SMI
PRODUCTS, INC.
5000
Noeline Avenue
Encino,
CA 91436
(310)
739-3741
---------
INFORMATION
STATEMENT
(Pursuant
to Section 14(f) of the Securities Exchange Act of 1934
and
Rule 14f-1 thereunder)
INTRODUCTION
This
Information Statement is being mailed on or about August 25, 2006, to the
holders of record on August 11, 2006 (the “Record Date”), of shares of Common
Stock, par value $0.001 per share, of SMI Products, Inc, a Nevada corporation
(“SMIP” or the “Company”), in connection with the change of control and
composition of the Board of Directors of the Company as contemplated by the
Stock Purchase Agreement, dated as of August 11, 2006 (the “Stock Purchase
Agreement”), by and among the Company, the persons listed on Schedule
A
thereto
(the “Sellers”) and Fountainhead Capital Partners Limited, a Jersey limited
controlled by Peter Zachariou, David Cantor and Jodi Kirsch (the “Purchaser”).
This
Information Statement is being furnished pursuant to Section 14(f) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 14f-1 of the
Securities and Exchange Commission or SEC thereunder. This Information Statement
is being provided solely for informational purposes and not in connection with
a
vote of the Company’s securityholders.
A
copy of
the Stock Purchase Agreement has been filed with the SEC as an exhibit to a
Current Report on Form 8-K that was filed by the Company on August 14,
2006.
WE
ARE NOT SOLICITING YOUR PROXY. NO VOTE
OR
OTHER ACTION BY THE COMPANY’S SECURITYHOLDERS
IS
REQUIRED IN RESPONSE TO THIS INFORMATION STATEMENT.
CHANGE
OF CONTROL
Pursuant
to the Stock Purchase Agreement, on August 11, 2006 (the "Closing Date"), the
Sellers sold to the Purchaser 5,551,000 shares (the “Shares”) of the Company’s
Common Stock (constituting approximately 73.5% of the issued and outstanding
equity interests and voting rights of the Company) that were then held by the
Sellers, in exchange for Six Hundred Thirty-Seven Thousand, Five Hundred Dollars
($637,500). The Purchaser used its working capital to acquire the Shares. The
Sellers will retain 281,000 shares of the Company’s Common Stock. As of the
Record Date, the Company had approximately 7,551,000 shares of Common Stock
outstanding. As of the Record Date, certain of the Sellers were the owners
of
convertible notes that were convertible into such number of shares of the
Company’s common stock, as determined by the Board of Directors of the Company
based on what it reasonably determines to be the fair market value of the
Company at the time of such conversion. The Notes were assigned to the
Purchaser at the closing (the “Closing”) of the sale of the Shares, pursuant to
the Stock Purchase Agreement. Holders of shares of Common Stock are entitled
to
one vote per share on all matters for which the securityholders are entitled
to
vote. The Closing resulted in a change in control of the Company.
In
connection with the Company’s entry into the Stock Purchase Agreement, James
Charuk has agreed to resign from all offices that he holds with the Company,
effective as of the Closing Date,
and as a
director of the Company, effective as of the tenth day following the mailing
of
this Information Statement to the stockholders of the Company (the “Director
Resignation Effective Date”). Geoffrey Alison has been appointed as a new
director of the Company, and as the Chief Executive Officer, President,
Treasurer and Secretary of the Company, effective immediately.
You
are
not required to vote on this change of directors and your vote is not requested.
Normally, the election of directors requires a plurality of the votes entitled
to vote and voting on the election of directors that are present in person
or
represented by proxy at a meeting held for the election of directors. In this
case, the Company’s current director is resigning in connection with a change of
control transaction and that director is appointing a new director to fill
a
vacancy on the board. The successor director will ultimately become the sole
director of the Company. Therefore, no vote of shareholders is required to
effectuate the resignation of the current director and the appointment of the
new director.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information with respect to the beneficial
ownership of the Company’s equity securities immediately before and after the
closing of the transactions contemplated by the Stock Purchase Agreement
by:
| · |
each
securityholder known by the Company to be the beneficial owner of
more
than 5% of the Company’s outstanding securities prior to or immediately
after the closing of the transactions contemplated by the Stock Purchase
Agreement;
|
| · |
each
current director and each person that will become a director following
the
closing of the Stock Purchase
Agreement;
|
| · |
each
of the named executive officers of the Company listed in the table
under
the caption “Executive Compensation”;
|
| · |
all
current directors and executive officers as a group;
and
|
| · |
all
directors and executive officers as a group following the closing
of the
Stock Purchase Agreement.
|
Unless
otherwise specified, the address of each of the persons set forth below is
in
care of SMI Products, Inc., 5000
Noeline Avenue, Encino, California 91436.
| |
|
|
Before
Closing of the Stock Purchase Agreement (2)
|
|
|
After
Closing of the Securities of Securities Agreement
(3)
|
|
|
Name
and Address of Beneficial Owner (1)
|
|
|
Amount
and Nature
of Beneficial
Ownership
|
|
|
Percent
of
Common
Stock
|
|
|
Amount
and Nature
of Beneficial
Ownership
|
|
|
Percent
of
Common
Stock
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
M. Charuk
3503
Cedar Locust
Sugarland,
Tx 77479
|
|
|
5,025,000
|
|
|
66.5
|
%
|
|
25,000
|
|
|
0.3
|
%
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fountainhead
Investments, Inc.(4)
8618
West 3rd Street, Los Angeles, CA 90048
|
|
|
0
|
|
|
0
|
%
|
|
5,551,000
|
|
|
73.5
|
%
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geoffrey
Alison
c/o
5000 Noeline Avenue
Encino,
CA 9143657
|
|
|
0
|
|
|
0
|
%
|
|
0
|
|
|
0
|
%
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and Officers
as
a
Group (5)
|
|
|
5,025,000
|
|
|
66.5
|
%
|
|
25,000
|
|
|
0.3
|
%
|
| (1) |
Beneficial
Ownership is determined in accordance with the rules of the Securities
and
Exchange Commission and generally includes voting or investment power
with
respect to securities. Each of the beneficial owners listed above
has
direct ownership of and sole voting power and investment power with
respect to the shares of Company common stock.
|
| (2) |
A
total of 7,551,000 shares of Company common stock are considered
to be
outstanding pursuant to SEC Rule 13d-3(d)(1). For each Beneficial
Owner above, any options exercisable within 60 days have been included
in
the denominator.
|
| (3) |
Based
on 7,551,000 shares of the Company’s Common Stock that are outstanding
after the consummation of the Stock Purchase
Agreement.
|
| (4) |
Fountainhead
Investments, Inc. is controlled by Peter Zachariou, David Cantor
and Jodi
Kirsch.
|
| (5) |
Consists
of 1 person (James M. Charuk) prior to the closing of the Stock Purchase
Agreement and 2 persons (James M. Charuk and Geoffrey Alison) thereafter.
As disclosed elsewhere herein, Mr. Charuk has resigned as a director,
however, his resignation will not become effective until ten days
following the date hereof.
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our executive officers and directors, and
person who beneficially own more than ten percent of our equity securities,
to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file. James Charuk, our former officer and director
failed to file timely Forms 4 or 5 in connection with his beneficial ownership
in the Company since the year ended December 31, 2000, and his ownership of
a
66.5% controlling interest in the Company since the year ended December 31,
2002. However, as disclosed elsewhere herein, Mr. Charuk has resigned as an
officer of the Company, effective immediately, and as a director of the Company,
effective ten days following the date hereof.
CHANGES
TO THE BOARD OF DIRECTORS
At
the
Closing, James
M.
Charuk,
the
sole officer and director of the Company submitted his resignation from all
offices of the Company that he holds, effective immediately, and from his
position as a director, effective on the Director Resignation Effective Date.
At
the Closing, Geoffrey
Alison
was
appointed as the Chief Executive Officer, President, Treasurer and Secretary
and
as a director of the Company.
To
the
best of the Company’s knowledge, except as set forth below, the incoming
director is not currently a director, does not hold any position with the
Company and has not been involved in any transactions with the Company or any
of
its directors, executive officers, affiliates or associates which are required
to be disclosed pursuant to the rules and regulations of the SEC. To the best
of
the Company’s knowledge, the designee has not been convicted in a criminal
proceeding, excluding traffic violations or similar misdemeanors, has not been
a
party to any judicial or administrative proceeding during the past five years
that resulted in a judgment, decree or final order enjoining the person from
future violations of, or prohibiting activities subject to, federal or state
securities laws, or a finding of any violation of federal or state securities
laws, except for matters that were dismissed without sanction or
settlement.
DIRECTORS
AND EXECUTIVE OFFICERS
The
name
of the current director of the Company and the incoming director and officer,
as
well as certain information about them are set forth below:
|
Name
|
Age
|
|
Position(s)
with the Company
|
|
James
M. Charuk
|
49
|
|
Director,
President (3)(4)
|
|
Geoffrey
Alison
|
32
|
|
Director,
Chief Executive Officer, President, Treasurer and Secretary
(1)(2)
|
__________________
|
(1)
|
Incoming
director, effective upon the
Closing.
|
|
(2)
|
Incoming
officer, effective upon the
Closing.
|
|
(3)
|
Current
director until the Director Resignation Effective
Date.
|
|
(4)
|
Current
officer until the Closing.
|
James
M. Charuk
was born
in Canada and immigrated to the United States in May 1990. During 1990-1991,
Mr.
Charuk was a database analyst for Digitech Information, a private company
specializing in oil reservoir analyses. From 1991 to December 1997, Mr. Charuk
served as a principal of Western Atlas International, a Houston, Texas- based
company specializing in geosciences and interpretation services for forestry
and
mining companies. Mr. Charuk's responsibilities included overseeing an annual
budget in excess of $14 Million for Western Atlas in the areas of Geosciences
and Interpretation Software Systems and Data Analysis. In December 1997, Mr.
Charuk became a Director of CCR Internet Realty, now known as E-Realty, and
served as a Director until January 2000. E-Realty is a pioneer in the E-Broker
residential real estate industry in the United States. eRealty.com is a team
of
real estate professionals who combine local real estate expertise with the
power
of the Internet to better serve home buyers and sellers. By utilizing
technology, eRealty.com’s goal is to save their customers time and money.
eRealty.com is involved in the real estate buying and selling process:
expediting, informing and executing these transactions in the most effective
and
cost effective manner. eRealty.com does not compete with SMI Products, Inc.'s
mortgagecommunicator.com, nor at this time, does it have any plans to do so
in
the future. From January 2000 to present, Mr. Charuk has been the Chief
Technology Officer and V.P. of Technology for E-Realty. He was also involved
as
an officer, director and shareholder in Institute for Learing, Inc., a public
shell company which subsequently merged with a private company and changed
its
name to China Broadband Corp.
Geoffrey
Alison was
appointed to the board of directors and as President, Treasurer and Secretary
of
the Company on August 11,
2006,
upon the effectiveness of the resignation of Mr. Charuk from such positions
in
connection with the change of control transaction described in this report.
Since January 2005, Mr. Alison has served as a director of Cape Coastal Trading
Corporation, a shell Company with securities quoted on the over-the-counter
bulletin board. Mr. Alison has been registered with the National Association
of
Securities Dealers since 1999 and has worked as a General Securities Principal
in for various securities firms including Stock USA, Inc (January 1999 - October
2001) and Assent, LLC (November 2001 - August 2004). From September 2004 through
the present date, Mr. Alison has been a registered General Securities Principal
with ECHOtrade, a Philadelphia Exchange member firm, as a securities trader
for
his own capital and benefit. From August 2003 through January 2005, he served
as
Chief Financial Officer, Secretary and a director of Intrac, Inc. (OTCBB:ITRD).
In October, 2002, Mr. Alison co-created Greenvest Industries, Inc. which
manufactures pet products under the brand name Happy Tails Pet Beds. Mr. Alison
is currently President and CEO of Greenvest Industries, Inc.
Mr.
Alison expects to spend approximately five hours per month on the Company’s
business and affairs.
LEGAL
PROCEEDINGS
There
is
no pending litigation by or against the Company.
To
the
Company’s knowledge, no director, officer or affiliate of the Company, and no
owner of record or beneficial owner of more than five percent (5%) of the
securities of the Company, or any associate of any such director, officer or
security holder is a party adverse to the Company or has a material interest
adverse to the Company in reference to pending litigation.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Except
with respect to the Stock Purchase Agreement and as described in the following
paragraphs, none of the Company’s directors or officers, nor any of the incoming
directors, nor any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to the Company’s
outstanding shares, nor any of the Company’s promoters, nor any relative or
spouse of any of the foregoing persons has any material interest, direct or
indirect, in any transaction for the past two years or in any presently proposed
transaction which, in either case, has affected, or will materially affect
the
Company. None of the Company’s directors or officers, nor any incoming director,
is indebted to the Company.
During
2005 and 2004, the Company incurred corporate, administrative and accounting
fees of approximately $18,861 and $18,861, respectively, which were paid by
certain of the shareholders of the Company on behalf of the Company, and
evidenced by certain unsecured loan agreements between each such shareholder
and
the Company which bear interest at the rate of 2% per annum. The Company had
a
loans payable to such shareholders in the amount of $69,434 and $51,998 at
December 31, 2005 and 2004, respectively.
On
August
11,
2006,
the Company and the Noteholders agreed to amend and restate the loan agreements
and to evidence the amounts due thereunder by convertible promissory notes
(“Notes”). The Notes bear interest at the rate of 2% per annum, are payable on
demand and are convertible into such number of shares of the Company’s common
stock as determined by the Board of Directors of the Company based on what
it
reasonably determines to be the fair market value of the Company at the
time of such conversion. The Notes were sold to the Purchaser at the Closing
pursuant to the Stock Purchase Agreement. For details regarding the Notes please
see the current report on Form 8-K filed by the Company on August 14, 2006.
BOARD
OF DIRECTORS’ MEETINGS AND COMMITTEES
Our
business is managed under the direction of the board, which consists of one
person. The board of directors held no meetings during fiscal year 2005 and
acted by written consent on 1 occasion.
The
Company does not have a standing audit, nominating or compensation committee
or
any committee performing a similar function. The Company does not have an audit
committee charter or a nominating committee charter or policy or similar
document. The Company currently has limited working capital and almost no
revenues. The Company’s financial statements are currently relatively simple.
Management does not believe that it would be in the best interests at this
time
to retain independent directors to sit on an audit committee or a nominating
or
compensation committee. If the Company is able to raise sufficient financing
in
the future or if it is successful at acquiring an operating enterprise or to
commence new operations, then the Company will likely seek out and retain
independent directors and form an audit committee and other
committees.
The
Company’s entire board of directors participates in the director nomination
process. The board of directors does not have a formal policy with regard to
the
consideration of any director candidates recommended by security holders. The
entire board will consider any person nominated by securityholders that is
reputable and that has experience in business and companies like the Company
in
general. The board will also consider the extent of any nominee’s educational
background in deciding whether to nominate a person for a directorship position.
The Company does not pay any fee to third parties for helping it nominate or
evaluate director candidates and the Company does not obtain such services
from
any third party.
The
Company’s director is not independent based on the NASDAQ rules defining
independence. If we are successful in effecting a business combination with
an
operating business or if we are otherwise able to commence a new business and
generate sufficient revenues, then we may seek out and retain one or more
qualified independent directors. At that time we intend to also set up an audit,
nominating and compensation committee.
The
Company does not have any audit committee financial expert serving on our board
of directors. If the Company is successful in effecting a business combination
with an operating Company or some other acquisition, the Company would likely
seek to retain an independent audit committee financial expert.
EXECUTIVE
COMPENSATION
There
have been no transactions between the Company and Geoffrey Alison other than
as
set forth in this Information Statement.
Mr.
Charuk, who was the only officer and director of the Company prior to the
Closing Date, did not accrue and does not receive any compensation for his
services performed during the past three calendar years.
Summary
Compensation Table
| |
|
|
|
Annual
Compensation
|
|
Long-Term
Compensation
|
|
| |
|
|
|
|
|
|
|
Awards
|
|
Payouts
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and Principal Position
|
|
Year
(1)
|
|
Salary
($)
|
|
Bonus
(2)
|
|
Other
Annual
Compensation
($)
|
|
Restricted
Stock Awards ($)
|
|
Securities
Underlying Options/SARs
|
|
LTIP
Payouts
|
|
All
Other Compensation
|
|
|
James
M. Charuk
|
|
|
2005
|
|
$
|
-0-
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
Chairman,
CEO, President & CFO
|
|
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|
|
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| |
|
|
2004
|
|
$
|
-0-
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
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| |
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|
|
|
| |
|
|
2003
|
|
$
|
-0-
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
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|
--
|
|
Cash
and Other Compensation
For
the
years ended December 31, 2005 and 2004 and through the date of this information
statement, the Company has not paid any executive officer or director any cash
or cash equivalent compensation. The Company has no other agreement or
understanding, express or implied, with any director or executive officer
concerning employment or cash or other compensation for services. The Company
will undoubtedly pay compensation to officers and other employees should it
succeed in acquiring a business and funds exist for compensation.
Bonuses
and Deferred Compensation
For
the
years ended December 31, 2005 and 2004 and through the date of this report,
no
director or executive officer has received compensation from the Company
pursuant to any compensatory or benefit plan. There is no plan or understanding,
express or implied, to pay any compensation to any director or executive officer
pursuant to any compensatory or benefit plan of the Company, although the
Company anticipates that it will compensate its officers and directors for
services to the Company with stock or options to purchase stock, in lieu of
cash.
The
Company does not have any employee stock compensation plan or compensatory
stock
option plan. The Company has no long-term incentive plans, as that term is
defined in the rules and regulations of the SEC. There are no other compensatory
or benefit plans, such as retirement or pension plans, in effect or anticipated
to be adopted, although other plans may be adopted by new management following
completion of a business combination.
Compensation
of Directors and Executive Officers
The
following table sets forth information concerning the compensation of the
Company's Chairman of the Board, Chief Executive Officer and its other most
highly compensated executive officers for the fiscal years ended December 31,
2005, 2004 and 2003. Such officers are sometimes collectively referred to below
as the "Named Officers."
None
of
the Named Officers received any form of non-cash compensation from the Company
in the fiscal years ended December 31, 2005, 2004 or 2003, nor currently
receives any such compensation. The Company may, once it is operational,
implement employee benefits that will be generally available to all its
employees and its subsidiary employees, including medical, dental and life
insurance benefits and a 401(k) retirement savings plan.
None
of
the Named Officers exercised any options or SARs during the fiscal year ended
December 31, 2005.
Compensation
Of Directors
The
Company has no standard arrangements in place or currently contemplated to
compensate the Company directors for their service as directors or as members
of
any committee of directors.
Employment
Contracts
No
person
has entered into any employment or similar contract with the Company. It is
not
anticipated that the Company will enter into any employment or similar contract
unless in conjunction with or following completion of a business
combination.
NO
STOCKHOLDER ACTION REQUIRED
This
Information Statement is being provided for informational purposes only, and
does not relate to any meeting of stockholders. Neither applicable securities
laws, nor the corporate laws of the State of Nevada require approval of the
sale
of the Shares contemplated by the Stock Purchase Agreement. No
vote or other action is being requested of the Company’s stockholders. This
Information Statement is provided for informational purposes
only.
This
Information Statement has been filed with the Securities and Exchange Commission
and is available electronically on EDGAR at www.sec.gov.
The
Board
of Directors
August
15, 2006