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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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SCHEDULE
14A
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Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
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Filed
by the Registrant ý
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Filed
by a Party other than the Registrant o
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Check
the appropriate box:
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o
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Preliminary
Proxy Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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ý
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §240.14a-12
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PPOL,
INC.
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(Name
of Registrant as Specified In Its Charter)
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Not
applicable
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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ý
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No
fee required.
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary materials.
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o
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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PPOL,
INC.
1
CITY BOULEVARD WEST
SUITE
820
ORANGE,
CALIFORNIA 92868
_______________
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
September
26, 2006
_______________
To
the
Shareholders of PPOL, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the ”Annual
Meeting”) of PPOL, Inc., a California corporation (the “Company”), will be held
at the Conference Center of Griffin Towers 5, located at 5 Hutton Centre
Drive,
Santa Ana, California 92707 on Tuesday, September
26, 2006
at 10:00
a.m. local time for the following purposes, as more fully described in the
Proxy
Statement accompanying this Notice:
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1.
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To
elect three (3) directors of the Company each to serve a term of
one (1)
year and until their successors are duly elected and qualified;
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2.
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To
ratify Windes & McClaughry Accountancy Corporation (“Windes &
McClaughry”) as the Company’s independent accountants;
and
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3.
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To
transact such other business as may properly come before the meeting
or
any adjournment thereof.
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Only Shareholders of record at the close of business on July 31, 2006 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. A list of such Shareholders will be available for examination by
any
stockholder at the Annual Meeting, or at the office of the Secretary of the
Company, 1 City Boulevard West, Suite 820, Orange, California 92868 for a
period
of ten (10) days prior to the Annual Meeting.
A copy of the Company’s Annual Report for the fiscal year ended March 31, 2006,
which contains consolidated financial statements, is included with this mailing.
Your attention is directed to the accompanying Proxy Statement for the text
of
the matters to be proposed at the Annual Meeting and further information
regarding each proposal to be made.
SHAREHOLDERS UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON ARE ASKED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE
IN PERSON IF YOU WISH.
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By
Order of the Board of Directors,
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/S/
MASAO YAMAMOTO
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Masao
Yamamoto
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CHAIRMAN
OF THE BOARD
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Orange,
California
September
11, 2006
PPOL,
INC.
1
CITY BOULEVARD WEST
SUITE
820
ORANGE,
CALIFORNIA 92868
_______________
PROXY
STATEMENT
APPROXIMATE
DATE PROXY MATERIAL FIRST SENT TO SHAREHOLDERS:
September
11, 2006
_______________
ANNUAL
MEETING OF SHAREHOLDERS—SEPTEMBER
26, 2006
INFORMATION
CONCERNING SOLICITATION AND VOTING
This
Proxy Statement is furnished by the Board of Directors of PPOL, Inc., a
California corporation (the “Board” and the “Company,” respectively), in
connection with the solicitation of proxies to be used at the Annual Meeting
of
Shareholders (the “Annual Meeting”) of the Company to be held on Tuesday,
September 26, 2006, at 10:00 a.m. local time, at the Conference Center of
Griffin Towers 5, located at 5 Hutton Centre Drive, Santa Ana, California
92707
and at any adjournments or postponements thereof. Our principal executive
office
is 1 City Boulevard West, Suite 820, Orange, California 92868 and our telephone
number is (714) 937-3211. The purposes of the Annual Meeting are set forth
in
the accompanying Notice of Annual Meeting of Shareholders.
ANY
PROXY IN WHICH NO DIRECTION IS SPECIFIED WILL BE VOTED IN FAVOR OF EACH OF
THE
MATTERS FOR WHICH NO DIRECTION IS SPECIFIED.
GENERAL
INFORMATION ABOUT THE ANNUAL MEETING
The
close
of business on July 31, 2006 has been fixed as the record date for the
determination of Shareholders entitled to receive notice of and to vote at
the
Annual Meeting. On that date, the Company’s outstanding voting securities
consisted of 20,542,875
shares
of
Common Stock. On all matters that come before the Annual Meeting, each
stockholder or his or her proxy will be entitled to one (1) vote for each
share
of Common Stock held by the stockholder on the record date.
If
a
broker, bank or other nominee holds your shares, you will receive instructions
from them that you must follow in order to have your shares voted.
The
holders of a majority of the Company’s stock issued and outstanding and entitled
to vote at the Annual Meeting, present in person or represented by proxy,
will
constitute a quorum for the transaction of business at the Annual Meeting
or any
adjournment thereof. Abstentions will be counted for purposes of determining
if
a quorum is present at the Annual Meeting for the transaction of business.
Accordingly, if you have returned valid proxy instructions or attend the
Annual
Meeting in person, your Common Stock will be counted for the purpose of
determining whether there is a quorum, even if you wish to abstain from voting
on some or all matters at the Annual Meeting. Broker nominee votes will be
counted as present or represented for purposes of determining the presence
of a
quorum.
Abstentions
are included in determining the number of shares voted on the proposals
submitted to Shareholders (other than the election of directors) and will
have
the same effect as a vote against such proposals. Although broker “non-votes”
and abstentions will be counted for the purposes of attaining a quorum for
Proposal One and Two (to elect Yoshihiro Aota, Richard Izumi and Masao Yamamoto
as directors and to ratify Windes & McClaughry as the Company’s independent
accountants, respectively ), directors are elected by a plurality of the
votes
of the shares of Common Stock represented and voted at the Annual Meeting
and,
therefore, broker non-votes and abstentions will have no effect on the outcome
of the election of directors.
If
any
shareholder gives notice at the Meeting prior to commencement of voting that
the
shareholder intends to cumulate his or her votes, then the directors shall
be
elected by the cumulative voting method. In such event, the shareholders
shall
have the right to cast that number of votes equal to the number of shares
which
they hold multiplied by the number of directors to be elected by them, i.e.,
for
the purpose of this election, three votes for each share. Each shareholder
may
cast the whole number of votes for one candidate, or distribute them among
two
or more candidates. The persons named in the accompanying proxy will have
discretionary authority to cumulate votes in the election of directors in
favor
of one or more candidates.
Richard H. Izumi will serve as proxy holder, with full power of substitution,
at
the annual shareholders meeting of stockholders to be held on September
26, 2006.
When
proxies are properly dated, executed and returned, the shares represented
by
such proxies will be voted at the Annual Meeting in accordance with the
instructions of the stockholder. However, if no specific instructions are
given,
the shares will be voted in accordance with the following recommendations
of our
Board of Directors:
•
“FOR”
the
election of Yoshihiro Aota, Richard Izumi and Masao Yamamoto to serve for
one
(1) year and until their successors are duly elected and qualified.
•
“FOR”
the
ratification of Windes & McClaughry as the Company’s independent
accountants.
We are not aware of any matters to be presented other than those described
in
this Proxy Statement. If any matters not described in the Proxy Statement
are
properly presented at the meeting, the proxy holders will use their own judgment
to determine how to vote your shares. If the meeting is adjourned, the proxy
holders can vote your shares on the new meeting date as well, unless you
have
revoked your proxy instructions.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time prior to its use by (i) delivering a written notice
of
revocation to the principal financial officer of the Company, (ii) filing
a duly
executed proxy bearing a later date with the Company or (iii) attending the
Annual Meeting and voting in person.
The costs of this solicitation will be borne by the Company. The Company
will
request brokerage houses and other nominees, custodians and fiduciaries to
forward soliciting material to beneficial owners of the Company’s Common Stock.
The Company may reimburse brokerage firms and other persons representing
beneficial owners for their expenses in forwarding solicitation materials
to
beneficial owners. Proxies may also be solicited by certain of the Company’s
directors, officers and regular employees, without additional compensation,
either personally, by telephone, facsimile or other means.
PROPOSAL
ONE
ELECTION
OF DIRECTORS
GENERAL
The
Bylaws of the Company provide that the Board of Directors is to be fixed
at no
less than three (3) and no more than seven (7) directors. The current number
of
directors is currently fixed at three (3).
The
Board
of Directors knows of no reason why the nominees should be unable or unwilling
to serve, but if any nominee should, for any reason, be unable or unwilling
to
serve, the proxies will be voted for the election of such other person to
the
office of director as the Board of Directors may recommend in the place of
such
nominee.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE
NOMINEES
FOR ELECTION AS MEMBERS OF THE BOARD OF DIRECTORS.
VOTING
INFORMATION
Proxies
solicited by the Board of Directors will, unless otherwise directed, be voted
to
elect all nominees proposed by the Board. A stockholder submitting a proxy
may
vote for all or any of the nominees for election to the Board of Directors
or
may withhold his or her vote from all or any of such nominees. If a quorum
is
present and voting, the nominees receiving the highest number of votes, up
to
the number of directors to be elected, will be elected to the Board. An
abstention from voting on this matter by a stockholder, while included for
purposes of calculating a quorum for the Annual Meeting, has no effect. In
addition, although broker “non-votes” will be counted for purposes of attaining
a quorum, they too will have no effect on the vote. The persons designated
in
the enclosed proxy will vote your shares FOR each nominee unless instructions
otherwise are indicated in the enclosed proxy.
Each
nominee has agreed to serve the Company as a director if elected. However,
as noted above, should any nominee become unwilling or unable to serve if
elected, the Proxy agents named in the proxy will exercise their voting power
in
favor of such other person as the Board of Directors of the Company may
recommend.
CURRENT
DIRECTORS AND NOMINEES
The following table sets forth the name, age and other information of current
directors and nominees:
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NAME
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AGE
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DIRECTOR
SINCE
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TERM
EXPIRES
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STANDING
FOR
RE-ELECTION
OR
ELECTION
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INDEPENDENT
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Yoshihiro
Aota(1)
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61
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5/20/2005
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2006
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Yes
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No
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Richard
Izumi(2)
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53
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3/31/
2005
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2006
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Yes
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No
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Masao
Yamamoto(3)
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57
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3/31/
2005
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2006
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Yes
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No
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The following is a brief background summary for each of the current and nominee
directors:
Mr. Yoshihiro Aota currently serves as CEO of U-World Co., Ltd., a Japanese
corporation involved in network marketing. He was the President and a director
of AJOL from 1994 through December 2004. Mr. Aota was also a director of
PPOL through December 31, 2004. Prior to AJOL, Mr. Aota worked for Forval
Corporation which was the majority shareholder in PPOL, Inc. While at Forval
Corporation, Mr. Aota directed Forval’s business strategy, PC business and NW
business. Prior to Forval Corporation, Mr. Aota was in charge of business
planning and administration of Katena Corporation, a Japanese Corporation.
Mr.
Aota holds a Bachelor of Science degree from Tokyo University.
Mr.
Richard Izumi is serving as Chief Financial Officer of PPOL, Inc. Mr. Izumi
is
also Senior Managing Director of JGS Co. Ltd, a Japanese corporation involved
in
the licensing of energy and high-tech related intellectual property and Director
of City Communication, Inc., a Japanese corporation involved in broadcast
technology He is also an independent consultant to public companies, including
the registrant, on financial matters and international transactions, primarily
between U.S. and Japan. Earlier he served as Partner at accounting firms
Ernst
& Young and Price Waterhouse (now known as PricewaterhouseCoopers). Mr.
Izumi holds a B.S. in Business Administration from the University of Southern
California.
Mr.
Masao
Yamamoto is currently serving as Chief Executive Officer of PPOL, Inc. and
Chief
Executive Officer of AJOL Co. Ltd., PPOL’s wholly owned subsidiary, where he
previously served as General Manager of Finance and Director. Prior to joining
AJOL he was General Manager of accounting with Chiiki Shinko Kyouiku Jigyo
Foundation. Mr. Yamamoto graduated from the Koganei Industrial School, with
a
major in Electronics.
If
elected, each of the nominees is expected to serve until the 2007 annual
meeting
of shareholders and thereafter until his or her successor is duly elected
and
qualified.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held ten meetings during the fiscal year ended March
31,
2006. Mr. Yamamoto and Mr. Izumi attended 10 of the 10 meetings held while
they were directors. Mr. Inoue attended 6 of the 6 meetings held while he
was a director. Mr. Aota attended 8 of the 8 meetings held while he was a
director.
Prior to their resignations on March 31, 2005, the board had four independent
directors who served on the 1) audit committee, 2) nominating and corporate
governance committee and 3) compensation committee. Subsequent to March,
31,
2005, with the resignation of the former independent directors, the current
Board has not assigned any members to committees. However, the entire
Board has taken on the responsibilities of each of the committees until such
time that independent directors are added to the Board. The Company does
not have any independent directors at the current time. The following
describes each intended committee and its intended function upon
formation.
Subsequent to March 31, 2005, the entire Board has been performing the
responsibilities of the Audit Committee. The functions of the Audit Committee,
upon reconstitution of independent directors, will include reviewing and
supervising the financial controls of the Company, making recommendations
to the
Board of Directors regarding the Company’s independent accountants, reviewing
the books and accounts of the Company, meeting with the officers of the Company
regarding the Company’s financial controls, acting upon recommendations of the
independent accountants and taking such further actions as the Audit Committee
deems necessary to complete an audit of the books and accounts of the Company.
The members of the Audit Committee will be “independent” as defined in Rule
4200(a)(15) of the National Association of Securities Dealers’ listing
standards. The Company currently does not have a financial expert on the
audit
committee because it currently does not yet have any independent directors
to
serve that role.
Subsequent to March 31, 2005, the entire Board has been performing the
responsibilities of the Compensation Committee. The Compensation Committee’s
functions, upon appointment of its members, will include reviewing with
management cash and other compensation policies for employees, making
recommendations to the Board of Directors regarding compensation matters
and
determining compensation for the Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer. In addition, the Compensation Committee
will administer the Company’s stock plans and determine the terms and conditions
of issuances of awards there under.
Subsequent to March 31, 2005, the entire Board has been performing the
responsibilities of the Nominating and Corporate Governance Committee. The
Nominating and Corporate Governance Committee, upon appointment of its members,
will make recommendations to the Board regarding the size and composition
of the
Board, establish procedures for the nomination process, recommend candidates
for
election to the Board of Directors and nominate officers for appointment
by the
Board. In addition, the Committee will review and report to the Board on
a
periodic basis with regard to matters of corporate governance. The Committee
will consider nominees recommended by security holders and evaluate those
nominees. Security holders making such a nomination must deliver the
recommendation in writing to the principal financial officer of the
Company.
AUDIT
FEES
The
Company incurred the following fees to Stonefield Josephson, Inc. during
the
2006 and 2005 fiscal years:
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2006
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2005
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Audit
fees
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339,000
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84,000
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Tax
fees
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—
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—
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All
other fees
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—
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—
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339,000
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84,000
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Stonefield
Josephson, Inc ceased to be the Company’s independent accountants as of
September 20, 2005.
Commencing
with the June 30, 2005 financial statements, Windes and McClaughry has been
retained as the company’s independent accountants: The Company incurred the
following fees to Windes & McClaughry during the 2006 fiscal
year:
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2006
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Audit
fees
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$
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185,000
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Tax
fees
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—
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All
other fees
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—
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$
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185,000
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Estimated
fees for the fiscal year ended March 31, 2006 audit to be invoiced in fiscal
2007 are $130,000 from Windes & McClaughry.
FINANCIAL
INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The
Company did not engage Stonefield Josephson, Inc. nor Windes & McClaughry
for financial information systems design and implementation, as defined in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X, during the most recent
fiscal year.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of March 31, 2006, certain information with
respect to the beneficial ownership of the Company’s Common Stock by (i) any
person (including any “group” as that term is used in Section 13(d)(3) of the
Exchange Act) known by the Company to be the beneficial owner of more than
5% of
any class of the Company’s voting securities, (ii) each director, (iii) each of
the named executive officers, as defined below, and (iv) all current directors
and executive officers of the Company as a group. As of March 31, 2006, there
were 20,542,875 shares (1) of issued and outstanding Common Stock.
|
NAME
AND ADDRESS
|
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NUMBER
OF SHARES
OF
COMMON STOCK
BENEFICIALLY
OWNED (1)
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PERCENT
OF TOTAL
COMMON
STOCK
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5%
SHAREHOLDERS
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Foster
Strategic Investment Partnership(2) 9 Raffles Place #08-01,
Republic Plaza |
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10,547,594
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51.34
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%
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Leo
Global Fund(3)
|
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Mori
Bldg, 3F Toranomon 11
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6-4
Toranomon, 2-Chome
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Minato-Ku,
Tokyo, Japan 105-0001
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3,138,571
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15.28
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%
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DIRECTORS
AND OFFICERS
|
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Yoshihiro
Aota
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Tennozu
First Tower 9th
floor
2-2-4
Higashi-Shinagawa, Shinagawa-ku
Tokyo,
Japan 140-0002.
|
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0
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0
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%
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Richard
H. Izumi
|
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1
City Boulevard West, Suite 820
|
|
|
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Orange,
California 92868
|
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24,489
|
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0.12
|
%
|
|
|
|
|
|
|
|
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Masao
Yamamoto
|
|
|
|
|
|
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Tennozu
First Tower 9th
floor
|
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0
|
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0%
|
|
|
2-2-4
Higashi-Shinagawa, Shinagawa-ku
Tokyo,
Japan 140-0002
|
|
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(1)
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities.
(2)
Based
on reasonable inquiry, the Company is aware that Green Capital claims beneficial
ownership of 100% of the shares owned by Foster Strategic Investment
Partnership. The basis for this determination is an oral understanding between
Green Capital and Foster Strategic Investment Partnership that Foster Strategic
Management will exercise its shareholder voting rights only with the concurrence
of Green Capital.
(3)
Based
on reasonable inquiry, the Company is aware that Green Capital claims beneficial
ownership of 98% of the shares owned by Leo Global Fund. The basis for this
determination is an oral understanding between Green Capital and Leo Global
Fund
that Leo Global Fund will exercise its shareholder voting rights only with
the
concurrence of Green Capital.
EXECUTIVE
COMPENSATION AND OTHER INFORMATION
A.
THE COMPANY
The following table sets forth the compensation of PPOL’s “Named Executive
Officers,” which consist of a) all persons serving as the chief executive
officer during the fiscal year and b) Chief Financial Officer:
|
NAME
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AGE
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POSITION
|
ANNUAL
SALARY
|
|||||||
|
Masao
Yamamoto
|
56
|
Chief
Executive Officer
|
$
|
0
|
||||||
|
Richard
Izumi
|
52
|
Chief
Financial Officer
|
$
|
330,000
|
||||||
|
Hisao
Inoue
|
54
|
Chief
Executive Officer
|
$
|
42,500
|
||||||
B.
AJOL (THE COMPANY’S WHOLLY OWNED SUBSIDIARY)
The following table sets forth the compensation of AJOL’s “Named Executive
Officers,” which consist of a) all persons serving as the chief executive
officer during the fiscal year and b) the four (4) most highly compensated
individuals serving at the end of the fiscal year, in addition to the chief
executive officer:
|
|
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SUMMARY
ANNUAL COMPENSATION TABLE
|
|
|||||||||
|
|
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FISCAL
|
|
|
|
|
|
|
|
|||
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NAME
AND PRINCIPAL POSITION
|
|
YEAR
|
|
SALARY
($)
|
|
BONUS
($)
|
|
TOTAL
|
|
|||
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Yoshihiro
Aota
|
|
2006
|
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$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
|
Representative
|
|
2005
|
|
$
|
147,513
|
|
$
|
557,880
|
|
$
|
705,393
|
|
|
|
|
2004
|
|
$
|
177,405
|
|
$
|
274,430
|
|
$
|
451,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Manabu
Nakamura
|
|
2006
|
|
$
|
110,052
|
|
$
|
44,172
|
|
$
|
154,224
|
|
|
Director
|
|
2005
|
|
$
|
114,265
|
|
$
|
41,841
|
|
$
|
156,106
|
|
|
|
|
2004
|
|
$
|
108,813
|
35,410
|
144,223
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Masao
Yamamoto
|
|
2006
|
|
$
|
173,754
|
|
$
|
0
|
|
$
|
173,754
|
|
|
Representative
Director
|
|
2005
|
|
$
|
133,118
|
|
$
|
55,788
|
|
$
|
188,906
|
|
|
|
|
2004
|
|
$
|
109,242
|
35,410
|
144,652
|
|
||||
|
Maki
Iida
|
|
2006
|
|
$
|
53,708
|
|
$
|
10,601
|
|
$
|
64,309
|
|
|
Director
|
|
2005
|
|
$
|
44,960
|
19,052
|
64,012
|
|
||||
|
|
|
2004
|
|
$
|
42,345
|
15,368
|
57,713
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Nobuyuki
Ishii
|
|
2006
|
|
$
|
0
|
$
|
0
|
|
$
|
0
|
|
|
|
Supervisor
|
|
2005
|
|
$
|
112,320
|
|
$
|
46,490
|
|
$
|
158,810
|
|
|
|
|
2004
|
|
$
|
92,250
|
21,246
|
113,496
|
|
||||
|
Akihito
Otani
|
|
2006
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
|
Supervisor
|
|
2005
|
|
$
|
66,649
|
|
$
|
13,041
|
|
$
|
79,690
|
|
|
|
|
2004
|
|
$
|
63,343
|
12,394
|
75,737
|
|
||||
OPTION
GRANTS IN LAST FISCAL YEAR
No
option
grants were made during the fiscal year ended March 31, 2006.
The
Company established a stock option plan in March 2004 (the “2004 Plan”). In
accordance with the 2004 Plan, the Company is authorized to issue incentive
stock options and non-qualified stock options for up to 2,000,000 shares
of the
Company’s common stock.
The Plan is intended to encourage stock ownership by employees and directors
of
the Company so that they may acquire or increase their proprietary interest
in
the Company and to encourage such employees and directors to remain in the
employ of the Company and to put forth maximum efforts for the success of
the
Company’s business. There were 1,220,000 options granted in March 2004 which
vested 100% in March 2006, two years after their grant date. There were
80,000 options granted in July 2004 which vested 100% in July 2005. There
were
no additional options granted in the year ended March 31, 2006.
|
|
Number
of
securities
underlying
options
|
Percent
of
Total
options
granted
to
employees
during
|
Exercise
price
per
|
Expiration
|
Potential
realizable value
at
assumed annual rates
of
stock price appreciation
for
option term (1)
|
||||||||||||||
|
Name
|
granted
|
fiscal
year
|
share
|
Date
|
5%
|
10%
|
|||||||||||||
|
2004
|
|
|
|
|
|
|
|||||||||||||
|
Yoshihiro
Aota
|
1,000,000
|
81.97
|
%
|
$
|
4.00
|
March
25, 2014
|
6,859,300
|
12,505,600
|
|||||||||||
|
|
|||||||||||||||||||
|
Nobuo
Takada
|
50,000
|
4.10
|
%
|
$
|
4.00
|
March
25, 2014
|
342,900
|
625,300
|
|||||||||||
|
|
|||||||||||||||||||
|
Masao
Yamamoto
|
40,000
|
3.28
|
%
|
$
|
4.00
|
March
25, 2014
|
274,400
|
500,200
|
|||||||||||
|
|
|||||||||||||||||||
|
Toshiaki
Shimojo
|
30,000
|
2.46
|
%
|
$
|
4.00
|
March
25, 2014
|
205,800
|
375,200
|
|||||||||||
|
|
|||||||||||||||||||
|
Yuji
Kamata
|
20,000
|
1.64
|
%
|
$
|
4.00
|
March
25, 2014
|
137,200
|
250,100
|
|||||||||||
|
|
|||||||||||||||||||
|
Nobuyuki
Ishii
|
40,000
|
3.28
|
%
|
$
|
4.00
|
March
25, 2014
|
274,400
|
500,200
|
|||||||||||
|
|
|||||||||||||||||||
|
Manabu
Nakamura
|
40,000
|
3.28
|
%
|
$
|
4.00
|
March
25, 2014
|
274,400
|
500,200
|
|||||||||||
|
|
|||||||||||||||||||
|
Total
for 2004
|
1,220,000
|
100.00
|
%
|
||||||||||||||||
|
|
|||||||||||||||||||
|
2005
|
|||||||||||||||||||
|
Robert
Brasch
|
40,000
|
50.00
|
%
|
$
|
4.00
|
July
25, 2014
|
274,400
|
500,200
|
|||||||||||
|
|
|||||||||||||||||||
|
Lowell
Hattori
|
40,000
|
50.00
|
%
|
$
|
4.00
|
July
25, 2014
|
274,400
|
500,200
|
|||||||||||
|
|
|||||||||||||||||||
|
Total
for 2005
|
80,000
|
100.00
|
%
|
||||||||||||||||
(1)
In
accordance with SEC rules, these columns show gains that could accrue for
the
respective options, assuming that the market price of our common stock
appreciates from the date of grant over a period of 10 years at an
annualized rate of 5% and 10%,
Reference
is made to Notes to Consolidated Financial Statements for the year ended
March
31, 2006 (which is included in the annual report on Form 10-K and which is
being
delivered with this Proxy Statement) for more detailed information regarding
the
Company’s 2004 Plan.
EMPLOYMENT
CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company does not enter into formal employment contracts with its
employees. However, the Company does enter into “at-will” employment
agreements under which both the Company and the employee may terminate the
relationship without cause.
COMPENSATION
OF DIRECTORS
The Company did not compensate Messrs. Aota, Inoue, Izumi or Yamamoto in
their
capacity as directors of PPOL. Their compensation was limited to what each
was
paid in their capacity as an Officer or other role with PPOL or its
subsidiary.
STOCK
PRICE PERFORMANCE GRAPH
This section includes a line graph comparing the cumulative total stockholder
return on our common stock with the cumulative total return of the American
Composite Index and the Russell 1000 Index from March 2005. The graph assumes
that $100 was invested on March 31, 2005 in each of our common stock, American
Composite Index and the Russell 1000 Index.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), requires the Company’s officers and directors, and persons who own more
than 10% of a registered class of the Company’s equity securities, to file
certain reports of ownership with the Securities and Exchange Commission
(the
“SEC”) and with the National Association of Securities Dealers, Inc. Such
officers, directors and shareholders are also required by SEC rules to furnish
the Company with copies of all Section 16(a) forms they file. To the Company’s
knowledge, all reports required to be filed during fiscal year ended March
31,
2006 pursuant to Section 16(a) of the Exchange Act by directors, executive
officers and 10% shareholders have been filed.
CODE
OF ETHICS
The Company adopted a code of ethics applicable to all of its directors,
officers and employees which is a “code of ethics” as defined by the applicable
rules of the Securities and Exchange Commission (SEC). This code of ethics
is
found as exhibit 14 to our 10-K for fiscal 2004 as filed with the SEC. If
the Company makes any amendments to this code of ethics other than technical,
administrative or other non-substantive amendments, or grants any waiver,
including implicit waivers, from a provision of this code of ethics, the
Company
will disclose the nature of the amendments or waivers, its effective date
and to
whom it applies in a report on Form 8-K filed with the SEC.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Green
Capital
On
May
30, 2005, the Company completed the acquisition of K.K. U Service, a Japanese
corporation ("USC") based in Tokyo, Japan pursuant to a Purchase Agreement
dated
May 30, 2005, by and between the Company, USC and K.K. Green Capital, a Japan
corporation (the Seller or Green Capital). The Company purchased all of the
issued and outstanding shares of USC for $3,522,000. Seller is the majority
investor in Foster Strategic Investment Partnership (FSIP), a Singapore
partnership, which owns approximately 10,547,594 shares of the Company's
common
stock, representing approximately 51.34% of the Company's issued and outstanding
stock.
The
following summarizes the assets acquired and liabilities assumed in connection
with the acquisition described in the preceding paragraph:
|
Current
assets
|
$
|
899,000
|
||
|
Deposits
|
1,455,000
|
|||
|
Intangibles
|
84,000
|
|||
|
Total
assets acquired
|
2,438,000
|
|||
|
Liabilities
assumed
|
(883,000
|
)
|
||
|
Net
assets acquired
|
$
|
1,555,000
|
The
purchase price represented a significant premium over the recorded net worth
of
USC's assets. In determining to pay this premium, we considered various factors,
including the opportunities that USC offers to enhance our future growth
opportunities, synergies with our present operations, cost and time advantages
of establishing a comparable company on our own, contacts with prospective
vendors and elimination of a potential competitor.
By
virtue
of the Seller’s relationship with FSIP, it has been determined that PPOL and USC
are de facto entities under common control. Accordingly, we have accounted
for
the acquisition of USC in a manner that is similar to the pooling method
to
comply with paragraph 11 of Financial Accounting Standards Board’s Statement of
Financial Accounting Standards Statement No. 141 Business Combinations. For
accounting purposes, the excess of purchase price over the net assets of
USC
will be treated as a dividend to Green Capital.
Advanced
Communications
During
the year ended March 31, 2006, PPOL entered into the following transactions
with
Advanced Communications K.K., a Japanese corporation that is 79.55% owned
by
Green Capital:
|
Inventory
purchases
|
$
|
12,123,000
|
||
|
Information
technology services
|
13,925,000
|
|||
|
$
|
26,048,000
|
Information
technology services, above, includes $2,212,000 in research and development
activities for the enhancement of our U-Phones’ functional features.
Inventory
purchases, noted above, are comprised of the SF-70 and U-Phone hardware
under an automatically renewing one year contract, unless a termination
notice
is
provided two months prior to the anniversary by either party. Under the
OEM
basis, we retained the rights to the design and metallic mold required
to
manufacture the SF-70, but outsourced the actual manufacturing of the SF-70
and
U-Phone to Advanced Communications
Seagull
During
the year ended March 31, 2006, PPOL entered into the following transactions
with
K.K. Seagull (Seagull), a Japanese corporation and shareholder of 926,956
shares
the Company's common stock:
|
Sales
promotion activities
|
$
|
5,197,000
|
||
|
Events
planning and production
|
1,451,000
|
|||
|
Information
technology services
|
212,000
|
|||
|
$
|
6,860,000
|
Forval
Effective
March 31, 2005 (the "Effective Date"), the Company entered into a Purchase
Agreement (the "Purchase Agreement"), as discussed below, with Forval, which
at
the time of the Effective Date owned approximately 10,547,594 shares of common
stock of the Company, representing approximately 58.62% of the Company's
issued
and outstanding common stock. Forval's Chief Executive Officer ("CEO"), Hideo
Ohkubo, also served as the CEO and Chairman of the Board of the Company at
the
time of the Effective Date of the Purchase Agreement. The Company was the
100%
owner of the common stock of Gatefor (the "Gatefor Shares"), a Japan joint
stock
company.. The Company was also the owner of 1,500 shares (the "OI Shares")
of
common stock of Object Innovation, Inc., a Florida corporation ("OI")
representing a 15% interest in OI. The Company and OI were parties to a certain
Exclusive Distribution Agreement, dated May 26, 2004 (the "Exclusive
Distribution Agreement), which agreement the Company assigned (the "Assignment")
to Gatefor pursuant to that certain Exclusive Distribution Right License
Agreement (the "Distribution Right License Agreement"), dated October 1,
2004,
between the Company and Gatefor. In connection with the Assignment, OI and
Gatefor entered into a revised letter of understanding, dated August 11,
2004
(the "Revised Letter of Understanding"), providing for, among other things,
OI's
right to purchase 5% of the equity of Gatefor and certain payments to be
made by
Gatefor to OI.
In
furtherance of the Purchase Agreement, the Company sold to Forval the Gatefor
Shares and the OI Shares, and assigned to Forval the Company's receivable
from
Gatefor (the "Gatefor Receivable") in the principal amount of $1,643,000,
plus
accrued interest. The Purchase Agreement approximately valued the Gatefor
Shares
at $1,395,000, and the OI Shares at $279,000. In connection with Forval's
acquisition of the Gatefor Shares, OI Shares and Gatefor Receivable, Forval
cancelled the Company's debt to Forval in the principal amount of approximately
$3,161,000 plus accrued interest, and further paid the Company approximately
$143,000. As further consideration in the transaction, the Company assigned
to
Forval all of the Company's right, title and interest in and to, and Forval
assumed all obligations under, the Exclusive Distribution Agreement and the
Distribution Right License Agreement, except that the payment of approximately
$930,000 previously made by Gatefor to the Company pursuant to the Distribution
Right License Agreement was deemed non-refundable.
For
accounting purposes, the transaction described in the preceding paragraph,
the
difference between the sum of amount of Forval's cancellation of the Company's
debt plus accrued interest, approximately $143,000 cash consideration, combined
with approximately $930,000 deemed non-refundable and PPOL's net book value
in
Gatefor immediately preceding the transaction was accounted for as a capital
contribution from the then majority shareholder, Forval. A Special Committee
(the "Committee") of independent directors of The Company's Board of Directors
was formed to review the terms and conditions of the Purchase Agreement.
The
Committee approved The Company's execution, delivery and performance of the
Purchase Agreement.
PPOL
entered
into separate agreements with Forval and Leo Global Fund, which collectively
held approximately 94% the Company's common stock, in which PPOL was to provide
certain consulting services during fiscal 2003. As provided for in the
agreements, PPOL received a prepayment of $483,858 from Forval and Leo Global
Fund in fiscal 2003. Since the Company did not complete the consulting services
called for in the agreements prior to March 31, 2003, the payments received
were
included in "deferred revenue," as a liability, at March 31, 2003. The
consulting services were completed in fiscal 2004 at which time the consulting
revenues were recognized. There is no assurance that PPOL will receive such
projects from Forval and Leo Global Fund in the future.
Common
stock offering:
On
May 30,
2005, the Company sold to four purchasers a total of 2,549,129 shares of
its
common stock, $0.001 par value per share ("Common Stock") for an aggregate
consideration of JPY1,100,000,000 (US $10,196,516) at $4 per share. The Company
entered into separate Stock Purchase Agreements ("Stock Purchase Agreements"),
each dated as of May 30, 2005, with (i) K.K. Contents Provider Tokyo, a Japan
corporation, which paid JPY400,0000,000 (US$3,707,824); (ii) K.K. Seagull,
a
Japan corporation, which paid JPY400,000,000 (US$3,707,824); (iii) K.K. H.I.
Consultants, a Japan corporation, which paid JPY200,000,000 (US$1,853,912);
and
(iv) K.K. System Partners, a Japan corporation, which paid JPY100,000,000
(US$926,956) (collectively, the "Investors"). The Company issued the Common
Stock in a private placement without registration under the Securities Act
of
1933, as amended (the "Act"), in reliance on one or more exemptions from
the
registration requirements under the Act, including Regulation D.
Pursuant
to
the Stock Purchase Agreements, the Company entered into a Registration Rights
Agreement ("Registration Rights Agreement"), dated May 30, 2005, with each
of
the four Investors, which granted "piggy-back" registration rights to the
Investors. Pursuant to the Registration Rights Agreement, if the Company
at any
time files a registration statement (other than a Form S-4 or Form S-8
registration statement) with the Securities and Exchange Commission under
the
Act, Registrant agrees to use its best efforts to include in such registration
statement such shares of the Investors' Common Stock as the Investors may
request, subject to the terms and conditions of the Registration Rights
Agreement.
The
Company
used the proceeds from the above noted sale of equity securities to purchase
100% of the issued and outstanding common stock of K.K. U Service, a Japanese
corporation.
The
CEO of
PPOL is also the Representative Director of K.K. H.I. Consultants.
UMBA
The
Company
has received $9,779,145, $11,166,830, and $10,426,425 during the years ended
March 31, 2006, 2005 and 2004, respectively, in service fee income from UMBA
for
providing certain administrative services in connection with their insurance
operations.
Other
Prior
to his
employment as CFO with PPOL, Inc. which began on March 31, 2005, Richard
Izumi
served the company as a consultant through his consulting company, ECO2 Pacific
Partners, LLC. We. paid ECO2 Pacific Partners, LLC $225,000 and $284,000
in the
years ending March 31, 2005 and March 31, 2004, respectively.
Tax
services
were performed by Izumi & Co. whose principal officer is Ms. Miwa
Izumi. Ms. Izumi is the spouse of our CFO, Richard Izumi. The Company paid
$8,000 and $12,000 to Izumi & Co. for tax planning and compliance related
matters in the fiscal years ended March 31, 2006 and 2005,
respectively.
STOCK
PERFORMANCE
The Company’s Common Stock began trading on the Over the Counter Bulletin Board
(OTCBB) during the third fiscal quarter on October 14, 2003. The outstanding
shares of Common Stock are currently held by approximately 6,020 shareholders
of
record as of July 31, 2006. The Company is currently quoted on the OTC Bulletin
Board system (“OTCBB”), and can be located on the OTCBB under the symbol
“PPLC.” The following chart lists the high and low closing stock price
range from the Company’s market makers. These over-the-counter market quotations
reflect the inter-deal prices without retail mark-up, markdown, or commissions
and may not necessarily represent actual transactions.
|
Year
Ended March 31, 2006
|
High
|
Low
|
|||||
|
First
Quarter
|
$
|
4.0
|
$
|
3.40
|
|||
|
Second
Quarter
|
$
|
8.00
|
$
|
3.90
|
|||
|
Third
Quarter
|
$
|
6.50
|
$
|
3.00
|
|||
|
Fourth
Quarter
|
$
|
3.50
|
$
|
2.00
|
The declaration of any dividends in the future by the Company is subject
to the
discretion of our board of directors and will depend upon various factors,
including our net earnings, financial condition, cash requirements, future
projects and other factors deemed relevant by our board of directors. PPOL
has not paid any cash or other dividends on its common stock since its inception
and currently does not intend to pay dividends in the foreseeable
future.
ANNUAL
REPORT ON FORM 10-K
At the Company’s cost, with the exception of associated exhibits charged at
$0.15 per page if requested, an annual report on Form 10-K as filed with
the SEC
for the year ended March 31, 2006 is being mailed concurrently with this
Proxy
statement to all shareholders as of the Record Date.
STOCKHOLDER
PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders may submit proposals on matters appropriate for stockholder
action
at subsequent annual meetings of the Company consistent with Rule 14a-8
promulgated under the Exchange Act. Proposals of Shareholders intended to
be
presented at the Company’s next annual meeting of Shareholders must be received
by the Company (Attention: Chief Financial Officer, at the principal offices
of
the Company), no later than March 24, 2007 for inclusion in the Company’s proxy
statement and form of proxy for that meeting. Stockholder proposals are also
subject to the Company’s Bylaws, which may be amended from time to
time.
OTHER
MATTERS
All properly executed proxies delivered pursuant to this solicitation and
not
revoked will be voted at the Annual Meeting in accordance with the directions
given. Any proxy in which no direction is specified will be voted in favor
of
each of the nominees and the matters to be considered.
The Board of Directors does not intend to bring any matters before the Annual
Meeting other than as stated in this Proxy Statement and is not aware that
any
other matters will be presented for action at the Meeting. Should any other
matters be properly presented, the persons named in the enclosed form of
proxy
will vote the proxy with respect thereto in accordance with their best judgment,
pursuant to the discretionary authority granted by the proxy.
|
|
By
Order of the Board of Directors,
|
|
|
|
|
|
/S/
MASAO YAMAMOTO
|
|
|
Masao
Yamamoto
|
|
|
CHAIRMAN
OF THE BOARD
|
Orange,
California
September
11, 2006
PPOL,
INC.
ý
DETACH
PROXY CARD HERE ý
|
|
|
 |
|||||||
| ELECTION OF DIRECTORS |
ý
|
Please mark votes as in this
example.
|
|||||||
|
Nominees standing for election to the
Board of
Directors:
Yoshihiro
Aota, Richard Izumi and Masao Yamamoto
|
|
|
|||||||
|
o
|
FOR |
o
|
WITHHOLD AUTHORITY
|
|
|||||
|
2.
RATIFICATION OF INDEPENDENT AUDITORS:
Proposal
to ratify the appointment of Windes & McClaughry
Accountancy
Corporation as the Company’s independent auditors.
oFOR oAGAINST oABSTAIN
I
PLAN TO ATTEND THE
ANNUAL
The
proxy is authorized to vote in his discretion upon such
MEETING
other
business as may properly before the meeting.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED
ENVELOPE.
Please
date this Proxy and sign exactly as your name appears hereon.
When signing as attorney, executor, administrator, trustee
or guardian, please give your full title. If there is more
than
one trustee, all should sign. All joint owners should
sign.
___________________________
Signature:
___________________________
Date:
|
o
|
 |
|||||||
|
|
|
||||||||
ý
DETACH
PROXY CARD HERE ý
 |
||
|
|
PROXY
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
AND
MAY BE REVOKED PRIOR TO ITS EXERCISE
PPOL,
INC.
The
undersigned stockholder(s) of PPOL, Inc., a California
corporation (the
“Company”), hereby appoints RICHARD IZUMI proxy, with full power
of
substitution, for and in the name of the undersigned at
the Annual Meeting
of Stockholders of the Company to be held on September
26, 2006, and at
any and all adjournments, to vote all shares of the capital
stock of said
Company held of record by the undersigned on July 31, 2006,
as if the
undersigned were present and voting the shares.
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE
MANNER DIRECTED. IN
THE ABSENCE OF ANY DIRECTION, THE SHARES WILL BE VOTED
FOR THE NOMINEES
NAMED IN THE PROPOSAL ON THE REVERSE SIDE AND IN ACCORDANCE WITH
THEIR DISCRETION ON SUCH OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE
MEETING.
THE
LISTED NOMINEES AND THE PROPOSAL HAVE BEEN PROPOSED
BY THE COMPANY. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE NOMINEES LISTED AND “FOR”
THE LISTED PROPOSAL.
(Continued,
and to be signed on reverse side)
See
reverse
side
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