CORPORATE HISTORY
Stinger Systems, Inc. is a publicly traded company. Stinger Systems, Inc. was founded in March 2000 as Electronic Defense Technology, LLC. Stinger entered the market to produce a quality line of less lethal electronic products to law enforcement agencies particularly of the criminal justice system. Stinger's first products included the Ultron® II handheld, contact stun device the electronic power shield, and the REACT™ electronic prisoner and defendant control system. Stinger also was responsible for nationwide training of product users having provided over 70,000 officers with complete documented training in the event of litigation over product use. Customers include the US Department of Justice, INS, Federal Bureau of Prisons and the US Marshals Service. In 2004, Stinger extended its product line by creating the Stinger™ non-lethal firearm which utilizes the same power output that the Ultron® II utilizes. The Ultron® II has sold more than 12,000 units in the U.S.
CORPORATE GOVERNANCE
Board Charter
BOARD OF DIRECTORS CHARTER
STINGER SYSTEMS, INC.
The Board of Directors is primarily responsible for providing effective governance over the Company's affairs by exercising reasonable business judgment. The Board may delegate its authority to Company management or Committees of the Board but Company management and Board Committees shall at all times be subject to the control and direction of the Board.
In discharging their obligations, Directors must be entitled to rely on the honesty and integrity of the Company's senior management as well as the advice of the Company's auditors and advisors. The Board shall also have access to management personnel and shall have the authority to engage reasonable advisors and auditors as it considers appropriate to discharge its duties at the Company's expense.
BOARD STRUCTURE
The board determines the size of the Board and the composition in accordance with the Company By-laws and any requirements of NASDAQ. The By-laws provide for a minimum of three Directors and a maximum of ten. Currently there are two independent directors and two executive directors on the Board.
MEETINGS
The Board will meet from time to time and as often as deemed necessary by the directors in order to fulfill their duties and responsibilities as directors and as dictated by the needs of the business. It is expected that under normal circumstances the Board will meet at least once a quarter. A quorum shall consist of a majority of board members unless the Board is comprised of an even number of directors in which case, a quorum shall be half that number.
INDEPENDENCE
The Board defines an independent director as one who is not involved in the daily management of the Company and is free from any business or other relationship that could materially interfere with the exercise of independent judgment regarding the Company's business and direction.
BOARD DUTIES
The responsibilities of the Board shall include:
Develop and approve strategic direction for the Company
Review and approve plans, strategies and objectives related to the strategic direction
Select, appoint and if necessary, remove the Chief Executive of the Company, determining his or her conditions of service and monitoring his or her performance against established objectives
Monitor the management and financial performance of the Company
Ensure that adequate risk management controls and reporting mechanisms are maintained
Review and approve major capital expenditures, acquisitions and divestitures
Ensure that continuous disclosure requirements are met
Ensure that responsible corporate governance is understood and observed at management and Board levels
Approve the appointment of the external auditor
Determine and approve dividends to be paid to shareholders
Establish appropriate Board committees
BOARD COMMITTEES
The Board may from time to time establish Board directed committees to assist in discharging the responsibilities of the Board. These include several standing committees. They are:
Audit and Risk Management Committee
Compensation Committee
These two committees are composed of independent Directors only. The Audit and Risk Management Committee meets at least twice a year and the other committees meet as needed.
BOARD ACCESS
The Board of Directors shall have full and unrestricted access to executives and other employees of the Company. The Board collectively and each director individually may take, at the Company's expense, such independent professional advice as is considered necessary to fulfill their relevant responsibilities. Individual Board members seeking such advice must obtain the approval of the Chairman (which may not be unreasonable withheld) and the advice will be made available to all Board members as appropriate.
Audit Committee Charter
STINGER SYSTEMS, INC.
CHARTER OF THE AUDIT COMMITTE OF THE BOARD OF DIRECTORS
I. PURPOSE
The primary purpose of the Audit Committee of the Board of Directors ("Board") of Stinger Systems, Inc. (the "Company") is to assist the Board in fulfilling its oversight responsibilities by (i) reviewing the financial information which will be provided to the shareholders, potential shareholders, the investment community and others; (ii) reviewing the systems of internal controls which management and the Board have established; (iii) reviewing the audit process; (iv) reviewing and evaluating the Company's outside auditors; and (v) providing an open avenue of communication among the outside auditors, financial and senior management, the internal auditing function, and the Board. The Board recognizes that an informed and vigilant Audit Committee represents an effective influence for ensuring adequate internal controls and accurate and complete financial reporting. The members of the Audit Committee are expected to discharge their duties with the same good faith, diligence, care and skill exercised in performing their duties as Directors of the Company.
II. FUNCTIONS
The Audit Committee shall perform the following functions:
Independent Accountants. After due consideration of management's recommendations, make its recommendation to the Board concerning the selection, retention, or change of the independent auditor. The independent auditor is accountable to the Board and the Audit Committee. The Committee shall provide direct oversight of the independent auditor including oversight of the appointment of the auditor, compensation, qualifications and independence.
Oversight of Independent Accountants. Evaluate the independent accountants on an annual basis and where appropriate recommend a replacement for the independent accountants. In such evaluation, the Audit Committee shall ensure that the independent accountants deliver to the Audit Committee a formal written statement delineating all relationships between the accountants and the Company. The Audit Committee also shall engage in a dialogue with the accountants with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent accountants and in response to the independent accountant's report take, or recommend that the Board take, appropriate action to satisfy itself of the independent accountant's independence.
Accounting Principles and Disclosure. Review significant developments in accounting rules. The Audit Committee shall review with management recommended changes in the Company's methods of accounting or financial statements. The Audit Committee shall review with the independent accountants any significant proposed changes in accounting principles and financial statements. The Audit Committee also shall review internal audit plans in significant compliance areas.
Financial Disclosure Documents. Review with management and the independent accountants the Company's financial disclosure. The purposes of the review shall be to evaluate the financial reporting process to reasonably assure that the financial statements fairly present the financial position and results of operations of the Company in accordance with generally accepted accounting principles, consistently applied. The Audit Committee shall inquire as to the following: (a) significant variations in financial information between reporting periods; (b) changes in accounting standards or rules promulgated by the Financial Accounting Standards Board or the U.S. Securities and Exchange Commission that have an impact on the financial statements; (c) estimates made by management having a material impact on the financial statements; and (d) changes in accounting principles adopted by the Company which have a significant impact on the financial statements.
Audit Review. Review the results of the annual audit. The review shall include any significant problems and material disputes between management and the independent accountants matters related to the conduct of the audit which are to be communicated to the Audit Committee under generally accepted auditing standards including, discussions relating to the independent accountants' judgments about such matters as the quality, not just the acceptability, of the Company's accounting practices. The review shall include any significant problems and regulatory concerns.
Internal Control Systems. Review with the independent accountants their report on the audit and review with management the independent accountants suggested changes or improvements in the Company's accounting practices or controls. Consult with the independent accountants regarding the adequacy of internal accounting controls. Where appropriate, consultation with the independent accountants regarding internal controls shall be conducted out of management's presence. The Audit Committee shall monitor remedial action being taken by management.
Ethical Environment. Consult with management on the establishment and maintenance of an environment that promotes ethical behavior, including the establishment and communication to guard against dishonest, unethical, or illegal activities.
Oversight of Executive Officers and Directors and Conflicts of Interest. Review significant conflicts of interest involving directors or executive officers. The Audit Committee shall review compliance with Company policies and procedures with respect to officers' expense accounts and prerequisites, including their use of corporate assets, and consider the results of any review of these areas by the independent accountant.
Adequacy of Personnel. Review periodically the adequacy of the Company's accounting, financial, and auditing personnel resources.
Charter Amendments. Review this Charter annually, assess its adequacy and propose appropriate amendments to the Board.
The Audit Committee's function is one of oversight and review, and it is not expected to audit the Company, to define the scope of the audit, to control the Company's accounting practices, or to define the standards to be used in preparation of the Company's financial statements.
III. COMPOSITION & INDEPENDENCE
The Audit Committee shall have at least three members. The Board shall appoint all members and the Chairman of the Audit Committee. All members shall be "independent directors" as determined in accordance with the Company's By-laws and the requirements for audit committee membership of any exchange on which the Company's securities are listed or of any applicable law.
Members of the Audit Committee shall be financially literate or become financially literate within a reasonable period of time after appointment to the Audit Committee. At least one member of the Audit Committee shall have accounting, related financial management expertise, or any other comparable experience or background that result in the individual's financial sophistication all in accordance with the requirements of any exchange on which the Company's securities are listed or of any applicable law. The Board shall determine whether a member of the Audit Committee is financially literate or has accounting or related financial management expertise.
In the event that an Audit Committee member faces a potential or actual conflict of interest with respect to a matter before the Audit Committee, that Audit Committee member shall be responsible for alerting the Audit Committee Chairman, and in the case where the Audit Committee Chairman faces a potential or actual conflict of interest, the Audit Committee Chairman shall advise the Chairman of the Board. In the event that the Audit Committee Chairman, or the Chairman of the Board, concurs that a potential or actual conflict of interest exists, an independent substitute Director shall be appointed as an Audit Committee member until the matter, posing the potential or actual conflict of interest, is resolved.
The Audit Committee shall have the power to adopt its own operating rules and procedures and to call upon assistance from officers and employees of the Company. The Audit Committee shall report its activities to the full Board following each meeting of the Audit Committee to keep the Board informed of Audit Committee activities and findings on a current basis.
IV. QUORUM AND MEETINGS
A quorum of the Audit Committee shall be declared when a majority of the appointed members of the Audit Committee are in attendance. The Audit Committee shall meet at least annually with management and the independent auditor regarding their systems of internal control, results of audits, and accuracy of financial reporting. The Audit Committee will also meet with the independent auditors of the Company, at such times as it deems appropriate, to review the independent auditors' examination and management report. Otherwise, the Audit Committee shall meet on an as needed basis. Meetings shall be scheduled at the discretion of the Chairman. The Audit Committee may ask members of management or others to attend the meeting and provide pertinent information as necessary.
V. REPORTS
The Audit Committee will report to the Board from time to time with respect to its activities and its recommendations. When presenting any recommendation or advice to the Board, the Audit Committee will provide such background and supporting information as may be necessary for the Board to make an informed decision. The Audit Committee will keep minutes of its meetings and will make such minutes available to the full Board for its review.
VI. OTHER AUTHORITY
The Audit Committee is authorized to confer with Company management and other employees to the extent it may deem necessary or appropriate to fulfill its duties. The Audit Committee is authorized to conduct or authorize investigations into any matters within the Audit Committee's scope of responsibilities. The Audit Committee also is authorized to seek outside legal or other advice to the extent it deems necessary or appropriate, provided it shall keep the Board advised as to the nature and extent of such outside advice. The Audit Committee will perform such other functions as are authorized for this Audit Committee by the Board.
INSIDER/EMPLOYEE TRADING POLICY
Stinger Systems' General Policy on Insider Trading
PURPOSE
This General Policy on Insider Trading sets forth standards of conduct applicable to the directors and associates of Stinger Systems Corporation and its direct and indirect subsidiaries whenever they are conducting securities transactions, whether for themselves or on behalf of others.
BACKGROUND
Federal and state laws prohibit you from buying, selling, recommending or making other transfers of securities if you are aware of material, nonpublic information about the issuer of the securities. These laws also prohibit you from disclosing this information to others who may trade in those securities. The consequences of an insider trading violation can be severe, both for you and for the Corporation. The Corporation has adopted this Policy to protect you and the Corporation from the serious liabilities and penalties that can result from violations of the insider trading laws.
This Policy applies to all directors and associates, as well as to your family members who reside in your household or whose securities transactions are subject to your influence or control.
STATEMENT OF POLICY
You may, from time to time, have access to material, nonpublic information concerning the Corporation, its customers or suppliers, or other companies. The following statement regarding the use and disclosure of this information applies to all your activities, whether related to your official duties for the Corporation or to your personal affairs:
You must not buy, sell, recommend or otherwise trade in any security, either personally or on behalf of others, including trading for proprietary or fiduciary accounts of the Corporation, while in possession of material, nonpublic information relating to such security, or communicate or disclose, in any manner, material, nonpublic information to others in violation of a duty to keep such information confidential.
You should consider information "material" if a reasonable investor would consider it important in deciding whether to buy, sell or hold a company's securities (in other words, if the information is reasonably certain to have an effect on the price of the securities, whether such effect is positive or negative). You should consider information "nonpublic" if it is not generally available to the public or investment community. For example, the Corporation generally considers information nonpublic until the expiration of 24 hours following a press release, a public filing with the Securities and Exchange Commission or the appearance of an article in a newspaper or other publication of general circulation.
You must not disclose or disseminate to others material, nonpublic information about a company, either within or outside the Corporation, except on a reasonable need-to-know basis that furthers a legitimate business purpose of the Corporation or the subject company. Unlawfully disclosing or "tipping" information about a company to others who then trade while in possession of the information may give rise to claims against the person tipping the information.
The Corporation expects you to conduct your personal financial affairs in a responsible and prudent manner. Further, Stinger Systems encourages you to manage and develop personal financial resources responsibly within your means, to maintain a sound financial condition and to invest in a responsible manner with a view to achieving long-term financial goals. You must never engage in investment practices that, by nature or practice are, or appear to be, inconsistent with the Policy, or that are illegal, improper, unethical or present a real or apparent conflict of interest.
SPECULATIVE TRADING
You must not engage in speculative trading with respect to the Corporation's securities. This generally prohibits short sales and trading in puts, calls and other options or derivatives with respect to the Corporation's securities unless the transaction is for legitimate, non-speculative purposes and you have obtained prior approval from management.
BLACKOUT PERIODS AND PRECLEARANCE PROCEDURES
From time to time, the Corporation will designate certain senior officers as "Insiders" for purposes of the Policy. Those officers who have been designated as "Insiders," as well as directors of the Corporation, are prohibited from trading in the Corporation's stock during the period 15 days before the end of each fiscal quarter through the end of the trading day on which financial results for that quarter are released to the public. Further, whether or not the Corporation is in a trading blackout, if you are a designated "Insider" or director of the Corporation, you must preclear any transaction in Stinger Systems stock through a designated Legal representative of Stinger Systems. The Corporation will notify you if you are a designated "Insider" and provide you the names of appropriate Legal representative contacts.
EXCEPTION TO POLICY FOR BLIND TRUST AND PRE-ARRANGED TRADING PROGRAMS
Notwithstanding the general prohibition set forth above, you may effect transactions in Corporation securities during a trading blackout or at a time when you are in possession of material, nonpublic information if your transactions are pursuant to a blind trust or trading program that complies with the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934. If you are a director or designated "Insider" subject to the blackout policy and preclearance procedures, you must obtain preclearance from a designated Legal representative prior to establishing a blind trust or a pre-arranged trading program in Stinger Systems securities.
The Corporation reserves the right to bar any transactions pursuant to a 10b5-1 trading program in Stinger Systems securities if the Board of Directors, in consultation with executive management and the Legal representative, determines that such a bar is in the best interests of the Corporation.
PENALTIES
Violations of any portion of the Policy may result in disciplinary action, including termination of employment. In addition, violations of insider trading requirements may subject you to civil and criminal penalties, fines and jail terms, and serious sanctions could be imposed against your managers and the Corporation.
FORWARD-LOOKING STATEMENTS
The information on this web site contains forward-looking information within the meaning of Section 27A of the Securities Act of the 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. The forward-looking information is based upon current information and expectations regarding Stinger Systems, Inc. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results could materially differ from what is expressed, implied, or forecasted in such forward-looking statements. Stinger Systems assumes no obligation to update the information contained in this press release.
Stinger Systems, Inc. is a publicly traded company under the ticker symbol STIY.OB. The Company's primary offices are located at: 2701 N. Rocky Point Drive, Suite 1130, Tampa, FL 33607.
As of December 31, 2005, the Company had approximately 14,993,500 shares issued and outstanding.
Click here to view the Company's filings with the Securities and Exchange Commission and reports of insider transactions.
Toll Free: 1-866-STUNSHOT (788-6746)
investors@stingersystems.com
Robert F. Gruder - Chief Executive Officer & Chairman
David J. Meador - Chief Financial Officer & Corporate Secretary
Robert F. Gruder - Chairman & CEO of Stinger Systems, Inc.™; No outside affiliations
T. Yates Exley - Vice Chairman; No outside affiliations
Michael Racaniello, CPA - Tax Consultant, Self-Employed; No outside affiliations
Andrew P. Helene - International Financial Consultant, Self-Employed; No outside affiliations
©2006 Stinger Systems, Inc.
1.866.STUNSHOT (788-6746) TOLL FREE
