SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
MB Software Corporation
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies: ______
2) Aggregate number of securities to which transaction applies: _________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing is calculated and state how it was determined): _______________
4) Proposed maximum aggregate value of transaction: _____________________
5) Total Fee Paid: ______________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ________________________________________________
2) Form, Schedule or Registration Statement No.: __________________________
3) Filing Party: __________________________________________________________
4) Date Filed: ____________________________________________________________
MB SOFTWARE CORPORATION
777 Main Street, Suite 3100
Fort Worth, Texas 76102
April __, 2008
NOTICE OF SHAREHOLDER ACTION BY WRITTEN CONSENT IN LIEU OF ANNUAL MEETING
Dear Shareholder:
Notice is hereby given that shareholders holding a majority of the issued
and outstanding shares of common stock of MB Software Corporation, a Texas
corporation (the "Company"), by written consent in lieu of an annual meeting,
(a) approved an amendment to the Company's Articles of Incorporation (1) to
increase the number of authorized shares of the Company's common stock from
20,000,000 to 100,000,000, (2) to change the name of the Company to Wound
Management Technologies, Inc., and (3) specifying that the Board of Directors
may, in any grant of equity rights, options or warrants, restrict the right to
waive the terms and conditions of any equity rights, options or warrants to the
holders of a designated percentage of a designated class or classes of capital
stock of the Company, and (b) re-elected the six members of the Board of
Directors for the term of office stated in the Information Statement. The date
of the last written consent of shareholders authorizing these actions was
delivered to the Company on March 20, 2008. The attached Information Statement
and Notice of Shareholder Action by Written Consent in Lieu of Annual Meeting
fully describe these matters.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
The Company's Board of Directors has fully reviewed and unanimously
approved the above-described actions and has determined that they are in the
best interests of the Company. The holders of a majority of our Common Stock
have executed a written consent in favor of each of the above-described actions.
THIS IS NOT A NOTICE OF A MEETING OF SHAREHOLDERS AND NO SHAREHOLDER'S MEETING
WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
A copy of our Annual Report on Form 10-K for the year ended December 31,
2007, accompanies this Notice.
On behalf of your Board of Directors, thank you for your support.
Sincerely,
/s/ Scott A. Haire
Scott A. Haire
Chairman of the Board,
Chief Executive Officer and President
MB SOFTWARE CORPORATION
777 Main Street, Suite 3100
Fort Worth, Texas 76102
April __, 2008
PRELIMINARY INFORMATION STATEMENT AND NOTICE OF SHAREHOLDER ACTION BY WRITTEN
CONSENT IN LIEU OF ANNUAL MEETING
This Information Statement and Notice of Shareholder Action by Written
Consent in Lieu of Annual Meeting (this "Information Statement") is furnished by
the Board of Directors of MB Software Corporation, a Texas corporation, (the
"Company") to the holders of the Company's capital stock as of March 20, 2008,
to provide information with respect to certain corporate actions taken by
written consent of shareholders holding a majority of the issued and outstanding
voting shares of the Company's capital stock (the "Majority Shareholders"). This
Information Statement also constitutes notice of action taken without a meeting
as required by Article 9.10A of the Texas Business Corporation Act.
The written consent, delivered by the Majority Shareholders to the Company
on March 20, 2008, approved of the following actions:
(1) An amendment to the Company's Articles of Incorporation as
described in this Information Statement; and
(2) The re-election of the six members of the Board of Directors for
the term of office stated in the Information Statement.
The Majority Shareholders, holding 12,110,148 shares of the Company's
common stock, par value $.001 per share ("Common Stock"), and 490.196 shares of
the Company's Series A Convertible Preferred Stock, par value $10.00 per share
("Preferred Stock"), have approved and adopted, by written consent, all of the
above-described actions. Each share of Preferred Stock is entitled to cast 5,100
votes and votes together with the Common Stock as a single class with respect to
each of the actions described in this Information Statement. Because the shares
of Common Stock and Preferred Stock held by the Majority Shareholders represent
approximately 60% of the votes entitled to be cast by shareholders (as of March
20, 2008) with respect to the above-described actions, all required corporate
approvals for these actions have been obtained. This Information Statement is
furnished solely for the purpose of informing shareholders of this corporate
action in the manner required by Rule 14c-2(b) under the Securities Exchange Act
of 1934.
Based on the foregoing, our Board of Directors has determined not to call
an annual meeting of shareholders, and no annual meeting of shareholders of the
Company was held in 2007. The Board believes it would not be in the best
interests of the Company and its shareholders to incur the costs of holding an
annual meeting or of soliciting proxies or consents from additional shareholders
in connection with these actions. There are no appraisal rights as a result of
the approval of these actions.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
THIS IS NOT A NOTICE OF A MEETING OF SHAREHOLDERS AND NO SHAREHOLDER'S MEETING
WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
By Order of the Board of Directors
/s/ Lucy J. Singleton
Lucy J. Singleton
Secretary
April __, 2008
Fort Worth, Texas
MB SOFTWARE CORPORATION
777 Main Street, Suite 3100
FORT WORTH, TEXAS 76102
PRELIMINARY INFORMATION STATEMENT AND NOTICE OF SHAREHOLDER ACTION BY WRITTEN
CONSENT IN LIEU OF ANNUAL MEETING
April __, 2008
This Information Statement is being first mailed on April __, 2008, to
shareholders of record on March 20, 2008, of MB Software Corporation, a Texas
corporation (the "Company"), by the Company's Board of Directors in connection
with the approval, by shareholders holding a majority (the "Majority
Shareholders") of the issued and outstanding common stock, par value $.001 per
share of the Company (the "Common Stock"), of (a) an amendment to the Company's
Articles of Incorporation (1) to change the name of the Company to Wound
Management Technologies, Inc., (2) to increase the number of authorized shares
of our Common Stock (the "Amendment"), and (3) specifying that the Board of
Directors may, in any grant of equity rights, options or warrants, restrict the
right to waive the terms and conditions of any equity rights, options or
warrants to the holders of a designated percentage of a designated class or
classes of capital stock of the Company and (b) the re-election of the six
members of the Board of Directors for the term of office stated in the
Information Statement.
RECORD DATE
The record date for determining the shareholders entitled to vote on the
matters described in this Information Statement was the close of business on
March 20, 2008, the date of the last signature on the written consent approving
and adopting the above items was delivered to the Company by the Majority
Shareholders (the "Record Date"), at which time the Company had issued and
outstanding 16,727,550 shares of Common Stock and 1,490.196 shares of Preferred
Stock. Each share of Common Stock is entitled to cast one vote, and each share
of Preferred Stock is entitled to cast 5,100 votes with respect to each of the
actions described in this Information Statement ("Actions"), and the Common
Stock and Preferred Stock vote together as a single class with respect to each
of the Actions. The shares of Common Stock and Preferred Stock constitute the
only outstanding voting securities of the Company entitled to be voted on the
Actions.
2
TABLE OF CONTENTS
INFORMATION STATEMENT AND NOTICE OF ACTION
TAKEN IN LIEU OF ANNUAL MEETING...........................................2
RECORD DATE....................................................................2
TABLE OF CONTENTS..............................................................3
QUORUM AND VOTING..............................................................4
DISSENTER'S RIGHTS.............................................................4
ACTION I - AMENDMENT...........................................................4
General...................................................................4
Increase in Authorized Shares.............................................4
Common Stock..............................................................5
Name Change and other Amendments..........................................5
Unanimous Board Recommendation............................................6
No Dissenter's Rights.....................................................7
ACTION II - ELECTION OF DIRECTORS..............................................7
CORPORATE GOVERNANCE...........................................................8
Meetings and Committees of the Board of Directors.........................8
Audit Committee......................................................8
Compensation Committee...............................................8
Nominating Committee.................................................9
Shareholder Communications with the Company's Board of Directors..........9
Compliance with Section 16(a) of the Exchange Act........................10
Code of Ethics...........................................................10
EXECUTIVE COMPENSATION........................................................10
Summary Compensation Table...............................................10
Compensation of Directors................................................10
Employment Agreements....................................................10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT....................................................11
PRINCIPAL ACCOUNTANT FEES AND SERVICES........................................12
Audit Fees...............................................................12
Audit-Related Fees.......................................................12
Tax Fees.................................................................12
All Other Fees...........................................................12
Audit Committee Pre-Approval Policies and Procedures.....................12
MISCELLANEOUS.................................................................13
3
QUORUM AND VOTING
Approval of the Amendment requires the affirmative vote of a majority of
the issued and outstanding shares entitled to vote on such matter and the
election of directors require the affirmative vote of a majority of all shares
entitled to vote and voted on such matter.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. WE HAVE RECEIVED THE APPROVAL, BY WRITTEN CONSENT, OF SHAREHOLDERS
HOLDING AN AGGREGATE OF 12,110,184, SHARES OF COMMON STOCK, AND 490.196 SHARES
OF THE ISSUED AND OUTSTANDING SHARES OF PREFERRED STOCK, OF BOTH THE AMENDMENT
AND THE ELECTION OF DIRECTORS (WHICH SHARES REPRESENT APPROXIMATELY 60% OF THE
VOTES ENTITLED TO BE CAST BY SHAREHOLDERS WITH RESPECT TO THE ABOVE-DESCRIBED
ACTIONS AS OF MARCH 20, 2008).
DISSENTER'S RIGHTS
Under Texas law, our shareholders are not entitled to dissenter's rights
with respect to either of the Actions set forth in this Information Statement or
to demand appraisal of their shares as a result of the approval of any of the
Actions.
ACTION I - AMENDMENT
General
The Board of Directors unanimously approved resolutions to amend the
Company's Articles of Incorporation to (1) rename the Company "Wound Management
Technologies, Inc.," (2) increase the authorized shares of our Common Stock from
20,000,000 shares to 100,000,000 shares, and (3) specify that the Board of
Directors may, in any grant of equity rights, options or warrants, restrict the
right to waive the terms and conditions of any equity rights, options or
warrants to the holders of a designated percentage of a designated class or
classes of capital stock of the Company. A copy of the Amendment is attached
hereto as Exhibit A.
Increase in Authorized Shares
The increase in our authorized shares of Common Stock was necessitated in
connection with the Company's acquisition from Applied Nutritionals, LLC, of the
exclusive world-wide license to certain patented technologies and processes
related to CellerateRxTM, an advanced collagen based wound care product
formulation. The Company has been marketing and selling CellerateRx, through its
wholly owned subsidiary, Wound Care Innovations, LLC ("WCI"), over the past
three years under the terms of a distribution agreement that was terminated in
2005. These new licenses, which became effective January 8, 2008, are limited to
the human health care market for external wound care, and include any new
product developments based on the licensed patent and processes. The term of
these licenses extends through the life of the licensed patent.
In consideration for the licenses, WCI has agreed to pay to AN and Mr.
George Petito, the founder of AN the following, beginning January 3, 2008: (a)
an advance royalty of $100,000 in the aggregate, (b) an aggregate royalty of
fifteen percent (15%) of gross sales occurring during the first year of the
license; (c) an additional advance royalty of $400,000, in the aggregate, on
January 3, 2009; plus (d) an aggregate royalty of three percent (3%) of gross
sales for all sales occurring after the payment of the $400,000 advance royalty.
In addition, after January 3, 2009, WCI must maintain a minimum aggregate annual
royalty payment of $375,000.
All royalties, other than the advance royalty payments described above,
are due and payable on a calendar quarterly basis on or before the forty-fifth
(45th) day of the month immediately following the calendar quarter in which
gross sales are received.
In addition to the license agreements, WCI also entered into an exclusive
manufacturing agreement with AN pursuant to which AN will manufacture all
CellerateRx and related products for WCI. The term of the manufacturing
4
agreement extends through the life of the licensed patent; provided that upon
the acquisition of WCI by a party with annual revenues of at least $100,000,000
or a market capitalization of at least $200,000,000, the acquiror may terminate
the manufacturing agreement.
In connection with the above transaction, WCI will also issue to Mr.
Petito 1,000 shares of a newly designated preferred stock. The preferred stock
will automatically convert into an aggregate of 5,100,000 shares of common stock
upon the filing by MB Software of an amendment to its Articles of Incorporation
increasing its authorized number of shares of common stock from 20,000,000 to
100,000,000, and participate with the common stock, on an as converted basis,
with respect to dividends and liquidation, and votes together with the common
stock as a single class, as if such shares of preferred stock had been
converted.
Common Stock
Prior to the Amendment, the Company was authorized to issue 20,000,000
shares of Common Stock par value $.001 per share. As of April _, 2008, there
were 16,727,550 shares of our Common Stock issued and outstanding and 4,089
shares were held in our treasury. The amendment to the Articles of Incorporation
will add 80,000,000 million shares of Common Stock to the authorized capital of
the Company. The Company currently has no plans to issue any Common Stock other
than in connection with the conversion of outstanding shares of Preferred Stock,
which will automatically convert into 7,600,000 shares of Common Stock upon
effectiveness of the Amendment, and the exercise of outstanding options and
warrants, if and when exercised.
The Company may consider from time to time mergers, acquisitions and other
transactions that may involve the issuance of additional shares of Common Stock
(any one or more of which may be under consideration or acted upon at any time).
The Company is not currently a party to any agreements with respect to any such
transactions, nor does it have any agreements, commitments or understandings
with respect to such transactions or that would involve the issuance of
additional shares of our Common Stock, other than currently outstanding options
and warrants to purchase Common Stock.
Depending upon the consideration per share received by the Company for any
subsequent issuance of Common Stock, such issuance could have a dilutive effect
on those shareholders who paid a higher consideration per share for their stock.
Also, future issuances will increase the number of outstanding shares of Common
Stock, thereby decreasing the percentage ownership in the Company (for voting,
distributions and all other purposes) represented by existing shares of Common
Stock. The availability for issuance of the additional shares of Common Stock
and any issuance thereof, or both, may be viewed as having the effect of
discouraging an unsolicited attempt by another person or entity to acquire
control of the Company. Although the Board of Directors has no present intention
of doing so, the Company's authorized but unissued shares of Common Stock could
be issued in one or more transactions that would make a takeover of the Company
more difficult or costly, and therefore less likely. The Company is not aware of
any person or entity who is seeking to acquire control of the Company.
The shares of our Common Stock are traded on the OTC Bulletin Board.
Holders of Common Stock may cast, for each share held, one vote for each matter
presented to the shareholders for a vote, including in the election of
directors. Holders of our Common Stock do not have any preemptive rights to
acquire any additional securities issued by the Company, nor do they have
cumulative voting rights.
Name Change and other Amendments
The name change was approved to more appropriately reflect the business
operations of the Company and was required pursuant to the terms and conditions
of a Note Purchase Agreement, dated as of January 11, 2008, by and between the
Company and T Squared Investments LLC. The Company also agreed, pursuant to the
Note Purchase Agreement, to amend its Articles of Incorporation to provide that:
"The terms and conditions of any rights, options and warrants approved by
the Board of Directors may provide that any or all of such terms and
conditions may be waived or amended only with the consent of the holders
of a designated percentage of a designated class or classes of capital
stock of the Corporation (or a designated group or groups of holders
5
within such class or classes, including but not limited to disinterested
holders), and the applicable terms and conditions of any such rights,
options or warrants so conditioned may not be waived or amended absent
such consent.".
Pursuant to the terms of the Note Purchase Agreement, the Company issued
and sold to T Squared Investments LLC (the "Investor") a convertible promissory
note in the principal amount of $700,000 (the "Note"). The Company also issued
and sold to the Investor 86,207 shares of Common Stock and warrants to purchase
an aggregate of 1,500,000 additional shares of Common Stock ("Warrants"), at a
cash purchase price of $50,000, pursuant to the terms of a Common Stock Purchase
Agreement.
The Note bears interest at the rate of eight percent per annum, payable
monthly. The Note initially converts into 1,206,897 shares, subject to the
adjustments to the conversion price described below; provided that the Investor
shall not be entitled to convert the Note into shares of Common Stock that would
result in beneficial ownership by the Investor and its affiliates of more than
4.9% of the then outstanding number of shares of Common Stock on such date. The
conversion price of the Note shall automatically be adjusted if the Company's
pre-tax earnings fall below certain thresholds. Specifically, if the Company's
pre-tax earnings are between $0.093 and $0.046 per share as reported for the six
months ended June 30, 2008, the conversion price of the Note shall be decreased
proportionally by 0% if the pre-tax earnings are $0.093 per share or greater and
by 50% if the pre-tax earnings are $0.046 per share. In addition, if the
Company's pre-tax earnings are between $0.204 and $0.102 per share as reported
for the year ended December 31, 2008, the conversion price of the Note shall be
decreased proportionally by 0% if the pre-tax earnings are $0.204 per share or
greater and by 50% if the pre-tax earnings are $0.102 per share. In no event,
however, shall the aforementioned conversion price adjustments be made if the
price of the Common Stock has not, during the three months prior to the
aforementioned measurement dates, been below $3.00 per share for any consecutive
20 day period. The conversion price of the Note shall also be adjusted if the
Company subsequently issues equity at a price per share below the then current
conversion price of the Note.
The Warrants are exercisable at any time and expire on January 11, 2013.
The Warrants are exercisable at $1.00 per share with respect to 500,000 shares
of Common Stock, and $1.25 per share with respect to 1,000,000 shares of Common
Stock. The exercise price automatically adjusts if the Company's pre-tax
earnings fall below certain thresholds, on the same basis as adjustments to the
conversion price of the Note described above. The Warrants also contain an
automatic exercise feature that is triggered if the volume weighted average
market price of the Common Stock is equal to or greater than $3.00 per share for
a period of 20 consecutive days and if there is an effective registration
statement for the shares underlying the Warrants.
The Common Stock Purchase Agreement contains restrictions on the Company's
ability to issue additional debt and preferred stock and provides the Investor
with a right of first refusal with respect to any subsequent funding of the
Company. The Common Stock Purchase Agreement also restricts the ability of the
Company's officers and directors to sell shares of Common Stock for a period of
three years.
In connection with the transactions described above, HEB LLC, a Nevada
limited liability company and a majority shareholder of the Company and an
affiliate of Mr. Scott Haire, our Chairman and Chief Executive Officer, issued
to the Investor options to purchase an aggregate of 1,200,000 shares of the
Company's Common Stock ("Options"). These Options may be exercised at any time
prior to the expiration of the date that is the later of (a) 36 months from the
grant date, or (b) 24 months from the effectiveness of a registration statement
covering the resale of the shares underlying the option. The exercise price of
the Options is (1) $300,000 with respect to 300,000 shares; (2) $450,000 with
respect to 300,000 shares; (3) $600,000 with respect to 300,000 shares; and (4)
$750,000 with respect to 300,000 shares.
The Company has agreed to file a registration statement covering the
resale of all shares of Common Stock sold, to be issued upon conversion of the
Notes and the exercise of the Warrants and Options.
Unanimous Board Recommendation
Our Board of Directors unanimously approved the Amendment.
The Company has received the approval of the Amendment through written
6
consent, of shareholders holding an aggregate of 12,110,184 shares of Common
Stock, and 490.196 shares of Preferred Stock. Each share of Preferred Stock is
entitled to cast 5,100 votes and votes together with the Common Stock as a
single class with respect to the Amendment. Because the shares of Common Stock
and Preferred Stock held by these shareholders represent approximately 60% of
the votes entitled to be cast (as of March 20, 2008) by shareholders with
respect to the above-described actions, all required corporate approvals for
these actions have been obtained.
After the expiration of the 20 day waiting period required by Securities
Exchange Act Rule 14c-2(b), we will file the Amendment with the State of Texas.
No Dissenter's Rights
Under the Texas Business Corporation Act, our shareholders are not
entitled to dissenter's rights with respect to our proposed amendment to our
Articles of Incorporation to effect the reverse split and we will not
independently provide our shareholders with any such right.
ACTION II - ELECTION OF DIRECTORS
The current Board of Directors has fixed the number of authorized
directors at six. The Majority Shareholders have elected the following
individuals to serve as directors of the Company for terms expiring at the
Company's Annual Meeting of Shareholders in 2009 or until their successors have
been elected and qualified. These individuals, each of whom have served as a
Director of the Company since 1995, have indicated his willingness to continue
serving as a member of the Board of Directors.
Year First
Name Age Position Elected
---- --- -------- -------
Scott A. Haire 43 Chairman, Chief Executive 1993
Officer, President and Director
Gilbert A. Valdez 64 Director 1996
Araldo A. Cossutta 83 Director 1994
Steven W. Evans 57 Director 1994
Robert E. Gross 63 Director 1994
Thomas J. Kirchhofer 67 Director 1994
Executive Officers of the Company are elected on an annual basis and serve
at the discretion of the Board of Directors. Directors of the Company are
elected on an annual basis.
Scott A. Haire is Chairman of the Board, Chief Executive Officer and
President of the Company. Prior to founding MB Software Corporation, he was an
employee of the Company from November 1993 to June 1994. Previously, Mr. Haire
was president of Preferred Payment Systems, a company specializing in electronic
claims and insurance system related projects.
Gilbert A. Valdez is Chief Operating Officer of the Company and past
President and CEO of four major financial and healthcare corporations. Most
recently, he served as CEO of Hospital Billing and Collection Services, Inc., a
$550 million healthcare receivables financing entity located in Wilmington,
Delaware; Datix Corporation, an Atlanta-based corporate divestiture from
Harris-Lanier; Medaphis Corporation, an interstate, multi-dimensional healthcare
service agency based in Atlanta; and NEIC, a national consortium of 40 major
insurance companies formed for development of electronic claim billing
standards. Mr. Valdez has 30 years of senior healthcare receivables financing
experience.
7
Araldo A. Cossutta is President of Cossutta and Associates, an
architectural firm based in New York City, with major projects throughout the
world. Previously, he was a partner with I.M. Pei & Partners and is a graduate
of the Harvard Graduate School of Design and the Ecole des Beaux Arts in Paris.
Mr. Cossutta was a significant shareholder in Personal Computer Card Corporation
("PC3") and was chairman of PC3 at the time of its acquisition by the Company in
November 1993. He also was a large shareholder and director of Computer
Integration Corporation of Boca Raton, Florida from 1993 to 2000.
Steven W. Evans is a Certified Public Accountant with Evans Miller &
Warriner, PSC, an accounting firm which he established in 1976 in Barbourville
Kentucky. He is also a founder and active in PTRL, which operates contract
research laboratories located in Kentucky, California and Germany. He is also a
founder and active in the management of environmental, financial and hotel
corporations in Kentucky and Tennessee.
Robert E. Gross is President of R. E. Gross & Associates, providing
consulting and systems projects for clients in the multi-location service,
banking and healthcare industries. From 1987 to 1990, he was vice
president-technical operations for Medaphis Physicians Service Corp., Atlanta,
Georgia. Prior to that, he held executive positions with Chi-Chi's, Inc., Royal
Crown and TigerAir. He also spent 13 years as an engineer with IBM.
Thomas J. Kirchhofer is president of Synergy Wellness Centers of Georgia,
Inc. He is past president of the Georgia Chiropractic Association.
The Company has received the written consent the re-election of each of
the foregoing directors from of shareholders holding an aggregate of 12,110,184
shares of Common Stock, and 490.196 shares of Preferred Stock. Each share of
Preferred Stock is entitled to cast 5,100 votes and votes together with the
Common Stock as a single class with respect to the Amendment. Because the shares
of Common Stock and Preferred Stock held by these shareholders represent
approximately 60% of the votes entitled to be cast (as of March 20, 2008) by
shareholders with respect to the above-described actions, all required corporate
approvals for these actions have been obtained.
CORPORATE GOVERNANCE
Meetings and Committees of the Board of Directors
Our business is managed under the direction of the Board of Directors. The
Board of Directors meets on a regularly scheduled basis to review significant
developments affecting us and to act on matters requiring approval of the Board
of Directors. It also holds special meetings when an important matter requires
attention or action by the Board of Directors between scheduled meetings. During
fiscal 2007, the Board of Directors did not meet, but acted by unanimous written
consent 4 times. The Board of Directors does not have a standing audit,
compensation, nominating or governance committee.
All of our directors are independent, as defined by Rule 4200(a)(15) of
the Nasdaq's listing standards, except for Mr. Haire, who is not independent
because he is currently employed by the Company as its Chief Executive Officer
and Mr. Cossutta, who is not independent due to the above described acquisition
of Wound Care.
Audit Committee
The Company does not maintain a standing Audit Committee. An audit
committee typically reviews, acts on and reports to the board of directors with
respect to various auditing and accounting matters, including the
recommendations and performance of independent auditors, the scope of the annual
audits, fees to be paid to the independent auditors, and internal accounting and
financial control policies and procedures. Certain stock exchanges currently
require companies to adopt a formal written charter that establishes an audit
committee that specifies the scope of an audit committee's responsibilities and
the means by which it carries out those responsibilities. In order to be listed
on any of these exchanges, the Company will be required to establish an audit
committee.
The Company's board of directors does not have an "audit committee
financial expert," within the meaning of such phrase under applicable
regulations of the Securities and Exchange Commission, serving on its audit
8
committee. The board of directors believes that all members of its audit
committee are financially literate and experienced in business matters, and that
one or more members of the audit committee are capable of (i) understanding
generally accepted accounting principles ("GAAP") and financial statements, (ii)
assessing the general application of GAAP principles in connection with our
accounting for estimates, accruals and reserves, (iii) analyzing and evaluating
our financial statements, (iv) understanding our internal controls and
procedures for financial reporting; and (v) understanding audit committee
functions, all of which are attributes of an audit committee financial expert.
However, the board of directors believes that there is not any audit committee
member who has obtained these attributes through the experience specified in the
SEC's definition of "audit committee financial expert." Further, like many small
companies, it is difficult for the Company to attract and retain board members
who qualify as "audit committee financial experts," and competition for these
individuals is significant. The board believes that its current audit committee
is able to fulfill its role under SEC regulations despite not having a
designated "audit committee financial expert."
Indebtedness of Directors and Executive Officers
------------------------------------------------
None of our directors or officers or their respective associates or
affiliates is indebted to us.
Family Relationships
--------------------
There are no family relationships among our directors or executive
officers.
Compensation Committee
----------------------
The Company does not maintain a standing Compensation Committee. Due to
the Company's small size at this point in time, the Board of Directors has not
established a separate compensation committee. All members of the Board of
Directors (with the exception of any member about whom a particular compensation
decision is being made) participate in the compensation award process. During
fiscal 2007, no executive officer received any compensation from the Company.
Nominating Committee
--------------------
The Company does not maintain a standing Nominating Committee and does not
have a Nominating Committee charter. Due to the Company's small size at this
point in time, the Board of Directors has not established a separate nominating
committee and feels that all directors should have input into nomination
decisions. As such, all members of the Board of Directors generally participate
in the director nomination process. Under the rules promulgated by the SEC, the
Board of Directors is, therefore, treated as a "nominating committee".
The Board of Directors will consider qualified nominees recommended by
shareholders. Shareholders desiring to make such recommendations should submit
such recommendations to the Corporate Secretary, c/o MB Software Corporation 777
Main Street, Suite 3100, Fort Worth, Texas 76102. The Board of Directors will
evaluate candidates properly proposed by shareholders in the same manner as all
other candidates.
With respect to the nominations process, the Board of Directors does not
operate under a written charter, but under resolutions adopted by the Board of
Directors. The Board of Directors is responsible for reviewing and interviewing
qualified candidates to serve on the Board of Directors, for making
recommendations for nominations to fill vacancies on the Board of Directors, and
for selecting the nominees for selection by the Company's shareholders at each
annual meeting. The Board of Directors has not established specific minimum age,
education, experience or skill requirements for potential directors. The Board
of Directors takes into account all factors they consider appropriate in
fulfilling their responsibilities to identify and recommend individuals as
director nominees. Those factors may include, without limitation, the following:
o an individual's business or professional experience, accomplishments,
education, judgment, understanding of the business and the industry in
which the Company operates, specific skills and talents, independence,
time commitments, reputation, general business acumen and personal and
professional integrity or character;
9
o the size and composition of the Board of Directors and the interaction
of its members, in each case with respect to the needs of the Company
and its shareholders; and
o regarding any individual who has served as a director of the Company,
his or her past preparation for, o attendance at, and participation in
meetings and other activities of the Board of Directors or its
committees and his or her overall contributions to the Board of
Directors and the Company.
The Board of Directors may use multiple sources for identifying and
evaluating nominees for directors, including referrals from the Company's
current directors and management as well as input from third parties, including
executive search firms retained by the Board of Directors. The Board of
Directors will obtain background information about candidates, which may include
information from directors' and officers' questionnaires and background and
reference checks, and will then interview qualified candidates. The Board of
Directors will then determine, based on the background information and the
information obtained in the interviews, whether to recommend that a candidate be
nominated to the Board of Directors. We strongly encourage and, from time to
time actively survey, our shareholders to recommend potential director
candidates.
Shareholder Communications with the Company's Board of Directors
Any shareholder wishing to send written communications to the Company's
Board of Directors may do so by sending them in care of Lucy Singleton,
Corporate Secretary, at the Company's principal executive offices. All such
communications will be forwarded to the intended recipient(s).
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our officers and directors, and
persons who own more than 10% of a registered class of our equity securities, to
file initial reports of ownership and reports of changes in ownership with the
SEC. Such persons are required by SEC regulation to furnish us with copies of
all Section 16(a) forms they file. Based solely on its review of the copies of
such forms received by it and representations from certain reporting persons
regarding their compliance with the relevant filing requirements, the Company
believes that all filing requirements applicable to its officers, directors and
10% shareholders were complied with during the fiscal year ended December 31,
2007, with the exception of one transaction effected by Mr. Cossutta, which was
filed late.
Code of Ethics
Due to the current formative stage of the Company's development, it has
not yet developed a written code of ethics for its directors or executive
officers.
EXECUTIVE COMPENSATION
Summary Compensation Table
No compensation in excess of $100,000 was awarded to, earned by, or paid
to any executive officer of the Company during the last three years. The
following table and the accompanying notes provide summary information for each
of the last three fiscal years concerning cash and non-cash compensation paid or
accrued by the Company's Chief Executive Officer over the past three years.
10
SUMMARY COMPENSATION TABLE
--------------------------- ------------------------------------- -------------------------------------------------------
Annual Compensation Long Term Compensation
--------------------------- ------------------------------------- -------------------------------------------------------
Awards Payouts
----------------------------------------------------------------- ---------------------------- --------------------------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Award(s) Options payouts Compensation
($) ($) ($) ($) SARs(#) ($) ($)
------------------- -------- ------------ ---------- ------------ ------------- -------------- ---------- ---------------
Scott A. Haire 2007 -0- - - - - - -
2006 -0- - - - - - -
2005 -0- - - - - -
------------------- -------- ------------ ---------- ------------ ------------- -------------- ---------- ---------------
Compensation of Directors
We do not pay our directors a fee for attending scheduled and special
meetings of our board of directors. We intend to reimburse each director for
reasonable travel expenses related to such director's attendance at board of
directors and committee meetings. In the future we might have to offer some
compensation to attract the caliber of independent board members the Company is
seeking.
Employment Agreements
None of our executive officers has an employment agreement with the
Company or any of its subsidiaries.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Effective August 20, 2004, we acquired Wound Care Innovations, LLC through
a merger of Wound Care with a newly formed Company subsidiary. The consideration
paid by the Company for Wound Care consisted of an aggregate of 6,000,000 shares
of our common stock. These shares were issued to H.E.B., LLC, a Nevada limited
liability company, and to Mr. Araldo Cossutta, the sole owners of Wound Care.
Mr. Scott A. Haire, our Chairman of the Board, Chief Executive Officer and
President is a one-percent member, but the managing member of HEB, and Mr.
Cossutta is a member of our Board of Directors.
In connection with the acquisition of Wound Care, HEB and Mr. Cossutta
also agreed to convert an aggregate of $1,800,612 of Wound Care's debt and other
obligations owed to HEB and Mr. Cossutta into an aggregate of 2,257,303
additional shares of our common stock.
Effective November 28, 2007, Wound Care Innovations entered into separate
exclusive license agreements with Applied Nutritionals and its founder George
Petito, pursuant to which Wound Care Innovations obtained the exclusive
world-wide license to certain patented technologies and processes related to
CellerateRx products.
Wound Care Innovations had been marketing and selling CellerateRx for the
three previous years under the terms of a distribution agreement that had been
terminated in 2005. The new licenses are limited to the human health care market
for external wound care, and include any new product developments based on the
licensed patent and processes. The term of these licenses extends through the
life of the licensed patent.
In consideration for the licenses, Wound Care Innovations agreed to pay to
Applied Nutritionals and Mr. Petito the following royalties, beginning January
3, 2008: (a) an advance royalty of $100,000 in the aggregate, (b) an aggregate
royalty of fifteen percent (15%) of gross sales occurring during the first year
of the license; (c) an additional advance royalty of $400,000, in the aggregate,
on January 3, 2009; plus (d) an aggregate royalty of three percent (3%) of gross
sales for all sales occurring after the payment of the $400,000 advance royalty.
In addition, after January 3, 2009, Wound Care Innovations must maintain a
minimum aggregate annual royalty payment of $375,000.
11
All royalties, other than the advance royalty payments described above,
are due and payable on a calendar quarterly basis on or before the forty-fifth
(45th) day immediately following the calendar quarter in which gross sales are
received.
In addition to the license agreements, Wound Care Innovations also entered
into an exclusive manufacturing agreement with Applied Nutritionals pursuant to
which Applied Nutritionals will manufacture all CellerateRx and related products
for Wound Care Innovations. The term of the manufacturing agreement extends
through the life of the licensed patent; but may be terminated by a successor in
interest to Wound Care Innovations, provided that the successor in interest has
annual revenues of at least $100,000,000 or a market capitalization of at least
$200,000,000.
In connection with the above transaction, the Company issued to Mr. Petito
1,000 shares of a newly designated Series A Convertible Preferred Stock.
Prior to entering into the new license agreements, Applied Nutritionals
held 900,000 shares of our common stock. These shares were issued to Applied
Nutritionals in 2004, in connection with the previous distribution agreement for
CellerateRx products. As majority member and manager of Applied Nutritionals,
Mr. Petito may be deemed to be the beneficial owner of these shares.
Effective January 1, 2008, we issued 490.196 shares of our Series A
Convertible Preferred Stock to Keystone Equity Partners in exchange for the
cancellation of approximately $1,500,000 in debt. The debt was recently acquired
by Keystone from H.E.B., LLC, our majority shareholder, and its affiliates.
Each share of Series A Convertible Preferred Stock will automatically
convert into an aggregate of 5,100 shares of common stock upon the filing of an
amendment to our Articles of Incorporation increasing our authorized number of
shares of common stock from 20,000,000 to 100,000,000. The preferred stock
participates with the common stock, on an as converted basis with respect to
dividends and liquidation, and votes together with the common stock as a single
class, as if such shares of preferred stock had been converted. The preferred
stock will automatically convert into an aggregate of 5,100,000 shares of common
stock upon the filing an amendment to our Articles of Incorporation increasing
our authorized number of shares of common stock from 20,000,000 to 100,000,000.
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of April 20, 2008, there were 16,727,550 shares of common stock issued
and outstanding. The following table sets forth certain information concerning
the ownership of the Company's common stock as of April 20, 2008, with respect
to: (a) each person known to the Company to be the beneficial owner of more than
five percent of the Company's common stock; (b) all directors; and (c) directors
and executive officers of the Company as a group. The notes accompanying the
information in the table below are necessary for a complete understanding of the
figures provided below.
Amount and Nature
Title Name of Beneficial of Beneficial Percent
Class Owner of Group(1) Ownership of Class
Common Scott A. Haire(2) 7,095,184 42.6%
Chairman and
Chief Executive Officer
Common Araldo A. Cossutta 5,015,000 30.0%
Director
Common Steven W. Evans 1,015,000 6.1%
Director
Common Thomas J. Kirchhofer -- *
Director
Common Robert E. Gross -- *
Director
Common Gilbert Valdez 1,666 *
Chief Operating Officer
and Director
Common Applied Nutritionals, LLC 900,000 5.4%
1890 Bucknell Drive
Bethleham, PA 18015
Common George Petito 6,000,000(3) 27.5%
1890 Bucknell Drive
Bethleham, PA 18015
Common Keystone Equity Partners 2,500,000(4) 13.0%
5125 Stephanie Drive
Ft. Worth, TX 76117
Common T Squared Investments, LLC 1,286,207(5) 7.7%
c/o T Squared Capital LLC
1325 Sixth Avenue, Floor 28
New York, New York 10019
Common All Directors and Executive Officers
As a Group (six in number) 14,026,850 83.9%
* less than 1%
(1) Unless otherwise noted, the address for each person or entity listed is 777
Main Street, Suite 3100, Fort Worth, Texas 76102.
(2) 6,980,070 of these shares are held by H.E.B., LLC. Mr. Haire is the
managing member of H.E.B., LLC, and as such, is deemed to be the beneficial
owner of such shares.
13
(3) Consists of 900,000 shares held by Applied Nutritionals and 1,000 shares of
Preferred Stock that will automatically convert into 5,100,000 shares of
Common Stock upon the effectiveness of the Amendment. Mr. Petito is the
majority member and the manager of Applied Nutritionals and in such
capacity, may be deemed to be the beneficial owner of such shares.
(4) Consists of 490.196 shares of Preferred Stock that will automatically
convert into 2,500,000 shares of Common Stock upon the effectiveness of the
Amendment.
(5) Includes options granted by H.E.B., LLC to purchase 1,200,000 shares,
exercisable within 60 days.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The firm of Pritchett, Siler & Hardy, P.C. served as the Company's
independent public accountants for the year ended December 31, 2007. The Board
of Directors of the Company, in its discretion, may direct the appointment of
different public accountants at any time during the year if the Board believes
that a change would be in the best interests of our stockholders. The Board of
Directors has considered the audit fees, audit-related fees, tax fees and other
fees paid the Company's accountants, as disclosed below, and determined that the
payment of such fees is compatible with maintaining the independence of the
accountants.
Audit Fees
The Audit fees billed by Pritchett, Siler & Hardy, P.C.. for professional
services rendered during 2007 for the audit of the Company's annual financial
statements on Form 10-K (and previous filings on Form 10-KSB) and the reviews of
the financial statements included in the Company's Form 10-QSB's for the fiscal
years ended December 31, 2007 and 2006 was $30,595 and respectively. Audit fees
billed by Clancy and Co., P.L.L.C. for professional services rendered for the
audit review of 2006 were $5,850.
Audit-Related Fees
None
Tax Fees
None
All Other Fees
None
Audit Committee Pre-Approval Policies and Procedures
The Company does not currently have an Audit Committee. Currently, the
Board of Directors pre-approves all audit and non-audit services that are to be
performed and fees to be charged by our independent auditor or assure that the
provision of these services does not impair the independence of such auditor.
The Board of Directors pre-approved all audit services and fees of our
independent auditor for the years ended December 31, 2007 and 2006. Our
independent auditors did not provide us with any non-audited services during the
period indicated above.
14
MISCELLANEOUS
All costs incurred in the mailing of this Information Statement will be
borne by the Company. The Company may make arrangements with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of information
materials to the beneficial owners of shares of Common Stock held of record by
such persons, and the Company may reimburse such brokerage houses and other
custodians, nominees and fiduciaries for their out-of-pocket expenses incurred
in connection therewith.
Our Annual Report on Form 10-K for the year ended December 31, 2007
accompanies this Information Statement.
By Order of the Board of Directors
/s/ Lucy J. Singleton
Lucy J. Singleton,
Secretary
Fort Worth, Texas
April __, 2008
EXHIBIT A
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
MB SOFTWARE CORPORATION
Pursuant to the provisions of Texas Business Corporation Act (the
"TBCA"), the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation.
FIRST: The name of the corporation is MB Software Corporation.
SECOND: The Articles of Incorporation in effect on the date hereof are
hereby amended by replacing ARTICLE ONE in its entirety as follows:
ARTICLE ONE
The name of the Corporation is "Wound Management Technologies, Inc.
THIRD: The Articles of Incorporation in effect on the date hereof are
hereby amended by replacing ARTICLE FOUR in its entirety as follows:
ARTICLE FOUR
The aggregate number of shares of capital stock that the
corporation will have authority to issue is one hundred and five
million (105,000,000), one hundred million (100,000,000) of which will
be shares of Common Stock having a par value of $.001 per share, and
five million (5,000,000) of which will be shares of preferred stock
having a par value of $10 per share.
Preferred stock may be issued in one or more series as may be
determined from time to time by the Board of Directors. All shares of
any one series of preferred stock will be identical except as to the
date of issue and the dates from which dividends on shares of the
series issued on different dates will cumulate, if cumulative.
Authority is hereby expressly granted to the Board of Directors to
authorize the issuance of one or more series of preferred stock, and to
fix, by resolution or resolutions providing for the issuance of such
series the voting powers, designations, preferences, and relative,
participating, optional, redemption, conversion, exchange or other
special rights qualifications, limitations or restrictions of such
series, and the number of shares in each series, to the full extent now
or hereafter permitted by law.
FOURTH: The Articles of Incorporation in effect on the date hereof are
hereby amended by replacing ARTICLE SIXTEEN in its entirety as follows:
ARTICLE SIXTEEN
"The terms and conditions of any rights, options and warrants
approved by the Board of Directors may provide that any or all of such
terms and conditions may be waived or amended only with the consent of
the holders of a designated percentage of a designated class or classes
of capital stock of the Corporation (or a designated group or groups of
holders within such class or classes, including but not limited to
disinterested holders), and the applicable terms and conditions of any
such rights, options or warrants so conditioned may not be waived or
amended absent such consent.".
FIFTH: This Amendment was approved by the holders of a majority of the
issued and outstanding voting shares of the Corporation, by written consent
pursuant to Article 9.10A of the TBCA on March 20, 2008.
SIXTH: This Amendment was approved in the manner required by the TBCA
or as otherwise provided in the Articles of Incorporation and Bylaws of the
Corporation.
The Corporation has caused these Articles of Amendment to be signed and
attested as of _________, 2008.
MB SOFTWARE, INC.
By:
------------------------------------
Scott A. Haire,
Chairman and Chief Executive Officer