Thursday, October 28, 2004 2:16:13 PM
MLRI 14A
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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 Rule 14a-12
MOLECULAR IMAGING CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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¨ 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Table of Contents
MOLECULAR IMAGING CORPORATION
9530 TOWNE CENTRE DRIVE, SUITE 120
SAN DIEGO, CALIFORNIA 92121
October 28, 2004
Dear Stockholder:
You are cordially invited to attend the fiscal year 2004 Annual Meeting of Stockholders of Molecular Imaging Corporation This meeting will be held at the Company’s corporate offices located at 9530 Towne Centre Drive, Suite 120, San Diego, California 92121, 10 A.M., local time, on Tuesday, December 14, 2004.
You will find information about the meeting in this Notice and Proxy Statement. Also enclosed with the proxy materials is our annual report on Form 10-KSB for our past fiscal year.
We look forward to greeting personally those of you who are able to be present at the annual meeting. Your vote is very important and it is important that your shares are represented, whether or not you are able to be with us at the meeting. To ensure your representation at the meeting, even if you anticipate attending in person, we urge you to mark, sign, date and return the enclosed proxy card. If you attend, you will, of course, be entitled to vote in person.
Sincerely,
/s/ KENNETH C. FREDERICK
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Kenneth C. Frederick
Chief Executive Officer
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Table of Contents
MOLECULAR IMAGING CORPORATION
9530 Towne Centre Drive, Suite 120
San Diego, California 92121
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Notice of Annual Meeting of Stockholders
To Be Held On
December 14, 2004
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TO OUR STOCKHOLDERS:
The fiscal year 2004 annual meeting of stockholders of Molecular Imaging Corporation (“MIC” or the “Company”), will be held at the Company’s corporate offices located at 9530 Towne Centre Drive, Suite 120, San Diego, California 92121, on Tuesday, December 14, 2004, at 10 A.M. local time, for the purpose of considering and acting upon the following matters described in more detail in the accompanying proxy statement:
• The election of three directors, each for a term of one year; and
• Such other business as may properly come before the annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE MATTER OUTLINED ABOVE.
The Board of Directors has fixed October 28, 2004 as the “record date” for determining stockholders entitled to notice of and to vote at the annual meeting. Only stockholders of record as of the record date will be entitled to notice of and to vote at the annual meeting or any adjournment of the annual meeting.
All stockholders are cordially invited to attend the annual meeting in person. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, EACH STOCKHOLDER IS REQUESTED TO COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. No postage is required if the proxy card is mailed in the United States. Proxy cards sent from overseas should be sent airmail or air courier to ensure they are received prior to the annual meeting. Any stockholders who attend the annual meeting, and so request, may revoke their proxy and vote their shares in person even if they have already returned a proxy card.
Each stockholder may be asked to present valid picture identification, such as a driver’s license or passport. “Street name” stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.
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Table of Contents
MOLECULAR IMAGING CORPORATION
9530 TOWNE CENTRE DRIVE, SUITE 120
SAN DIEGO, CALIFORNIA 92121
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ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 14, 2004
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TABLE OF CONTENTS
ABOUT THE MEETING
3
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
3
WHO IS ENTITLED TO VOTE AT THE MEETING?
3
WHAT ARE THE VOTING RIGHTS OF THE STOCKHOLDERS?
3
HOW DO I VOTE AND WHO WILL VOTE MY PROXY?
3
MAY I REVOKE MY PROXY?
3
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
4
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
4
WHAT CONSTITUTES A QUORUM?
4
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
4
HOW WILL VOTES BE TABULATED?
5
WHAT ARE THE BOARD OF DIRECTORS’ RECOMMENDATIONS?
5
DOES THE BOARD OF DIRECTORS HAVE AN AUDIT COMMITTEE?
5
DOES THE BOARD OF DIRECTORS HAVE A COMPENSATION COMMITTEE?
5
DOES MIC HAVE ANY OTHER STANDING COMMITTEES OF ITS BOARD OF DIRECTORS?
5
DOES MIC HAVE ANY ADVISORY COMMITTEES?
5
WHO IS PAYING THE COST FOR THIS PROXY SOLICITATION AND HOW IS THE SOLICITATION PROCESS CONDUCTED?
6
DO I HAVE DISSENTER’S RIGHTS?
6
HOW DO I MAKE A STOCKHOLDER PROPOSAL AT THE NEXT ANNUAL MEETING?
6
HOW DO I OBTAIN MORE INFORMATION ABOUT MIC?
6
STOCK OWNERSHIP
7
HOW MUCH STOCK DO MIC’S DIRECTORS AND EXECUTIVE OFFICERS OWN AND WHO ARE THE LARGEST OWNERS OF MIC’S STOCK?
7
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
9
HOW IS THE COMPENSATION FOR OUR EXECUTIVE OFFICERS DETERMINED?
9
WHAT IS THE SUMMARY COMPENSATION FOR EXECUTIVE OFFICERS?
9
WHAT IS MIC’S PHILOSOPHY BEHIND ITS GRANTING OF STOCK OPTIONS TO ITS EXECUTIVE OFFICERS?
10
HOW MANY STOCK OPTIONS AND WARRANTS WERE GRANTED TO THE EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE IN THE LAST FISCAL YEAR?
10
HAS MIC ENTERED INTO ANY EMPLOYMENT AGREEMENTS WITH ITS EXECUTIVE OFFICERS?
10
WHO WERE THE DIRECTORS DURING THE LAST FISCAL YEAR?
11
HOW ARE OUR DIRECTORS COMPENSATED?
12
HOW ARE MEMBERS OF THE AUDIT AND COMPENSATION COMMITTEE COMPENSATED?
13
HOW ARE MEMBERS OF THE MEDICAL ADVISORY BOARD COMPENSATED?
13
HAVE THE DIRECTORS AND OFFICERS OF THE COMPANY COMPLIED WITH SECTION 16(a) OF THE EXCHANGE ACT?
14
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HOW MANY TIMES DID THE BOARD OF DIRECTORS MEET DURING THIS PAST FISCAL YEAR?
14
ARE THERE ANY EXECUTIVE OFFICERS OF MIC WHO ARE NOT MEMBERS OF OUR BOARD OF DIRECTORS?
14
DOES THE COMPANY HAVE A CODE OF ETHICS?
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
15
INDEPENDENT PUBLIC ACCOUNTANTS
17
REPORT OF THE AUDIT COMMITTEE
18
PROPOSAL 1—ELECTION OF DIRECTORS
19
OTHER BUSINESS
21
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MOLECULAR IMAGING CORPORATION
9530 Towne Centre Drive, Suite 120
San Diego, California 92121
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PROXY STATEMENT
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This proxy statement contains information and is furnished in connection with the solicitation by the Board of Directors of Molecular Imaging Corporation, a Delaware corporation (“MIC” or the “Company”), of proxies for use at the fiscal year 2004 annual meeting of stockholders of Molecular Imaging Corporation to be held at the Company’s corporate offices at 9530 Towne Centre Drive, Suite 120, San Diego, California 92121, on Tuesday, December 14, 2004, and any adjournment of the annual meeting. This proxy statement and accompanying proxy card are being mailed to stockholders on or about November 8, 2004.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, the stockholders will act upon the matters outlined in the notice of meeting on the cover page of this proxy statement, including:
• The election of directors.
In addition, our management will report on the performance of MIC during the 2004 fiscal year and respond to questions from stockholders.
WHO IS ENTITLED TO VOTE AT THE MEETING?
The Board of Directors has fixed the close of business on October 28, 2004, as the “record date” for the determination of stockholders who are entitled to notice of the meeting and who are entitled to vote at the annual meeting. As of the record date we had 56,267,801 outstanding shares of common stock, par value $.0001 per share. Only these holders of common stock will be entitled to notice of and to vote at the annual meeting. Each share of common stock represents one vote on any and all matters voted upon at the annual meeting.
WHAT ARE THE VOTING RIGHTS OF THE STOCKHOLDERS?
The holders of our common stock will vote together as a single class on all matters to be acted upon at the annual meeting and each holder of common stock will be entitled to one vote per share of common stock held.
HOW DO I VOTE AND WHO WILL VOTE MY PROXY?
If you properly complete, sign and return the accompanying proxy card, it will be voted as you direct. Kenneth C. Frederick and Steven J. Davis, the persons named as proxies on the proxy card accompanying this proxy statement, will vote each properly executed and returned proxy as indicated on the directions of the returned proxy, or if no direction is indicated, the proxy will be voted in accordance with the recommendations of our Board of Directors contained in this proxy statement. Even if you plan to attend the annual meeting, your plans may change, so it is a good idea to complete, sign and return your proxy card in advance of the annual meeting. “Street name” stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.
MAY I REVOKE MY PROXY?
Yes. Each stockholder giving a proxy has the power to revoke it at any time before the shares it represents are voted. Revocation of a proxy is effective upon receipt by our Secretary, at or prior to the annual meeting, of
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either an instrument revoking the proxy or a duly executed proxy bearing a later date. Additionally, a stockholder may change or revoke a previously executed proxy by attending the annual meeting and requesting to vote in person. Please note that attendance at the annual meeting without requesting to vote in person will not revoke a previously granted proxy.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple accounts at the transfer agent and/or with stockbrokers. Please sign and return all proxy cards to ensure that all of your shares are voted.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
It depends on the manner in which you hold your shares.
If you hold your shares in your name, you may only vote by:
• Returning a properly executed proxy card; or
• By voting in person at the annual meeting.
You may not vote by telephone or electronically through the Internet, except as described below.
However, if your shares are registered in the name of a bank, brokerage firm, or other custodian (so you are a “beneficial” owner), you may vote by:
• Returning a properly executed proxy card;
• Submitting a proxy from the custodian at the annual meeting; or
• You may also be eligible to vote electronically via the Internet or by telephone.
A large number of banks and brokerage firms are participating in the ADP Investor Communication Services online program. This program provides beneficial owners the opportunity to vote via the Internet or by telephone. If your bank or brokerage firm is participating in ADP’s program, the voting instruction form for ADP will provide instructions for electronic voting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting of at least a majority of the outstanding shares of our common stock entitled to vote, whether present in person or by proxy, will constitute a quorum. A quorum must be present at the annual meeting to permit the conduct of business.
If you hold your shares in “street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. Thus, if you do not give your broker or nominee specific instructions, your shares may not be voted on those matters and will not be counted in determining the number of shares necessary for approval. Shares represented by such “broker non-votes” will, however, be counted in determining whether there is a quorum.
WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSAL?
The affirmative vote of a plurality of the votes cast at the annual meeting is required to elect directors. A properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors will not be voted for the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. “Broker non-votes” are not included in the tabulation of the vote concerning the election of our directors and, therefore, do not have the effect of votes in opposition to that election.
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HOW WILL VOTES BE TABULATED?
The election inspectors appointed for the annual meeting will tabulate the votes cast in person or by proxy at the annual meeting and will determine whether or not a quorum is present. The election inspectors will treat abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum but as un-voted for purposes of determining the approval of any matter submitted to the stockholders for a vote. If a broker indicates on the proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter but will be counted for purposes of determining the presence of a quorum.
WHAT ARE THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS?
Unless you give other instructions on your proxy card, the persons named above will vote in accordance with the recommendations of the Board of Directors. The Board of Directors’ recommendations are set forth together with the description of each item in this proxy statement. In summary, the Board of Directors recommends a vote:
• FOR the election of directors.
With respect to any other matter that properly comes before the annual meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion.
DOES THE BOARD OF DIRECTORS HAVE AN AUDIT COMMITTEE?
Yes. At a meeting on January 30, 2002, the Board of Directors established an Audit Committee to consist of at least two (2) directors. The Audit Committee has adopted a written Audit Committee Charter, which was filed as an Appendix to last year’s proxy statement. The current members of the Audit Committee are Dr. Axel Steudle (as Chair) and Kenneth Frederick. The Company believes Dr. Axel Steudle is “independent” as defined in the listing rules of the National Association of Securities Dealers (the “NASD”). Mr. Frederick is the Chief Executive Officer of the Company and is therefore not considered to be “independent” as defined in the NASD listing rules. During Fiscal Year ended June 30, 2004, the Audit Committee met six (6) times to review and discuss our financial statements and discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, “Communication With Audit Committee”.
DOES THE BOARD OF DIRECTORS HAVE A COMPENSATION COMMITTEE?
Yes. The Board of Directors established a Compensation Committee in September 2002. The Compensation Committee currently consists of two (2) directors. The directors who are currently serving on the Compensation Committee are Dr. Peter Conti and Dr. Axel Steudle. The Compensation Committee met one (1) time during Fiscal Year ended June 30, 2004 to review and discuss employee, officer and director compensation.
DOES THE COMPANY HAVE ANY OTHER STANDING COMMITTEES OF ITS BOARD OF DIRECTORS?
No. As of the date of this report, we do not have a nominating committee or any other committees of the Board of Directors.
DOES THE COMPANY HAVE ANY ADVISORY COMMITTEES?
Yes. We also have a Medical Advisory Board. The Medical Advisory Board is comprised of physicians that possess broad experience in various aspects of molecular imaging. The experience and reputation of these physicians provide a unique resource for informing other physicians in the medical community of the benefits and advantages of molecular imaging and the services we provide. In addition, the Medical Advisory Board
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provides educational services to our personnel and the medical community in general. The Medical Advisory Board is independent of the Board of Directors. Members of the Medical Advisory Board are consultants, and do not have fiduciary obligations to the Company in their role as members of the Medical Advisory Board. Any advice given to us by the Medical Advisory Board is not binding on the Company or our Board of Directors.
WHO IS PAYING THE COST FOR THIS PROXY SOLICITATION AND HOW IS THE SOLICITATION PROCESS CONDUCTED?
This proxy solicitation is being made on behalf of the Company, by the existing management. The Company will pay the expense of the proxy solicitation. We do not anticipate that the costs and expenses incurred in connection with this proxy solicitation will exceed those normally expended for a proxy solicitation for those matters to be voted on in the annual meeting. We will, upon request, reimburse brokers, banks and similar organizations for out-of-pocket and reasonable clerical expenses incurred in forwarding proxy material to their principals.
In addition to the solicitation of proxies by use of the mails, solicitation also may be made by telephone, telegraph or personal interview by our directors, officers and regular employees, none of whom will receive additional compensation for any such solicitation.
DO I HAVE DISSENTER’S RIGHTS?
No. None of the actions proposed to be taken at the annual meeting will entitle any stockholder to dissent and demand a right of appraisal or payment for their shares under the General Corporation Law of the State of Delaware.
HOW DO I MAKE A STOCKHOLDER PROPOSAL AT THE NEXT ANNUAL MEETING?
Proposals of stockholders that are intended to be presented by those stockholders at our fiscal year 2005 annual meeting and intended to be included in MIC’s proxy materials relating to our fiscal year 2005 annual meeting must be received by us at least 120 calendar days prior to the one year anniversary of the mailing date of this proxy statement. That date is on or about July 8, 2005. However, if we move the date for our fiscal year 2005 annual meeting by more than 30 days, stockholder proposals must be received within a reasonable time before we begin to print and mail our proxy materials for a proposal to be included in our proxy materials.
Any proposals must be in compliance with applicable laws and regulations and follow the procedures prescribed in the Securities and Exchange Commission’s Rule 14a-8 to be considered for possible inclusion in the proxy materials. Any shareholder proposals submitted to us after July 8, 2005, or a reasonable time before we mail our proxy for our next annual meeting, whichever is earlier, will be considered untimely and will be subject to discretionary voting authority by the proxy holder.
We have not been notified by any stockholder of his or her intent to present a stockholder proposal from the floor at this year’s annual meeting. The enclosed proxy card grants the proxy holder discretionary authority to vote on any matter properly brought before the annual meeting.
HOW DO I OBTAIN MORE INFORMATION ABOUT THE COMPANY?
We file annual, quarterly and special reports and other information with the Securities and Exchange Commission. You may read and copy any of these documents at the Commission’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference room. Copies of this material may be obtained by mail at prescribed rates from the Public Reference Section of the Commission at the same address. You may read and download the filings of MIC over the internet at the Commission’s web site at http://www.sec.gov. You may also request
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copies of our filings by contacting our Secretary, c/o Molecular Imaging Corporation, 9530 Towne Centre Drive, Suite 120, San Diego, California 92121. Our common stock is listed on the Over-the-Counter Bulletin Board under the symbol “MLRI.OB.”
STOCK OWNERSHIP
HOW MUCH STOCK DO THE DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY OWN AND WHO ARE THE LARGEST OWNERS OF THE COMPANY’S STOCK?
As of October 18, 2004 we had two classes of stock outstanding, known as “common stock” and “Series C Convertible Preferred Stock.” The Series C Convertible Preferred Stock does not have voting rights. It is convertible at any time, at the election of the holder, into shares of common stock at 80% of the current market price of the common stock (70% during the occurrence of certain events of default), but at not less than $.05 per common share, nor more than $.25 per common share.
Since the beginning of the fiscal year, the Company experienced a significant concentration of ownership by its single largest stockholder. On June 8, 2004, the Company sold $1,100,000 of Series C Convertible Preferred Stock to Dragon Nominees Limited (“Dragon”). Dragon is a company organized under the laws of England and Wales. Dragon is controlled by Mr. Ivan Bradbury, a stockholder in MIC. Dragon has the right to convert the Series C Convertible Preferred Stock into shares of Company common stock at any time. Further, under the terms of the July 2002 Stock Purchase Agreement with Dragon, Dragon has a right of first refusal to purchase additional securities offered by the Company. Based on a Form 13D filed with the SEC immediately following the transaction, Mr. Bradbury acquired the shares with personal funds, and the acquisition brought Mr. Bradbury’s beneficial ownership of the Company’s common stock to 31.5%. The percentage of ownership can increase to over 40%, depending on the conversion price of the Series C Convertible Preferred Stock at the time of conversion. Based on its review of filings made with the SEC, the Company does not believe that Mr. Bradbury currently beneficially owns a majority of the common stock of the Company. However, this concentration of ownership allows Mr. Bradbury to exert significant influence over matters requiring stockholder approval.
The following table sets forth certain information regarding beneficial ownership of our stock as of October 18, 2004 (unless otherwise noted), (a) by each person who is known by us to own beneficially more than 5% of any class of our securities, (b) by each of our directors, and (c) by all of our officers and directors as a group. All figures for options or warrants include options or warrants vesting within 60 days after October 18, 2004.
Title of Class
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Name and Address of Beneficial Owner
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Amount
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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 Rule 14a-12
MOLECULAR IMAGING CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
(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:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Table of Contents
MOLECULAR IMAGING CORPORATION
9530 TOWNE CENTRE DRIVE, SUITE 120
SAN DIEGO, CALIFORNIA 92121
October 28, 2004
Dear Stockholder:
You are cordially invited to attend the fiscal year 2004 Annual Meeting of Stockholders of Molecular Imaging Corporation This meeting will be held at the Company’s corporate offices located at 9530 Towne Centre Drive, Suite 120, San Diego, California 92121, 10 A.M., local time, on Tuesday, December 14, 2004.
You will find information about the meeting in this Notice and Proxy Statement. Also enclosed with the proxy materials is our annual report on Form 10-KSB for our past fiscal year.
We look forward to greeting personally those of you who are able to be present at the annual meeting. Your vote is very important and it is important that your shares are represented, whether or not you are able to be with us at the meeting. To ensure your representation at the meeting, even if you anticipate attending in person, we urge you to mark, sign, date and return the enclosed proxy card. If you attend, you will, of course, be entitled to vote in person.
Sincerely,
/s/ KENNETH C. FREDERICK
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Kenneth C. Frederick
Chief Executive Officer
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Table of Contents
MOLECULAR IMAGING CORPORATION
9530 Towne Centre Drive, Suite 120
San Diego, California 92121
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Notice of Annual Meeting of Stockholders
To Be Held On
December 14, 2004
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TO OUR STOCKHOLDERS:
The fiscal year 2004 annual meeting of stockholders of Molecular Imaging Corporation (“MIC” or the “Company”), will be held at the Company’s corporate offices located at 9530 Towne Centre Drive, Suite 120, San Diego, California 92121, on Tuesday, December 14, 2004, at 10 A.M. local time, for the purpose of considering and acting upon the following matters described in more detail in the accompanying proxy statement:
• The election of three directors, each for a term of one year; and
• Such other business as may properly come before the annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE MATTER OUTLINED ABOVE.
The Board of Directors has fixed October 28, 2004 as the “record date” for determining stockholders entitled to notice of and to vote at the annual meeting. Only stockholders of record as of the record date will be entitled to notice of and to vote at the annual meeting or any adjournment of the annual meeting.
All stockholders are cordially invited to attend the annual meeting in person. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, EACH STOCKHOLDER IS REQUESTED TO COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. No postage is required if the proxy card is mailed in the United States. Proxy cards sent from overseas should be sent airmail or air courier to ensure they are received prior to the annual meeting. Any stockholders who attend the annual meeting, and so request, may revoke their proxy and vote their shares in person even if they have already returned a proxy card.
Each stockholder may be asked to present valid picture identification, such as a driver’s license or passport. “Street name” stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.
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MOLECULAR IMAGING CORPORATION
9530 TOWNE CENTRE DRIVE, SUITE 120
SAN DIEGO, CALIFORNIA 92121
--------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 14, 2004
--------------------------------------------------------------------------------
TABLE OF CONTENTS
ABOUT THE MEETING
3
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
3
WHO IS ENTITLED TO VOTE AT THE MEETING?
3
WHAT ARE THE VOTING RIGHTS OF THE STOCKHOLDERS?
3
HOW DO I VOTE AND WHO WILL VOTE MY PROXY?
3
MAY I REVOKE MY PROXY?
3
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
4
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
4
WHAT CONSTITUTES A QUORUM?
4
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
4
HOW WILL VOTES BE TABULATED?
5
WHAT ARE THE BOARD OF DIRECTORS’ RECOMMENDATIONS?
5
DOES THE BOARD OF DIRECTORS HAVE AN AUDIT COMMITTEE?
5
DOES THE BOARD OF DIRECTORS HAVE A COMPENSATION COMMITTEE?
5
DOES MIC HAVE ANY OTHER STANDING COMMITTEES OF ITS BOARD OF DIRECTORS?
5
DOES MIC HAVE ANY ADVISORY COMMITTEES?
5
WHO IS PAYING THE COST FOR THIS PROXY SOLICITATION AND HOW IS THE SOLICITATION PROCESS CONDUCTED?
6
DO I HAVE DISSENTER’S RIGHTS?
6
HOW DO I MAKE A STOCKHOLDER PROPOSAL AT THE NEXT ANNUAL MEETING?
6
HOW DO I OBTAIN MORE INFORMATION ABOUT MIC?
6
STOCK OWNERSHIP
7
HOW MUCH STOCK DO MIC’S DIRECTORS AND EXECUTIVE OFFICERS OWN AND WHO ARE THE LARGEST OWNERS OF MIC’S STOCK?
7
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
9
HOW IS THE COMPENSATION FOR OUR EXECUTIVE OFFICERS DETERMINED?
9
WHAT IS THE SUMMARY COMPENSATION FOR EXECUTIVE OFFICERS?
9
WHAT IS MIC’S PHILOSOPHY BEHIND ITS GRANTING OF STOCK OPTIONS TO ITS EXECUTIVE OFFICERS?
10
HOW MANY STOCK OPTIONS AND WARRANTS WERE GRANTED TO THE EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE IN THE LAST FISCAL YEAR?
10
HAS MIC ENTERED INTO ANY EMPLOYMENT AGREEMENTS WITH ITS EXECUTIVE OFFICERS?
10
WHO WERE THE DIRECTORS DURING THE LAST FISCAL YEAR?
11
HOW ARE OUR DIRECTORS COMPENSATED?
12
HOW ARE MEMBERS OF THE AUDIT AND COMPENSATION COMMITTEE COMPENSATED?
13
HOW ARE MEMBERS OF THE MEDICAL ADVISORY BOARD COMPENSATED?
13
HAVE THE DIRECTORS AND OFFICERS OF THE COMPANY COMPLIED WITH SECTION 16(a) OF THE EXCHANGE ACT?
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HOW MANY TIMES DID THE BOARD OF DIRECTORS MEET DURING THIS PAST FISCAL YEAR?
14
ARE THERE ANY EXECUTIVE OFFICERS OF MIC WHO ARE NOT MEMBERS OF OUR BOARD OF DIRECTORS?
14
DOES THE COMPANY HAVE A CODE OF ETHICS?
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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INDEPENDENT PUBLIC ACCOUNTANTS
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REPORT OF THE AUDIT COMMITTEE
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PROPOSAL 1—ELECTION OF DIRECTORS
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OTHER BUSINESS
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MOLECULAR IMAGING CORPORATION
9530 Towne Centre Drive, Suite 120
San Diego, California 92121
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PROXY STATEMENT
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This proxy statement contains information and is furnished in connection with the solicitation by the Board of Directors of Molecular Imaging Corporation, a Delaware corporation (“MIC” or the “Company”), of proxies for use at the fiscal year 2004 annual meeting of stockholders of Molecular Imaging Corporation to be held at the Company’s corporate offices at 9530 Towne Centre Drive, Suite 120, San Diego, California 92121, on Tuesday, December 14, 2004, and any adjournment of the annual meeting. This proxy statement and accompanying proxy card are being mailed to stockholders on or about November 8, 2004.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, the stockholders will act upon the matters outlined in the notice of meeting on the cover page of this proxy statement, including:
• The election of directors.
In addition, our management will report on the performance of MIC during the 2004 fiscal year and respond to questions from stockholders.
WHO IS ENTITLED TO VOTE AT THE MEETING?
The Board of Directors has fixed the close of business on October 28, 2004, as the “record date” for the determination of stockholders who are entitled to notice of the meeting and who are entitled to vote at the annual meeting. As of the record date we had 56,267,801 outstanding shares of common stock, par value $.0001 per share. Only these holders of common stock will be entitled to notice of and to vote at the annual meeting. Each share of common stock represents one vote on any and all matters voted upon at the annual meeting.
WHAT ARE THE VOTING RIGHTS OF THE STOCKHOLDERS?
The holders of our common stock will vote together as a single class on all matters to be acted upon at the annual meeting and each holder of common stock will be entitled to one vote per share of common stock held.
HOW DO I VOTE AND WHO WILL VOTE MY PROXY?
If you properly complete, sign and return the accompanying proxy card, it will be voted as you direct. Kenneth C. Frederick and Steven J. Davis, the persons named as proxies on the proxy card accompanying this proxy statement, will vote each properly executed and returned proxy as indicated on the directions of the returned proxy, or if no direction is indicated, the proxy will be voted in accordance with the recommendations of our Board of Directors contained in this proxy statement. Even if you plan to attend the annual meeting, your plans may change, so it is a good idea to complete, sign and return your proxy card in advance of the annual meeting. “Street name” stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.
MAY I REVOKE MY PROXY?
Yes. Each stockholder giving a proxy has the power to revoke it at any time before the shares it represents are voted. Revocation of a proxy is effective upon receipt by our Secretary, at or prior to the annual meeting, of
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either an instrument revoking the proxy or a duly executed proxy bearing a later date. Additionally, a stockholder may change or revoke a previously executed proxy by attending the annual meeting and requesting to vote in person. Please note that attendance at the annual meeting without requesting to vote in person will not revoke a previously granted proxy.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple accounts at the transfer agent and/or with stockbrokers. Please sign and return all proxy cards to ensure that all of your shares are voted.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
It depends on the manner in which you hold your shares.
If you hold your shares in your name, you may only vote by:
• Returning a properly executed proxy card; or
• By voting in person at the annual meeting.
You may not vote by telephone or electronically through the Internet, except as described below.
However, if your shares are registered in the name of a bank, brokerage firm, or other custodian (so you are a “beneficial” owner), you may vote by:
• Returning a properly executed proxy card;
• Submitting a proxy from the custodian at the annual meeting; or
• You may also be eligible to vote electronically via the Internet or by telephone.
A large number of banks and brokerage firms are participating in the ADP Investor Communication Services online program. This program provides beneficial owners the opportunity to vote via the Internet or by telephone. If your bank or brokerage firm is participating in ADP’s program, the voting instruction form for ADP will provide instructions for electronic voting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting of at least a majority of the outstanding shares of our common stock entitled to vote, whether present in person or by proxy, will constitute a quorum. A quorum must be present at the annual meeting to permit the conduct of business.
If you hold your shares in “street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. Thus, if you do not give your broker or nominee specific instructions, your shares may not be voted on those matters and will not be counted in determining the number of shares necessary for approval. Shares represented by such “broker non-votes” will, however, be counted in determining whether there is a quorum.
WHAT VOTE IS REQUIRED TO APPROVE THE PROPOSAL?
The affirmative vote of a plurality of the votes cast at the annual meeting is required to elect directors. A properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors will not be voted for the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. “Broker non-votes” are not included in the tabulation of the vote concerning the election of our directors and, therefore, do not have the effect of votes in opposition to that election.
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HOW WILL VOTES BE TABULATED?
The election inspectors appointed for the annual meeting will tabulate the votes cast in person or by proxy at the annual meeting and will determine whether or not a quorum is present. The election inspectors will treat abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum but as un-voted for purposes of determining the approval of any matter submitted to the stockholders for a vote. If a broker indicates on the proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter but will be counted for purposes of determining the presence of a quorum.
WHAT ARE THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS?
Unless you give other instructions on your proxy card, the persons named above will vote in accordance with the recommendations of the Board of Directors. The Board of Directors’ recommendations are set forth together with the description of each item in this proxy statement. In summary, the Board of Directors recommends a vote:
• FOR the election of directors.
With respect to any other matter that properly comes before the annual meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion.
DOES THE BOARD OF DIRECTORS HAVE AN AUDIT COMMITTEE?
Yes. At a meeting on January 30, 2002, the Board of Directors established an Audit Committee to consist of at least two (2) directors. The Audit Committee has adopted a written Audit Committee Charter, which was filed as an Appendix to last year’s proxy statement. The current members of the Audit Committee are Dr. Axel Steudle (as Chair) and Kenneth Frederick. The Company believes Dr. Axel Steudle is “independent” as defined in the listing rules of the National Association of Securities Dealers (the “NASD”). Mr. Frederick is the Chief Executive Officer of the Company and is therefore not considered to be “independent” as defined in the NASD listing rules. During Fiscal Year ended June 30, 2004, the Audit Committee met six (6) times to review and discuss our financial statements and discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, “Communication With Audit Committee”.
DOES THE BOARD OF DIRECTORS HAVE A COMPENSATION COMMITTEE?
Yes. The Board of Directors established a Compensation Committee in September 2002. The Compensation Committee currently consists of two (2) directors. The directors who are currently serving on the Compensation Committee are Dr. Peter Conti and Dr. Axel Steudle. The Compensation Committee met one (1) time during Fiscal Year ended June 30, 2004 to review and discuss employee, officer and director compensation.
DOES THE COMPANY HAVE ANY OTHER STANDING COMMITTEES OF ITS BOARD OF DIRECTORS?
No. As of the date of this report, we do not have a nominating committee or any other committees of the Board of Directors.
DOES THE COMPANY HAVE ANY ADVISORY COMMITTEES?
Yes. We also have a Medical Advisory Board. The Medical Advisory Board is comprised of physicians that possess broad experience in various aspects of molecular imaging. The experience and reputation of these physicians provide a unique resource for informing other physicians in the medical community of the benefits and advantages of molecular imaging and the services we provide. In addition, the Medical Advisory Board
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provides educational services to our personnel and the medical community in general. The Medical Advisory Board is independent of the Board of Directors. Members of the Medical Advisory Board are consultants, and do not have fiduciary obligations to the Company in their role as members of the Medical Advisory Board. Any advice given to us by the Medical Advisory Board is not binding on the Company or our Board of Directors.
WHO IS PAYING THE COST FOR THIS PROXY SOLICITATION AND HOW IS THE SOLICITATION PROCESS CONDUCTED?
This proxy solicitation is being made on behalf of the Company, by the existing management. The Company will pay the expense of the proxy solicitation. We do not anticipate that the costs and expenses incurred in connection with this proxy solicitation will exceed those normally expended for a proxy solicitation for those matters to be voted on in the annual meeting. We will, upon request, reimburse brokers, banks and similar organizations for out-of-pocket and reasonable clerical expenses incurred in forwarding proxy material to their principals.
In addition to the solicitation of proxies by use of the mails, solicitation also may be made by telephone, telegraph or personal interview by our directors, officers and regular employees, none of whom will receive additional compensation for any such solicitation.
DO I HAVE DISSENTER’S RIGHTS?
No. None of the actions proposed to be taken at the annual meeting will entitle any stockholder to dissent and demand a right of appraisal or payment for their shares under the General Corporation Law of the State of Delaware.
HOW DO I MAKE A STOCKHOLDER PROPOSAL AT THE NEXT ANNUAL MEETING?
Proposals of stockholders that are intended to be presented by those stockholders at our fiscal year 2005 annual meeting and intended to be included in MIC’s proxy materials relating to our fiscal year 2005 annual meeting must be received by us at least 120 calendar days prior to the one year anniversary of the mailing date of this proxy statement. That date is on or about July 8, 2005. However, if we move the date for our fiscal year 2005 annual meeting by more than 30 days, stockholder proposals must be received within a reasonable time before we begin to print and mail our proxy materials for a proposal to be included in our proxy materials.
Any proposals must be in compliance with applicable laws and regulations and follow the procedures prescribed in the Securities and Exchange Commission’s Rule 14a-8 to be considered for possible inclusion in the proxy materials. Any shareholder proposals submitted to us after July 8, 2005, or a reasonable time before we mail our proxy for our next annual meeting, whichever is earlier, will be considered untimely and will be subject to discretionary voting authority by the proxy holder.
We have not been notified by any stockholder of his or her intent to present a stockholder proposal from the floor at this year’s annual meeting. The enclosed proxy card grants the proxy holder discretionary authority to vote on any matter properly brought before the annual meeting.
HOW DO I OBTAIN MORE INFORMATION ABOUT THE COMPANY?
We file annual, quarterly and special reports and other information with the Securities and Exchange Commission. You may read and copy any of these documents at the Commission’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference room. Copies of this material may be obtained by mail at prescribed rates from the Public Reference Section of the Commission at the same address. You may read and download the filings of MIC over the internet at the Commission’s web site at http://www.sec.gov. You may also request
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copies of our filings by contacting our Secretary, c/o Molecular Imaging Corporation, 9530 Towne Centre Drive, Suite 120, San Diego, California 92121. Our common stock is listed on the Over-the-Counter Bulletin Board under the symbol “MLRI.OB.”
STOCK OWNERSHIP
HOW MUCH STOCK DO THE DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY OWN AND WHO ARE THE LARGEST OWNERS OF THE COMPANY’S STOCK?
As of October 18, 2004 we had two classes of stock outstanding, known as “common stock” and “Series C Convertible Preferred Stock.” The Series C Convertible Preferred Stock does not have voting rights. It is convertible at any time, at the election of the holder, into shares of common stock at 80% of the current market price of the common stock (70% during the occurrence of certain events of default), but at not less than $.05 per common share, nor more than $.25 per common share.
Since the beginning of the fiscal year, the Company experienced a significant concentration of ownership by its single largest stockholder. On June 8, 2004, the Company sold $1,100,000 of Series C Convertible Preferred Stock to Dragon Nominees Limited (“Dragon”). Dragon is a company organized under the laws of England and Wales. Dragon is controlled by Mr. Ivan Bradbury, a stockholder in MIC. Dragon has the right to convert the Series C Convertible Preferred Stock into shares of Company common stock at any time. Further, under the terms of the July 2002 Stock Purchase Agreement with Dragon, Dragon has a right of first refusal to purchase additional securities offered by the Company. Based on a Form 13D filed with the SEC immediately following the transaction, Mr. Bradbury acquired the shares with personal funds, and the acquisition brought Mr. Bradbury’s beneficial ownership of the Company’s common stock to 31.5%. The percentage of ownership can increase to over 40%, depending on the conversion price of the Series C Convertible Preferred Stock at the time of conversion. Based on its review of filings made with the SEC, the Company does not believe that Mr. Bradbury currently beneficially owns a majority of the common stock of the Company. However, this concentration of ownership allows Mr. Bradbury to exert significant influence over matters requiring stockholder approval.
The following table sets forth certain information regarding beneficial ownership of our stock as of October 18, 2004 (unless otherwise noted), (a) by each person who is known by us to own beneficially more than 5% of any class of our securities, (b) by each of our directors, and (c) by all of our officers and directors as a group. All figures for options or warrants include options or warrants vesting within 60 days after October 18, 2004.
Title of Class
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Name and Address of Beneficial Owner
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Amount
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