority to issue is 25,000,000 shares of
common stock, $0.001 par value.
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
an annual meeting of the stockholders of the Corporation was duly called and
held upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware, at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 243 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Profile Technologies, Inc. has caused this
certificate to be signed by Philip L. Jones, its Secretary, this 17th day of
September, 2004.
PROFILE TECHNOLOGIES, INC.
By: ___________
Print: Philip L. Jones
Its: Secretary
APPENDIX B
----------
PROFILE TECHNOLOGIES, INC.
CHARTER OF THE AUDIT COMMITTEE
I. PURPOSE
The primary purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance, and ethics; and the
Corporation's auditing, accounting and financial reporting processes generally.
Consistent with this function, the Audit Committee should encourage continuous
improvement of, and should foster adherence to, the Corporation's policies,
procedures and practices at all levels. The Audit Committee's primary duties and
responsibilities are to:
Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
Review and appraise the audit efforts of the Corporation's independent
accountants and the internal audit function*.
Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditor*,
and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be composed of two or more directors, each of
whom shall be an independent director as that term is defined by the National
Association of Securities Dealers (NASD). A director who is not independent
according to the NASD definition may be appointed to the Audit Committee if the
Board, under exceptional and limited circumstances, determines that membership
on the Committee by the individual is in the best interests of the Corporation
and its shareholders, and the Board discloses in the next annual proxy statement
subsequent to the determination the nature of the relationship and the reasons
for the determination.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee shall
have accounting or related financial management expertise. Committee members may
enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until their successors shall
be duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by a majority vote of the full
Committee.
III. MEETINGS
The Committee shall meet at least three times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the director of
internal auditing*, and the independent accountants in separate executive
sessions to discuss any matters that the Committee or each of these groups
believe should be discussed privately.
Prior to the commencement of the annual audit, the Committee should be
advised by management and the external and internal auditors* about:
o The audit scope and approach;
o Special areas needing attention;
o Significant planned changes in the Corporation's accounting
principles, policies, and practices; and
o Recent developments in accounting principles or reporting practices
that may affect the Corporation.
The Committee should meet annually with the independent auditors and
management to review the Corporation's annual financial statements consistent
with IV.2 below, and the Committee, or at least its Chair, should meet quarterly
with the independent auditors and management to review the Corporation's
quarterly report consistent with IV.4 below.
The Committee shall keep written minutes of its meetings. Copies of such
minutes shall be distributed to each member of the Board of Directors and filed
by the Secretary of the Corporation in the minute book os the Audit Committee.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the Corporation's annual financial statements and any reports or
other financial information submitted to any governmental body or the
public, including any certification, report, opinion, or review conducted
by the independent accountants.
3. Review the regular internal reports to management prepared by the internal
auditor* and management's response.
4. Review with financial management and the independent accountants the 10-Q
report prior to its filing or prior to the public release of earnings. The
Chair of the Committee may represent the entire Committee for purposes of
this review.
Independent Accountants
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness, and approve the
fees and other compensation to be paid to the independent accountants. On
an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Corporation to determine the accountants' independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accounts when circumstances warrant.
7. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy of the
Corporation's financial statements.
Financial Reporting Processes
8. In consultation with the independent accountants and the internal auditor*,
review the integrity of the Corporation's financial reporting processes,
both internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
10. Conside and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditor*.
Process Improvement
11. Establish regular and separate systems of reporting to the Audit Committee
by each of management, the independent accountants, and the internal
auditor* regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to the
appropriateness of such judgments.
12. Following completion of the annual audit, review separately, with each of
management, the independent accountants and the internal auditor* any
significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
13. Review any significant disagreement among management and the independent
accountants or the internal auditor* in connection with the preparation of
the financial statements.
14. Review with the independent accountants, the internal auditor* and
management to extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been
implemented.
Ethical and Legal Compliance
15. Establish, review, and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
16. Review management's monitoring of the Corporation's compliance with the
Ethical Code and ensure that management has the proper review system in
place to ensure that the Corporation's financial statements, reports and
other financial information disseminated to governmental bodies and the
public satisfy legal requirements.
17. Review activities, organizational structure, and qualifications of the
internal auditor*.
18. Review, with the Corporation's counsel, legal compliance matters including
corporate securities trading policies.
19. Review, with the Corporation's counsel, any legal matter that could have a
significant impact on the Corporation's financial statements.
20. Perform any other activities consistent with this Charter, the
Corporation's By-Laws and the governing law, as the Committee or the Board
deems necessary or appropriate.
* NOTE: At the time of initial adoption of this Charter, the Corporation had not
instituted an internal audit function. Therefore all references in this Charter
to such a function and/or to the persons responsible for carrying out should be
understood as taking effect only if and when such a function has been
instituted.
Profile Technologies, Inc.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
I, the undersigned shareholder of Profile Technologies, Inc. (the "Company"), do
hereby nominate, constitute and appoint Henry E. Gemino, my true and lawful
proxy and attorney with full power of substitution for me and in my name, place
and stead, to represent and vote all of the common stock, par value $0.001 per
share, of the Company, held in my name on its books as of October 25, 2004, at
the Annual Meeting of Shareholders to be held on Monday, December 13, 2004.
PROPOSAL 1. Election of the following Directors:
[ ] FOR all nominees listed below (except [ ] WITHHOLD Authority to vote
as marked to the contrary below) for all nominees listed
below
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write the name(s) of such nominee(s) below.)
Henry E. Gemino ___________________________
Murphy Evans ___________________________
William A. Krivsky ___________________________
Charles Christenson ___________________________
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES.
--------------------------------------------------------------------------------
PROPOSAL 2. Adoption of the Amendment to the Company's Certificate of
Incorporation increasing the authorized shares of common stock from 15,000,000
to 25,000,000:
[ ] FOR adoption of the [ ] AGAINST Authority to vote [ ] ABSTAIN
Amendment for adoption of Amendment
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR"
ADOPTION OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION INCREASING THE AUTHORIZED SHARES OF COMMON STOCK
FROM 15,000,000 TO 25,000,000.
--------------------------------------------------------------------------------
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting of Shareholders.
IMPORTANT: PLEASE SIGN AND DATE ON REVERSE
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, the proxy
will be voted FOR Proposal 1. Should any other matter requiring a vote of
the shareholders arise, the proxy named above is authorized to vote in
accordance with his best judgment in the interest of the Company.
IMPORTANT: Please sign exactly as your name appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign the full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ADDRESSED ENVELOPE OR OTHERWISE TO Continental Stock Transfer & Trust Company,
17 Battery Place, New York, New York 10004. IF YOU DO NOT SIGN AND RETURN A
PROXY OR ATTEND THE MEETING AND VOTE, YOUR SHARES CANNOT BE VOTED.
______________________________
Date
______________________________
Signature
______________________________
Signature (if jointly held)
______________________________
Print Name(s) Here