10-K/A 1 mti10kamend2008vfinal.txt FORM 10-KA U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2008 COMMISSION FILE NUMBER 000-49805 MACHINETALKER, INC. (Exact name of registrant as specified in its charter) DELAWARE 01-05922991 ----------------------- ------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 513 DE LA VINA STREET, SANTA BARBARA, CALIFORNIA 93101 ---------------------------------------------- (Address of principal executive offices) (Zip Code) (805) 957-1680 ---------------------------------------------- Registrant's telephone number, including area code SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED -------------------------- ------------------------ COMMON STOCK OTC Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes |_| No |X| Indicate by check mark if the registrant is not required to filed reports pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [___] Accelerated filer [___] Non-accelerated filer [___] Smaller reporting company [_X_] (Do not check if a smaller reporting company) Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| The aggregate market value of voting stock held by non-affiliates of the registrant was approximately $1,025,725 as of March 31, 2009 (computed by reference to the last sale price of a share of the registrant's Common Stock on that date as reported by OTC Bulletin Board). There were 181,976,793 shares outstanding of the registrant's Common Stock as of May 31, 2009. TABLE OF CONTENTS
PART III ITEM 10 Directors, Executive Officers, and Corporate Governance 1 ITEM 11 Executive Compensation 4 ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related 5 Stockholder Matters ITEM 15 Exhibits, Financial Statement Schedules 6 SIGNATURES 7
PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE The following table lists the executive officers and directors of the Company as of April 30, 2009: NAME AGE POSITION ------------------- --- ---------------------------------------- Roland F. Bryan (1) 74 President, Chief Executive Officer, Chief Financial Officer, Secretary, and Chairman of the Board of Directors Gerald A. Nadler 67 Chief Scientist (Key Employee) Mark J. Richardson 55 Director --------------------- (1) Member of Audit Committee. Mr. Bryan is not an independent director and he may not qualify as a financial expert for the purposes of satisfying the requirements of the Securities and Exchange Commission that audit committees be comprised of independent directors, at least one of whom is a financial expert. Management believes that the Company's small size and limited resources has so far hindered it from attracting a third director who can serve on the Audit Committee as an independent financial expert. Nevertheless, the Company will continue to seek such a candidate. ROLAND F. BRYAN has been the President, Chief Executive Officer, and Chairman of the Board of Directors of MTI since our inception in January 2002, the Chief Financial Officer of MTI since November 2003, and the Secretary of MTI since May 2006. For the six years prior to founding MTI, Mr. Bryan was self employed as an independent advisor to several high-tech companies on corporate organization, management, marketing and product development. Mr. Bryan's professional background is in the areas computer science research and process control through computer automation. During the last 25 years he has built up and sold several high-tech companies in the fields of telecommunications networking, military computer systems and commercial equipment for network access. In 1974, he founded Associated Computer Consultants, Inc. ("ACC"), a company that implemented interconnections to the first packet network for many United States government agencies. In 1983 the name of the company was changed to Advanced Computer Communications, Inc. and continued to produce networking products for both military and commercial applications. ACC made the Inc. 500 List of Fastest Growing Companies in 1984. In 1991 the company was split into two separate businesses, one to concentrate on military products, the other to concentrate on commercial products. ACC was acquired by Ericsson in 1998 for $265 million. In September 1994, WIRED MAGAZINE honored Mr. Bryan and 18 others, as the "Creators of the Internet." GERALD A. NADLER has been our Chief Scientist and a key employee of MTI since our inception in January 2002. From 1998 to January 2002, Mr. Nadler was self employed as an independent advisor consulting on designs of networking products for Cratos Networks, Nortel/Aptis, Lucent/Ascend, Openroute, Shiva, and Data General. In 1992, Mr. Nadler founded and from 1992 to 1995 was the President of Elettra Systems, a data communications company. From 1987 to 1991, he designed the spread spectrum wireless meter-reading system for Metricom. In 1985, he founded and from 1985 to 1987 was the President of Token Automation, a data communications company. In 1979, he founded and from 1979 to 1985 was the President of Distributed Computer Systems, a computer and data communications company. From 1976 to 1979, he was a computer architect at Wang Laboratories. MARK J. RICHARDSON has been a director of MTI since October 2008. Mr. Richardson has been a securities lawyer since he graduated from the University of Michigan Law School in 1978. He practiced as an associate and partner in large law firms until 1993, when he established his own practice under the name Richardson & Associates. He has been the principal securities counsel on a variety of equity and debt placements for corporations, partnerships, and real estate companies. His practice includes public and private offerings, venture capital placements, debt restructuring, compliance with federal and state securities laws, representation of publicly traded companies, NASDAQ filings, corporate law, partnerships, joint ventures, mergers, asset acquisitions, and stock purchase agreements. As a partner in a major international law firm in the 1980's, Mr. Richardson participated in the leveraged buyout and recapitalization of a well known producer of animated programming for children, financed by Prudential Insurance and Bear Stearns, Inc. He was also instrumental in -1- restructuring the public debentures of a real estate company without resorting to a bankruptcy proceeding. From 1986 to 1993 Mr. Richardson was a contributing author to State Limited Partnerships Laws - California Practice Guide, Prentice Hall Law and Business. Prior to receiving his juris doctor degree cum laude from the University of Michigan Law School in 1978, Mr. Richardson received a bachelor of science degree summa cum laude in Resource Economics from the University of Michigan School of Natural Resources in 1975, where he earned the Bankstrom Prize for academic excellence and achieved Phi Beta Kappa honors. Mr. Richardson is an active member of the Los Angeles County and California State Bar Associations, including the Section on Corporations, Business and Finance and the Section on Real Estate. Richardson & Associates is outside corporate legal counsel for the Company and certain of its affiliates. LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS Under Delaware General Corporation Law and our Articles of Incorporation, our directors will have no personal liability to us or our stockholders for monetary damages incurred as the result of the breach or alleged breach by a director of his "duty of care." This provision does not apply to the directors' (i) acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (iii) approval of any transaction from which a director derives an improper personal benefit, (iv) acts or omissions that show a reckless disregard for the director's duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of serious injury to the corporation or its shareholders, (v) acts or omissions that constituted an unexcused pattern of inattention that amounts to an abdication of the director's duty to the corporation or its shareholders, or (vi) approval of an unlawful dividend, distribution, stock repurchase or redemption. This provision would generally absolve directors of personal liability for negligence in the performance of duties, including gross negligence. The effect of this provision in our Articles of Incorporation is to eliminate the rights of MTI and our stockholders (through stockholder's derivative suits on behalf of MTI) to recover monetary damages against a director for breach of his fiduciary duty of care as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (i) through (vi) above. This provision does not limit nor eliminate the rights of MTI or any stockholder to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director's duty of care. In addition, our Articles of Incorporation provide that if Delaware law is amended to authorize the future elimination or limitation of the liability of a director, then the liability of the directors will be eliminated or limited to the fullest extent permitted by the law, as amended. Delaware General Corporation Law grants corporations the right to indemnify their directors, officers, employees and agents in accordance with applicable law. Our Bylaws provide for indemnification of such persons to the full extent allowable under applicable law. These provisions will not alter the liability of the directors under federal securities laws. We intend to enter into agreements to indemnify our directors and officers, in addition to the indemnification provided for in our Bylaws. These agreements, among other things, indemnify our directors and officers for certain expenses (including attorneys' fees), judgments, fines, and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of MTI, arising out of such person's services as a director or officer of MTI, any subsidiary of MTI or any other company or enterprise to which the person provides services at the request of MTI. We believe that these provisions and agreements are necessary to attract and retain qualified directors and officers. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling MTI pursuant to the foregoing provisions, MTI has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable. BOARD COMMITTEES The Board of Directors has appointed an Audit Committee. As of April 30, 2009, the sole member of the Audit Committee is Roland Bryan, who may not be considered to be independent as defined in Rule 4200 of the National Association of Securities Dealers' listing standards. The Board of Directors has adopted a -2- written charter of the Audit Committee. The Audit Committee is authorized by the Board of Directors to review, with our independent accountants, the annual financial statements of MTI prior to publication, and to review the work of, and approve non-audit services preformed by, such independent accountants. The Audit Committee will make annual recommendations to the Board for the appointment of independent public accountants for the ensuing year. The Audit Committee will also review the effectiveness of the financial and accounting functions and the organization, operations and management of MTI. The Audit Committee was formed on February 8, 2005. The Audit Committee held one meeting during fiscal year ended December 31, 2008. As of April 30, 2009, we have not yet appointed a Compensation Committee. REPORT OF THE AUDIT COMMITTEE Our Audit Committee has reviewed and discussed our audited financial statements for the fiscal year ended December 31, 2008 with senior management. The Audit Committee has also discussed with HJ Associates & Consultants, LLP, Certified Public Accountants ("HJ"), our independent auditors, the matters required to be discussed by the statement on Auditing Standards No. 61 (Communication with Audit Committees) and received the written disclosures and the letter from HJ required by Independence Standards Board Standard No. 1 (Independence Discussion with Audit Committees). The Audit Committee has discussed with HJ the independence of HJ as our auditors. Finally, in considering whether the independent auditors provision of non-audit services to us is compatible with the auditors' independence for HJ, our Audit Committee has recommended to the Board of Directors that our audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 for filing with the United States Securities and Exchange Commission. Our Audit Committee did not submit a formal report regarding its findings. AUDIT COMMITTEE ROLAND BRYAN Notwithstanding anything to the contrary set forth in any of our previous or future filings under the United States Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate this report in future filings with the Securities and Exchange Commission, in whole or in part, the foregoing report shall not be deemed to be incorporated by reference into any such filing. CODE OF CONDUCT We have adopted a Code of Conduct that applies to all of our directors, officers and employees. The text of the Code of Conduct has been posted on MTI's Internet website and can be viewed at www.machinetalker.com. Any waiver of the provisions of the Code of Conduct for executive officers and directors may be made only by the Audit Committee and, in the case of a waiver for members of the Audit Committee, by the Board of Directors. Any such waivers will be promptly disclosed to our shareholders. COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT Section 16(a) of the Exchange Act requires our officers and directors, and certain persons who own more than 10% of a registered class of our equity securities (collectively, "Reporting Persons"), to file reports of ownership and changes in ownership ("Section 16 Reports") with the Securities and Exchange Commission (the "SEC"). Reporting Persons are required by the SEC to furnish us with copies of all Section 16 Reports they file. Based solely on its review of the copies of such Section 16 Reports received by it, or written representations received from certain Reporting Persons, all Section 16(a) filing requirements applicable to our Reporting Persons during and with respect to the fiscal year ended December 31, 2008 have been complied with on a timely basis. -3- ITEM 11. EXECUTIVE COMPENSATION EXECUTIVE OFFICER COMPENSATION The following table sets forth the total compensation paid in all forms to the executive officers and directors of the Company during the periods indicated: SUMMARY COMPENSATION TABLE
---------------------- ------- ----------- -------- --------- ------------- -------------- --------------- ----------- NON-EQUITY NON-QUALIFIED NAME AND INCENTIVE DEFERRED PRINCIPAL POSITION OPTION PLAN COMPENSATION ALL OTHER (1) YEAR SALARY BONUS AWARDS COMPENSATION EARNINGS COMPENSATION TOTAL ---------------------- ------ ----------- -------- --------- ------------- -------------- --------------- ----------- Roland Bryan, Chief 2008 $120,000 (1) 0 0 0 0 0 $120,000(1) Executive Officer 2007 $120,000 0 0 0 0 0 $120,000 Executive Officers 2008 $120,000 0 0 0 0 0 $120,000 as a Group 2007 $120,000 0 0 0 0 0 $120,000 ------------------------- (1) Mr. Bryan deferred and accrued the entire amount of his salary in 2008.
EMPLOYMENT AGREEMENTS The Company has not entered into any employment agreements with its executive officers to date. The Company may enter into employment agreements with them in the future. OUTSTANDING EQUITY AWARDS None of the Company's executive officers received any equity awards during the fiscal year ended December 31, 2008. DIRECTOR COMPENSATION The following table summarizes the compensation paid or accrued by us for the year ended December 31, 2008 to MTI's directors who are not also executive officers of the Company and who were serving as directors of MTI on December 31, 2008. No other stock or option awards for directors were outstanding on December 31, 2008. DIRECTOR COMPENSATION
---------------------------------------------------------------------------------------------------------------------- FEES EARNED NON-EQUITY ALL OTHER OR PAID IN STOCK OPTION INCENTIVE PLAN COMPENSATION NAME CASH AWARDS ($) AWARDS ($) COMPENSATION ($) TOTAL ($) ---------------------------------------------------------------------------------------------------------------------- Mark J. Richardson, - 0 - $560 (1) - - 0 - - 0 - - 0 - $ 560 Director -------------------------
(1) The Company issued 70,000 shares of common stock to Mr. Richardson for his services as a director during the year ended December 31, 2008. The valuation of the award was based upon the fair market value on the closing price of the Company's common stock as quoted on the OTC Bulletin Board on the date the shares were issued. This value per share is presented in the Statement of Shareholder's Deficit included in the Company's financial statements in Item 8 of this Report. -4- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth the names of our executive officers and directors and all persons known by us to beneficially own 5% or more of the issued and outstanding common stock of MachineTalker at April 30, 2009. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or become exercisable within 60 days of April 30, 2009 are deemed outstanding even if they have not actually been exercised. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. The percentage ownership of each beneficial owner is based on 85,086,699 outstanding shares of common stock (on a post one-for-five reverse split basis). Except as otherwise listed below, the address of each person is c/o MachineTalker, Inc., 513 De La Vina Street, Santa Barbara, California 93101. Except as indicated, each person listed below has sole voting and investment power with respect to the shares set forth opposite such person's name as of April 30, 2009 (post one-for-five reverse split).
NUMBER OF SHARES BENEFICIALLY NAME AND ADDRESS OF STOCKHOLDER OWNED (1)(2) PERCENTAGE OWNERSHIP ----------------------------------- ---------------------------------- ------------------------------------ ROLAND F. BRYAN(3) 42,373,429 49.80 CHRISTOPHER T. KLEVELAND (4) 4,450,000 5.23 MARK P. HARRIS(5) 4,450,000 5.23 MARK J. RICHARDSON 70,000 * 233 Wilshire Boulevard, Suite 820 Santa Monica, California 90401 UTEK CORPORATION 9,900,000 11.64 2109 E. Palm Avenue Tampa, FL 33605 All Current Executive Officers as 42,373,429 49.80 a Group All Current Directors who are not 70,000 * Executive Officers as a Group -----------------------------------
* Less than 0.1%. (1) Except as pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned. The total number of issued and outstanding shares and the total number of shares owned by each person does not include unexercised warrants and stock options, and is calculated as of February 28, 2009. (2) Roland F. Bryan is the President, Chief Executive Officer, and Chairman of the Board of Directors of MTI. The Bryan Family Trust owns 4,700,000 of these shares. Mr. Bryan holds an option to purchase 2,700,000 shares from Mr. Harris at $0.50 per share and an option to purchase 2,700,000 shares from Mr. Kleveland at $0.50 per share. In addition, Mr. Harris and Mr. Kleveland have agreed that Mr. Bryan has the right to vote the shares held under these option agreements. (3) Roland F. Bryan converted promissory notes payable to him by MTI in the aggregate outstanding principal amount of $347,000 into shares of the Company's common stock at the price of $0.01 per share for a total of 34,700,000 shares. In December 2008, to the benefit of the Company and its shareholders, Mr. Bryan cancelled a convertible note from MTI in the principal amount of $436,000, which was potentially convertible into 3,480,000 shares of common stock at $0.125 per share. The interest owed to Mr. Bryan on this cancelled note is $56,842 which remains on the balance sheet. (4) Christopher Kleveland is a former director and former Vice President of Operations of MTI. (5) Mark P. Harris is a former director of MTI. -5- ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) Exhibits
EXHIBIT DESCRIPTION ------- -------------------------------------------------------------------------------------------- 3.1 Certificate of Incorporation (1) 3.2 Amendments to Certificate of Incorporation (1) 3.3 Amendment to Certificate of Incorporation 3.4 Bylaws (1) 4.1 Specimen Certificate for Common Stock (1) 4.2 2002 Stock Option Plan (1) 4.3 Form of Incentive Stock Option Agreement (1) 4.4 Form of Non Qualified Stock Option Agreement (1) 4.5 Form of Lock-Up Agreement to be entered into by the Company with Wings Fund, Inc., Roland Bryan, Mark J. Richardson, and Chris Outwater, dated as of May 2, 2009 (6) 10.1 Lease Agreement by and between MachineTalker, Inc. and SecureCoin, Inc., dated August 20, 2003 (1) 10.2 Agreement No. CA-00062 by and between MachineTalker, Inc. and Kellogg, Brown & Root Services, Inc., dated December 20, 2004 (2) 10.3 Agreement by and between MachineTalker, Inc. and Science Applications International Corporation, dated July 1, 2004 (1) 10.4 Acquisition Agreement for Wideband Detection Technologies, Inc. dated July 20, 2007 (4) 10.5 Acquisition Agreement for Micro Wireless Technologies, Inc. dated December 28, 2007 (5) 10.6 Stock Purchase Agreement with Wings Fund, Inc., a Nevada corporation, and Pearl Innovations, LLC, a Nevada limited liability company, dated as of May 5, 2009 (6) 14.1 Code of Conduct (3) 31.1 Section 302 Certification 32.1 Section 906 Certification ---------------
(1) Incorporated by reference to the Form SB-2 Registration Statement filed with the Securities and Exchange Commission dated August 1, 2005. (2) Incorporated by reference to Amendment No. 4 to the Form SB-2 Registration Statement filed with the Securities and Exchange Commission dated November 2, 2005. (3) Incorporated by reference to the Form 10-KSB filed with the Securities and Exchange Commission dated April 14, 2007. (4) Incorporated by reference to the Form 8K filed with the Securities and Exchange Commission dated July 20, 2007. (5) Incorporated by reference to the Form 8K filed with the Securities and Exchange Commission dated January 3, 2008. (6) Incorporated by reference to the Form 8K filed with the Securities and Exchange Commission dated May 13, 2009. -6- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November 10, 2009 MACHINETALKER, INC. By: /s/ Roland Bryan -------------------------------------------- Roland Bryan, Chairman of the Board, Chief Executive Officer, President (Principal Executive Officer), and Chief Financial Officer (Chief Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Roland Bryan Dated: November 10, 2009 --------------------------------------------------- Roland Bryan, Chairman of the Board, Chief Executive Officer, President (Principal Executive Officer), and Chief Financial Officer (Chief Accounting Officer) By: /s/ Mark J. Richardson Dated: November 10, 2009 --------------------------------------------------- Mark J. Richardson, Director -7-