CSMG Technologies, Inc (fka CTGI)

[sojourner]

PROPOSAL 2. AMENDMENT TO OUR ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES
http://www.secinfo.com/d12TC3.v1gn6.htm#1stPage

The Board proposes amending our Articles of Incorporation to increase the total number of authorized shares to 90,000,000 and the number of authorized shares of common stock to 80,000,000.

The Board determined that the amendment is in the best interests of the company and our shareholders and recommends approval by the shareholders. If the proposed amendment is approved by the shareholders, the Board currently intends to file, with the Secretary of State of the State of Texas, an Amended and Restated Articles of Incorporation (the “Amended and Restated Articles of Incorporation”) reflecting the amendment as soon as practicable following shareholder approval. The following summary is qualified in its entirety by reference to the Amended and Restated Articles of Incorporation, which is attached as Appendix B to this proxy statement.

Our Articles of Incorporation currently authorizes us to issue up to 50,000,000 shares of capital stock, consisting of 40,000,000 shares of common stock and 10,000,000 shares of preferred stock. An increase in the number of authorized shares of our common stock to 80,000,000 shares will increase our total capitalization to 90,000,000 shares.

Of the 40,000,000 shares of common stock currently authorized, as of the close of business on November 1, 2006, there were 33,005,392 shares issued and outstanding.

From inception, we have funded our operations primarily through the issuance of common stock and securities convertible into common stock. We will continue to need future funding from time-to-time. Furthermore, we are continually seeking acquisitions and other business combinations, which often involve the issuance of common stock.

The Board of Directors believes that the proposed increase in the number of shares of common stock is important to facilitate our efforts to raise additional capital to fund our research and development, to expand our commercial operations and to allow for greater flexibility in entering into possible future business combinations. The Board has proposed this increase in authorized shares of common stock to ensure that we have sufficient shares available for general corporate purposes, including, without limitation, equity financings, acquisitions, establishing strategic relationships with corporate and other partners, providing equity incentives to employees, and payments of stock dividends, stock splits or other recapitalizations.

In particular, we believe that in order to fully commercialize our product candidates and technologies, we will need additional funding in the future. This funding may be obtained through, among other alternatives, public or private issuance of equity or equity linked debt. In order to be positioned timely to take full advantage of market and other conditions suitable for equity related financings, the Board of Directors believes that we should increase the number of our authorized shares of common stock.

We have executed a letter of intent for a firm commitment underwriting for our majority-owned subsidiary, Live Tissue Connect, Inc. However, as of the date of this proxy statement, we have not made a determination to issue additional equity of our company in the near future, but we intend to evaluate available alternatives for funding from time-to-time to fully exploit our products, product candidates and technologies. Any decision to issue equity, including any equity authorized by the proposed increase in authorized shares of common stock, will depend on, among other things, our evaluation of our funding needs, developments in the testing and commercialization of our products, product candidates and technologies, current and expected future market conditions and other factors.

As is the case with the current authorized but unissued shares of common stock, the additional shares authorized by this proposed amendment could be issued upon approval by the Board of Directors without further vote of our shareholders. Under our Articles of Incorporation, shareholders do not have preemptive rights to subscribe to additional securities that we may issue, which means that current shareholders do not have a prior right to purchase any new issue of common stock to maintain their proportionate ownership interest. In addition, if we issue additional shares of common stock or securities convertible into or exercisable for common stock, such issuance would have a dilutive effect on current shareholders’ voting power and could have a dilutive effect on the earnings per share of our currently outstanding shares of common stock.

The proposed amendment to our Articles of Incorporation could, under certain circumstances, have an anti-takeover effect. The proposed increase in the number of authorized shares of common stock may discourage or make it more difficult to effect a change in control of our company. For example, we could issue additional shares to dilute the stock ownership or voting power of persons seeking to gain control of the company. However, it is not currently our intention, nor the intention of our Board of Directors, to utilize the increased number of authorized shares for anti-takeover purposes.