SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
KIWA BIO-TECH PRODUCTS GROUP CORPORATION
(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 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:
|_| 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:
KIWA BIO-TECH PRODUCTS GROUP CORPORATION
17700 Castleton Street, Suite 589
City of Industry, California 91748
April 29, 2005
Dear Stockholders:
You are cordially invited to attend the Kiwa Bio-Tech Products Group
Corporation Annual Meeting of Stockholders to be held on Friday, June 24, 2005,
at 10:00 a.m. local time at our executive office located at Room 516, Block A,
Tai Li Ming Yuan Building, Jia 1, Waiguanxie Street, Chaoyang District, Beijing,
P.R.C.
The matters to be acted upon are described in the accompanying Notice of
Annual Meeting and Proxy Statement. At the meeting, we will also report on Kiwa
Bio-Tech Products Group Corporation's operations and respond to any questions
you may have.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend, it is
important that your shares be represented. Please sign, date, and mail the
enclosed proxy card as soon as possible in the enclosed postage prepaid envelope
in order to ensure that your vote is counted. If you attend the meeting, you
will, of course, have the right to vote your shares in person.
Very truly yours,
/s/ Wei Li
---------------------------
Chief Executive Officer and
Chairman of the Board
KIWA BIO-TECH PRODUCTS GROUP CORPORATION
17700 Castleton Street, Suite 589
City of Industry, California 91748
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Friday, June 24, 2005
-------------------
To the Stockholders:
The Annual Meeting of the Stockholders of Kiwa Bio-Tech Products Group
Corporation, a Delaware corporation, will be held on Friday, June 24, 2005 at
our executive office located at Room 516, Block A, Tai Li Ming Yuan Building,
Jia 1, Waiguanxie Street, Chaoyang District, Beijing, P.R.C., at 10:00 a.m.
local time for the following purposes:
1. To elect five directors to serve until the Annual Meeting of Stockholders
for the 2005 fiscal year and until their respective successors are elected
and qualified;
2. To ratify the selection of Grobstein, Horwath & Company, LLP as the
Company's independent auditors for the fiscal year ending December 31,
2005; and
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only stockholders of record at the close of business on April 27, 2005
will be entitled to notice of, and to vote at, the annual meeting and any
adjournments thereof.
The Company's Proxy Statement is enclosed. Financial and other information
concerning the Company is contained in the enclosed Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2004.
By Order of the Board of Directors
/s/ James Nian Zhan
Secretary
City of Industry, California
April 29, 2005
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE URGE YOU TO DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT TO THE COMPANY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE. THIS WILL ENSURE THE
PRESENCE OF A QUORUM AT THE ANNUAL MEETING. GIVING THIS PROXY DOES NOT AFFECT
YOUR RIGHT TO REVOKE IT LATER OR VOTE YOUR SHARES IN PERSON IN THE EVENT THAT
YOU SHOULD ATTEND THE MEETING.
KIWA BIO-TECH PRODUCTS GROUP CORPORATION
17700 Castleton Street, Suite 589
City of Industry, California 91748
-------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
Friday, June 24, 2005
-------------------
This Proxy Statement is furnished by the Board of Directors of Kiwa
Bio-Tech Products Group Corporation, a Delaware corporation (the "Company"), to
the holders of common stock of the Company, in connection with the solicitation
of proxies by the Board of Directors for use at the Annual Meeting of
Stockholders of the Company for fiscal year 2005, to be held at 10:00 a.m. local
time on Friday, June 24, 2005, at our executive office located at Room 516,
Block A, Tai Li Ming Yuan Building, Jia 1, Waiguanxie Street, Chaoyang District,
Beijing, P.R.C.. These proxy materials were first mailed to stockholders on or
about May 16, 2005.
GENERAL
Company Background and Change of Control
We were originally incorporated in the State of Utah on June 14, 1933,
under the name Tintic Gold Mining Company, to perform mining operations in Utah.
On March 12, 2004, pursuant to an Agreement and Plan of Merger dated as of March
11, 2004 by and among Tintic Gold Mining Company, TTGM Acquisition Corporation,
a wholly-owned subsidiary of Tintic Gold Mining Company, and Kiwa Bio-Tech
Products Group Ltd., a British Virgin Islands international business company,
TTGM Acquisition Corporation merged with and into Kiwa Bio-Tech Products Group
Ltd (the "Tintic/Kiwa merger"). Each share of Kiwa Bio-Tech Products Group Ltd.
common stock was converted into 1.5445839 shares of Tintic Gold Mining Company
Common Stock in exchange for all of the outstanding Kiwa shares. Immediately
after the Tintic/Kiwa merger, Kiwa Bio-Tech Products Group Ltd. became Tintic
Gold Mining Company's wholly-owned subsidiary. The Tintic/Kiwa merger resulted
in a change of control of Tintic Gold Mining Company, with former Kiwa Bio-Tech
Products Group Ltd. stockholders owning approximately 89% of Tintic Gold Mining
Company on a fully diluted basis. Subsequent to the Tintic/Kiwa merger, Tintic
Gold Mining Company changed its name to Kiwa Bio-Tech Products Group
Corporation. On July 22, 2004, we reincorporated in the State of Delaware.
Annual Report
Our annual report, filed on form 10-KSB, for the fiscal year ended
December 31, 2004 is enclosed with this proxy statement.
Voting Securities
Only stockholders of record as of the close of business on April 27, 2005
will be entitled to vote at the meeting and any adjournment thereof. As of April
27, 2005, there were 49,135,930 shares of our common stock outstanding. Each
holder of shares of our common stock is entitled to one vote for each share of
stock held on the proposals presented in this proxy statement.
Voting of Proxies
All valid proxies received prior to the annual meeting will be voted. All
shares represented by a proxy will be voted, and where a stockholder specifies
by means of the proxy a choice with respect to any matter to be acted upon, the
shares will be voted in accordance with the specification so made.
In the absence of specific instructions, proxies will be voted by the
individuals named in the proxy "FOR" the election as directors of those five
nominees named in this proxy statement, "FOR" the proposal to ratify the
appointment of Grobstein, Horwath & Company, LLP as independent public
accountants for the Company, and in their discretion on all other matters that
may properly come before the annual meeting.
As indicated on the enclosed proxy card, with respect to the election of
directors, you may vote "For" all or some of the nominees or your vote may be
"Withheld" with respect to one or more of the nominees. For the proposal to
ratify the selection of the Company's independent public accountants, you may
vote "For," "Against" or "Abstain."
Votes Required for Approval of Proposals
The five director nominees receiving the greatest number of votes shall
elected to the Board of Directors, even though not receiving a majority of the
votes. The favorable vote of the holders of a majority of the shares of common
stock present in person or by proxy and entitled to vote thereon at the annual
meeting is required for the proposal to ratify the appointment of Grobstein,
Horwath & Company, LLP as the Company's independent auditors for the fiscal year
ending December 31, 2005.
For the purpose of determining the vote required for approval of matters
to be voted on at the annual meeting, shares held by stockholders who abstain
from voting on a matter will be treated as being "present" and "entitled to
vote" on the matter, and, therefore, an abstention (withholding a vote as to all
matters) has the same legal effect as a vote against the matter. However, in the
case of a broker non-vote or where a stockholder withholds authority from his
proxy to vote the proxy as to a particular matter, such shares will not be
treated as "present" or "entitled to vote" on the matter, and, therefore, a
broker non-vote or the withholding of a proxy's authority will have no effect on
the outcome of the vote on the matter, other than to affect the existence of a
quorom. A "broker non-vote" refers to shares of our common stock represented at
the annual meeting in person or by proxy by a broker or nominee where such
broker or nominee (1) has not received voting instructions on a particular
matter from the beneficial owners or persons entitled to vote and (2) does not
have discretionary voting power on such matter.
Quorum
Our Bylaws provide that a majority of all the shares of the stock entitled
to vote, whether present in person or represented by proxy, shall constitute a
quorum for the transaction of business at the meeting. Abstentions and broker
non-votes will be counted as present for purposes of determining the presence of
a quorum.
Revocability of Proxies
Any person giving a proxy in response to this solicitation has the power
to revoke it at any time before it is voted. Proxies may be revoked by any of
the following actions:
o delivering a written notice of revocation to our Corporate Secretary
at our principal executive office located at 17700 Castleton Street,
Suite 589, City of Industry, California 91748;
o delivering a properly executed proxy showing a later date to our
Corporate Secretary at our principal executive office located at
17700 Castleton Street, Suite 589, City of Industry, California
91748; or
o attending the meeting and voting in person (attendance at the
meeting will not, by itself, revoke a proxy).
Solicitation of Proxies
The cost of soliciting proxies will be borne by the Company. We will
solicit stockholders by mail through our regular employees, and will request
banks and brokers, and other custodians, nominees and fiduciaries, to solicit
their customers who have stock of the Company registered in the names of such
persons and will reimburse them for their reasonable, out-of-pocket costs. In
addition, we may use the services of our officers, directors, and others to
solicit proxies, personally or by telephone, without additional compensation.
2
MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
Five directors are to be elected at the annual meeting, to hold office
until the next annual meeting of stockholders and until their successors are
elected and qualified, or until their earlier resignation or removal. The
accompanying proxy will be voted in favor of the following persons to serve as
directors unless the stockholder indicates to the contrary on the proxy. We
expect that each of the nominees will be available for election, but if any of
them is not a candidate at the time the election occurs, it is intended that the
proxy will be voted for the election of another nominee to be designated by the
Board of Directors to fill any such vacancy. All of the director nominees are
currently directors of the Company.
Upon consummation of the Tintic/Kiwa merger on March 12, 2004, Wei Li was
appointed as Chief Executive Officer and Chairman of the Board of Directors, Da
chang Ju was appointed as a member of the Board of Directors and George
Christopulos resigned as Chief Executive Officer, President, Chief Financial
Officer and Chairman of the Board. On or about March 27, 2004, Jack Coombs and
Hugh Coltharp resigned from the Board of Directors and Lian jun Luo, James Nian
Zhan and Yun long Zhang were appointed as directors. To our knowledge, no
agreements exist among present and former controlling stockholders of the
Company or their associates with respect to the election of the members of our
Board of Directors or other matters, and no other agreements exist which might
result in a change of control of the Company.
The following persons have been nominated to be elected as directors at
the annual meeting:
Name Age Title
-------------------- ----- ---------------------------------------------------
Wei Li 43 Chief Executive Officer and Chairman of the Board
Lian jun Luo 34 Chief Financial Officer and Director
James Nian Zhan 40 Secretary and Director
Da chang Ju 64 Director
Yun long Zhang 41 Director
Wei Li became our Chief Executive Officer and Chairman of the Board on
March 12, 2004. Prior to the Tintic/Kiwa merger, Mr. Li was the acting Chief
Executive Officer of Kiwa Bio-Tech Products Group Ltd. since January 1, 2004.
Mr. Li founded Kiwa Bio-Tech Products Group Ltd. to capitalize on the growth of
the ag-biotechnology industry in China. Prior to founding Kiwa Bio-Tech Products
Group Ltd., Mr. Li founded China Star Investment Group ("China Star"), an entity
which provides integrated financing services and/or venture investments to
growth businesses in China. Mr. Li served as President of China Star from June
1993 to January 2004. In 1989, Mr. Li founded Xinhua International Market
Development Ltd., a company which engaged in investing in China's high tech,
pharmaceutical, medical device, media, entertainment and real estate industries.
Mr. Li holds a B.S. in finance from Hunan Finance and Economics University.
Lian jun Luo became our Chief Financial Officer on March 12, 2004, and one
of our directors on March 27, 2004. Mr. Luo served as the Chief Executive
Officer of Kiwa Bio-Tech Products Group Ltd. from October 2002 to December 2003.
From January 2002 to October 2002, Mr. Luo served as the Chief Financial Officer
of China Star. From August 2000 to December 2001, Mr. Luo served as manager of
Security Department and Assistant of President at Jilin HengFa Group Ltd., a
Chinese drug manufacturing company, responsible for the company's preparation
for an aborted IPO and for merger and acquisition activities. From May 1998 to
July 2000, Mr. Luo worked as manager of Investment Department and Associate
General Manager for Hongli Enterprise Ltd, a Chinese investment company on
merger and acquisition transactions. Mr. Luo obtained his law degree from China
University of Politics Science and Law in 1993. Mr. Luo is a certified public
accountant and lawyer in China.
James Nian Zhan became our Secretary on March 12, 2004, and one of our
directors on March 27, 2004. Mr. Zhan has 15 years of business experience in the
areas of financial management, investment banking, operations and information
systems, both in the United States and China, including experience with United
3
States public companies. Mr. Zhan most recently worked with Cornerstone Propane
L.P. (NYSE: CNO/OTC: CNPP), the 6th largest propane distributor in the United
States, from April 2002 to August 2004. From November 1999 to December 2001, Mr.
Zhan was Senior Analyst at RSM Equico, a United States investment banking firm
in mergers and acquisitions for middle-market companies, where he focused on
advising corporate clients on valuation, corporate restructuring and mergers &
acquisitions. Mr. Zhan holds an MBA degree from the Olin School of Business at
Washington University in St. Louis.
Da chang Ju became one of our directors on March 12, 2004. From 1987 to
1999, when he retired, Mr. Ju worked as General Manager of XinShen Company, an
investment firm in China. He was responsible for the company's daily operations
and investment decision making. He served as a member of Kiwa Bio-Tech Products
Group Ltd.'s Board of Directors since 2003 and a member of the Board of
Directors of China Star from 1999 to 2000. Mr. Ju holds a B.S. in mathematics
from Capital Normal University in Beijing, China.
Yun long Zhang became one of our directors on March 27, 2004. From May
2000 to present, Mr. Zhang has been the General Manager of China Star,
responsible for the group's daily operations. From 1994 to 2000, Mr. Zhang
served as the head of the Investment Department at China National Economic and
Systems Reform Research and Services Center, an economic reform think tank for
the central government. Mr. Zhang holds a degree in statistics.
The Board of Directors recommends that stockholders vote "FOR" the
nominees named in this proxy statement. The five individuals receiving the
greatest number of votes shall be deemed elected even if they do not receive a
majority vote.
DIRECTOR AND EXECUTIVE OFFICER INFORMATION
Executive Officers
Information with respect to Messrs. Wei Li, Lian jun Luo and James Nian
Zhan, our executive officers, is set forth above under "Proposal 1. Election of
Directors."
There is no arrangement or understanding between any of the directors or
officers of the Company and any other person pursuant to which any director or
officer was or is to be selected as a director or officer, and there is no
arrangement, plan or understanding as to whether non-management stockholders
will exercise their voting rights to continue to elect the current directors to
the Board of Directors. There are also no arrangements, agreements or
understandings between non-management stockholders that may directly or
indirectly participate in or influence the management of the Company's affairs.
The Board of Directors and its Committees
During 2004, our Board of Directors held 11 meetings. No member of our
Board of Directors attended fewer than 75% of the meetings. We currently do not
have a policy with respect to board members' attendance at annual meetings.
We do not have a standing audit, nominating or compensation committee. As
a small, development-stage company, we believe that all of our directors acting
together, as opposed to a subset of them acting by means of a committee, is the
most efficient and effective framework for us to perform the functions otherwise
associated with audit, nominating and compensation committees.
Nominating Committee Functions
Since we do not have a nominating committee, all of the members of the
Board of Directors participate in the consideration of director nominees. The
Board of Directors has determined that one of its members are independent under
the independence standards of The Nasdaq Stock Market. We do not currently have
a written nominating committee charter or similar document.
Process for Identifying and Evaluating Nominees for the Board of Directors
4
Our Board of Directors may employ a variety of methods for identifying and
evaluating director nominees. If vacancies are anticipated or arise, our Board
of Directors considers various potential candidates which may come to our
attention through current board members, professional search firms, stockholders
or other persons. These candidates may be evaluated by our Board of Directors at
any time during the year.
Our Board of Directors considers candidates recommended by stockholders
when the nominations are properly submitted as described in "Consideration of
Stockholder Nominees" below. Following verification of the stockholder status of
persons proposing candidates, our Board of Directors will make an initial
analysis of the qualifications of any candidate recommended by stockholders or
others pursuant to the criteria summarized herein to determine whether the
candidate is qualified for service on the board, before deciding to undertake a
complete evaluation of the candidate. If our Board of Directors determines that
additional consideration is warranted, it may use a third-party search firm to
gather additional information about the prospective nominee's background and
experience. Other than the verification of compliance with procedures and
stockholder status, and the initial analysis performed before undertaking a
complete evaluation, our Board of Directors will treat a potential candidate
nominated by a stockholder like any other potential candidate.
In evaluating a director candidate, our Board of Directors will review his
or her qualifications including capability, availability to serve, conflicts of
interest, general understanding of business, understanding of the Company's
business and technology, educational and professional background, personal
accomplishment and other relevant factors. Our Board of Directors has not
established any specific qualification standards for director nominees, although
from time to time the Board of Directors may identify certain skills or
attributes as being particularly desirable to help meet specific needs that have
arisen. Our Board of Directors may also interview prospective nominees in person
or by telephone. After completing this evaluation, the Board of Directors will
determine the nominees.
Consideration of Stockholder Recommendations
Our Board of Directors considers director candidates recommended by
stockholders. Candidates recommended by stockholders are evaluated on the same
basis as are candidates recommended by our Board of Directors. Any stockholder
wishing to recommend a candidate for nomination by the Board of Directors should
provide the following information in a letter addressed to the Board in care of
our Secretary: (i) the name and address of the stockholder recommending the
person to be nominated; (ii) a representation that the stockholder is a holder
of record of stock of the Company, including the number of shares held and the
period of holding; (iii) a description of all arrangements or understandings
between the stockholder and the recommended nominee; (iv) information as to any
plans or proposals of the type required to be disclosed in Schedule 13D and any
proposals that the nominee proposes to bring to the Board of Directors if
elected; (v) any other information regarding the recommended nominee that would
be required to be included in a proxy statement filed pursuant to Regulation 14A
pursuant to the Securities Exchange Act of 1934 and (vi) the consent of the
recommended nominee to serve as a director of the Company if elected. Additional
information may be requested to assist our Board of Directors in determining the
eligibility of a proposed candidate to serve as a director. In addition, the
notice must meet any other requirements contained our bylaws. Stockholders may
nominate candidates directly by complying with our bylaws and applicable law,
including the deadlines described under "Proposals of Stockholders," below.
Audit Committee Functions
Since we do not have an audit committee, the entire Board of Directors
acts as the audit committee. The Board of Directors has determined that none of
its members qualify as an audit committee financial expert as defined in Item
401(e) of Regulation S-B. We have not been able to identify a suitable candidate
for our Board of Directors that would qualify as an audit committee financial
expert. We do not currently have a written audit committee charter or similar
document.
Stockholder Communications with Board of Directors
5
Any stockholder or interested party who wishes to communicate with our
Board of Directors or any specific directors may write to Kiwa Bio-Tech Products
Group Corporation, Board of Directors, 17700 Castleton Street, Suite 589, City
of Industry, California 91748
The mailing envelope must contain a clear notation indicating that the
enclosed letter is a "Stockholder-Board Communication" or "Stockholder-Director
Communication." All such letters must identify the author as a stockholder and
clearly state whether the intended recipients are all members of the board or
just certain specified individual directors. The Company will receive and make
copies of all such letters and circulate them to the appropriate director or
directors.
Certain Relationships and Related Transactions
China Star Investment Group
Mr. Wei Li, a 30.2% stockholder of the Company as of April 27, 2005, owns
a 10% interest in China Star. Yun long Zhang, one of our directors, is also
General Manager of China Star, responsible for the group's daily operations. As
of December 31, 2004, the Company had an outstanding balance to China Star of
$112,105, which was primarily related to a loan from China Star and operating
expenses that China Star paid on behalf of the Company
In October 2003, the Company obtained a $100,000 loan from China Star. The
loan was scheduled to mature on October 20, 2004, and bears interest at 12% per
annum, payable at maturity. As part of the loan terms, China Star had the right
to convert the loan into shares of the Company's common stock at $0.25 per share
at any time prior to the maturity date, subject to the Company completing a
reverse merger transaction in the United States, which was accomplished in March
2004. China Star has waived this conversion right. The final maturity date has
been subsequently extended to August 31, 2005.
China Star also paid certain operating expenses on behalf of the Company
amounted of $106, 279 during the year ended December 31, 2004. The Company
reimbursed China Star $63,600 during the year ended December 31, 2004.
Additionally, we lease an office in the United States under a commercial
lease agreement with China Star that expires in June 2005 with an aggregate
monthly lease payment of approximately $2,560. Pursuant to the lease agreement
dated April 1, 2004, rent expenses for the year ended December 31, 2004 were
$21,904. We paid no rental expenses under the lease in 2003. We are currently
considering renewing the lease but have not yet entered into any definitive
agreement.
Vehicle Lease
In December 2004 we entered into an agreement with a director, Mr. Li Wei,
pursuant to which Mr. Li leases the Company a motor vehicle. The term of the
agreement is less than one year. The monthly rental payment is $1,812 and the
Company made no payments of rental expenses for the fiscal year ended December
31, 2004.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 2004 certain information
with respect to the beneficial ownership of our common stock by (i) each of our
directors and executive officers, (ii) each person who is known by us to
beneficially own more than 5% of our outstanding common stock, and (iii) all of
our directors and executive officers as a group. The numbers for each
stockholder listed below include shares of our common stock issuable upon the
exercise of options or any other rights beneficially owned by such person or
entity that are exercisable within 60 days of December 31, 2004. Percentage
ownership is calculated based on 40,873,710 shares of our common stock
outstanding as of December 31, 2004. None of the shares listed below are
issuable pursuant to stock options, stock appreciation rights ("SARs") or
warrants.
6
Name Number of Shares Percent of Class
--------------------------------------------------------------- -------------------- --------------------
Wei Li (1).................................................... 12,356,672 30.2%
Da chang Ju (2)............................................... 10,062,088 24.6
Lian jun Luo.................................................. 308,916 *
James Nian Zhan............................................... 308,916 *
Yun long Zhang................................................ 308,916 *
All Star Technology Inc. (1).................................. 12,356,672 30.2%
InvestLink (China) Limited (2)................................ 10,062,088 24.6
De jun Zou.................................................... 3,089,168 7.6
Times Crossword Investment Ltd. (3)........................... 3,089,168 7.6
Yi Mao (3).................................................... 3,089,168 7.6
All officers and directors as a group (5 persons)............. 23,345,508 57.1
* Less than 1%
(1) Consists of shares held by All Star Technology Inc., a British Virgin
Islands international business company. Wei Li exercises voting and
investment control over the shares held by All Star Technology Inc. Wei Li
is a principal stockholder of All Star Technology Inc. and may be deemed
to beneficially own such shares, but disclaims beneficial ownership in
such shares held by All Star Technology Inc. except to the extent of his
pecuniary interest therein.
(2) Consists of 6,178,336 shares of common stock held directly by InvestLink
(China) Limited ("Investlink") and 3,883,752 shares of common stock held
by InvestLink as custodian for Gui sheng Chen. InvestLink has the sole
power to vote or direct the vote and dispose or direct the disposition of
10,062,088 shares but disclaims beneficial ownership of such shares except
to the extent of its pecuniary interest therein. Da chang Ju exercises
voting and investment control over the shares held by InvestLink. Da chang
Ju is a principal stockholder of InvestLink and may be deemed to
beneficially own such shares, but disclaims beneficial ownership in such
shares held by InvestLink except to the extent of his pecuniary interest
therein.
(3) Mr. Yi Mao exercises voting and investment control over the shares held by
Times Crossword Investment, Ltd.
DIRECTOR AND EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information for the fiscal years ended
December 31, 2004 and December 31, 2003 concerning the compensation paid to (i)
each person serving as our chief executive officer during 2004 and (ii) all
other individuals serving as our executive officers at December 31, 2004 whose
total annual salary and bonus during 2004 exceeded $100,000 (collectively, the
"named executive officers").
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Securities
Restricted Underlying
Other Annual Stock Options/ LTIP All Other
Name and Principal Position Year Salary Bonus Compensation Awards SARs Payouts Compensation
--------------------------- ---- ------ ----- ------------ ------ ---- ------- ------------
Wei Li (1)................................... 2004 -- -- -- -- -- -- --
Chief Executive Officer 2003 $17,561 -- -- -- -- -- --
2002 -- -- -- -- -- -- --
George Christopulos (2)...................... 2004 -- -- -- -- -- -- --
Former Chief Executive Officer,
President 2003 -- -- -- $8,139 (3) -- -- --
and Chief Financial Officer 2002 -- -- -- 7,875 (4) -- -- --
------------
7
(1) Mr. Li became Chief Executive Officer of the Company upon consummation of
the Tintic/Kiwa merger on March 12, 2004. Mr. Li's compensation for 2003
was paid by Kiwa Bio-Tech Products Group, Ltd.
(2) Mr. Christopulos resigned as the Company's Chief Executive Officer,
President and Chief Financial Officer upon consummation of the Tintic/Kiwa
merger on March 12, 2004.
(3) 81,391 shares of restricted stock valued at $0.10 per share were issued to
Mr. Christopulos as compensation for services rendered to the Company
during the fiscal year ended December 31, 2003.
(4) 45,000 shares of restricted stock valued at $0.175 per share were issued
to Mr. Christopulos as compensation for services rendered to the Company
during the fiscal year ended December 31, 2002.
2004 Stock Incentive Plan
On May 10, 2004, our Board of Directors determined that it was in our best
interest to provide equity incentives to certain of our directors, officers and
employees and or consultants and adopted, subject to stockholder approval, our
2004 Stock Incentive Plan (the "2004 Stock Plan"). On June 3, 2004, our
stockholders approved the 2004 Stock Plan. Under the 2004 Stock Plan, we may
issue to qualifying participants options and stock purchase rights with respect
to up to 1,047,907 shares of our common stock, of which not more than 350,000
shares may be granted to any participant in any fiscal year. This key aspect of
our compensation program is designed to attract, retain, and motivate the highly
qualified individuals required for our long-term success. As of December 31,
2004, we had not made any grants under our 2004 Stock Plan.
The options of the 2004 Stock Plan will expire ten years from the date of grant.
The options which are not issued to an officer, a director or a consultant, will
become exercisable at least as rapidly as 20% per year over the five-year period
commencing on the date of grant.
Stock Option and SAR Grants in 2004
We did not grant any stock options or SARs to the named executive officers
during 2004.
Aggregate Option and SAR Exercises in 2004 and Fiscal Year-End Values
No stock options or SARs were exercised by the named executive officers
during 2004. At December 31, 2004, none of the named executive officers held any
stock options or SARs. The Company did not adjust or amend the exercise price of
any stock options or SARs previously awarded to any named executive officers
during 2004.
Compensation of Directors
At this time, we do not have any arrangement or policy for compensation of
directors for their service on our Board of Directors, nor do we have any plans
to adopt such a policy or arrangement. If and when we do compensate directors,
we do not anticipate paying employee directors additional compensation for their
service above their compensation as an employee.
In 2004, there were no other arrangements pursuant to which any director
was compensated for service provided as a director.
Employment Contracts and Termination of Employment and Change of Control
Arrangements
We entered into employment Agreements with two of our key employees,
Messrs. Lian jun Luo and Bin Qu, on March 18, 2003.
Mr. Luo's agreement has a three-year term commencing on January 2, 2003,
which is renewable upon written agreement of the parties prior to expiration.
8
Mr. Luo had a three-month probationary period which ended on April 2, 2003.
Under the agreement, Mr. Luo is entitled to an annual base salary of RMB 144,000
each year and shares of common stock of the Company equal to 1% of the total
number of shares outstanding on each of October 1, 2003, 2004 and 2005. Mr. Luo
may also be granted an annual performance bonus of RMB 56,000.
Mr. Qu's agreement has a three-year term commencing on March 1, 2003,
which is renewable upon written agreement of the parties prior to expiration.
Mr. Qu had a three-month probationary period which ended on June 1, 2003. Under
the agreement, Mr. Qu is entitled to an annual base salary of RMB 144,000 each
year year and shares of common stock of the Company equal to 1% of the total
number of shares outstanding on each of March 1, 2004, 2005 and 2006. Mr. Qu may
also be granted an annual performance bonus of RMB 56,000.
During the term of their respective agreements Messrs. Luo and Qu may not
compete with the Company or hire or solicit the Company's employees. In
addition, each of Messrs. Luo and Qu agreed, during the term of the respective
agreements and for five years after the termination thereof, not to disclose any
of the Company's confidential information. If the Company terminates either
agreement, Mr. Luo or Mr. Qu, as applicable, will be entitled to three months'
severance. If Mr. Luo or Mr. Qu terminates his employment agreement, he must pay
a default penalty equal to three months of his salary.
Except as set forth above, we do not have employment agreements with any
other members of management or key personnel. In addition, there are no
compensatory plans or arrangements with respect to a named executive officer
that would result in payments or installments in excess of $100,000 upon the
resignation, retirement or other termination of such executive officer's
employment with us or from a change-in-control.
PROPOSAL 2. RATIFICATION OF SELECTION OF AUDITORS
Our audit committee of the Board of Directors has appointed Grobstein,
Horwath & Company, LLP as the independent auditors for the Company for the
fiscal year ending December 31, 2005. The Board of Directors approved the
engagement of Grobstein, Horwath & Company, LLP as the Company's independent
auditors and the dismissal of Pritchett, Siler & Hardy, P.C., the Company's
previous independent auditors, on May 5, 2004. The change resulted from the
Tintic/Kiwa merger which became effective on March 12, 2004.
Pritchett, Siler & Hardy, P.C.'s report on the Company's consolidated
financial statements for the fiscal year ended December 31, 2003 included an
explanatory paragraph expressing concern about the Company's ability to continue
as a going concern, but did not contain any other adverse opinion or disclaimer
of opinion and was not qualified as to uncertainty, audit scope or accounting
principles. The Company had no disagreements with Pritchett, Siler & Hardy, P.C.
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which, if not resolved to Pritchett,
Siler & Hardy, P.C.'s satisfaction, would have caused it to make reference to
the subject matter of the disagreements in connection with its report on the
Company's consolidated financial statements. The Company requested Pritchett,
Siler & Hardy, P.C. to furnish a letter to the SEC stating whether it agrees
with the above statements. A copy of that letter is filed as an exhibit to our
Current Report on Form 8-K filed with the SEC on May 10, 2004. We have
authorized Pritchett, Siler & Hardy, P.C. to respond fully to any inquiries from
Grobstein, Horwath & Company, LLP relating to its engagement as the Company's
independent auditor.
Services provided to the Company by Grobstein, Horwath & Company, LLP in
fiscal years 2004 and 2003 are set forth below. We do not expect representatives
of Grobstein, Horwath & Company, LLP to be present at the annual meeting.
The affirmative vote of a majority of the shares represented at the
meeting is required for the ratification of the Board's selection of Grobstein,
Horwath & Company, LLP as the Company's independent auditors for the fiscal year
ending December 31, 2005.
The Board of Directors recommends that stockholders vote "FOR" the
ratification of the selection of Grobstein, Horwath & Company, LLP as
independent auditors of the Company.
Audit Fees
9
Audit fees for 2004 for professional services rendered by Grobstein,
Horwath & Company, LLP were approximately $95,500. The amount includes fees for
the audit of our consolidated financial statements as of and for the fiscal year
ended December 31, 2004 and reviews of our quarterly reports on Form 10-QSB.
Audit fees for 2003 for professional services rendered by Pritchett, Siler
& Hardy, P.C. were approximately $7,474. The amount includes fees for the audit
of our consolidated financial statements for the fiscal year ended December 31,
2003 and reviews of our unaudited consolidated interim financial statements for
the first and second quarters of year 2004.
Audit-Related Fees
Audit-related fees for 2004 for assurance and related services by
Grobstein, Horwath & Company, LLP were $63,527. The amount includes fees for
auditing the financial statements in relation to our registration statement on
Form SB-2 and to the reverse merger on March 12, 2004 and not reported under the
caption Audit Fees.
Audit-related fees for 2003 for assurance and related services by
Pritchett, Siler & Hardy, P.C. were $1,720. The amount includes fees for
assurance and related services reasonably related to the performance of the
audit or review of financial statements and not reported under the caption Audit
Fees.
Tax Fees
Tax fees for 2004 for professional services rendered by Grobstein, Horwath
& Company, LLP were $6,500. The amount includes fees for tax compliance,
authority, audit support and planning services.
Tax fees for 2003 for professional services rendered by Pritchett, Siler &
Hardy, P.C. were approximately $1,045. The amount includes fees for tax
compliance services.
All Other Fees
There were no additional aggregate fees billed by Grobstein, Horwath &
Company, LLP for 2004 or by Pritchett, Siler & Hardy, P.C. for 2003 for other
services rendered to the Company. Since we do not have a formal audit committee,
our entire Board of Directors serves as our audit committee. We have not adopted
pre-approval policies and procedures with respect to the Company's accountants,
but the Board of Directors approved the engagement of each of Grobstein, Horwath
& Company, LLP and Pritchett, Siler & Hardy, P.C. before their respective
engagements.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
officers, directors and certain other stockholders to file reports of ownership
and changes in ownership with the SEC. Officers, directors and certain other
stockholders are required by regulation to furnish us with copies of all Section
16(a) forms they file. Based solely on a review of the Forms 3 and 4 and
amendments thereto furnished to the Company during 2004 and Form 5 and
amendments thereto furnished to the Company with respect to 2004, during 2004 no
individual or entity failed to file on a timely basis any reports required by
Section 16(a) except for: (i) George Christopulos filed a Form 4 on March 22,
2004 disclosing one transaction that was not timely reported and a Form 4 on
April 27, 2004 disclosing three transactions that were not timely reported; (ii)
John Michael Coombs filed a Form 4 on March 22, 2004 disclosing two transactions
that were not timely reported and a Form 4 on April 27, 2004 disclosing two
transactions that were not timely reported; (iii) Jack R. Coombs filed a Form 4
on April 27, 2004 disclosing one transaction that was not timely reported; and
(iv) Hugh N. Coltharp filed a Form 4 on April 27, 2004 disclosing one
transaction that was not timely reported.
CODE OF ETHICS
10
We have adopted a Code of Business Conduct and Ethics (the "Code") that is
applicable to all employees, consultants and members of the Board of Directors,
including the Chief Executive Officer, Chief Financial Officer and Secretary.
This Code embodies our commitment to conduct business in accordance with the
highest ethical standards and applicable laws, rules and regulations. We will
provide any stockholder a copy of the Code, without charge, upon written request
to the Company's Secretary.
PROPOSALS OF STOCKHOLDERS
Stockholders who, in accordance with SEC Rule 14a-8, wish to present
proposals for inclusion in the proxy materials to be distributed in connection
with next year's annual meeting must submit their proposals so that they are
received at the Company's principal executive offices no later than the close of
business on December 30, 2005.
In accordance with our Bylaws, in order to be properly brought before the
2006 annual meeting, a stockholder's notice of the matter the stockholder wishes
to present, or the person or persons the stockholder wishes to nominate as a
director, must be delivered to or mailed and received by the Company's Corporate
Secretary at its principal executive offices not less than 60 days nor more than
180 days prior to the 2006 annual meeting. However, if less than 70 days' notice
or prior public disclosure of the date of the meeting is given or made to the
stockholders, notice of the matter the stockholder wishes to present, or the
person or persons the stockholder wishes to nominate as a director, must be so
received not later than the close of business on the 10th day following the day
on which the notice of the meeting date was mailed or public disclosure was
made. To be in proper form, a stockholder's notice must include the specified
information concerning the proposal or nominee as described in our Bylaws.
Please send notices of intention to present proposals at the 2006 annual
meeting to the Company's Corporate Secretary, 17700 Castleton Street, Suite 589,
City of Industry, California 91748. The Company reserves the right to reject,
rule out of order, or take other appropriate action with respect to any proposal
that does not comply with these and other applicable requirements.
OTHER BUSINESS
t 6 0 The Board of Directors does not currently intend to bring any other
business before the meeting, and so far as is known to the Board, no matters are
to be brought before the meeting except as specified in the notice of the
meeting. However, as to any other business which may properly come before the
meeting, the proxy holders will vote any shares represented by proxies in their
discretion.
KIWA BIO-TECH PRODUCTS GROUP CORPORATION
By Order of the Board of Directors
/s/ James Nian Zhan
Secretary
City of Industry, California
April 29, 2005
11
[FRONT]
PROXY
FOR ANNUAL MEETING OF THE STOCKHOLDERS
KIWA BIO-TECH PRODUCTS GROUP CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Wei Li and James Nian Zhan (collectively,
the "Proxies"), and each of them, with full power of substitution, as proxies to
vote the shares which the undersigned is entitled to vote at the Annual Meeting
of the Company to be held at our executive office located at Room 516, Block A,
Tai Li Ming Yuan Building, Jia 1, Waiguanxie Street, Chaoyang District, Beijing,
P.R.C., on Friday, June 24, 2005 at 10:00 a.m. local time and at any
adjournments thereof.
1. Election of Directors: FOR WITHHOLD FOR ALL EXCEPT
Nominees: |_| |_| |_|
01 Wei Li
02 Lian jun Luo
03 James Nian Zhan Instruction: To withhold authority to vote for any individual nominee,
04 Da chang Ju mark "For All Except" and write the name of the nominee(s) below:
05 Yun long Zhang
-------------------------------------------------------------------
2. Proposal to ratify the selection of FOR WITHHOLD ABSTAIN
Grobstein, Horwath & Company, LLP |_| |_| |_|
as the Company's independent auditors
for the fiscal year ending December 31, 2005.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
[REVERSE]
This proxy when properly signed will be voted and will be voted in the
manner directed herein by the undersigned stockholder. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND IN THE DISCRETION OF THE
PROXIES AS TO ANY OTHER MATTERS THAT PROPERLY COME BEFORE THE ANNUAL MEETING.
---------------------------------
Signature
---------------------------------
Signature, if held jointly
Dated: ____________________, 2005
IMPORTANT - PLEASE SIGN AND
RETURN PROMPTLY. When
shares are held by joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee, or guardian,
please give full title as
such. If a corporation,
please sign in full
corporate name by President
or other authorized
officer. If a partnership,
please sign in partnership
name by an authorized
person.