SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
SOYO GROUP, INC.
(Name of Registrant as Specified In Its Charter)
ANDREW N. BERNSTEIN, ESQ.
(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)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
SOYO GROUP, INC.
1420 South Vintage Avenue
Ontario, California 91761-3646
Telephone: (909) 292-2500
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held Friday, February 17, 2006
To Our Shareholders:
PLEASE TAKE NOTICE that a Special Meeting of Shareholders of Soyo
Group, Inc. will be held at 5445 DTC Parkway, Suite 520, Greenwood Village,
Colorado 80111, on Friday, February 17, 2006, at 11:00 a.m., local time, for the
following purpose:
1. To approve the establishment of our 2005 stock compensation plan for
the benefit of our officers, directors, employees and advisors (the "2005 Stock
Compensation Plan Proposal").
The board of directors has fixed the close of business on January 27,
2006 as the record date for the determination of shareholders entitled to notice
of and to vote at the meeting and at any adjournment. A proxy statement which
describes the foregoing proposal and a form of proxy accompany this notice.
By Order of the Board of Directors
Nancy Chu
CFO and Secretary
Dated: February 1, 2006
IMPORTANT
Whether or not you expect to attend the meeting, please execute the
accompanying proxy and return it promptly in the enclosed reply envelope which
requires no postage. If you grant a proxy, you may revoke it at any time prior
to the meeting. Also, whether or not you grant a proxy, you may vote in person
if you attend the meeting.
SOYO GROUP, INC.
1420 South Vintage Avenue
Ontario, California 91761-3646
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
To Be Held Friday, February 17, 2006
SOLICITATION OF PROXY
The accompanying proxy is solicited on behalf of the board of directors
of Soyo Group, Inc. for use at our special meeting of shareholders to be held at
5445 DTC Parkway, Suite 520, Greenwood Village, Colorado 80111, on Friday,
February 17, 2006, and at any adjournment. In addition to mail, proxies may be
solicited by personal interview, telephone or telegraph by our officers,
directors and other employees, who will not receive additional compensation for
such services. We may also request brokerage houses, nominees, custodians and
fiduciaries to forward the soliciting material to the beneficial owners of stock
held of record and will reimburse them at the rates suggested by the New York
Stock Exchange. We will bear the cost of this solicitation of proxies, which is
expected to be nominal. Proxy solicitation will commence with the mailing of
this proxy statement on or about February 1, 2006.
Execution and return of the enclosed proxy will not affect your right
to attend the meeting and to vote in person. If you execute a proxy, you still
retain the right to revoke it at any time prior to exercise at the meeting. A
proxy may be revoked by delivery of written notice of revocation to our
secretary, by execution and delivery of a later proxy, or by voting the shares
in person at the meeting. A proxy, when executed and not revoked, will be voted
in accordance with its instructions. If there are no specific instructions,
proxies will be voted "FOR" the proposal to approve the establishment of our
2005 Stock Compensation Plan.
PURPOSE OF MEETING
As stated in the notice of special meeting of shareholders accompanying
this proxy statement, the only business to be conducted and the only matter to
be considered and acted upon at the meeting is as follows:
1. To approve the establishment of our 2005 stock compensation plan for
the benefit of our officers, directors, employees and advisors (the "2005 Stock
Compensation Plan Proposal").
VOTING AT MEETING
Our voting securities consist solely of common stock, $0.001 par value
per share.
The record date for shareholders entitled to notice of and to vote at
the meeting is the close of business on January 27, 2006, at which time we had
outstanding and entitled to vote at the meeting 48,681,511 shares of common
stock. Shareholders are entitled to one vote, in person or by proxy, for each
share of common stock held in their name on the record date. Shareholders
representing a majority of the common stock outstanding and entitled to vote
must be present or represented by proxy to constitute a quorum.
Approval of the 2005 Stock Compensation Plan Proposal will require the
affirmative vote of the holders of a majority of all of our shares of common
stock outstanding and entitled to vote at the meeting.
Ming Tung Chok, our president, chief executive officer and director,
and Nancy Chu, our chief financial officer, secretary and director, have advised
us that they intend to vote all of their 26,209,548 shares held by them as of
the record date, representing 53.8% of all outstanding shares, in favor of the
2005 Stock Compensation Plan Proposal. Accordingly, if such shares are so voted,
the 2005 Stock Compensation Plan Proposal will be approved and adopted without
any action on the part of any other stockholder of the Company.
STOCK OWNERSHIP
The following table sets forth certain information as of December 31,
2005 regarding the beneficial ownership of our shares of common stock by:
(i) each of our executive officers;
(ii) each of our directors;
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(iii) each person who is known by us to own beneficially more than
5% of our outstanding common stock; and
(iv) all of our directors and executive officers as a group.
This information gives effect to securities deemed outstanding pursuant to Rule
13d-3(d)(1) under the Securities Exchange Act of 1934, as amended. As of
December 31, 2005, we had 48,681,511 shares of our common stock issued and
outstanding. As far as is known to our management, no person owns beneficially
more than five percent of our outstanding shares of common stock as of December
31, 2005 except as set forth below.
Amount and Nature Percentage of Class
Name and Address of Beneficial Owner of Beneficial Ownership Beneficially Owned
------------------------------------ ----------------------- ------------------
Ming Tung Chok (1)(2) 12,000,000 24.65%
Nancy Chu (1)(2) 14,209,548 29.19%
All executive officers and directors 26,209,548 53.84%
as a group (2 persons)
SOYO Computer, Inc. (3) 1,219,512 2.51%
Urmston Capital (4) 7,065,392 14.51%
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(1) The address of these holders is 1420 South Vintage Avenue, Ontario,
California 91761.
(2) Ming Tung Chok and Nancy Chu are husband and wife and are considered to
be the beneficial owner of each other's shares. Collectively, they own
26,209,548 shares.
(3) The address for SOYO Computer, Inc. is No. 21 Wu-kung 5 Road, Hsing
Chuang City, Taipu Hsien, Taiwan, ROC.
(4) The address for Urmston Capital is 148 Xinglung Road, Sec. 3, WenShan
District, Taipei, Taiwan, ROC.
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THE 2005 STOCK COMPENSATION PLAN PROPOSAL
On February 18, 2005, our board of directors adopted and approved our
2005 Stock Compensation Plan (the "Plan") subject to shareholder approval. The
purpose of the Plan and the grant of stock options under it is to promote our
and your interests by providing our executive officers, directors, employees and
advisors with an opportunity to acquire a proprietary ownership interest in us
and to develop a stronger incentive to put forth maximum effort for our
continued success and growth. In addition, the opportunity to acquire a
proprietary interest in us improves our ability to attract and retain key
personnel of outstanding ability. We believe that stock options encourage
optionees to remain in our employ in order to benefit from any appreciation of
our common stock.
Options granted pursuant to the Plan will constitute either incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or options which constitute nonqualified options
at the time of issuance of such options. The Plan provides that incentive stock
options and/or nonqualified stock options may be granted to our officers,
directors, employees and advisors selected by our Compensation Committee. A
total of 5,000,000 shares of common stock are authorized and reserved for
issuance under the Plan, subject to adjustment to reflect changes in our
capitalization in the case of a stock split, stock dividend or similar event.
The Plan expires February 18, 2015.
The Plan is administered by our Compensation Committee which has the
sole authority to interpret the Plan and to make all determinations necessary or
advisable for administering the Plan, including but not limited to:
o who shall be granted options under the Plan;
o the term of each option;
o the number of shares covered by such option;
o whether the option shall constitute an incentive option or a
nonqualified option;
o the exercise price for the purchase of the shares covered by the
option, provided that the exercise price for any incentive option must
be at least equal to the fair market value of the shares as of the date
of grant of such option;
o the period during which the option may be exercised;
o whether the right to purchase the number of shares covered by the
option shall be fully vested on issuance of the option so that such
shares may be purchased in full at one time or whether the right to
purchase such shares shall become vested over a period of time so that
such shares may only be purchased in installments; and
o the time or times at which the options shall be granted.
Except in the case of disability or death, no option shall be
exercisable after an optionee who is an employee ceases to be employed by the
Company; provided, however, the Compensation Committee has the right to extend
the exercise period following the date of termination of such optionee's
employment. If an optionee's employment is terminated by reason of death or
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disability, the Compensation Committee may extend the option term following the
date of termination of the optionee's employment. Upon the exercise of the
option, the exercise price must be paid in full either in cash, shares of our
common stock or a combination.
On July 8, 2005, subject to shareholder approval of the Plan, we
granted a total of 2,889,000 options to purchase 2,889,000 shares at an exercise
price of $0.75 per share for a term through July 22, 2010, each in cumulative
annual increments of 33.3% beginning July 22, 2006, including the following
grants to our executive officers and directors:
o 600,000 options to Ming Chok, our president, chief executive
officer, and a director
o 600,000 options to Nancy Chu, our chief financial officer and
a director
If any option to purchase reserved shares is not exercised for any
reason or if such option to purchase shall terminate as provided by the Plan,
such shares which have not been so purchased shall again become available for
the purposes of the Plan unless the Plan shall have been terminated.
We have been advised that the federal income tax consequences of the
Plan to us and the optionees, and possible exercise of options granted under the
Plan, will depend upon future circumstances and possible changes in the tax
laws. The following summary discussion addresses certain federal income tax
consequences of the Plan. This discussion does not address all of the tax
consequences that may be applicable to any particular optionee or to us. In
addition, this discussion does not address foreign, state, or local taxes, nor
does it address federal taxes other than federal income tax. This discussion is
based upon applicable statutes, regulations, case law, administrative
interpretations and judicial decisions in effect as of the date of this proxy
statement.
The income tax treatment of nonstatutory options is governed by ss.83
of the Code. This section basically provides that if an option has a readily
ascertainable fair market value when granted, then the optionee must recognize
ordinary income at the time of grant but not at the time of exercise or
disposal; if an option does not have a readily ascertainable fair market value
when granted, the optionee must recognize ordinary income at the time of its
exercise or disposal of the option but not at the time of its grant. We will
receive a corresponding compensation deduction for the amount included by the
optionee as income in the same year that the optionee includes such amount as
income. Consequently, whether a nonstatutory option has a readily ascertainable
fair market value at grant will determine whether the grant or the exercise of
the nonstatutory option is the taxable event for the optionee who rendered the
services for which the option was granted.
No tax consequences result from the granting of an incentive stock
option or from the exercise of an incentive stock option by the employee. In
addition, the employer generally will not be allowed a business expense
deduction with respect to an incentive stock option unless the employee disposes
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of the stock prior to the required holding period. The employee will be taxed at
capital gain rates when he sells stock acquired under an incentive stock option
plan, provided he has not disposed of the stock for at least two years from the
date the option was granted to him and he has held the stock itself at least one
year after the stock was transferred to him. If the foregoing holding period
rules are not satisfied, the gain that would have been realized at the time the
option was exercised is included as ordinary income in the year of the
disqualifying sale. For this purpose, the gain is equal to the lesser of (i) the
fair market value of the stock on the date of exercise over the option price of
the stock, or (ii) the amount realized on disposition over the adjusted basis of
the stock. The employer is allowed to deduct a corresponding amount as a
business deduction at the same time the employee is required to recognize the
ordinary income arising from the early disposition.
Notwithstanding the preceding, when calculating income for alternative
minimum tax purposes, the favorable tax treatment of ss.421(a) is disregarded
and the bargain purchase element (that is, the spread between the option price
and the fair market value of the option stock at exercise) of the incentive
stock option will be considered as part of the taxpayer's alternative minimum
taxable income.
THE BOARD OF DIRECTORS RECOMMENDS TO OUR SHAREHOLDERS THAT YOU VOTE FOR
THE APPROVAL AND ADOPTION OF THE 2005 STOCK COMPENSATION PLAN PROPOSAL.
The above notice and proxy statement are sent by order of our board of
directors.
Nancy Chu
Chief Financial Officer
and Secretary
February 1, 2006
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE SPECIAL MEETING OF SHAREHOLDERS OF
SOYO GROUP, INC.
TO BE HELD FEBRUARY 17, 2006
The undersigned hereby appoints Nancy Chu as the lawful agent and Proxy
of the undersigned (with all powers the undersigned would possess if personally
present, including full power of substitution), and hereby authorizes her to
represent and to vote, as designated below, all the shares of common stock of
Soyo Group, Inc. held of record by the undersigned as of the close of business
on January 27, 2006, at the Special Meeting of Shareholders to be held on
Friday, February 17, 2006, or any adjournment or postponement.
1. To approve the establishment of our 2005 stock compensation plan for
the benefit of our officers, directors, employees and advisors (the
"2005 Stock Compensation Plan Proposal").
_____ FOR _____ AGAINST _____ ABSTAIN
It is understood that when properly executed, this proxy will be voted
in the manner directed herein by the undersigned shareholder. WHERE NO CHOICE IS
SPECIFIED BY THE SHAREHOLDER, THE PROXY WILL BE VOTED IN FAVOR OF ITEM (1)
ABOVE.
The undersigned hereby revokes all previous proxies relating to the
shares covered hereby and confirms all that said Proxy or her substitutes may do
by virtue hereof.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated:_______________, 2006
Signature
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
[_] PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE MEETING.