proxy_statement.htm
ADVANCED
MATERIALS GROUP, INC.
3303 Lee
Parkway, Suite 105
Dallas,
Texas 75219
May 30,
2008
To our
stockholders:
You are
cordially invited to attend the 2008 annual meeting of stockholders of Advanced
Materials Group, Inc. (the “Company” or “AM”), which will be held at 2:00 p.m.
local time, on Monday, June 30, 2008, at The Busch Firm, 2532 Dupont Drive,
Irvine, California 92612. All holders of the Company’s outstanding common stock
as of April 30, 2008 are entitled to vote at the annual meeting.
Enclosed
is a copy of the Company’s annual report, notice of annual meeting of
stockholders, proxy statement and proxy card. A current report on the business
operations of the Company will be presented at the meeting and stockholders will
have an opportunity to ask questions.
We hope
you will be able to attend the annual meeting. Whether or not you expect to
attend, it is important you complete, sign, date and return the proxy card in
the enclosed postage prepaid envelope in order to ensure that your shares will
be represented at the annual meeting.
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/s/ Ricardo G.
Brutocao
Ricardo
G. Brutocao
Chief
Executive Officer and Director
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/s/ William G.
Mortensen
William
G. Mortensen
President
and Chief Financial Officer
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ADVANCED
MATERIALS GROUP, INC.
3303 Lee
Parkway, Suite 105
Dallas,
Texas 75219
________________
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be held Monday, June 30, 2008
NOTICE IS
HEREBY GIVEN that the annual meeting of stockholders of Advanced Materials
Group, Inc., a Nevada corporation (the “Company”), will be held at 2:00 p.m.
local time, on Monday, June 30, 2008, at The Busch Firm, 2532 Dupont Drive,
Irvine, California 92612, for the following purposes:
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1.
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To
elect five nominees to the Board of Directors;
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2.
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To
ratify the appointment of Catherine Fang CPA, LLC as the independent
accountants for the Company for the fiscal year ending November 30, 2008;
and
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3.
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To
transact such other business as may properly come before the annual
meeting or any adjournments and postponements
thereof.
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The Board
of Directors has fixed the close of business on April 30, 2008 as the record
date for the determination of stockholders entitled to notice of and to vote at
the annual meeting. Only holders of the Company’s common stock at the close of
business on the record date are entitled to vote at the meeting. A list of
stockholders entitled to vote at the meeting will be available for inspection at
the Company’s executive offices. Stockholders will need to register at the
annual meeting in order to attend. You will need proof of your identity and
proof of ownership of shares of our common stock as of April 30, 2008 in order
to register. If your shares are not registered in your name, you will
need to bring to the annual meeting either a copy of an account statement or a
letter from the broker, bank or other institution in which your shares are
registered that shows your ownership of our common stock as of April 30,
2008.
Accompanying
this notice are a proxy and a proxy statement. PLEASE SIGN AND DATE THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. As described
in the proxy statement, the proxy may be revoked at any time prior to its
exercise at the meeting. If you are a beneficial owner and not a record owner,
please follow the directions provided by your broker.
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By
Order of the Board of Directors
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/s/ William G. Mortensen
William
G. Mortensen
President
and Chief Financial Officer
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May 30,
2008
YOUR
VOTE IS IMPORTANT
You
are cordially invited to attend the annual meeting of stockholders. However,
even if you do plan to attend, please promptly complete, sign, date and mail the
enclosed proxy in the envelope provided. Returning a signed proxy will not
prevent you from voting in person at the annual meeting, if you so desire, but
will help secure a quorum and reduce or eliminate the expense of additional
proxy solicitation.
TABLE OF
CONTENTS
| VOTING
AND
PROXY .................................................................................................................................... |
1 |
PROPOSAL 1 ....................................................................................................................................................
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2
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7
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EXECUTIVE
COMPENSATION .....................................................................................................................
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8
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PROPOSAL
2 ....................................................................................................................................................
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12
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OTHER
MATTERS ...........................................................................................................................................
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13
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STOCKHOLDER
PROPOSALS ....................................................................................................................
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13
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AVAILABLE
INFORMATION ........................................................................................................................
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13
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ANNUAL
REPORT ...........................................................................................................................................
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13
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3303 Lee
Parkway, Suite 105
Dallas,
Texas 75219
________________
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
To
be held Monday, June 30, 2008
________________
This
proxy statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of Advanced Materials Group, Inc. (the
“Company”) for use at the annual meeting of stockholders to be held at 2:00 p.m.
local time, on Monday, June 30, 2008, at The Busch Firm, 2532 Dupont Drive,
Irvine, California 92612 and at any adjournments or postponements thereof. It is
anticipated that this proxy statement and accompanying proxy card will be mailed
on or about May 30, 2008 to all stockholders entitled to vote at the annual
meeting.
In voting
by proxy for directors, stockholders may vote in favor of all director nominees,
withhold their votes as to all nominees, or withhold their votes as to specific
nominees. In voting with respect to proposals, stockholders may vote “FOR” or
“AGAINST” such proposals. Stockholders should specify their choices
on the accompanying proxy card.
The
shares represented by each properly executed, unrevoked proxy will be voted as
directed by the stockholder with respect to the matters described in the proxy.
If no specific instructions are given with regard to the matters to be voted
upon, the shares represented by a signed proxy card will be voted “FOR” the
election of all director nominees named herein, and “FOR” the ratification of
the appointment of Catherine Fang CPA, LLC as the Company’s independent
accountants for the fiscal year ending November 30, 2008. If any other matters
properly come before the annual meeting, the persons named as proxies will vote
upon these matters in accordance with their best judgment. Any stockholder
giving a proxy has the power to revoke it at any time before it is voted by
providing written notice to the Secretary of the Company, by issuance of a
subsequent proxy, or by voting at the annual meeting in person.
At the
close of business on April 30, 2008, the record date for determining
stockholders entitled to notice of and to vote at the annual meeting, the
Company had issued and outstanding 12,346,026 shares of common stock, par value
$.001 per share, held by approximately 2,200 holders of record. Each share of
common stock entitles the holder of record to one vote on any matter coming
before the annual meeting. Only stockholders of record at the close of business
on the record date are entitled to notice of and to vote at the annual meeting
or at any adjournments or postponements thereof.
The
presence, in person or by proxy, of a majority of the outstanding shares of
common stock of the Company entitled to vote at the annual meeting, regardless
of whether a proxy has authority to vote on all matters presented at the
meeting, shall constitute a quorum at the annual meeting. The five nominees for
director who receive the highest number of votes shall be elected. On matters
other than the election of directors, the proposal will be approved if the
number of votes cast in favor of the proposal exceeds the number of votes cast
in opposition, unless for any particular proposal the vote of a greater
proportion of shares, or of any particular class of shares, or of each class, is
required by law or by the Company’s articles of incorporation or bylaws.
Abstentions and broker non-votes on proposal 2 and on any other particular
proposal that will be approved if the number of votes cast in favor of the
proposal exceeds the number of votes cast in opposition, will not be treated as
a vote cast on the proposal and, therefore, will not affect the outcome of those
matters to be voted on at the meeting.
For
beneficial owners that are not record owners to vote, they will need to follow
the directions from their broker enclosed with this proxy
statement.
Any
stockholder has the power to revoke his or her proxy at any time before it is
voted at the annual meeting by submitting written notice of revocation to our
corporate secretary or by filing a duly executed proxy bearing a later date. A
proxy will not be voted if the stockholder who executed it is present at the
annual meeting and elects to vote in person the shares represented by the
proxy.
The
Company will pay the expenses of soliciting proxies for the annual meeting,
including the cost of preparing, assembling, and mailing the proxy solicitation
materials. Proxies may be solicited personally, or by mail or telephone. Proxy
solicitors may include directors, officers and regular employees of the Company.
Brokerage firms, nominees, custodians and fiduciaries also may be requested to
forward proxy materials to the beneficial owners of shares held of record by
them.
The
Company’s bylaws provide that its Board of Directors shall consist of at least
three directors, with the exact number of directors that constitute the Board of
Directors to be set by a resolution of the Board of Directors or by a majority
of the Company’s stockholders. The number of directors on the Board of Directors
currently is set at five.
Directors
are elected annually and hold office until the next annual meeting of
stockholders or until their respective successors are duly elected and
qualified. It is intended that the proxies solicited by the Board of Directors
will be voted “FOR” election of the five nominees listed below unless a contrary
instruction is made on the proxy. If one or more of these nominees should be
unable or unwilling to serve for any reason, the persons named in the
accompanying proxy may vote for another candidate or candidates nominated by the
Board of Directors. However, the proxy holders may not vote proxies for a
greater number of persons than the number of nominees named on the proxy card.
All of the nominees listed below are presently directors of the
Company.
THE
COMPANY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF THE FIVE
NOMINEES LISTED BELOW.
Director
Nominees
Timothy R. Busch, 53, has been
the Chairman and a director of the Company since February 1998 and September
1997, respectively. Mr. Busch started his career as a tax estate planning
attorney founding The Busch Firm in Irvine, CA in 1979. Mr. Busch is a licensed
attorney in California, Michigan, Texas and Washington, D.C. and has a
non-practicing/inactive status as a CPA in California and Michigan. Mr. Busch is
a director of several privately held companies and is an investor in a number of
public and private enterprises including real estate ventures focusing on full
service hotels. Mr. Busch also serves on many non-profit boards which include
private Christian Education.
N. Price Paschall, 59, has been a
director of the Company since January 1994. Mr. Paschall also serves as the
Chairman of the Company’s Compensation Committee. Mr. Paschall has been Managing
Director of Context Capital Group, an investment-banking firm that serves
clients in the medical and industrial markets, since February 1992. Mr. Paschall
was a partner of Shea, Paschall, Powell-Hambros Bank, and its predecessor
company, a firm specializing in mergers and acquisitions, from January 1983 to
January 1992. Mr. Paschall holds a B.A. in Business Administration from
California Polytechnic University at Pomona. He currently serves on
the Board of Directors of CPU Tech, a private technology company located in
Pleasanton, CA.
Maurice J. DeWald, 67, has been a director
and Chairman of the Audit Committee of the Company since February 1998. From
June 1992 to the present, Mr. DeWald has been Chairman and Chief Executive
Officer of Verity Financial Group, Inc., a private investment and financial
advisory firm. Mr. DeWald is a former member of the KPMG LLC Board of Directors
and also served as the Managing Partner of the Los Angeles office of KPMG LLC
from 1986 to 1991. He currently serves on the Board of Directors of Mizuho
Corporate Bank of California, Aperture Healthcare, Inc., Integrated Healthcare
Holdings, Inc. and Grubb & Ellis Healthcare REIT, Inc.
Ricardo G. Brutocao, 63, was appointed the
position of Chief Executive Officer to fill the Company's previously announced
vacancy at that position on January 2, 2006 and will serve in this capacity on a
part-time, at-will basis. Mr. Brutocao also had served as a director of the
Company since 2005. Mr. Brutocao also serves as a director of Centergistic
Solutions, Inc., a maker of performance management software, a position Mr.
Brutocao has held since 2001. Mr. Brutocao also serves as President and COO of
Dacor, Inc., a privately held appliance manufacturer, and has held these
positions since August 6, 2007. From 2000 to 2001, Mr. Brutocao was the interim
Chief Executive Officer of ZLand, Inc., a software company.
John Sawyer, 63, has been a director of
the Company since March 2006. Mr. Sawyer is Chairman and President of Penhall
Company. He joined Penhall Company in 1978 as the Estimating Manager of the
Anaheim Division. In 1980, Mr. Sawyer was appointed Manager of Penhall's
National Contracting Division, and in 1984, he assumed the position of Vice
President and became responsible for managing all construction services
divisions. Mr. Sawyer has been President of Penhall since 1989, and Chairman
since 1998. Mr. Sawyer is also a director and member of the audit committee for
H&E Equipment Services.
Executive
Officers
Following
is information regarding each current executive officer of the Company who is
not a member of the Board of Directors.
William G. Mortensen, 42, was appointed
President and retained as the Chief Financial Officer on August 22, 2005 and
previously held the position of Chief Financial Officer and Controller as of
June 1, 2004. Mr. Mortensen was employed by Cingular Wireless LLC as Associate
Director in Finance, and before the Cingular joint venture he was with SBC, Inc.
as a manager of SBC Services supporting the SBC Wireless division since 1999.
Before joining SBC, Inc. Mr. Mortensen worked for Frito-Lay, Inc. as a manager
of finance and for over eight years with EDS, Inc. holding various financial
positions. Mr. Mortensen holds a BBA degree in Business Administration from
Abilene Christian University and has experience in the
telecommunications, high-tech and manufacturing industries.
Independence
The
majority of the Board of Directors are “independent” as that term is defined in
NASD Marketplace Rule 4200(a)(15). The Board of Directors has determined that
each of Mr. Dewald, Mr. Paschall, and Mr. Sawyer are “independent” as that term
is defined in NASD Marketplace Rule 4200(a)(15).
Term
of Office and Family Relationships
The
Company’s directors are elected at each annual stockholders’ meeting. Each of
the Company’s directors is to hold office until his successor is elected and
qualified or until his earlier death, resignation or removal. Each of the
Company’s executive officers serves at the discretion of the Company’s Board of
Directors. There are no family relationships among the Company’s executive
officers, directors and director nominees.
Director
Compensation
Each of
the Company's directors, other than Mr. Brutocao, receives $10,000 annually and
reimbursement for out-of-pocket expenses incurred in connection with his
attendance at each meeting of the Board of Directors or committee of the Board
of Directors. In addition, each director receives non-qualified stock options,
under the Company's 2007 Stock Incentive Plan, to purchase 20,000 shares of the
Company's common stock at fair market value when first elected to the Board of
Directors, and 10,000 shares of common stock at fair market value each January
subsequent to their reelection to the Board of Directors. The options become
fully vested six months after their issuance. The chairman of the Company's
Audit Committee receives an additional $2,000 annually. All director fees are
paid on a quarterly basis. Mr. Brutocao does not receive director compensation
other than reimbursement of out-of-pocket expenses incurred in connection with
his attendance at Board or committee meetings.
Prior to
May, 2007, no director stock options had been granted since 2004, as the
Company’s policy during that period was for no options to be issued until the
Company was current with its periodic SEC filings. In May 2007, the 2007 Stock
Incentive Plan was submitted to and approved by the Company’s stockholders. On
July 9, 2007, the Company issued stock options to the directors other than Mr.
Brutocao to compensate the directors for prior years in which options were not
issued. The following chart represents the amount of options granted
to each director:
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Director
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Number
of Shares
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Share
Price
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Timothy
Busch
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45,200
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$ 0.90
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Maurice
DeWald
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45,200
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$ 0.90
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N.
Price Paschall
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45,200
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$ 0.90
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John
Sawyer
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47,600
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$ 0.90
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Board
of Directors and Committees
The Board
of Directors held 4 meetings during fiscal 2007. During the fiscal year ended
November 30, 2007, no incumbent director attended fewer than 75% of the
aggregate of: (1) the total number of meetings of the Board of Directors (held
during the period for which he has been a director); and (2) the total number of
meetings held by all committees of the Board of Directors on which he served
(during the periods that he served).
The Board
of Directors has standing Compensation and Audit Committees, but does not have a
nominating committee because the Board of Directors has determined that the
entire Board of Directors can efficiently and effectively fulfill this function
by using a variety of methods for identifying and evaluating nominees for
director, including candidates that may be referred by the Company’s
stockholders. Stockholders who desire to recommend candidates for evaluation may
do so by contacting the Company in writing, identifying the potential candidate
and providing background information. See “Security Holder Communications with
the Board of Directors.” Candidates may also come to the attention of the Board
of Directors through the recommendation of current members of the Board of
Directors, professional search firms and other persons. In evaluating potential
candidates, the Board of Directors takes into account a number of factors,
including among others, the following:
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independence
from management;
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whether
the candidate has relevant business
experience;
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judgment,
skill, integrity and reputation;
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existing
commitments to other businesses;
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corporate
governance background;
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financial
and accounting background, to enable the Board of Directors to determine
whether the candidate would be suitable for Audit Committee membership;
and
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the
size and composition of the Board of
Directors.
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The
Compensation Committee currently is composed of Mr. Paschall and Mr. DeWald,
with Mr. Paschall serving as Chairman. The Compensation
Committee met one time during fiscal 2007. The Compensation Committee evaluates
the performance of the Company’s officers and makes recommendations to the Board
of Directors concerning compensation. The Compensation Committee also determines
option grants made pursuant to the Company’s stock option plans based on
recommendations of management.
The Audit
Committee currently is composed of Mr. DeWald and Mr. Paschall, with
Mr. DeWald serving as Chairman. The Audit Committee met four
times during fiscal 2007. The Audit Committee operates under a written charter
that is available for viewing on the Company’s website at
http://www.advancedmaterials.net. The Board of Directors has
determined that each of the members of the Audit Committee is “independent” as
that term is defined in NASD Marketplace Rule 4200(a)(15) and that Mr. DeWald is
an “audit committee financial expert” as that term is defined in Item 407(d) of
Regulation S-B. The Audit Committee’s principal functions are to monitor the
Company’s financial reporting process and internal control system, review and
appraise the audit efforts of the Company’s independent auditors and provide an
open avenue of communication among the Company’s independent auditors, financial
and senior management and Board of Directors.
Security
Holder Communications with the Board of Directors
The Board
of Directors has established a process to receive communications from security
holders. Security holders and other interested parties may contact any member
(or all members) of the Board of Directors, or the independent directors as a
group, any committee of the Board of Directors or any chair of any such
committee, by mail or electronically. To communicate with the Board of
Directors, any individual directors or any group or committee of directors,
correspondence should be addressed to the Board of Directors or any such
individual directors or group or committee of directors by either name or title.
All such correspondence should be sent “c/o Secretary” at Advanced Materials
Group, Inc., 3303 Lee Parkway, Suite 105, Dallas, Texas 75219. To communicate
with any director electronically, security holders should send an e-mail “c/o
Secretary,” at investor_relations@advancedmaterials.net.
All
communications received as set forth in the preceding paragraph will be opened
by the Company’s Secretary for the sole purpose of determining whether the
contents represent a message to the directors. Any contents that are not in the
nature of advertising, promotions of a product or service, patently offensive
material or matters deemed inappropriate for the Board of Directors will be
forwarded promptly to the addressee. In the case of communications to the Board
of Directors or any group or committee of directors, the Company’s Secretary
will make sufficient copies (or forward such information in the case of e-mail)
of the contents to send to each director who is a member of the group or
committee to which the envelope or e-mail is addressed.
Policy
With Regard to Board Members’ Attendance at Annual Meetings
It is the
Company’s policy that members of the Board of Directors are invited and
encouraged to attend all of the Company’s annual meetings. At the time of the
Company’s 2007 annual meeting of stockholders, the Company had five directors,
all of whom were in attendance at the 2007 annual meeting of
stockholders.
Report
of the Audit Committee
The Audit
Committee of the Board of Directors is asked to report to the stockholders on
certain matters each year in the Company’s proxy statement.
The Audit
Committee represents the Board of Directors in discharging its responsibilities
relating to the accounting, reporting and financial practices of the Company and
its subsidiaries, and has the general responsibility for the surveillance of
internal controls and accounting and audit activities of the Company and its
subsidiaries. Management has the primary responsibility for preparing the
Company’s financial statements and for its financial reporting process, and the
Company’s independent auditors are responsible for expressing an opinion on the
conformance of the Company’s financial statements to accounting principles
generally accepted in the United States. The Audit Committee is responsible for,
among other things, reviewing and discussing with management and the Company’s
independent auditors the Company’s annual and quarterly financial statements and
financial reporting process, including an analysis of the auditors’ judgment as
to (a) the quality of the Company’s accounting procedures and practices, (b) any
significant changes in the accounting policies of the Company and (c) any
accounting and financial impact on the Company’s financial reports.
In this
context, the Audit Committee reviewed and discussed with management and the
independent auditors the Company’s quarterly and audited annual financial
statements for the fiscal year ended November 30, 2006 and 2007. The Audit
Committee also discussed with the independent auditors the matters that the
independent auditors are required to discuss with the Audit Committee pursuant
to Statement on Auditing Standard No. 61 (Communication with Audit Committees).
In addition, the Audit Committee received from the independent auditors the
written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and actively
engaged in a dialogue with the independent auditors with respect to any and all
disclosed relationships or services that may impact the objectivity and
independence of the independent auditors. In reviewing and discussing such
matters, the Audit Committee considered whether the auditors’ provision of
non-audit services during fiscal 2006 and 2007 was compatible with maintaining
the auditors’ independence.
Based on
the review and discussions referred to above, the Audit Committee recommended to
the Board of Directors that the Company’s audited financial statements be
included in the Company’s Annual Report on Form 10-KSB for the fiscal year ended
November 30, 2007, for filing with the Securities and Exchange
Commission.
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Members
of the Audit Committee:
Maurice
J. DeWald and N. Price Paschall
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Certain
Relationships and Related Transactions
On April
22, 2004, each of Mr. Busch and Mr. Delk loaned the Company $150,000 in exchange
for the issuance of unsecured promissory notes bearing interest at the rate of
10.0% per annum and warrants to purchase up to 50,000 shares of the Company's
common stock at an exercise price of $0.363 per share. Interest and principal on
the notes were due July 21, 2004 but were not paid timely. As a result, the
interest rate of the notes increased to the default rate of 12.0% per annum on
July 22, 2004, and in October 2004, the Company paid to each of Mr. Busch and
Mr. Delk $50,000 of principal plus interest accrued through July 21, 2004 on the
entire principal balances of their notes and issued as a penalty to each of Mr.
Busch and Mr. Delk an additional warrant to purchase up to 50,000 shares of the
Company's common stock at an exercise price of $0.363 per share. Each of the
warrants issued to Mr. Busch and Mr. Delk expires May 13, 2008. The outstanding
balance on the notes was approximately $44,000 at November 30,
2006.
On August
26, 2005, AM issued to each of the Lenawee Trust and Plus Four Private Equities,
L.P. 625,000 shares of AM's common stock for $0.20 per share ($125,000 each).
The Lenawee Trust is an affiliate of Timothy R. Busch, the Chairman of AM's
Board of Directors.
The
Company is or has been a party to employment, consulting and compensation
arrangements with related parties, as more particularly described above under
the headings "Employment Contracts, Termination of Employment and
Change-in-Control Arrangements" and "Director Compensation."
Announced
October 25, 2006 AM announced that Robert Delk, past CEO and President of the
Company, in a private transaction, sold 1,419,218 shares, or 11.1% of the
outstanding shares in the Company, to an investor group headed by AMDG Chairman
Tim Busch, CEO Ricardo Brutocao, President William G. Mortensen and the
Company’s largest single stockholder, Plus Four Private Equities,
LP.
In
connection with the above transaction 100,000 stock warrants were given to
Timothy R. Busch and Robert Delk. Robert Delk sold his 100,000
warrants to William G. Mortensen in a private transaction during
2007. All Warrants have been exercised by Timothy R. Busch and
William G. Mortensen as of March 2008.
The
following table sets forth certain information regarding the common stock
beneficially owned as of April 30, 2008 by:
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each
person who is known by the Company to own beneficially or exercise voting
or dispositive control over more than 5%of the common
stock;
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§
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each
of the Company's directors and director
nominees;
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§
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each
of the Company's current Named Executive Officers;
and
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all
current executive officers and directors as a
group.
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There
were 12,346,026 shares of the Company's common stock outstanding as of the close
of business on April 30, 2008.
Beneficial
ownership is determined in accordance with Rule 13d-3 promulgated by the
Commission under the Securities Exchange Act of 1934 ("Exchange Act") and
generally includes voting or investment power with respect to securities. Except
as indicated below, the Company believes each holder possesses sole voting and
investment power with respect to all of the shares of voting stock owned by that
holder, subject to community property laws where applicable. In computing the
number of shares beneficially owned by a holder and the percentage ownership of
that holder, shares of common stock subject to options or warrants held by that
holder that are currently exercisable or are exercisable within 60 days after
the date of the table are deemed outstanding. Those shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of any
other person or group.
The
inclusion of shares in this table as beneficially owned is not an admission of
beneficial ownership. Except as indicated below, the address for each named
beneficial owner is the same as the Company's. Ownership of less than 1.00% is
indicated with an asterisk.
TITLE
OF CLASS: COMMON STOCK
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership(1)
|
|
Dito
Caree LP, Dito Devcar LP, Plus 4 LLC and Richard H.
Pickup
|
|
24.42%
|
|
|
|
7.33%
|
Timothy
R. Busch and the Lenawee Trust
|
|
21.14%
|
|
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|
2.63%
|
|
|
|
0.85%
|
|
|
|
2.12%
|
|
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|
0.47%
|
|
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|
4.78%
|
All
current executive officers and directors as a group (6 persons)
(11)
|
7,869,364
|
63.74%
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(1)
|
Beneficial
ownership has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934 and unless otherwise indicated, represents
securities for which the beneficial owner has sole voting and investment
power. Any securities held in the name of, and under, the voting and
investment authority of a spouse of an executive officer or director have
been excluded.
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(2)
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Calculated
based on 12,346,026 shares of common stock outstanding on April 30, 2008,
plus, for each person or group, any securities that person or group has
the right to acquire within 60 days pursuant to options, warrants,
conversion privileges or other
rights.
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(3)
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Represents
986,300 shares held by Dito Caree LP, 200,000 shares held by Dito Devcar
LP and 1,828,806 shares held by Plus 4 LLC. Mr. Pickup holds voting and
dispositive power over these shares as general partner of each of Dito
Caree LP and Dito Devcar LP, and Plus 4 LLC. Mr. Pickup's address is c/o
David Hehn, 3753 Howard Hughes Parkway #200, Las Vegas,
Nevada 89109-0938.
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(4)
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Represents
617,000 shares held by Mr. Spagna and 287,500 shares held jointly by Mr.
Spagna and his spouse and children, as reported on a Schedule 13D/A filed
with the Commission on February 5, 2003. Mr. Spagna's address is 515
Airport Executive Park, Nanuet, New
York 10954.
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(5)
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Lenawee
Trust is a trust of which Timothy Busch and his spouse are beneficiaries
and hold voting and dispositive power. Represents 2,469,919 of common
stock, and stock options held by Timothy Busch of 140,200
shares.
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(6)
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Represents
20,000 shares purchased and 305,200 stock options to purchase common
stock.
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(7)
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Represents
105,200 stock options to purchase common
stock
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(8)
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Represents
50,000 options to purchase common stock at $0.40 per share and 10,000
options to purchase common stock at $0.60 per share, 201,900 shares
purchased.
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(9)
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Represent
57,600 shares underlying options to purchase common
stock.
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(10)
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Represents
110,000 stock options and purchased stock of 479,739
shares.
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(11)
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Includes
7,869,364 shares of common stock underlying securities that members of
this group have the right to acquire within 60 days pursuant to options,
warrants, conversion privileges or other
rights.
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The
following table sets forth certain information regarding compensation paid by
the Company for services rendered to the Company by its principal executive
officer and to each of the other most highly compensated executive officers of
the Company who earned more than $100,000 in salary and bonus during the fiscal
years ended November 30, 2006 and 2007 (the "Named Executive
Officers").
Name
and Principal Position
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President
and Chief Financial Officer
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Option
Grants in 2007
None
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The
following table sets forth certain information regarding the exercise of options
by the Named Executive Officers during fiscal 2007 and unexercised stock options
held by the Named Executive Officers as of November 30, 2007.
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Underlying
Unexercised Options at November 30, 2007
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Value
of Unexercised In-the-Money Options at November 30,
2007(2)
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Shares
Acquired on Exercise
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(1)
Market value of underlying securities on the date of exercise, minus the
exercise price.
(2) Based
on the last reported sale price ($0.50 per share) on the Pink Sheets
on April 30, 2008 (the record date).
Employment
Contract, Termination of Employment and Change-in-Control
Arrangements
On August
22, 2005, the Company entered into an Employment Agreement with William G.
Mortensen ("Mortensen") governing his service as President and Chief Financial
Officer of the Company. The terms of Mortensen’s employment are at will;
however, if he is terminated without cause (as defined in the Employment
Agreement), he will receive severance pay equal to six months' base salary if
the termination occurs within the first year of the term, and equal to three
months' base salary if the termination occurs thereafter. Mortensen's base
annual salary is set at $135,000 and he is entitled to bonuses calculated by
formulas based upon AM's income from continuing operations before taxes. This
agreement renews annually with compensation increases approved by the
Compensation Committee. As of December 1, 2007 Mr. Mortensen’s
compensation is $150,000 with a bonus plan and stock options to be given is
certain performance criteria are met.
In
January 2006, the Company entered into an at-will employment arrangement with
Ricardo G. Brutocao to fill the Company's open Chief Executive Officer position.
Mr. Brutocao has an unwritten agreement to be compensated by the Company at the
rate of $140,000 per year, effective December 1, 2007, based on recommendations
by the Compensation Committee. In November 2005, Mr. Brutocao was elected
to the Company's board of directors. Prior to that Mr. Brutocao had been
providing consulting services to the Company and as a result was granted 100,000
options on January 2006 at $.20 per share of which 20% vested immediately and
the remaining vest ratably over a four year period. As of April 30, 2008, 60,000
stock options were vested and 40,000 remained unvested. Vesting of the
remaining unvested options is contingent on continued service to the
Company. Mr. Brutocao was granted in March 2008 10,000 stock options
to vest in accordance with the 2007 Stock Option plan.
The
following table shows certain information regarding outstanding equity awards as
of November 30, 2007 for the Company’s Named Executive Officers:
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Number
of Securities Underlying Unexercised Options (1)
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Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
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(1)
Represents options granted with employment
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee consisted of the following non-employee directors during
fiscal 2006 and 2007: Mr. Paschall and Mr. DeWald. No director who was a member
of the Compensation Committee during fiscal 2006 and 2007 was an officer or
employee of the Company or its subsidiaries during fiscal 2006 or 2007, was
formerly an officer of the Company or its subsidiaries, or had any relationship
requiring disclosure pursuant to Item 404 of Regulation S-K under the Securities
Act of 1933 (“Securities Act”).
None of
the Company’s executive officers serves as a member of a compensation committee
of another corporation (or other Board committee of such company performing
equivalent functions or, in the absence of any such committee, the entire Board
of Directors of such corporation), one of whose executive officers served on the
Company’s Compensation Committee. None of the Company’s executive officers
served during fiscal 2006 and 2007 as a director of another corporation, one of
whose executive officers served on the Company’s Compensation Committee. None of
the Company’s executive officers served during fiscal 2006 and 2007 as a member
of a compensation committee of another corporation (or other Board committee of
such corporation performing similar functions or, in the absence of any such
committee, the entire Board of Directors), one of whose executive officers
served as one of the Company’s directors.
Report
of the Compensation Committee
The
Compensation Committee of the Board of Directors, composed of Mr. Paschall, Mr.
Sawyer and Mr. DeWald, has the authority to recommend to the Board of Directors
changes to the Company’s executive compensation programs, including the
Company’s stock incentive plans. The Company’s executive compensation program is
designed to provide competitive levels of base compensation in order to attract,
retain and motivate high quality employees, tie individual total compensation to
individual performance and success of the Company, and align the interests of
the Company’s executive officers with those of its stockholders.
The Company has a Compensation
Committee Charter, which was adopted by the Board of directors on November 2,
2004. The Compensation Committee Charter is available for viewing on
the Company’s website at http://www.advancedmaterials.net.
Executive
Compensation Program
The
Company’s executive compensation program consists of three principal elements:
base salary, cash bonus and stock options. The Board of Directors sets the
annual base salary for executives after consideration of any employment
agreement provisions and the recommendations of the Compensation Committee.
Prior to making its recommendations, the Compensation Committee reviews
historical compensation levels of the executives, evaluates past performance and
assesses expected future contributions of the executives. In making the
determinations regarding base salaries, the Company considers generally
available information regarding the salaries prevailing in the
industry.
The
Company maintains incentive plans under which executive officers may be paid
cash bonuses at the end of each fiscal year. The bonuses under these incentive
plans depend upon individual performance and the achievement by the Company of
certain financial targets established by the Board of Directors prior to the
start of each fiscal year. The compensation plans are administered by the
Compensation Committee of the Company.
Total
compensation for executive officers also includes long-term incentives offered
in the form of stock options, which are generally provided through initial stock
option grants at the date of hire and periodic additional stock options grants.
Stock options align the interests of the executive officers with the interests
of stockholders due to the fact that the executive can realize a gain only if
the Company’s stock appreciates in value. In determining the amount of such
grants, the Compensation Committee considers the contributions of each executive
to the overall success of the Company in the past fiscal year, the
responsibilities to be assumed in the upcoming fiscal year, appropriate
incentives for the promotion of the long-term growth of the Company, and grants
to other executives in the industry holding comparable positions as well as the
executive’s position within the Company.
Executive
Officer Compensation
In
January 2006, the Company entered into an at-will employment arrangement with
Ricardo G. Brutocao to fill the Company's open Chief Executive Officer position.
Mr. Brutocao has an unwritten agreement to be compensated by the Company at the
rate of $125,000 per year. In November 2005, Mr. Brutocao was elected to the
Company's board of directors. Prior to that Mr. Brutocao had been providing
consulting services to the Company and as a result was granted 100,000 options
at $.20 per share of which 20% vested immediately and the remaining vest ratably
over a four year period. Vesting is contingent on continued service to the
Company. In 2007 the compensation committee approved a compensation rate
increase to $140,000 per year. The rate remains the same for year
2008. Also the officer was awarded 10,000 stock options.
On August
22, 2005, the Company entered into an Employment Agreement with William G.
Mortensen ("Mortensen") governing his service as President and Chief Executive
Officer of the Company. The terms of Mortensen’s employment are at will;
however, if he is terminated without cause (as defined in the Employment
Agreement), he will receive severance pay equal to six months' base salary if
the termination occurs within the first year of the term, and equal to three
months' base salary if the termination occurs thereafter. Mortensen's base
annual salary is set at $120,000 and he is entitled to bonuses calculated by
formulas based upon AM's income from continuing operations before
taxes. This agreement renews annually with compensation increases
approved by the Compensation Committee. In 2007 the committee
approved a rate increase to $135,000 and an increase for 2008 to
$150,000. Also the committee approved 10,000 stock
options.
In
determining the Executive Officer compensation, the Compensation Committee
considers the Company’s overall performance, as measured by sales revenue,
profitability, earnings per share and share valuation. The compensation
committee met three times in year 2007 to discuss compensation
issues.
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This
report was furnished by
Mr.
Paschall and Mr. DeWald
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Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the officers and directors of the Company as
well as persons who own more than 10% of a registered class of the Company’s
equity securities, to file reports of ownership and changes in ownership with
the Commission. Officers, directors and greater-than-10% stockholders are
required by the regulations of the Commission to furnish the company with copies
of all Section 16(a) forms that they file.
To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company, all
Section 16(a) requirements applicable to our officers, directors and
greater-than-10% shareholders were satisfied during the fiscal year ended
November 30, 2007.
Code
of Ethics
The
Company has adopted a code of ethics that is applicable to all of the Company’s
directors, officers and employees and is intended to meet the definition of a
“code of ethics” as set forth in Item 406(b) of Regulation S-K of the
Commission. The Company will provide a copy of the code of ethics to any person
without charge, upon written request to Advanced Materials Group, Inc.,
Attention: Investor Relations, 3303 Lee Parkway, Suite 105, Dallas, Texas
75219.
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APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
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General
The
Company is asking its stockholders to ratify the Audit Committee’s appointment
of Catherine Fang, CPA, LLC as its independent auditors for the fiscal year
ending November 30, 2008. If the Company’s stockholders fail to ratify the
appointment, the Audit Committee may reconsider this appointment. Even if the
appointment is ratified, the Audit Committee, in its discretion, may direct the
appointment of a different independent auditing firm at any time if the Audit
Committee determines that such a change would be in the best interests of the
Company and its stockholders.
Representatives
of Catherine Fang CPA, LLC are not expected to be present at the
meeting.
Principal
Accountant Fees and Services
The
following table presents fees for professional audit services rendered by
Catherine Fang CPA, LLC for fiscal years 2006 and 2007 and fees billed for other
services rendered during those periods for Catherine Fang CPA, LLC.
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2007
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2006
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Audit
Fees
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$49,899
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$55,952
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Audit-Related
Fees
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$15,000
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$15,875
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Tax
Fees
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$11,000
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$14,636
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All
Other Fees
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0
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0
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Total
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$75,899
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$86,463
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Audit Fees. Consists of fees
billed for professional services rendered for the audit of the Company’s
consolidated financial statements and review of the interim consolidated
financial statements included in quarterly reports and services that are
normally provided in connection with statutory and regulatory filings or
engagements.
Audit-Related Fees. Consists
of fees billed for assurance and related services that are reasonably related to
the performance of the audit or review of the Company’s consolidated financial
statements and are not reported under “Audit Fees.” These services include legal
review and consultations concerning financial accounting and reporting
standards.
Tax Fees. Consists of fees
billed for professional services for tax compliance, tax advice and tax
planning. These services include assistance regarding federal, state and
international tax compliance.
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors
The Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by the independent auditors. These services may include audit
services, audit-related services, tax services and other services. Pre-approval
is generally provided for up to one year and any pre-approval is detailed as to
the particular service or category of services and is generally subject to a
specific budget. The independent auditors and management are required to
periodically report to the Audit Committee regarding the extent of services
provided by the independent auditors in accordance with this pre-approval, and
the fees for the services performed to date. The Audit Committee may also
pre-approve particular services on a case-by-case basis.
THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT
OF CATHERINE FANG CPA, LLC AS THE INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR
THE FISCAL YEAR ENDING NOVEMBER 30, 2008.
The Board
of Directors knows of no other matters to be brought before the annual meeting.
However, if other matters should come before the annual meeting, it is the
intention of each person named in the proxy to vote such proxy in accordance
with his or her judgment on such matters.
Pursuant
to Rule 14a-8 of the Exchange Act, proposals by stockholders which are intended
for inclusion in the Company’s proxy statement and proxy and to be presented at
the Company’s 2008 annual stockholders’ meeting to be held in calendar year
2009, must be received by the Company by December 1, 2008 in order to be
considered for inclusion in the Company’s proxy materials relating to the
Company’s 2009 annual stockholders’ meeting. Such proposals should be addressed
to the Company’s Secretary and may be included in next year’s annual
stockholders’ meeting proxy materials if they comply with rules and regulations
of the Commission governing stockholder proposals.
For all
other proposals by stockholders to be timely, a stockholder’s notice must be
delivered to, or mailed and received at, the Company’s principal executive
offices not later than December 1, 2008. If a stockholder fails to notify the
Company of any such proposal prior to that date, management will be allowed to
use its discretionary voting authority with respect to proxies held by
management when the proposal is raised at the annual meeting, without any
discussion of the matter in the Company’s proxy statement.
The Company is subject to the
informational requirements of the Exchange Act. In accordance with the Exchange
Act, the Company files reports, proxy statements and other information with the
Commission. These materials can be inspected and copied at the Public Reference
Room maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. Copies of these
materials can also be obtained from the Commission at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Company’s common stock is traded in the pink
sheets under the symbol “ADMG.PK.”
A copy of
the Company’s annual report on Form 10-KSB for the fiscal year ended November
30, 2007, as filed with the Commission, accompanies this proxy statement. The
annual report is not incorporated by reference into this proxy statement and is
not deemed to be a part of this proxy solicitation material.
An
additional copy of the Company’s annual report will be furnished by first class
mail, without charge, to any person from whom the accompanying proxy is
solicited upon written or oral request to Advanced Materials Group, Inc.,
Attention: Investor Relations, 3303 Lee Parkway, Suite 105, Dallas, Texas 75219,
telephone (972) 432-0602. In addition, all of the Company’s public filings,
including its annual report, can be found free of charge on the worldwide web at
www.sec.gov or
www.advancedmaterials.net.
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By
the Order of the Board of Directors
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/s/ William G.
Mortensen
William
G. Mortensen
President
and Chief Financial Officer
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Dallas,
Texas
May 30,
2008