SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 1)
X Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Confidential, For Use of the Commission Only
(as permitted by Rule 14a6(e)(2))
EYI INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
______________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) 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
fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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:
EYI INDUSTRIES, INC.
Dear Shareholder:
You are cordially invited to attend the special meeting of Shareholders of EYI
Industries, Inc. The special meeting will be held at the offices of Kirkpatrick
& Lockhart Nicholson Graham LLP, 10100 Santa Monica Boulevard, Seventh Floor,
Los Angeles, California 90062, on August 22, 2006.
Your vote is important and I urge you to vote your shares by proxy, whether or
not you plan to attend the meeting. After you read this proxy statement, please
indicate on the proxy card the manner in which you want to have your shares
voted. Then date, sign and mail the proxy card in the postage-paid envelope
that is provided. If you sign and return your proxy card without indicating
your choices, it will be understood that you wish to have your shares voted
in accordance with the recommendations of EYI's Board of Directors.
We hope to see you at the meeting.
Sincerely,
/s/ Jay Sargeant
President, CEO and Director
July 20, 2006
EYI INDUSTRIES, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 22, 2006
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders
of EYI Industries Inc. will be held at the offices of
Kirkpatrick & Lockhart Nicholson Graham LLP,
10100 Santa Monica Boulevard, Seventh Floor, Los Angeles, California
90062, on August 22, 2006, beginning at 9:30 a.m., Pacific Daylight Time,
for the following purposes:
1. To approve an amendment to EYI's Articles of Incorporation to increase the
number of shares of authorized common stock, par value $0.01, from
1,000,000,000 to 3,000,000,000 shares
2. To consider such other business as may properly come before the meeting or
any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on July
20, 2006,as the record date for determining the shareholders entitled
to notice of and to vote at the Special Meeting or at any adjournment thereof.
A complete list of the shareholders entitled to vote at the Special Meeting will
be open for examination by any shareholder during ordinary business hours for
a period of ten days prior to the Annual Meeting at EYI's corporate offices
at 7865 Edmonds Street, Burnaby, BC V3N 1B9.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSALS.
IMPORTANT
You are cordially invited to attend the Special Meeting in person. In order
to ensure your representation at the meeting, however, please promptly
complete, date sign and return the enclosed proxy in the accompanying
envelope. If you should decide to attend the Special Meeting and vote
your shares in person, you may revoke your proxy at that time. PLEASE
NOTE THAT ATTENDANCE AT THE MEETING WILL BE LIMITED TO STOCKHOLDERS OF
EYI INDUSTRIES,INC. AS OF THE RECORD DATE (OR THEIR AUTHORIZED
REPRESENTATIVES) HOLDING ADMISSION TICKETS OR OTHER EVIDENCE OF
OWNERSHIP. THE ADMISSION TICKET IS DETACHABLE FROM YOUR PROXY CARD.
IF YOUR SHARES ARE HELD BY A BANK OR BROKER, PLEASE BRING TO THE MEETING
YOUR BANK OR BROKER STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF
EYI INDUSTRIES STOCK TO GAIN ADMISSION TO THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Jay Sargeant
President, CEO, and Director
July 20, 2006
Burnaby, British Columbia
Proxy Statement for
Special Meeting of Stockholders of
EYI INDUSTRIES, INC.
To Be Held on August 22, 2006
TABLE OF CONTENTS
ABOUT THE MEETING 1
PROPOSAL INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK 3
DESCRIPTION OF SECURITIES 5
EXECUTIVE COMPENSATION 8
FISCAL YEAR END OPTIONS/SAR VALUES 10
PRINCIPAL HOLDERS OF VOTING SECURITIES 13
PRINCIPAL ACCOUNTANT FEEES AND SERVICES 15
OTHER MATTERS TO BE ACTED UPON AT THE SPECIAL MEETING OF STOCKHOLDERS 16
ADDITIONAL INFORMATION 16
APPENDIX A A-1
EYI INDUSTRIES, INC.
PROXY STATEMENT
This proxy statement contains information related to the Special
Meeting of EYI, a Nevada corporation, to be held at the offices of Kirkpatrick
& Lockhart Nicholson Graham LLP, 10100 Santa Monica Boulevard, Seventh Floor,
Los Angeles, California 90062, on August 22, 2006, beginning at 9:30 a.m.,
Pacific Daylight Time, and at any postponements or adjournments thereof, for
the purposes set forth herein. This proxy statement, the enclosed proxy, a copy
of EYI's Annual Report to Stockholders for the fiscal year ended December
31, 2005 and a copy of EYI's Quarterly Report for the quarter ended March 31,
2006 are first being mailed on or about July 21, 2006, to all stockholders
entitled to vote. EYI is making this proxy solicitation.
ABOUT THE MEETING
What is the purpose of the special meeting?
At EYI's Special Meeting, shareholders will act upon the matters
outlined in the notice of meeting on the cover page of this proxy statement,
which relates to an increase in the number of shares of authorized common stock,
par value $0.01, to 3,000,000,000 shares.
Who is entitled to vote?
Only shareholders of record on the close of business on the record date,
July 20, 2006, are entitled to receive notice of the annual meeting and to vote
the shares of common stock that they held on that date at the meeting, or any
postponements or adjournments of the meeting. The holders of common stock vote
together as a single class.
See "Description of Securities."
Who can attend the special meeting?
All shareholders as of the record date, or their duly appointed
proxies,may attend the Special Meeting. Seating, however, is limited.
Admission to the meeting will be on a first-come, first-serve basis.
Registration will begin at 9:00 a.m., and seating will begin at 9:15 a.m.
Each shareholder may be asked to present valid picture identification,
such as a driver's license or passport. Cameras, recording devices and
other electronic devices will not be permitted at the meeting.
Please note that if you hold your shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a
brokerage statement reflecting your stock ownership as of the record date and
check in at the registration desk at the meeting.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As
of the record date, the shareholders held a total of 269,593,647 votes.
As such, holders of at least 53,918,729 votes (i.e., 20% of our issued and
outstanding common stock) must be present at the meeting, in person or by
proxy, to obtain a quorum. Proxies received but marked as abstentions and
broker non-votes will be included in the calculation of the number of shares
considered to be present at the meeting.
How do I vote?
If you complete and properly sign the accompanying proxy card and
return it to EYI, then it will be voted as you direct. If you are a registered
shareholder and attend the meeting, then you may deliver your completed proxy
card in person or vote by ballot at the meeting. "Street name" shareholders
who wish to vote at the meeting will need to obtain a proxy form from the i
nstitution that holds their shares.
What if I do not specify how my shares are to be voted?
If you submit a proxy but do not indicate any voting instructions,
then your shares will be voted in accordance with the Board's recommendations.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy card, you may
change your vote at any time before the proxy is exercised by filing with
the Secretary of EYI either a notice of revocation or a duly executed
proxy bearing a later date. The powers of the proxy holders will be suspended
if you attend the meeting in person and so request, although attendance at
the meeting will not by itself revoke a previously granted proxy.
What are the Board's recommendations?
Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote in accordance with the
recommendation of the Board of Directors. The Board's recommendation is set
forth together with the description of such item in this proxy statement.
In summary, the Board recommends a vote:
"FOR" the approval of increase in the number of shares of authorized
common stock,par value $0.01, from 1,000,000,000 to 3,000,000,000
shares (see page 3).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
What vote is required to approve each item?
Approval of an Increase to the Number of Shares of Authorized
Common Stock. For the approval of the Increase to the Number of Shares
of Authorized Common Stock, the affirmative vote of the holders of a
majority of the outstanding shares entitled to vote will be required
for approval. A properly executed proxy marked "Abstain" with respect
to such matter will not be voted, although it will be counted for
purposes of determining whether there is a quorum.
Accordingly, an abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or
other nominee, your broker or nominee may not be permitted to exercise
voting discretion with respect to some of the matters to be acted upon.
Thus, if you do not give your broker or nominee specific instructions,
your shares may not be voted on those matters and will not be counted
in determining the number of shares necessary for approval. Shares
represented by such "broker non-votes," however, will be counted in
determining whether there is a quorum.
PROPOSAL - INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
General Information
EYI's Board of Directors has authorized an amendment to EYI's
Articles of Incorporation to increase the number of authorized shares
of common stock from 1,000,000,000 to 3,000,000,000. As of July 14, 2006,
there were 266,893,427, shares of common stock outstanding. The additional
shares will be issuable for proper corporate purposes, such the issuance
of common stock upon the exercise of outstanding options and warrants;
conversion of outstanding convertible debentures; and for dividends or
splits. As at July 19, 2006 the following shares are required for
issuance upon conversion of outstanding: (i) stock options 8,939,750,
(ii) warrants 129,538,868 and (iii) convertible debentures 310,826,100
(based on the closing price of EYII.OB on July 19, 2006). EYI has no
present plans to issue any shares of common stock for dividends or splits.
EYI has no current intentions or understandings to issue additional
authorized shares of common stock other than with respect to the
issuance of common stock in connection with the exercise of outstanding
stock options, warrants or conversion of outstanding convertible
debentures, dividends and splits.
Stockholder approval of the amendment to EYI's Certificate of
Incorporation to increase the authorized shares of common stock will
give EYI greater flexibility by permitting such stock to be issued
without the delay of obtaining stockholder approval. The Board of
Directors believes it to be in the best interests of EYI to increase
the number of authorized shares of common stock to ensure that adequate
shares are available for issuance if such issuance becomes desirable.
Additional Information About The Vote
There are possible negative ramifications associated with authorizing
additional shares of common stock. These include the following:
Dilution to the existing shareholders, including a decrease in our net
income per share in future periods. This could cause the market price of
our stock to decline.
The issuance of authorized but unissued stock could be used to deter a
potential takeover of EYI that may otherwise be beneficial to shareholders
by diluting the shares held by a potential suitor or issuing shares to a
shareholder that will vote in accordance with EYI's Board of Directors'
desires. A takeover may be beneficial to independent shareholders because,
among other reasons, a potential suitor may offer such shareholders a
premium for their shares of stock compared to the then-existing market
price. EYI does not have any plans or proposals to adopt provisions or
enter into agreements that may have material anti-takeover consequences.
The additional shares of common stock authorized would become part
of EYI's existing class of common stock and would have the same rights
and privileges as the shares of common stock presently outstanding. All
outstanding shares of common stock will continue to have one vote per share.
There are no preemptive rights with respect to EYI's common stock.
The Board of Directors of EYI has the authority to issue shares
of preferred stock authorized in one or more series and to fix the powers,
designations,rights, preferences and restrictions thereof, including
liquidation preferences and rights as to dividends, conversion, voting
and redemption, and the number of shares constituting each series, without
any further vote or action by EYI's shareholders. The issuance of a series
of preferred stock in certain circumstances, based on its terms, may delay
or prevent a change in control of EYI, may discourage bids for the
common stock at a premium over the market price of the common stock and
may directly affect the market price of and the voting and other rights of
holders of common stock. EYI currently has no plans to issue any further
series of preferred stock.
If the amendment to our Articles of Incorporation is adopted, an
amendment to the Articles of Incorporation of EYI shall be filed with the
Nevada Secretary of State so that Section 3 shall be as follows:
"The total number of shares of capital stock that the Corporation is
authorized to issue is 2,510,000,000, which are to be divided into two
classes as follows: 3,000,000,000 shares of common stock, par value $0.001
per share; and 10,000,000shares of preferred stock, par value $0.001 per
share.
Vote Required For An Increase In Authorized Shares Of Common Stock
Approval of an amendment to EYI's Articles of Incorporation to
increase the number of authorized shares of common stock will require
that the holders of at least a majority of the outstanding shares entitled
to vote thereon vote "FOR".
Recommendation Of The Board Of Directors
Our Board of Directors unanimously recommends a vote "FOR" the
approval of an amendment to our Company's Articles of Incorporation to
increase the number of authorized shares of common stock, $0.001 par value,
from 1,000,000,000 to 3,000,000,000 shares.
DESCRIPTION OF SECURITIES
The following description of our capital stock and certain
provisions of our Articles of Incorporation and By-Laws is a summary. For
additional information,please refer to our Articles of Incorporation, as
amended, and By-Laws, as amended.
Common Stock
Our Articles of Incorporation authorize the issuance of
1,000,000,000 shares of common stock, $0.001 par value per share. As of
July 20, 2006, 269,593,647 shares of common stock were issued and outstanding.
The following description is a summary of the capital stock of EYI Industries
and contains the material terms of the capital stock. Additional information
can be found in EYI Industries' Articles of Incorporation and Bylaws.
Each holder of our common stock is entitled to one vote per share
of common stock standing in such holder's name on our records on each matter
submitted to a vote of our stockholders, except as otherwise required by law.
Holders of our common stock do not have cumulative voting rights so that the
holders of more than 50% of the combined shares of our common stock voting
for the election of directors may elect all of the directors if they choose
to do so and, in that event, the holders of the remaining shares
of our common stock will not be able to elect any members to our board of
directors. Holders of our common stock are entitled to equal dividends and
distributions, per share, when, as and if declared by our board of directors
from funds legally available. Holders of our common stock do not have
preemptive rights to subscribe for any of our securities nor are any shares
of our common stock redeemable or convertible into any of our other
securities. If we liquidate, dissolve or wind up our business or affairs,
our assets will be divided up pro-rata on a share-for-share basis among
the holders of our common stock after creditors and preferred shareholders,
if any, are paid.
Preferred Stock
Our Articles of Incorporation authorize the issuance of 10,000,000
shares of preferred stock, $0.001 par value per share, the designation and
rights of which are to be determined by our Board of Directors. As of
July 20, 2006, no shares of preferred stock were issued and outstanding.
Our Board of Directors has authority, without action by the
shareholders,to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights,and other
rights of such series. We consider it desirable to have preferred stock
available to provide increased flexibility in structuring possible future
acquisitions and financing and in meeting corporate needs which may
arise. If opportunities arise that would make desirable the issuance of
preferred stock through either public offering or private placements, the
provisions for preferred stock in our Articles of Incorporation would
avoid the possible delay and expense of a shareholder's meeting, except
as may be required by law or regulatory authorities. Issuance of the
preferred stock could result, however, in a series of securities
outstanding that will have certain preferences with respect
to dividends and liquidation over the common stock which would result
in dilution of the income per share and net book value of the common
stock. Issuance of additional common stock pursuant to any conversion
right which may be attached to the terms of any series of preferred
stock may also result in dilution of the net income per share and
the net book value of the common stock. The specific terms of any
series of preferred stock will depend primarily on market conditions,
terms of a proposed acquisition or financing, and other factors existing
at the time of issuance. Therefore, it is not possible at this time to
determine in what respect a particular series of preferred stock will be
superior to our common stock or any other series of preferred stock
which we may issue. Our Board of Directors may issue additional preferred
stock in future financing, but has no current plans to do so at this time.
The issuance of preferred stock could have the effect of making
it more difficult for a third party to acquire a majority of our
outstanding voting stock. We intend to furnish holders of our common
stock annual reports containing audited financial statements and to make
public quarterly reports containing unaudited financial information.
Convertible Debentures
Summary Of Warrants
Period Issued Purchase Aggregate Details
Issued Warrants Price Value of Issuance
4th Quarter 2003 3,668,413 $ - $ - Balance of Safe ID warrants
1st Quarter 2004 857,143 $ 0.20 $ 171,429 Private Placement $0.14 per unit; warrants exercise price is $0.30
609,312 $ 0.30 $ 182,794 Private Placement $0.21 per unit; warrants exercise price is $0.30
916,667 $ 0.24 $ - Balance of reverse acq./share exchange not properly determined
December 31, 2003(expired)
2nd Quarter 2004 5,476,190 $ 0.21 $1,150,000 Pursuant to an Agreement with Eyewonder dated May 4, 2004
566,833 $ 0.30 $ 170,050 Private Placement $0.21 per unit; warrants exercise price is $0.30
26,129 $ 0.31 $ 8,100 Pursuant to an agreement dated May 25, 2004 with Source Capital Group, Inc.
2nd Quarter 2005 1,000,000 $ 0.02 $ 20,000 Private Placement $0.02 per unit, warrant exercise price is $0.02
Total 13,120,687 $ 1,702,372
Summary of Stock Options
Date of Number of Exercise Options Vesting Capacity
Grant Options Price (US) Exercised Period of Grant
March 30, 2004 3,200,000 $0.165 3,200,000 March 30, 2004 Consultant
1,000,000 $0.165 1,000,000 March 30,2004 Employee
April 5, 2004 1,439,000 $0.20 300,000 50% August 5, 2004 Canadian Consultants and Employees
and 50% August 5, 2005
April 5, 2004 2,990,000 $0.20 36,360 Fully vested upon issuance Senior Management and Executives
April 30, 2004 6,400,000 $0.19 0 Fully vested upon issuance Consultants (Executive Officers)
April 30, 2004 2,910,000 $0.19 0 50% October 1, 2004
and 50% October 1, 2005 US Consultants providing services
in various to EYI
April 30, 2004 2,000,000 $0.19 0 Vesting on October 1, 2004 Consultant working with EYI with respect
to productsin Latin Countries
June 1, 1004 100,000 $0.22 0 Vesting on August 1, 2004 Consultant working with EYI in assisting in the
development and marketing of new EYI products
July 2, 2004 100,000 $0.26 0 50% October 4, 2004
and 50% October 4, 2005 Consultants providing assistance to EYI
Senior Management
September30,2004 2,650,000 $0.11 400,250 Vesting on September 30,2004 Senior Management/Consultants
October 13, 2004 500,000 $0.08 250,000 Vesting October 13, 2004 Consultant
November 1,2004 250,000 $0.20 0 50% February 1 2005
and 50% February 1 2006 Consultant
December 27,2004 7,450,000 $0.08 100,000 100% December 31, 2004 Senior Management/Consultants and Employees
February 9, 2005 6,000,000 $0.06 3,000,000 100% February 9, 2005 Senior Management
March 10, 2005 250,000 $0.04 250,000 100% March 10, 2005 Consultant
May 30, 2005 500,000 $0.03 0 100% May 30, 2005 Senior Management
June 1, 2005 500,000 $0.10 0 50% October 1, 2005
and 50% August 1, 2006 Consultant
November 29, 2005 140,000 $0.02 0 50% May 29, 2006
and 50% November 29, 2006 Employees
*** In addition under an Agreement dated May 4, 2004, EYI Industries
has agreed to issue options to purchase 1,100,000 shares of common stock
at a price of $0.22 per share to certain individuals designated by Eyewonder.
Secured Convertible Debentures
On April 24, 2006, we entered into a secured convertible debenture
transaction with Cornell Capital Partners, Taib Bank, B. S. C. and Certain
Wealth, Ltd. in the principal amount of $4,500,000. Pursuant to a Securities
Purchase Agreement, on April 24, 2006 EYI Industries received net proceeds
of $1,305,000, associated with the issuance of secured convertible debentures
in the principal amount of $1,500,000 and we will issue additional secured
convertible debentures in the principal amount of $1,500,000 two (2) business
days prior to filing the accompanying registration statement and we will
issue additional secured convertible debentures in the principal amount of
$1,500,000 two (2) business days prior to the accompanying registration
statement being declared effective by the Securities and Exchange Commission.
On June 8, 2006, we received net proceeds of $1,350,000, associated with
the issuance of the second tranche of secured convertible debentures in the
principal amount of $1,500,000. On June 20, 2006, we receive net proceeds
of $1,350,000, associated with the issuance of the third tranche of
secured convertible debentures in the principal amount of $1,500,000, in
the following amounts: $750,000 to Cornell Capital Partners, $416,667 to
TAIB Bank, B. S. C., and $333,333 to Certain Wealth, Ltd. The secured
convertible debentures are convertible at the holder's option any time up to
maturity at a conversion price equal to the lower of (i) $0.06 or (ii) 80%
of the lowest daily volume weighted average priceof our common stock for the
5 trading days immediately preceding the conversion date. The secured
convertible debentures are secured by all of EYI Industries' assets. The
secured convertible debentures accrue interest at a rate of 10%
per year and have a term of 3 years. In the event the secured convertible
debentures are redeemed, then EYI Industries will issue to the holders a
warrant to purchase 100,000 shares for every $100,000 redeemed at an
exercise price equal to 20% of the principal amount being redeemed. The
holders purchased the secured convertible debentures from EYI Industries
in a private placement on April 24, 2006. EYI Industries is registering
in this offering 615,663,401 shares of common stock underlying the secured
convertible debentures.
Pursuant to the terms of the Securities Purchase Agreement and the
issuance of our secured convertible debentures, on April 24, 2006 we issued
to Cornell Capital Partners seventeen (17) warrants to purchase up to an
aggregate 124,062,678 shares of our common stock at the discretion of Cornell
Capital Partners (collectively, the "Warrants") each for good and valuable
consideration. Pursuant to the terms of the Warrants, Cornell Capital
Partners is entitled to purchase from us: (1) 10,416,650 shares of our
common stock at $0.02 per share, (2) 13,888,866 shares of our common stock
at $0.03 per share, (3) 10,416,650 shares of our common stock at $0.04 per
share, (4) 8,333,320 shares of our common stock at $0.05 per share,
(5) 6,944,433 shares of our common stock at $0. 06 per share, (6)
5,952,371 shares of our common stock at $0.07 per share, (7) 11,250,000
shares of our common stock at $0.08 per share, (8) 10,000,000 shares of our
common stock at $0.09 per share,(9) 19,000,000 shares of our common stock
at $0.10 per share, (10) 8,181,818 shares of our common stock at $0.1 per
share, (11) 7,500,000 shares of our common stock at $0.12 per share, (12)
3,333,333 shares of our common stock at $0.15 per share, (13) 2,500,000
shares of our common stock at $0.20 per share, (14) 2,000,000 shares of
our common stock at $0.25 per share, (15) 1,666,666 shares of our common
stock at $0.30 per share, (16) 1,428,571 shares of our common stock
at,$0.35 per share and (17) 1,250,000 shares of our common stock at
$0.40 per share upon surrender of the Warrants (or as subsequently
adjusted pursuant to the terms of each Warrant). Each Warrant has
"piggy back" registration rights and shall expire five (5)
years from the date of issuance, on or about April 24, 2011.
Disclosure Of SEC Position On Indemnification For Securities Act Liabilities
Our Articles of Incorporation, as well as our By-Laws provide for
the indemnification of directors, officers, employees and agents of the
corporation to the fullest extent provided by the corporate laws of the
State of Nevada, as well as is described in the Articles of Incorporation
and the By-Laws. These sections generally provide that the Company may
indemnify any person who was or is a party to any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative
or investigative except for an action by or in right of the corporation by
reason of the fact that he or she is or was a director, officer, employee
or agent of the corporation. Generally, no indemnification may be made where
the person has been determined to be negligent or guilty of misconduct
in the performance of his or her duties to the Company.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or controlling
persons of EYI Industries,pursuant to the foregoing provisions, or otherwise,
we have been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in
the Securities Act of 1933, and is, therefore, unenforceable.
Anti-Takeover Effects Of Provisions Of The Articles Of Incorporation
Authorized And Unissued Stock
The authorized but unissued shares of our common and preferred stock
are available for future issuance without our shareholders' approval. These
additional shares may be utilized for a variety of corporate purposes including
but not limited to future public or direct offerings to raise additional
capital, corporate acquisitions and employee incentive plans.
EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid by EYI Industries,
as well as certain other compensation paid or accrued, during the fiscal
years ended December 31, 2005, 2004 and 2003 to EYI Industries' named
executive officers. No restricted stock awards, long-term incentive plan
payouts or other types of compensation, other than the compensation
identified in the chart below, were paid to these executive officers during
these fiscal years.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation All
Name TitleYearSalaryBonusOther Annual
Compensation Restricted Options/LTIP payouts Other
Stock Awarded SARs ($) Compensation
Jay Sargeant(1)
President,
CEO and
Director
2005 -- -- $240,000 (2) -- -- -- 1,500,000 -- --
2004 -- -- $240,000 (2) -- -- -- 4,200,000 -- --
2003 -- -- $240,000 (2) -- -- -- -- -- --
Dori O'Neill(3)
Chief
Operations
Officer,
Secretary,
Treasurer
And Director2005 -- -- $240,000 (4) -- -- -- 1,500,000 -- --
2004 -- -- $240,000 (4) -- -- -- 7,400,000 -- --
2003 -- -- $180,000 (4) -- -- -- -- -- --
Maurizio 2005 N/A N/A N/A N/A N/A N/A N/A N/A --
Forigo (5) 2004 N/A N/A N/A N/A N/A N/A N/A N/A --
Former 2003 -- -- -- -- -- -- -- -- --
President
and CEO
Notes:
(1) Mr. Sargeant was appointed as our President and Chief Executive
Officer on December 31, 2003.
(2) We paid management consulting fees to Flaming Gorge, Inc., a
private company controlled by Mr. Sargeant, our President, CEO and
director, for his management of the operation of the company and our
subsidiaries, reporting to the Board of Directors, and appointing
managers to oversee certain departments. Mr. Sargeant was compensated
at the rate of $20,000 per month, on a month to month basis commencing
November 5, 2002. The agreement was for an initial five-year term,
which is automatically renewable upon expiry of the
five-year period on a year-to-year basis. Effective January 1, 2004,
we extended the consulting agreement of Mr. Sargeant for an additional
five years.
(3) Mr. O'Neill was appointed as our Executive Vice-President, Chief
Operations Officer,Secretary, Treasurer on December 31, 2003.
(4) We paid management consulting fees to O'Neill Enterprises Inc.,
a private company controlled by Mr. O'Neill, our Executive
Vice-President, COO, Secretary, Treasurerand director, for the management
of day to day activities andoperations of the company and our subsidiaries.
Mr. O'Neill was compensated at the rate of $15,000 per month,on a month
to month basis commencing November 5, 2002. The agreement was for an
initial five-year term, which is automatically renewable upon expiry of
the five-year period on a year-to-year basis. Effective January 1, 2004,
we increased the consulting fees payable to Mr. O'Neill to $20,000 per
month,and extended the term by five years.
(5) Mr. Forigo resigned as our President and CEO on Demember 31, 2003.
The following table contains information regarding options granted
during the year ended December 31, 2005 to EYI Industries' named
executive officers.
OPTION/SAR GRANTS TABLE
Name No. Of Securities Underlying% Total Options/SARs Exercise or Base Expiration
Options/SARS Granted (#) Granted to Employees Price Date
in year ended December ($ perShare)
31 2004%
Jay Sargeant 1,500,000 20% 0.06 02/09/07
President, Chief
Executive Officer
and Director
Dori O'Neill 1,500,000 20% 0.06 02/09/07
Chief Operations
Officer,
Secretary,
Treasurer
and Director
The following table contains information regarding options exercised
in the year ended December 31, 2005,and the number of shares of common
stock underlying options held as of December 31, 2005, by EYI Industries'
named executive officers.
AGGREGATED OPTIONS/SAR EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTIONS/SAR VALUES
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options/SARs In-the-Money Options/SARs
Acquired on Value at FY-End at FY-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable Unexcersiable Exercisable Unexercsiable
Jay Sargeant
President,
Chief Executive
Officer and
Director -- $-- 2,999,750 -- -- --
Dori O'Neill
Chief Operations Officer, Secretary,
Treasurer and Director
-- $-- 2,500,000 -- -- --
Rajesh Raniga
Chief Financial -- $-- 450,000 -- -- --
Officer
Security Ownership Of Management
We are not aware of any arrangement that might result in a change in control
in the future.
Securities Authorized For Issuance Under Equity Compensation Plans
The following table sets forth certain information concerning all
equity compensation plans previously approved by stockholders and
all previous equity compensation plans not previously approved by
stockholders, as of the most recently completed fiscal year. On
February 17, 2004, our board of directors approved the Stock
Compensation Program (the "Plan"). The Plan became effective on
March 30, 2004. Under the Plan, options to purchase up to 25,000,000
shares of our common stock may be granted to our employees,
officers, directors, and eligible consultants of our company. The
Plan provides that the option price be the fair market value of
the stock at the date of grant as determined by the Board of
Directors. Options granted become exercisable and expire as
determined by the Board of Directors.
EQUITY COMPENSATION PLAN INFORMATION AS AT JULY 20, 2006
Plan Category Number of securities Weighted-average Number of securities
to be issued upon exercise price of outstanding remaining available for
exercise of outstanding options, warrants and rights issuance under equity
options, warrants and (b) compensation plans
rights (a) (excluding securities
reflected in column (a)
(c)
Equity Compensation Nil N/A N/A
Plans approved by
security holders
Equity Compensation 16,252,390 $0.14 per share 211,000
Plans not approved
by security holders
Total 16,252,390 $0.14 per share 211,000
Stock Compensation Program
On February 17, 2004, we established our Stock Compensation Program.
The purpose of the Plan is to advance the interests of our company and
our stockholders by strengthening our ability to obtain and retain
the services of the types of employees, consultants, officers and
directors who will contribute to our long term success and to provide
incentives which are linked directly to increases in stock value which
will inure to the benefit of all our stockholders. The Plan is administered
by our Board of Directors or by a committee of two or more non-employee
directors appointed by the Board of Directors (the "Administrator").
Subject to the provisions of the Plan, the Administrator has full and
final authority to grant the awards of stock options and to determine
the terms and conditions of the awards and the number of shares to
be issued pursuant thereto. Options granted under the Plan may be either
"incentive stock options," which qualify for special tax treatment under
the Internal Revenue Code of 1986, as amended, (the "Code"), nonqualified
stock options or restricted shares.
All of our employees and members of our Board of Directors are
eligible to be granted options. Individuals who have rendered or are
expected to render advisory or consulting services to us are also
eligible to receive options. The maximum number of shares of our
common stock with respect to which options or rights may be granted
under the Plan to any participant is 25,000,000 shares, subject to
certain adjustments to prevent dilution.
The exact terms of the option granted are contained in an
option agreement between us and theperson to whom such option is
granted. Eligible employees are not required to pay anything to
receive options. The exercise price for incentive stock options
must be no less than 70% of the fair market value of the common
stock on the date of grant. The exercise price for nonqualified
stock options is determined by the Administrator in its sole and
complete discretion. An option holder may exercise options from
time to time, subject to vesting. Options will vest immediately
upon death or disability of a participant and upon certain change
of control events.
The Administrator may amend the Plan at any time and in any
manner, subject to the following: (1) no recipient of any award may,
without his or her consent, be deprived thereof or of any of his
or her rights thereunder or with respect thereto as a result of
such amendment or termination; and (2) any outstanding incentive
stock option that is modified, extended, renewed, or otherwise
altered must be treated in accordance with Section 424(h) of the Code.
The Plan terminates on March 30, 2014 unless sooner
terminated by action of the Board of Directors. All awards granted
under the Plan expire ten years from the date of grant, or such shorter
period as is determined by the Administrator. No option is exercisable
by any person after such expiration. If an award expires,
terminates or is canceled, the shares of our common stock not purchased
thereunder may again be available for issuance under the Plan.
We filed a registration statement under the Securities Act of
1933, as amended, to register the 25,000,000 shares of our common
stock reserved for issuance under the Plan on March 30, 2004.
Repricing of Options in 2004
During the year ended December 31, 2004, our board of directors
approved the re-pricing of: options to purchase 3,200,000 shares of
our common stock granted in favor of Mr. Sargeant, our President and Chief
Executive Officer on April 30, 2004 at a price of $0.19; and (ii) options
to purchase 3,200,000 shares of our common stock granted in favor of
Mr. O'Neill, our Chief Operating Officer on April 30, 2004 at a price
of $0.19. The option price was reduced to $0.08 per share in order that
the exercise price was more reflective of the then current trading price
of our common stock and in order to provide a continuing performance
incentive. The 6,400,000 options were cancelled on December 27, 2004
and 3,200,000 options were issued on December 27, 2004 to each of
Mr. O'Neill and Mr. Sargeant to replace their cancelled options. The
options have an $0.08 exercise price and expire December 27, 2006.
On February 9, 2005 the Company cancelled 3,200,000 options for both
Mr. O'Neill and Mr. Sargeant. On the same date the Company issued
1,500,000 options at $0.06 to both Mr. O'Neill and Mr. Sargeant.
Compensation Arrangements
Compensation Of Directors
All of our directors receive reimbursement for out-of-pocket
expenses for attending Board of Directors meetings. From time to time
we may engage certain members of the Board of Directors to perform
services on behalf of the Company and may compensate such persons for
the performance of those services.
In November 2002, we entered into a consulting agreement with
Flaming Gorge, Inc., a company controlled by Jay Sargeant, our President,
Chief Executive Officer and a member of our Board of Directors. Pursuant
to this agreement, we agreed to pay Flaming Gorge, Inc. $20,000 per month in
consideration of management consulting services provided by Mr. Sargeant to
us. The agreement automatically renews on a year-to-year basis at the end
of the initial five (5) year term. Effective January 1, 2004, we extended
the term of the agreement for five years.
In November 2002, we entered into a consulting agreement with O'Neill
Enterprises, Inc.,a company controlled by Dori O'Neill, our Executive
Vice President, Chief Operations Officer,Secretary, Treasurer and a member
of our Board of Directors. Pursuant to the agreement, we agreed to pay
$15,000 per month in consideration of management consulting services
provided by Mr. O'Neill to us. This agreement automatically renews on
a year-to-year basis at the end of the initial five (5) year term.
Effective January 1, 2004, we increased the consulting fees payable to
O'Neill Enterprises, Inc., to $20,000 per month for management consulting
services provided by Mr. O'Neill and extended the term for five years.
Long-Term Incentive Plans
We do not have any long-term incentive plans, pension plans, or similar
compensatory plans for our directors or executive officers.
PRINCIPAL HOLDERS OF VOTING SECURITIES
Security Ownership Of Certain Beneficial Owners And Management
The following table sets forth information about the beneficial
ownership of our common stock as of July 20, 2006 by each person who we
know is the beneficial owner of more than 5% of the outstanding shares of
common stock each of our directors or those nominated to be directors,
and executive officers, and all of our directors and executive officers
as a group.
Title of Class Name and Address Amount and Nature Percentage
of Beneficial Owner of Beneficial Ownership of Common Stock(1)
Directors and Executive Officers
Common Stock Jay Sargeant 44,958,896 16.67%
3324 Military Avenue Direct
Los Angeles,California and Indirect(2)
Common Stock Dori O'Neill 12,363,361 4.58%
6520 Walker Avenue Direct
Burnaby,British Columbia and Indirect (3)
Canada
Common Stock Rajesh Raniga 700,000 shares *
13357-56 Avenue Direct
Surrey, British Columbia and Indirect(4)
Canada
Common Stock All Directors and Executive
Officers as a Group 57,672,257 shares
(Three Persons) Direct and Indirect 21.39%
Holders of More than 5% of Our Common Stock
Common Stock Barry Larose 22,067,084 shares(5) 8.18%
20080 84th Avenue Indirect
Langley, British Columbia
Canada
Common Stock Jay Sargeant 44,958,896 16.67%
3324 Military Avenue Direct and Indirect(2)
Los Angeles, California
Common Stock Dori O'Neill 12,363,361 4.58%
6520 Walker Avenue Direct and Indirect (3)
Burnaby, British Columbia
Canada
Notes
* Less than 1%.
(1) Applicable percentage of ownership is based on 269,593,647
shares of common stock outstanding as of July 20, 2006 together
with securities exercisable or convertible into shares of common
ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to securities.
Shares of common stock subject to securities exercisable or convertible
into shares of common stock that are currently exercisable or exercisable
by the person holding such options for the purpose of computing the
percentage of ownership of such person, but are not treated as
outstanding for the purpose of computing the percentage ownership
of any other person.
(2) The shares are held as follows: (i) 146,419 shares are held by Mr.
Jay Sargeant (ii)50,000 shares are held by Northern Colorado, Inc., a
company controlled by Mr. Sargeant;(iii) 42,462,727 shares are held
by Viper Network,Inc., a company controlled by Mr. Sargeant; (iv)
2,299,750 shares which may be acquired by Mr. Sargeant on exercise
of incentive stock options within 60 days of July 20, 2006.
(3) The shares are held as follows: 2,454,500 shares of our common stock
are held by Dori O'Neill directly, 7,308,861 shares are held by O'Neill
Enterprises Inc., a company controlled by Mr. O'Neill and 2,500,000 shares
may be acquired by Mr. O'Neill on exercise of incentive stock options
within 60 days of July 20, 2006.
(4) Consists of 250,000 shares held directly by Mr. Raniga and 100,000
shares which may be acquired by Mr. Raniga on exercise of incentive
stock options within 60 days of July 20, 2006.
(5) Barry LaRose indirectly holds 22,067,084 shares which are currently
held in trust.
PRINCIPAL ACCOUNTANT FEEES AND SERVICES
Audit Fees
The aggregate fees billed for the two most recently completed
fiscal years ended December 31, 2005 and 2004 for professional services
rendered by the principal accountant for the audit of the Corporation's
annual financial statements and review of the financial statements
included in our Quarterly Reports on Form 10-QSB, and services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for these fiscal periods, were
as follows:
Year Ended
Year Ended
December 31, December 31,
2005 2004
Audited Related Fees
$ 56,664
$ 106,500
Tax Fees
5,823 0
All Other Fees
1,899
0
Total
$ 64,386
$ 106,500
OTHER MATTERS TO BE ACTED UPON AT THE SPECIAL MEETING OF STOCKHOLDERS
The management of EYI knows of no other matters to be
presented at the Special Meeting. Should any matter requiring a
vote of the stockholders other than those listed in this Proxy
Statement arise at the meeting, the persons named in the proxy
will vote the proxies in accordance with their best judgment.
ADDITIONAL INFORMATION
Proxy Solicitation Costs. EYI is soliciting the enclosed
proxies. The cost of soliciting proxies in the enclosed form will
be borne by EYI. Officers and regular employees of EYI may, but
without compensation other than their regular compensation,
solicit proxies by further mailing or personal conversations,
or by telephone, telex, facsimile or electronic means. EYI will,
upon request, reimburse brokerage firms for their reasonable
expenses in forwarding solicitation materials to the beneficial
owners of stock.
Incorporation by Reference. Certain financial and other
information required pursuant to Item 13 of the Proxy Rules is
incorporated by reference to EYI's Annual Report on Form 10-KSB
for the year ended December 31, 2005, which are being delivered
to the shareholders with this proxy statement. In order to
facilitate compliance with Rule 2-02(a) of Regulation S-X,
one copy of the definitive proxy statement will include a manually
signed copy of the accountant's report.
July 20, 2006
/s/ Jay Sargeant
Burnaby, British Columbia
President, CEO and Director
APPENDIX A
REVOCABLE PROXY
EYI INDUSTRIES, INC.
The undersigned hereby appoints JAY SARGEANT and DORI O'NEILL,
or each of them individually,with full power of substitution, to
act as proxy and to represent the undersigned at the 2006
Annual Meeting of shareholders and to vote all shares of common
stock of EYI Industries, Inc. which the undersigned is entitled
to vote if personally present at said meeting to be held at THE OFFICES
OF KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP, 10100 SANTA MONICA
BOULEVARD, SEVENTH FLOOR, LOS ANGELES,CALIFORNIA 90062, on
August 22, 2006, beginning at 9:30 a.m., Pacific Daylight Time,
and at all postponements or adjournments thereof upon all business
as may properly come before the meeting with all the powers the
undersigned would possess if then and there personally present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS
PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
OF THE NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1. PROXIES ARE
GRANTED THE DISCRETION TO VOTE UPON ALL OTHER MATTERS THAT MAY
PROPERLY BE BROUGHT BEFORE THE MEETING OR ANY POSTPONEMENT OR
ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERDSIGNED. IF NO DIRECTION IS MADE,
THE SHARES WILL BE VOTED "FOR" PROPOSAL ONE. SUCH PROXY ALSO
DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH REPSECT TO
ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
PLEASE RETAIN THIS ADMISSION TICKET
FOR THE SPECIAL MEETING OF STOCKHOLDERS OF
EYI INDUSTRIES, INC.
AT THE OFFICES OF KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP
10100 SANTA MONICA BOULEVARD, SEVENTH FLOOR
LOS ANGELES, CALIFORNIA 90062
AUGUST 22, 2006
9:30 A.M., PACIFIC DAYLIGHT TIME
PRESENT THIS TICKET
TO A EYI INDUSTRIES, INC. REPRESENTATIVE
AT THE ENTRANCE TO THE MEETING ROOM
Vote By Mail
Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided or return it to
EYI Industries, Inc., c/o Jay Sargeant, 7865 Edmonds Street,
Burnaby, British Columbia, Canada V3N 1B9.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT
THIS MEETING, WHETHER OR NOT YOU ATTEND THE MEETING
IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED,
WE URGE YOU TO COMPLETE AND MAIL THE PROXY CARD BELOW.
IF YOU PLAN TO ATTEND THE SPECIAL MEETING OF STOCKHOLDERS,
PLEASE MARK THE APPROPRIATE BOX ON
THE PROXY CARD BELOW.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
EYI INDUSTRIES, INC.
Vote on Proposals
1. To approve an amendment to EYI's Articles of
Incorporation to increase the number of shares of authorized
common stock, par value $0.001, from 1,000,000,000 to
3,000,000,000 shares.
FOR
AGAINST
ABSTAIN
2. To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE
OF SPECIAL MEETING AND PROXY STATEMENT OF THE COMPANY.
Please sign your name exactly as it appears on your stock
certificate. When signing as attorney-in-fact,executor,
administrator, trustee or guardian, please add your title as
such. When signing as joint tenants, all parties in the joint
tenancy must sign. If signer is a corporation, please sign in
full corporate name by duly authorized officer or officers
and affix the corporate seal.
Please indicate if you plant to attending this meeting:
Yes
No
Signature
Date
Signature (Joint Owners)
Date