-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BZtiD7mDGxtZxJsDTGQ+zbJI53u7Wwm759bQ2Xg9C8VBwfXHZliBA74B75L4G2GY 4ZXMv4AzLER/E4ohCo3Ubg== 0001096906-07-000297.txt : 20070928 0001096906-07-000297.hdr.sgml : 20070928 20070223180744 ACCESSION NUMBER: 0001096906-07-000297 CONFORMED SUBMISSION TYPE: PRER14C PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20070226 DATE AS OF CHANGE: 20070315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIRTRAN CORP CENTRAL INDEX KEY: 0000813716 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 680121636 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRER14C SEC ACT: 1934 Act SEC FILE NUMBER: 000-49654 FILM NUMBER: 07647113 BUSINESS ADDRESS: STREET 1: 4125 SOUTH 6000 WEST CITY: WEST VALLEY CITY STATE: UT ZIP: 84128 BUSINESS PHONE: 8019635112 MAIL ADDRESS: STREET 1: 4125 SOUTH 6000 WEST CITY: WEST VALLEY CITY STATE: UT ZIP: 84128 FORMER COMPANY: FORMER CONFORMED NAME: VERMILLION VENTURES INC DATE OF NAME CHANGE: 20000502 PRER14C 1 cirtranpre14ca.txt CIRTRAN CORPORATION SCHEDULE 14C AMENDMENT NO. 1 ================================================================================ SCHEDULE 14C AMENDMENT NO. 1 (Rule 14c-101) INFORMATION REQUIRED IN INFORMATION STATEMENT SCHEDULE 14C INFORMATION Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 Check the appropriate box: [X] Preliminary Information Statement (Amendment No. 1) [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) [ ] Definitive Information Statement CirTran Corporation - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Charter) - -------------------------------------------------------------------------------- (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 14c-5(g) 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 of Schedule and the date of its filing. 1) Amount Previously Paid:_______________________________________ 2) Form, Schedule or Registration Statement No___________________ 3) Filing Party:_________________________________________________ 4) Date Filed:___________________________________________________ ================================================================================ CirTran Corporation 4125 South 6000 West West Valley City, Utah 84128 WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. Information Statement pursuant to Section 14(c) of the Securities Exchange Act of 1934 February ___, 2007 To the Shareholders: The purpose of this Information Statement is to is to inform the holders of record, as of the close of business on February 5, 2007 (the "Record Date"), of shares of common stock, par value $0.001 per share (the "Common Stock") of CirTran Corporation, a Nevada corporation ("CirTran" or the "Company"), that the holders of 52.61% of our capital stock as of the Record Date have given written consent as of January 1, 2007, to approve the amendment of our articles of incorporation to increase our authorized capital to include 1,500,000,000 shares of our common stock. We encourage you to read the attached Information Statement carefully, including the exhibits, for further information regarding these actions. In accordance with Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act"), the approval of the action described herein by the holders of a majority of the voting power of the Company will be deemed ratified and effective at a date that is at least 20 days after the date this Information Statement has been mailed or furnished to our stockholders. This Information Statement is first being mailed or furnished to stockholders on or about [February __], 2007. THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS' MEETING WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED HEREIN. This Information Statement is being furnished to you solely for the purpose of informing stockholders of the matters described herein in compliance with Regulation 14C of the Exchange Act. By Order of the Board of Directors, /s/ Iehab Hawatmeh Salt Lake City, Utah February__, 2007 Iehab Hawatmeh, President and Director CirTran Corporation 4125 South 6000 West West Valley City, Utah 84128 (801) 963-5112 --------------------------------- INFORMATION STATEMENT --------------------------------- This Information Statement is being provided to the Shareholders of CirTran Corporation ("CirTran" or the "Company"), in connection with our prior receipt of approval by written consent, in lieu of a meeting of shareholders, to approve an amendment to our Articles of Incorporation to increase our authorized capital to include 1,500,000,000 shares of our common stock, $0.001 par value per share. ACTIONS BY BOARD OF DIRECTORS AND CONSENTING STOCKHOLDERS General The Company will pay all costs associated with the distribution of this Information Statement, including the costs of printing and mailing. The Company will only deliver one Information Statement to multiple stockholders sharing an address unless the Company has received contrary instructions from one or more of the stockholders. The Company will promptly deliver a separate copy of this Information Statement and future stockholder communication documents to any stockholder at a shared address to which a single copy of this Information Statement was delivered, or deliver a single copy of this Information Statement and future stockholder communication documents to any stockholder or holders sharing an address to which multiple copies are now delivered, upon written or oral request to the following address: 4125 South 6000 West West Valley City, Utah 84128 (801) 963-5112 Stockholders may also address future requests regarding delivery of information statements and/or annual reports by contacting the Company at the address listed above. Information on Consenting Stockholders Pursuant to the Company's Bylaws and the Nevada Revised Statutes, the amendment to our Articles of Incorporation (the "Amendment") must be approved by the vote of the holders of shares representing a majority of the voting power of the common stock. The Company's Articles of Incorporation do not authorize cumulative voting. As of the Record Date, the Company had 750,000,000 authorized shares of capital stock, of which ______________ were issued and outstanding. The consenting stockholders, who consist of 35 current stockholders of the Company, are collectively the record and beneficial owners of 344,945,599 shares, which represented 52.61% of the 655,716,326 issued and outstanding shares of the Company's outstanding capital stock as of January 1, 2007. Pursuant to Chapter 78.325 of the Nevada Revised Statutes, the consenting stockholders voted in favor of the actions described by written consent, dated as of January 1, 2007. The actions taken by the Company's Board of Directors and the consenting stockholders will become effective on [March ___], 2007, twenty business days from the mailing of this Information Statement to the stockholders of record on the Record Date. No consideration was paid to the consenting stockholders to obtain their written consent to these actions. -2- DISSENTERS' RIGHTS OF APPRAISAL No action was taken in connection with the proposal by the Company's Board of Directors or the consenting stockholders for which Nevada law, our Articles of Incorporation or our Bylaws provide a right of a stockholder to dissent and obtain appraisal of or payment for such stockholder's shares. VOTING SECURITIES As of the Record Date, we had __________________ shares of Common Stock issued and outstanding, which is the only class of voting securities that would be entitled to vote at a stockholders' meeting if one were to be held. Each share of Common Stock is entitled to one vote. RECORD DATE The close of business on Monday, [February 5], 2007, was fixed as the record date for determining the shareholders entitled to notice of the action taken by shareholder resolution. As of the record date there were _________________ shares of the Company's common stock outstanding and entitled to vote, held by ________ holders of record. For a description of the principal holders of such stock, see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" below. This Information Statement and the enclosed Proxy are being furnished to shareholders on or about February ___, 2007. Under applicable law, shareholder approval of the increase in authorized capital will become effective on March ___, 2007, which is at least twenty days after the date this Information Statement is first sent to shareholders. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. WE ARE NOT ASKING YOU FOR YOUR SIGNATURE TO ANY WRITTEN CONSENT RESOLUTIONS OF SHAREHOLDERS. YOU ARE REQUESTED NOT TO SEND US ANY DOCUMENT IN RESPONSE TO THIS MAILING. -3- INCREASE IN AUTHORIZED CAPITAL As of January 1, 2007, the first paragraph of Article IV of the Company's Articles of Incorporation, as amended to date, read: "FOUR: The aggregate number of shares which this Corporation shall have authority to issue is 750,000,000 Common Shares having a par value of $0.001 per share. Each share of stock shall entitle the holder thereof to one (1) vote on each matter submitted to a vote at a meeting of the shareholders. All stock of the Corporation shall be of the same class and shall have the same rights and preferences. The capital stock of the Corporation shall be issued as fully paid, and the private property of the shareholders shall not be liable for the debts, obligations or liabilities of the Corporation. Fully paid stock of this Corporation shall not be liable to any further call of assessment. On May 19, 2000, the shareholders of the Corporation approved a one for three thousand (3,000) reverse stock split of the issued and outstanding shares of the Corporation. The Company's Board of Directors has approved the adoption of, and has received the approval from the holders of 52.61% of the Company's issued and outstanding common stock as of the January 1, 2007, to adopt, an amendment to Article Four of the Company's certificate of incorporation that would increase the number of shares of common stock that the Company is authorized to issue from 750,000,000 shares to 1,500,000,000 shares. The new first paragraph of Article IV of the Certificate of Incorporation, as amended, will read as follows: ARTICLE IV CAPITALIZATION The aggregate number of shares which this Corporation shall have authority to issue is 1,500,000,000 Common Shares having a par value of $0.001 per share. Each share of stock shall entitle the holder thereof to one (1) vote on each matter submitted to a vote at a meeting of the shareholders. All stock of the Corporation shall be of the same class and shall have the same rights and preferences. The capital stock of the Corporation shall be issued as fully paid, and the private property of the shareholders shall not be liable for the debts, obligations or liabilities of the Corporation. Fully paid stock of this Corporation shall not be liable to any further call of assessment. Effective as of the time at which this Certificate of Amendment to Articles of Incorporation (the "Amended Articles") becomes effective (the "Effective Date"), all outstanding shares of common stock of the Corporation automatically shall be subdivided at the rate of 1.20 shares for one share (the "Forward Split") without the necessity of any further action on the part of the holders thereof or the Corporation, provided, however, that the Corporation shall, through its transfer agent and as necessary, exchange certificates representing common stock outstanding immediately prior to the Effective Date of the Forward Split (the "Existing Common") into new certificates representing the appropriate number of shares of common stock resulting from the subdivision ("New Common"). Except for this change, the amendment would not affect any other provision of the Articles of Incorporation. The text of the proposed amendment to amend Article IV to the Articles of Incorporation is attached to this Information Statement as Exhibit 1 and is incorporated herein by reference. Background of the Proposed Amendment Increase in Authorized Capital ------------------------------ As of January 1, 2007, we were authorized, pursuant to our Articles of Incorporation, as amended to date, to issue up to 750,000,000 shares of our common stock, and there were 655,716,326 shares of the Company's Common Stock issued and outstanding. Additionally, as of the Record Date, the Company had the following obligations to reserve or issue shares of its common stock: -4- The Highgate Convertible Debenture Transaction On May 26, 2005, we entered into a securities purchase agreement (the "Purchase Agreement") with Highgate House Funds, Ltd., a Cayman Island exempted company ("Highgate"), relating to the issuance by us of a 5% Secured Convertible Debenture, due December 31, 2007, in the aggregate principal amount of $3,750,000 (the "Highgate Debenture"). In connection with the purchase of the Highgate Debenture, we used $2,265,000 to repay two promissory notes to Cornell Capital Partners, LP ("Cornell"), one in the amount of $1,700,000, and the other in the amount of $565,000. Highgate and Cornell have the same general partner, Yorkville Advisors, but have different portfolio managers. We also paid a commitment fee of $240,765, a structuring fee of $10,000 to Highgate, and legal fees of $5,668. As such, of the total purchase amount of $3,750,000, the net proceeds to us were $1,228,567, which we received following the closing of the issuance of the Highgate Debenture. We used these proceeds for general corporate and working capital purposes. The Highgate Debenture bears interest at a rate of 5%. Highgate is entitled to convert, at its option, all or part of the principal amount owing under the Highgate Debenture into shares of our common stock at a conversion price equal to the lesser of (a) $0.10 per share, or (b) an amount equal to the lowest closing bid price of the Common Stock as listed on the OTC Bulletin Board, as quoted by Bloomberg L.P. for the twenty (20) trading days immediately preceding the conversion date. Except as otherwise set forth in the Highgate Debenture, Highgate's right to convert principal amounts owing under the Highgate Debenture into shares of our common stock is limited as follows: 1. Highgate may convert up to $250,000 worth of the principal amount plus accrued interest of the Highgate Debenture in any consecutive 30-day period when the market price of our stock is $0.10 per share or less at the time of conversion; 2. Highgate may convert up to $500,000 worth of the principal amount plus accrued interest of the Highgate Debenture in any consecutive 30-day period when the price of our stock is greater than $0.10 per share at the time of conversion, provided, however, that Highgate may convert in excess of the foregoing amounts if we and Highgate mutually agree; and 3. Upon the occurrence of an event of default (as defined in the Highgate Debenture), Highgate may, in its sole discretion, accelerate full repayment of all debentures outstanding and accrued interest thereon or may, notwithstanding any limitations contained in the Highgate Debenture and/or the Purchase Agreement, convert the Highgate Debenture and accrued interest thereon into shares of our common stock pursuant to the Highgate Debenture. Pursuant to the Highgate Debenture, interest is to be paid at the time of maturity or conversion. We may, at our option, pay accrued interest in cash or in shares of common stock. If paid in stock, the conversion price shall be the closing bid price of the common stock on either (i) the date the interest payment is due; or (ii) if the interest payment is not made when due, the date on which the interest payment is made. As noted above, assuming a hypothetical conversion of the $2,650,000 remaining as of January 29, 2007, at a hypothetical conversion price of $0.02 per share, we would need to issue 132,500,000 shares of our common stock to Highgate. Please note that if the conversion price changes, the number of shares issuable on conversion also changes. We have included a table below with examples of the number of shares issuable at various conversion prices. The 2005 Cornell Convertible Debenture Transaction On December 30, 2005, we entered into a securities purchase agreement (the "Cornell Purchase Agreement") with Cornell Capital Partners, a Delaware limited partnership ("Cornell Capital"), relating to the issuance by us of a 5% Secured Convertible Debenture, due July 30, 2008, in the aggregate principal amount of $1,500,000 (the "Cornell Debenture"). -5- We also paid a commitment fee of $120,000, and a structuring fee of $10,000 to Cornell Capital. As such, of the total purchase amount of $1,500,000, the net proceeds to us were $1,370,000. The Cornell Debenture bears interest at a rate of 5%. Cornell Capital is entitled to convert, at its option, all or part of the principal amount owing under the Debenture into shares of the Company's common stock at a conversion price equal one hundred percent (100%) of the lowest closing bid price of the Common Stock as listed on the OTC Bulletin Board, as quoted by Bloomberg L.P. for the twenty (20) trading days immediately preceding the Conversion Date, subject to certain restrictions and limitations set forth in the Cornell Debenture. Under the terms of the Cornell Debenture, except upon an event of default as defined in the Cornell Debenture, Cornell Capital may not convert the Cornell Debenture for a number of shares of common stock in excess of that number of shares of common stock which, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by Cornell Capital and its affiliates to exceed 4.99% of the outstanding shares of the common stock following such conversion. Pursuant to the Cornell Debenture, interest is to be paid at the time of maturity or conversion. We may, at our option, pay accrued interest in cash or in shares of our common stock. If paid in stock, the conversion price shall be the closing bid price of the common stock on either (i) the date the interest payment is due; or (ii) if the interest payment is not made when due, the date on which the interest payment is made. In connection with the Cornell Purchase Agreement, we also agreed to grant to Cornell Capital warrants (the "Cornell Warrants") to purchase up to an additional 10,000,000 shares of our common stock. The Cornell Warrants have an exercise price of $0.09 per share, and expire three years from the date of issuance. The Cornell Warrants also provide for cashless exercise if at the time of exercise there is not an effective registration statement or if an event of default has occurred. As noted above, assuming a hypothetical conversion of the $1,500,000 remaining as of January 29, 2007, at a hypothetical conversion price of $0.02 per share, we would need to issue 75,000,000 shares of our common stock to Cornell. Please note that if the conversion price changes, the number of shares issuable on conversion also changes. We have included a table below with examples of the number of shares issuable at various conversion prices. The 2006 Cornell Convertible Debenture Transaction On August 23, 2006, we entered into a securities purchase agreement (the "2006 Cornell Purchase Agreement") with Cornell relating to the issuance by us of another 5% Secured Convertible Debenture, due April 23, 2009, in the aggregate principal amount of $1,500,000 (the "2006 Cornell Debenture"). We also paid a commitment fee of $120,000, and a structuring fee of $15,000 to Cornell. As such, of the total purchase amount of $1,500,000, the net proceeds to us were $1,365,000. The 2006 Cornell Debenture bears interest at a rate of 5%. Cornell is entitled to convert, at its option, all or part of the principal amount owing under the 2006 Cornell Debenture into shares of the Company's common stock at a conversion price equal one hundred percent (100%) of the lowest closing bid price of the Common Stock as listed on the OTC Bulletin Board, as quoted by Bloomberg L.P. for the twenty (20) trading days immediately preceding the Conversion Date, subject to certain restrictions and limitations set forth in the 2006 Cornell Debenture. Under the terms of the 2006 Cornell Debenture, except upon an event of default as defined in the 2006 Cornell Debenture, Cornell may not convert the Cornell Debenture for a number of shares of common stock in excess of that number of shares of common stock which, upon giving effect to such conversion, would cause the aggregate number of shares of Common Stock beneficially owned by Cornell and its affiliates to exceed 4.99% of the outstanding shares of the common stock following such conversion. -6- Pursuant to the 2006 Cornell Debenture, interest is to be paid at the time of maturity or conversion. We may, at our option, pay accrued interest in cash or in shares of our common stock. If paid in stock, the conversion price shall be the closing bid price of the common stock on either (i) the date the interest payment is due; or (ii) if the interest payment is not made when due, the date on which the interest payment is made. In connection with the 2006 Cornell Purchase Agreement, we also agreed to grant to Cornell warrants (the "2006 Cornell Warrants") to purchase up to an additional 15,000,000 shares of our common stock. The 2006 Cornell Warrants have an exercise price of $0.06 per share, and expire three years from the date of issuance. The 2006 Cornell Warrants also provide for cashless exercise if at the time of exercise there is not an effective registration statement or if an event of default has occurred. As noted above, assuming a hypothetical conversion of the $1,500,000 remaining under the 2006 Cornell Debenture, as of January 29, 2007, at a hypothetical conversion price of $0.02 per share, we would need to issue 75,000,000 shares of our common stock to Cornell. Please note that if the conversion price changes, the number of shares issuable on conversion also changes. The Cornell Debenture (issued in December 2005) and the 2006 Cornell Debenture are referred to collectively as the "Cornell Debentures." We have included a table below with examples of the number of shares issuable at various conversion prices. Highgate and Cornell have the same general partner, Yorkville Advisors, but have different portfolio managers. Additionally, the escrow agent appointed in connection with the purchase and sale of both the Cornell debenture transactions and the Highgate debenture transaction is David Gonzalez, who is an officer of Cornell. A chart showing the number of shares issuable upon hypothetical conversions of the Highgate Debenture and the Cornell Debentures at particular conversion prices is as follows: Holders of CirTran common stock are subject to the risk of additional and substantial dilution to their interests as a result of the issuances of common stock in connection with the Convertible Debentures. The following table describes the number of shares of common stock that would be issuable, assuming that the full principal amount of the Cornell Debentures and the Highgate Debentures (collectively, the "Convertible Debentures"), excluding any interest accrued, was converted into shares of our common stock, irrespective of the availability of registered shares and any conversion limitations contained in the Convertible Debentures, and further assuming that the applicable conversion or exercise prices at the time of such conversion or exercise were the following amounts:
- ------------------------------------------------------------------------------------------ Shares Issuable Upon Hypothetical Conversion of Shares Issuable Upon Total Shares Issuable Conversion $2,650,000 Principal Conversion of in Connection with Price Amount of $3,000,000 Principal Conversion of Convertible Debenture Amount of Convertible Aggregate Principal by Debentures by Amount of Highgate House Funds, Ltd. Cornell Capital Partners Convertible Debentures - ------------------------------------------------------------------------------------------ $0.01 265,000,000 300,000,000 565,000,000 - ------------------------------------------------------------------------------------------ $0.02 132,500,000 150,000,000 282,500,000 - ------------------------------------------------------------------------------------------ $0.03 88,333,333 100,000,000 183,333,333 - ------------------------------------------------------------------------------------------ $0.04 66,250,000 75,000,000 141,250,000 - ------------------------------------------------------------------------------------------ $0.05 53,000,000 60,000,000 113,000,000 - ------------------------------------------------------------------------------------------ $0.10 26,500,000 30,000,000 56,500,000 - ------------------------------------------------------------------------------------------
Given the formula for calculating the shares to be issued in connection with conversions of the Convertible Debentures, there effectively is no limitation on the number of shares of common stock which may be issued in connection with conversions of the Convertible Debentures, except for the number of shares registered under prospectuses and related registration statements. As such, holders of our common stock may experience substantial dilution of their interests to the extent that Highgate and/or Cornell converts amounts under the Convertible Debentures. -7- Although we have entered into an agreement with Cornell wherein Cornell agreed that it would not convert any of the principal or interest on the Cornell Debentures or exercise any of the Warrants granted to Cornell until we had taken the steps necessary to increase our authorized capital, if we are successful in increasing our authorized capital, Cornell will be able to convert the Cornell Debentures pursuant to its terms, which could result in the dilution described above. ANAHOP Private Placement Transactions On May 24, 2006, we closed a private placement of shares of our common stock and warrants (the "May Private Offering"). Pursuant to a securities purchase agreement (the "Agreement"), we sold Fourteen Million, Two Hundred Eighty-five Thousand, Seven Hundred Fifteen (14,285,715) shares of our Common Stock (the "Shares") to ANAHOP, Inc., a California corporation ("ANAHOP"). The consideration paid for the Shares was One Million Dollars ($1,000,000). There were no underwriting discounts. In addition to the Shares, we issued warrants (the "May Warrants") to designees of ANAHOP as follows: - A warrant to purchase up to 10,000,000 shares, with an exercise price of $0.15 per share, exercisable upon the date of issuance, to Albert Hagar. - A warrant to purchase up to 5,000,000 shares, with an exercise price of $0.15 per share, exercisable upon the date of issuance, to Fadi Nora. - A warrant to purchase up to 5,000,000 shares, with an exercise price of $0.25 per share, exercisable upon the date of issuance, to Fadi Nora. - A warrant to purchase up to 10,000,000 shares, with an exercise price of $0.50 per share, to Albert Hagar. The May Warrants have exercise prices ranging from $0.15 to $0.50 as noted above, and are exercisable as of the date of issuance and through and including the date which is five years following the date on which our Common Stock is listed for trading on either the Nasdaq Small Cap Market, the Nasdaq Capital Market, the American Stock Exchange, or the New York Stock Exchange (the "Expiration Date"). On June 30, 2006, we closed a second private placement of shares of our common stock and warrants (the "June Private Offering"). Pursuant to a securities purchase agreement (the "June Agreement"), the Company agreed to sell Twenty-Eight Million, Five Hundred Seventy-One Thousand, Four Hundred Twenty-Eight (28,571,428) shares of its Common Stock (the "June Shares") to ANAHOP. The total consideration to be paid for the Shares will be Two Million Dollars ($2,000,000) if all tranches of the sale close. Pursuant to the Agreement, ANAHOP agreed to pay Three Hundred Thousand Dollars ($300,000) at the time of closing, and an additional Two Hundred Thousand Dollars ($200,000) within 30 days of the closing. (The payments of $300,000 and $200,000 are referred to collectively as the "First Tranche Payment.") Upon the receipt of the First Tranche Payment, we agreed to issue a certificate or certificates to the Purchaser representing 7,142,857 of the Shares. The 7,142,857 shares were issued in July 2006. The remaining $1,500,000 is to be paid by ANAHOP as follows: (i) No later than thirty calendar days following the date on which any class of our capital stock is first listed for trading on either the Nasdaq Small Cap Market, the Nasdaq Capital Market, the American Stock Exchange, or the New York Stock Exchange, ANAHOP agreed to pay an additional $500,000 to us; and (ii) No later than sixty calendar days following the date on which any class of our capital stock is first listed for trading on either the Nasdaq Small Cap Market, the Nasdaq Capital Market, the American Stock -8- Exchange, or the New York Stock Exchange, ANAHOP agreed to pay an additional $1,000,000 to us. (The payments of $500,000 and $1,000,000 are referred to collectively as the "Second Tranche Payment.") Upon receipt by us of the Second Tranche Payment, we agreed to issue a certificate or certificates to ANAHOP representing the remaining 21,428,571 Shares. Additionally, once we have received the Second Tranche Payment, we agreed to issue warrants (the "June Warrants") to designees of the Purchaser as follows: - A warrant to purchase up to 20,000,000 shares, with an exercise price of $0.15 per share, exercisable upon the date of issuance, to Albert Hagar. - A warrant to purchase up to 10,000,000 shares, with an exercise price of $0.15 per share, to Fadi Nora. - A warrant to purchase up to 10,000,000 shares, with an exercise price of $0.25 per share, exercisable upon the date of issuance, to Fadi Nora. - A warrant to purchase up to 23,000,000 shares, with an exercise price of $0.50 per share, exercisable upon the date of issuance, to Albert Hagar. The June Warrants have exercise prices ranging from $0.15 to $0.50 as noted above, and are exercisable as of the date of issuance and through and including the later of (1) the fifth anniversary of the date of the June Warrant or (2) the fifth anniversary of the date on which our Common Stock is first listed for trading on either the Nasdaq Small Cap Market, the Nasdaq Capital Market, the American Stock Exchange, or the New York Stock Exchange (the "Expiration Date"). Warrants The 110,000,000 Warrants which the Company had outstanding as of the Record Date, consisted of: - 30,000,000 May Warrants issued in connection with the May Private Offering; - 63,000,000 June Warrants issued in connection with the June Private Offering; - 10,000,000 Warrants issued to Cornell in connection with the Cornell Debenture; and - 7,000,000 Warrants held by other holders. There is no guarantee that any or all of these warrants will be exercised, or that we will be required to issue any shares of common stock in connection with these warrants. However, until such time as the warrants listed above have expired, we will continue to reserve shares for issuance in connection with the warrants. Options We also have outstanding options to purchase up to 11,250,500 shares of our common stock, held by various holders. As with the warrants, there is no guarantee that any or all of these options will be exercised, or that we will be required to issue any shares of common stock in connection with these options. However, until such time as these options have expired, we will continue to reserve shares for issuance in connection with the options. We do not have any lock-down or other agreements with the option holders regarding the non-exercise of these options. In summary, and assuming a hypothetical conversion of the Convertible Debentures at the market price as of the Record Date, which was approximately [$0.02], the Company has the obligation or anticipation of issuing the following shares: -9- ------------------------------ ------------------------------ Convertible Debentures 282,500,000 ------------------------------ ------------------------------ Warrants 110,000,000 ------------------------------ ------------------------------ ANAHOP Second Tranche Shares 21,428,571 ------------------------------ ------------------------------ Options 11,250,000 ------------------------------ ------------------------------ ------------------------------ ------------------------------ TOTAL 425,178,571 ------------------------------ ------------------------------ In light of the Company's current authorized capital, and in light of the share obligations listed in the table above, Management believes that the proposed amendment to increase the Company's authorized capital would benefit the Company by: - enabling the Company to meet its obligations set forth above; - allowing the Board of Directors to issue additional equity securities to raise additional capital; - allowing the Board of Directors to pursue strategic investment and technology partners; - allowing the Board of Directors to facilitate possible future acquisitions; and - allowing the Company to provide stock-related employee benefits. As of the date of the Information Statement, the Company's primary source of financing has been private sales of Common Stock or other equity securities, such as the prior equity line of credit and the ANAHOP private transaction, as well as debt securities convertible into Common Stock, such as the current Convertible Debentures. To facilitate additional similar financing transactions, the authorized capital of the Company will need to be increased pursuant to a shareholder-approved amendment to the certificate of incorporation. As of the date of this Information Statement, and other than the Company's existing obligations and commitments to reserve and issue shares as described herein, the Company did not have any plans, arrangements, commitments, or understandings for the issuance of additional shares of the common stock which are proposed to be authorized. Nevertheless, the Board of Directors believes that the increase in the Company's authorized capital is necessary both to meet the Company's present commitments, and to facilitate additional future financing transactions should they become necessary. For these reasons, the Company's Board of Directors has sought shareholder approval of the proposed amendment. Depending upon the consideration per share received by the Company for any subsequent issuance of Common Stock, such issuance could have a dilutive effect on those shareholders who previously paid a higher consideration per share for their stock. Also, future issuances of Common Stock will increase the number of outstanding shares, thereby decreasing the percentage ownership in the Company (for voting, distributions and all other purposes) represented by existing shares of Common Stock. The availability for issuance of the additional shares of Common Stock may be viewed as having the effect of discouraging an unsolicited attempt by another person or entity to acquire control of the Company. Although the Board of Directors has no present intention of doing so, the Company's authorized but unissued Common Stock could be issued in one or more transactions that would make a takeover of the Company more difficult or costly, and therefore less likely. The Company is not aware of any person or entity who is seeking to acquire control of the Company. Holders of Common Stock do not have any preemptive rights to acquire any additional securities issued by the Company. Forward Stock Split ------------------- The Company also received shareholder approval to effectuate a forward stock split (the "Stock Split") on a ratio of 1.20 new shares (the "New Shares") for each one share of the Company's common stock (the "Old Shares"). -10- The Board of Directors has determined that it will be advantageous to the Company to have additional shares available and issued to the Company's current shareholders. Additionally, The Board has determined that share liquidity could be enhanced by having additional shares held by the Company's shareholders. Moreover, the Company feels that the Stock Split likely would be beneficial to the Company's shareholders. EFFECTIVE DATE The amendment to our Articles of Incorporation, as amended to date, to increase in our authorized capital from 750,000,000 shares of common stock to 1,500,000,000 shares of common stock, has been approved by shareholders holding sufficient shares to authorize such amendment. The Articles of Amendment will become effective upon filing the Articles of Amendment with the Nevada Secretary of State. Under federal securities laws, we cannot file the Articles of Amendment until at least 20 days after mailing this Information Statement. We anticipate that we will file the Articles of Amendment on March __, 2007, which is at least twenty days following our mailing of this Information Statement to our shareholders of record as of February 5, 2007, the Record Date. The shareholders of record of the Company's common stock as of March ___, 2007, will receive the benefit of the Stock Split. As soon as practicable after the Effective Date of the Articles of Amendment, the Company's stockholders as of March ___, 2007, will be notified that the Stock Split has been effected. The Company expects that its transfer agent, Interwest Transfer Company, will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of Old Shares will be asked to surrender to the exchange agent certificates representing Old Shares in exchange for certificates representing New Shares in accordance with the procedures to be set forth in the letter of transmittal the Company sends to its stockholders. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder's outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the exchange agent. Any Old Shares submitted for transfer, whether pursuant to a sale, other disposition or otherwise, will automatically be exchanged for New Shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO. NO DISSENTERS' OR APPRAISAL RIGHTS There is no provision in the Nevada Revised Statutes or in our Articles of Incorporation, as amended to date, which provides our stockholders with dissenters' rights or appraisal rights to demand payment in cash for their shares of common stock in connection with the implementation of the proposal to amend our Articles of Incorporation to increase our authorized capital stock or to effectuate the Stock Split. CONSENT REQUIRED Pursuant to Sections 78.207 and 78.390 of the Nevada Revised Statutes, we may amend our Articles of Incorporation and increase our authorized capital upon the approval by the holders of a majority of the voting power of our common stock. As of January 1, 2007, there were 655,716,326, shares of our common stock issued and outstanding. We received approval from the holders of an aggregate of 344,945,599 shares of our common stock, or 52.61% of our issued and outstanding common stock as of January 1, 2007. As such, we received the approval of holders of sufficient shares to adopt the amendment to our Articles of Incorporation to increase our authorized capital. Pursuant to Section 78.320 of the Nevada Revised Statutes, we were entitled to take this action by written consent of our shareholders rather than through holding an annual or special meeting of shareholders. Pursuant to that section and to the federal securities laws, we are required to provide you notice of the corporate action taken prior to its effectiveness, as discussed above under the heading "Effective Date." WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. -11- INFORMATION ABOUT CIRTRAN CORPORATION The following sets forth the names, ages and positions of our directors and officers and the officers of our operating subsidiaries, CirTran Corporation (Utah) and CirTran Asia, along with their dates of service in such capacities. Name Age Positions Iehab J. Hawatmeh 39 President, Chief Executive Officer, Chief Financial Officer, Secretary and Director of CirTran Corporation; President of CirTran Corporation (Utah). Served since July 2000. Trevor Saliba 32 Director since June 2001. Senior Vice-President, Sales and Marketing. Served since January 2002. Shaher Hawatmeh 41 Chief Operating Officer Served since June 2004 Charles Ho 51 President, CirTran-Asia Served since June 2004 Richard T. Ferrone 58 Chief Financial Officer Served since May 2006 Iehab J. Hawatmeh, MBA Chairman, President & CEO Mr. Iehab Hawatmeh founded CirTran Corporation in 1993 and has been its Chairman, President and CEO since its inception. Mr. Hawatmeh oversees all daily operation including financial, technical, operational and sales functions for the Company. Under Mr. Hawatmeh's direction, the Company has seen its annual sales exceed $20 million, its employment exceed 360 and completed two strategic acquisitions. Prior to forming the Company, Mr. Hawatmeh was the Processing Engineering Manager for Tandy Corporation overseeing the company's entire contract manufacturing printed circuit board assembly division. In addition, Mr. Hawatmeh was responsible for developing and implementing Tandy's facility Quality Control and Processing Plan model which is used by CirTran today. Mr. Hawatmeh received his Master's of Business Administration from University of Phoenix and his Bachelor's of Science in Electrical and Computer Engineering from Brigham Young University. Iehab and Shaher Hawatmeh are brothers. Trevor M. Saliba, MS Senior Vice President, Worldwide Business Development Mr. Saliba is responsible for sales and marketing activities worldwide and is responsible for overseeing all worldwide business development strategies for the Company. Mr. Saliba was elected to the Board of Directors in 2001. From 1997 - 2001 he was President and CEO of Saliba Corp., a privately held contracting firm he founded. From 1995-1997 he was an Associate with Morgan Stanley. From 1992 - 1995 he was Vice President of Sales and Marketing for SNJ Industries. Mr. Saliba holds a Bachelors Degree in Business Administration and a Masters Degree in Finance from La Salle University and has completed an Advanced Graduate Program in Engineering and Management at the University of California, Berkeley. -12- In June 2002 Mr. Saliba filed for personal bankruptcy in the U.S. Bankruptcy Court in Los Angeles, California, which has not yet been discharged. The bankruptcy was unrelated to Mr. Saliba's involvement in CirTran. Shaher Hawatmeh Chief Operating Officer Mr. Shaher Hawatmeh joined the Company in 1993 as its Controller shortly after its founding. Today, Mr. Hawatmeh directly oversees all daily manufacturing production, customer service, budgeting and forecasting for the Company. Following the companies acquisition of Pro Cable Manufacturing in 1996, Mr. Hawatmeh directly managed the entire Company, supervising all operations for approximately two years and successfully oversaw the integration of this new division into the Company. Prior to joining CirTran, Mr. Hawatmeh worked for the Utah State Tax Commission. Mr. Hawatmeh earned his Master's of Business Administration with an emphasis in Finance from the University of Phoenix and his Bachelor's of Science in Business Administration and a Minor in Accounting. Iehab and Shaher Hawatmeh are brothers. Charles Ho President, CirTran-Asia Mr. Ho, who became the President of our CirTran-Asia division on June 15, 2004, served for six years as the chairman of Meicer Semiconductor Co., Ltd., one of the leading semiconductor manufacturers located in China, and was a co-founder of two of the leading design and manufacturing firms of DVD and CD players: Lead Data Co., Ltd., and Media Group. Mr. Ho has served as CEO for Uking System Inc. since 1986 and is still holds that position. Mr. Ho has a Master of Business Administration Degree from the University of South Australia and Bachelor of Science degree in Industrial Design from National Taipei University of Technology. Richard T. Ferrone Chief Financial Officer Prior to joining the Company, Mr. Ferrone had headed his own accounting firm, Ferrone & Associates, which he established in Salt Lake City in 1994. Previously, he was vice president and CFO for then-publicly-held GCI Industries, Inc./Golf Card International for seven years, and served as CFO of Huntsman, Christensen Real Estate & Development Co. Mr. Ferrone had also served as vice president and chief financial officer for BSD Medical Corporation after he started his career with a regional CPA firm in Salt Lake City. Mr. Ferrone has a B.S. in Accounting from the University of Utah, where he also studied for a Master of Professional Accountancy with a tax emphasis. At this time, the Company does not have an audit committee. The Company's Board of Directors acts as the Company's audit committee. Similarly, the Company's Board of Directors has determined that the Company does not have an audit committee financial expert as defined under Securities and Exchange Commission rules. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During June 2006 the president of the Company loaned the Company a net amount of $110,837 which was recorded as a note payable to the lender. During December 2005 the president of the Company loaned the Company $95,806 which was recorded as a note payable to the lender. The proceeds of this loan were used to fund on going operations of the Company. In January 2006, the Company made a payment to the lender which repaid the entire balance ($95,806) of the loan. As of December 31, 2001, Iehab Hawatmeh had loaned us a total of $1,390,125. The loans were demand loans, bore interest at 10% per annum and were unsecured. Effective January 14, 2002, we entered into four substantially identical agreements with existing shareholders pursuant to which we issued an aggregate of 43,321,186 shares of restricted common stock at a price of $0.075 per share for $500,000 in cash and the cancellation of $2,749,090 principal amount of our debt. Two of these agreements were with the Saliba Private Annuity -13- Trust, one of our principal shareholders, and a related entity, the Saliba Living Trust. The Saliba trusts are also principals of Abacas Ventures, Inc., which entity purchased our line of credit in May 2000. Pursuant to the Saliba agreements, the trusts were issued a total of 26,654,520 shares of common stock in exchange for $500,000 cash and the cancellation of $1,499,090 of debt. We used the $500,000 cash from the sale of the shares for working capital. As a result of this transaction, the percentage of our common stock owned by the Saliba Private Annuity Trust and the Saliba Living Trust increased from approximately 6.73% to approximately 17.76%. Mr. Trevor Saliba, one of our directors and officers, is a passive beneficiary of the Saliba Private Annuity Trust. Pursuant to the other two agreements made in January 2002, we issued an aggregate of 16,666,666 shares of restricted common stock at a price of $0.075 per share in exchange for the cancellation of $1,250,000 of notes payable by two shareholders, Mr. Iehab Hawatmeh (our president, a director and our principal shareholder) and Mr. Rajai Hawatmeh. Of these shares, 15,333,333 were issued to Iehab Hawatmeh in exchange for the cancellation of $1,150,000 in debt. As a result of this transaction, the percentage of our common stock owned by Mr. Hawatmeh increased from 19.9% to approximately 22.18%. In February 2000, prior to its acquisition of Vermillion Ventures, Inc., a public company, Circuit Technology, Inc., while still a private entity, redeemed 680,145 shares (as presently constituted) of common stock held by Raed Hawatmeh, who was a director of Circuit Technology, Inc. at that time, in exchange for $80,000 of expenses paid on behalf of the director. No other stated or unstated rights, privileges, or agreements existed in conjunction with this redemption. This transaction was consistent with other transactions where shares were offered for cash. In 1999, Circuit entered into an agreement with Cogent Capital Corp., or "Cogent," a financial consulting firm, whereby Cogent agreed to assist and provide consulting services to Circuit in connection with a possible merger or acquisition. Pursuant to the terms of this agreement, we issued 800,000 (pre-forward split) restricted shares (12,000,000 post-forward split shares) of our common stock to Cogent in July 2000 in connection with our acquisition of the assets and certain liabilities of Circuit. The principal of Cogent was appointed a director of Circuit after entering into the financial consulting agreement and resigned as a director prior to the acquisition of Circuit by Vermillion Ventures, Inc. on July 1, 2000. Also, as of December 31, 2004 the company owed I&R Properties, LLC, the previous owner of our principal office and manufacturing facility for unpaid accrued rent and accrued interest. The Company settled with owed I&R Properties, LLC., on accrued rent and interest of $400,000 by issuing 10,000,000 shares of unregistered common stock in March 2005. Management believed at the time of each of these transactions and continues to believe that each of these transactions were as fair to the Company as could have been made with unaffiliated third parties. Abacas Ventures An explanation of the relationship between CirTran and Abacas Ventures, Inc., is as follows: Two trusts, the Saliba Living Trust and the Saliba Private Annuity Trust (collectively, the "Saliba Trusts"), were investors in Circuit Technology, a Utah corporation and predecessor entity of the Company. The trustees of the trusts are Tom and Betty Saliba, and Tom Saliba, respectively. (Tom Saliba is the nephew of the grandfather of Trevor Saliba, one of the directors of CirTran.) In July 2000, CirTran Corporation merged with Circuit Technology. Through that merger, the Saliba Trusts became shareholders of CirTran. The Saliba Trusts are also two of the shareholders of an entity named Abacas Ventures, Inc. ("Abacas"). At the time of the merger, CirTran was in default on several of its obligations, including an obligation to Imperial Bank. The Saliba Trusts, through Abacas, purchased the bank's claim against CirTran to protect their investment in CirTran. Since that time, Abacas has continued to settle debts of CirTran to improve Abacas's position and to take advantage of certain discounts that creditors of CirTran offered to settle their claims. On two occasions, the Abacas shareholders have agreed to convert outstanding debt owed by CirTran to Abacas into shares of CirTran common stock (discussed below). Abacas continues to work with the company to settle claims by creditors against CirTran, and, on occasion, to provide funding. There can be no assurance that Abacus will agree to convert its existing debt, or any debt it acquires in the future, into shares of CirTran, or that conversions will occur at a price and on terms that are favorable to CirTran. If Abacus and CirTran cannot agree on -14- acceptable conversion terms, Abacus may demand payment of some or all of the debt. If CirTran does not have sufficient cash or credit facilities to pay the amount then due and owing by CirTran to Abacus, Abacus may exercise its rights as a senior secured lender and commence foreclosure or other proceedings against the assets of CirTran. Such actions by Abacus could have a material adverse effect upon CirTran and its ability to continue in business. In January, 2002, the Company entered into an agreement with Abacas under which the Company issued an aggregate of 19,987,853 shares of common stock to four of Abacas's shareholders in exchange for cancellation by Abacas of an aggregate amount of $1,499,090 in senior debt owed to the creditors by the Company. The shares were issued with an exchange price of $0.075 per share, for the aggregate amount of $1,500,000. In December, 2002, the Company entered into an agreement with Abacas under which the Company issued an aggregate of 30,000,000 shares of common stock to four of Abacas's shareholders in exchange for cancellation by Abacas of an aggregate amount of $1,500,000 in senior debt owed to the creditors by the Company. The shares were issued with an exchange price of $0.05 per share, for the aggregate amount of $1,500,000. During 2002, the Company entered into a verbal bridge loan agreement with Abacas. This agreement allows the Company to request funds from Abacas to finance the build-up of inventory relating to specific sales. The loan bears interest at 24% and is payable on demand. There are no required monthly payments. During the years ended December 31, 2004 and 2003, the Company was advanced $3,128,281 and $350,000, respectively, and made cash payments of $3,025,149 and $875,000, respectively. During the year ended December 31, 2004, Abacas completed negotiations with several vendors of the Company, whereby Abacas purchased various past due amounts for goods and services provided by vendors, as well as notes payable (see Note 6). The total of these obligations was $1,263,713. The Company has recorded this transaction as a $1,263,713 non-cash increase to the note payable owed to Abacas, pursuant to the terms of the Abacas agreement. The total principal amount owed to Abacas between the note payable and the bridge loan was $1,530,587 and $163,742 as of December 31, 2004 and 2003, respectively. The total accrued interest owed to Abacas between the note payable and the bridge loan was $430,828 and $230,484 as of December 31, 2004 and 2003, respectively, and is included in accrued liabilities. In March 2005, the shareholders of Abacas agreed to cancel $2,050,000 of principal and accrued interest in return for the Company's issuing 51,250,000 shares of our restricted common stock to certain shareholders of Abacas. No registration rights were granted. As of January 29, 2007, no further loans had been made to the Company from Abacas. Compliance With Section 16(a) of the Exchange Act Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by regulation of the Securities and Exchange Commission to furnish us with copies of all Section 16(a) forms which they file. Based solely on its review of the copies of such forms furnished to us during the fiscal year ended December 31, 2005, we are aware of the following untimely filings: Iehab Hawatmeh, Raed Hawatmeh, Trevor Saliba and Shaher Hawatmeh all filed untimely Forms 5. -15- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the number and percentage of the 655,716,326 outstanding shares of our common stock which, according to the information supplied to us, were beneficially owned, as of January 1, 2007, by (i) each person who is currently a director, (ii) each executive officer, (iii) all current directors and executive officers as a group and (iv) each person who, to our knowledge, is the beneficial owner of more than 5% of our outstanding common stock. Except as otherwise indicated, the persons named in the table have sole voting and dispositive power with respect to all shares beneficially owned, subject to community property laws where applicable. Beneficial ownership is determined according to the rules of the Securities and Exchange Commission, and generally means that person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power over that security. Each director, officer, or 5% or more shareholder, as the case may be, has furnished us information with respect to beneficial ownership. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed below, based on the information each of them has given to us, have sole investment and voting power with respect to their shares, except where community property laws may apply. - -------------------------------------------------------------------------------- Percent of Name and Address Relationship Common Shares Class - -------------------------------------------------------------------------------- Saliba Private Annuity Trust (1) 5% 75,698,990 11.54% 115 S. Valley Street Shareholder Burbank, CA 91505 - -------------------------------------------------------------------------------- Iehab J. Hawatmeh Director, 60,000,000 9.15% 4125 South 6000 West Officer West Valley City, Utah 84128 & 5% Shareholder - -------------------------------------------------------------------------------- Raed Hawatmeh (3) Former Director 24,000,000 3.63% 10989 Bluffside Drive Studio City, CA 91604 - -------------------------------------------------------------------------------- Trevor Saliba (2) Director 9,000,000 1.37% 13848 Valleyheart Drive Sherman Oaks, CA 91423 - -------------------------------------------------------------------------------- Charles Ho Officer of 0 0.00% 4125 South 6000 West Subsidiary of West Valley City, Utah 84128 Company - -------------------------------------------------------------------------------- Shaher Hawatmeh Chief Operating 1,000,000 0.15% 4125 South 6000 West Officer West Valley City, Utah 84128 - -------------------------------------------------------------------------------- Richard T. Ferrone Chief Financial 0 0.00% 4125 South 6000 West Officer West Valley City, Utah 84128 - -------------------------------------------------------------------------------- All Officers and Directors as a Group 70,000,000 10.68% (4 persons) - -------------------------------------------------------------------------------- - ------------------- (1) Includes 13,189,620 shares held by the Saliba Living Trust. Thomas L. Saliba and Betty R. Saliba are the trustees of The Saliba Living Trust and Thomas L. Saliba is the sole trustee of The Saliba Private Annuity Trust. These -16- persons control the voting and investment decisions of the shares held by the respective trusts. Mr. Thomas L. Saliba is a nephew of the grandfather of Mr. Trevor Saliba, one of our directors and officers. Mr. Trevor Saliba is one of five passive beneficiaries of Saliba Private Annuity Trust and has no control over its operations or management. Mr. Saliba disclaims beneficial control over the shares indicated. (2) Includes options to purchase up to 1,000,000 shares each that can be exercised anytime at exercise prices of $0.027 per share. (3) Includes options to purchase up to 6,250,000 shares that can be exercised anytime at exercise prices of $0.02 - $0.03 per share. Raed Hawatmeh resigned from the Company's Board of Directors on May 10, 2006. BOARD OF DIRECTORS MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION PLEASE NOTE: In 2006, the SEC revised its disclosure requirements relating to compensation of directors and named executive officers. Small Business Issuers are required to provide the information under the new disclosure format for 2006, but are not required to conform the disclosure for prior years to the new format. The following information consists of the new format disclosure for 2006, and for purposes of providing information to our shareholders, the prior format disclosure for prior years. Compensation Discussion and Analysis The following is a discussion of the Company's program for compensation of its named executive officers and directors. As of the date of this Report, the Company did not have a compensation committee, and as such, the Company's Board of Directors were responsible for determining the Company's compensation program. Compensation Program Objectives The Company's compensation program is designed to encompass several factors in determining the compensation of the Company's named executive officers. The following are the main objectives of the compensation program for the Company's named executive officers: - Retain qualified officers. - Provide overall corporate direction for the officers and also to provide direction that is specific to officer's respective areas of authority. The level of compensation amongst the officer group, in relation to one another, is also considered in order to maintain a high level of satisfaction within the leadership group. We consider the relationship that the officers maintain to be one of the most important elements of the leadership group. - Provide a performance incentive for the officers. The Company's compensation program is designed to reward the officers in the following areas: - achievement of specific goals; - professional education and development; - creativity in the form of innovative ideas and analysis for new programs and projects; - new program implementation; - attainment of company goals, budgets, and objectives; - results oriented determination and organization; - positive and supportive direction for company personnel; and - community involvement. As of the date of this Report, there were four principal elements of named executive officer compensation. The Board of Directors determines the portion of compensation allocated to each element for each individual named executive officer. The discussions of compensation practices and policies are of historical practices and policies. Our Board of Directors is expected to continue these policies and practices, but will reevaluate the practices and policies as it considers advisable. -17- The elements of the compensation program include: - Base salary; - Performance bonus and commissions; - Stock options and stock awards - Employee benefits in the form of: - health and dental insurance; - life insurance; - paid parking and auto reimbursement; and - Other de minimis benefits. Base salary Base salary is intended to provide competitive compensation for job performance and to attract and retain qualified named executive officers. The base salary level is determined by considering several factors inherent in the market place such as: the size of the company; the prevailing salary levels for the particular office or position; prevailing salary levels in a given geographic locale; and the qualifications and experience of the named executive officer. Performance bonus and commissions Bonuses are in large part based on company performance. An EBITDA formula is the sole determining factor used to calculate the performance bonus for the Chief Executive Officer and Chief Operating Officer. The Marketing Officer receives a performance bonus based on the EBITDA formula and also a commission based on a percentage of sales revenue. The Chief Financial Officer receives a performance bonus based on performance, as determined by the Board of Directors, at minimum amount that has been established as part of an employment contract. Policy decisions to waive or modify performance goals have not been a significant factor to date in that there have not been contractual changes made other than the normal renewal or updating of contracts as would be expected as part of an annual review. Stock options and stock awards Stock ownership is provided to enable named executive officers and directors to participate in the success of the Company. The direct or potential ownership of stock will also provide the incentive to expand the involvement of the named executive officer to include, and therefore be mindful of, the perspective of stockholders of the Company. Employee benefits Several of the employee benefits for the named executive officers are selected to provide security for the named executive officers. Most notably, insurance coverage for health, life, and liability are intended to provide a level of protection to that will enable the named executive officers to function without having the distraction of having to manage undue risk. The health insurance also provides access to preventative medical care which will help the named executive officers function at a high energy level, to manage job related stress, and contribute to the overall well being of the named executive officers, all of which contribute to an enhanced job performance. Other de minimis benefits Other de minimis employee benefits such as cell phones, parking, and auto usage reimbursements are directly related to job functions but contain a -18- personal use element which is considered to be a goodwill gesture that contributes to enhanced job performance. As discussed above, the Board of Directors determines the portion of compensation allocated to each element for each individual named executive officer. As a general rule, salary is competitively based while giving consideration to employee retention, qualifications, performance, and general market conditions. Typically, stock options are based on the current market value of the option and how that will contribute to the overall compensation of the named executive officer. Consideration is also given to the fact that the option has the potential for an appreciated future value. As such, the future value may be the most significant factor of the option, but it is also more difficult to quantify as a benefit to the named executive officer. Accordingly, in determining the compensation program for the Company, as well as setting the compensation for each named executive officer, the Board of Directors attempts to attract the interest of the named executive officer within in the constraints of a compensation package that is fair and equitable to all parties involved.
EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE - ------------------------------------------------------------------------------------------------------------------------------------ Change in Pension Value and Bonus Nonqualified Name and Or Non-Equity Deferred Principal Commission Stock Option Incentive Plan Compensation All Other Position Year Salary (C) Awards Grants Compensation Earnings Compensation Total $ $ $ (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) - ------------------------------------------------------------------------------------------------------------------------------------ Iehab Hawatmeh, President and Chief Executive Officer 2006 225,000 57,807 -0- -0- -0- -0- -0- 282,807 - ------------------------------------------------------------------------------------------------------------------------------------ Richard Ferrone Chief Financial Officer 2006 73,845 21,000 -0- -0- -0- -0- -0- 94,845 Trevor Saliba, Chief Marketing Officer 2006 120,000 18,755 -0- -0- -0- -0- -0- 138,755 - ------------------------------------------------------------------------------------------------------------------------------------ Shaher Hawatmeh, Chief Operating Officer 2006 150,000 7,790 -0- -0- -0- -0- -0- 157,790 - ------------------------------------------------------------------------------------------------------------------------------------ Charles Ho President CirTran Asia 2006 -0- 407,397(C) -0- -0- -0- -0- -0- 407,397 - ------------------------------------------------------------------------------------------------------------------------------------
(1) For each of the individuals listed in the table above, "All Other Compensation" would include perquisites including cellular phones, automobile reimbursement, parking reimbursement, life insurance, and health and dental insurance. However, the aggregate value of all such perquisite compensation is less than $10,000 for each of the individuals named in the table above. Additionally, the Company believes that each of the elements of perquisite compensation listed are integrally and directly related to the performance of the executive duties of the individuals listed above, although certain of the elements (including cellular phone use and automobile reimbursement) may have a personal benefit component as well. -19- Narrative Disclosure to Summary Compensation Table. -------------------------------------------------- Employment Agreements On July 1, 2004, CirTran Corporation entered into an employment agreement with Iehab Hawatmeh, dated as of June 26, 2004. The agreement, which is for a term of five years and renews automatically on a year-to year basis, provides for a base salary of $225,000, plus a bonus of 5% of our earnings before interest, taxes, depreciation, and amortization, payable quarterly, as well as any other bonus our board of directors may approve. Under the Agreement, Mr. Hawatmeh agreed to serve as our Chief Executive Officer and President and to perform such other duties as delegated by our board of directors. The agreement provides for benefits including health insurance coverage, cell phone, car allowance, life insurance, and D&O insurance. Under the Agreement, Mr. Hawatmeh's employment may be terminated for cause, or upon his death or disability. In the event that Mr. Hawatmeh is terminated without cause, we are obligated to pay him, as a severance payment, an amount equal to five full years of his then-current annual base compensation, half upon such termination and half one year later, together with a continuation of insurance benefits for a period of five years. In May 2006, we entered into a three-year employment contract with Richard Ferrone to serve as the Chief Financial Officer of the Company to perform those duties delegated by the Board of Directors and the President of the Company and all other duties consistent with such description. The term of his employment started on May 15, 2006, and will continue for three years thereafter, unless sooner terminated by either party as provided in the agreement. Thereafter, the agreement will be automatically renewed on a year-to-year basis after the expiration of the initial or any subsequent term of the Agreement unless terminated by either party as provided in the agreement. Mr. Ferrone will receive, commencing on May 15, 2006, a base salary of $120,000.00 per year. The base salary shall be reviewed by the Board annually and may be increased as determined by the Board. The Board's determination of salary will be based primarily on Mr. Ferrone's ability to meet, and to cause the Company to meet, annually established goals. He is also entitled to a bonus of $40,000 per year, payable in quarterly increments. In addition, he may be granted options to purchase shares of the Company's common stock as determined from time to time by the Board or the Committee established pursuant to the Company's Stock Option Plan. On July 1, 2004, CirTran Corporation entered into an employment agreement with Trevor Saliba, dated as of June 26, 2004. The agreement, which is for a term of three years and renews automatically on a year-to year basis, provides for a base salary of $120,000, plus a bonus of 1% of our gross sales generated directly by Mr. Saliba, a bonus of 5% of all gross investments made into CirTran which are directly generated and arranged by Mr. Saliba, a bonus of 1% of the net purchase price of any acquisitions completed by us which are directly generated and arranged by Mr. Saliba (payable in CirTran common stock), as well as any other bonus our board of directors may approve. Under the Agreement, Mr. Saliba agreed to serve as our Executive Vice President of Sales and Marketing, and to perform such other duties as delegated by our board of directors. The agreement provides for benefits including health insurance coverage, cell phone, car allowance, life insurance, and D&O insurance. Under the Agreement, Mr. Saliba's employment may be terminated for cause, or upon his death or disability. In the event that Mr. Saliba is terminated without cause, we are obligated to pay him, as a severance payment, an amount equal to one years' salary. If the Agreement expires of its terms or is terminated for any reason, Mr. Saliba may not compete with us for a period of one year from the date of termination of the agreement. Mr. Saliba also agreed not to solicit our employees or customers, or attempt to induce anyone to cease doing business with us for a period of two years after the termination of the agreement. On July 1, 2004, we also entered into an employment agreement, dated as of June 26, 2004, with Shaher Hawatmeh, the brother of Iehab Hawatmeh. The agreement, which is for a term of three years and renews automatically on a year-to year basis, provides for a base salary of $150,000, plus a bonus of 1% of our earnings before interest, taxes, depreciation, and amortization, payable quarterly, as well as any other bonus our board of directors may approve. Under the Agreement, Mr. Shaher Hawatmeh agreed to serve as our Chief Operating Officer, and to perform such other duties as delegated by our board of directors. The agreement provides for benefits including health insurance coverage, cell phone, life insurance, and D&O insurance. Under the Agreement, -20- Mr. Shaher Hawatmeh's employment may be terminated for cause, or upon his death or disability. In the event that Mr. Shaher Hawatmeh is terminated without cause, we are obligated to pay him, as a severance payment, an amount equal to one years' salary. If the Agreement expires of its terms or is terminated for any reason, Mr. Shaher Hawatmeh may not compete with us for a period of one year from the date of termination of the agreement. Mr. Shaher Hawatmeh also agreed not to solicit our employees or customers, or attempt to induce anyone to cease doing business with us for a period of two years after the termination of the agreement. On June 15, 2004, our subsidiary, CirTran-Asia, entered into an employment agreement with Charles Ho. The agreement, which is for a term of three years and renews automatically on a year-to year basis, provides that for each additional product that Mr. Ho procures pursuant to the agreement between CirTran-Asia and Michael Casey Enterprises, LTD., Mr. Ho shall be entitled to receive such compensation as provided for in that agreement in the form of options to purchase shares of CirTran common stock. Under the Agreement, CirTran-Asia will not provide benefits to Mr. Ho, and his employment may be terminated for cause, or upon his death or disability. If the Agreement expires of its terms or is terminated for any reason, Mr. Ho may not compete with us for a period of one year from the date of termination of the agreement. Mr. Ho also agreed not to solicit our employees or customers, or attempt to induce anyone to cease doing business with us for a period of two years after the termination of the agreement.
OUTSTANDING EQUITY AWARDS AT FISCAL 2006 YEAR-END - ------------------------------------------------------------------------------------------------------------------------------------ Option Awards Stock Awards - --------------- ---------------------------------------------------------------- -------------------------------------------------- Name Number of Number of Equity Option Option Number of Market Value Equity Equity Securities Securities Incentive Plan Exercise Expiration Shares or of Shares or Incentive Incentive Underlying Underlying Awards: Number Price ($) Date Units of Units of Plan Awards: Plan Awards: Unexercised Unexercised of Securities Stock That Stock That Number of Market or Options (#) Options Underlying Have Not Have Not Unearned Payout Value Exercisable (#) Unexercised Vested (#) Vested ($) Shares, of Unearned Unexercisable Unearned Units, or Shares, Options Other Rights Units, or (#) That Have Other Rights Not Vested That Have (#) Not Vested ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) - --------------- ----------- ------------- -------------- --------- ---------- --------- ------------ ----------- ------------ Iehab Hawatmeh, -0- -0- -0- N/A N/A -0- -0- -0- -0- CEO - --------------- ----------- ------------- -------------- --------- ---------- --------- ------------ ----------- ------------ Richard -0- -0- -0- N/A N/A -0- -0- -0- -0- Ferrone, CFO - --------------- ----------- ------------- -------------- --------- ---------- --------- ------------ ----------- ------------ Trevor Saliba, -0- -0- -0- N/A N/A -0- -0- -0- -0- CMO - --------------- ----------- ------------- -------------- --------- ---------- --------- ------------ ----------- ------------ Shaher -0- -0- -0- N/A N/A -0- -0- -0- -0- Hawatmeh, COO - --------------- ----------- ------------- -------------- --------- ---------- --------- ------------ ----------- ------------ Charles Ho, -0- -0- -0- N/A N/A -0- -0- -0- -0- President CirTran Asia - --------------- ----------- ------------- -------------- --------- ---------- --------- ------------ ----------- ------------
(1) Two Officers of the company exercised shares of stock that had been awarded from to them from the 2004 Stock Option Program. Trevor Saliba, Chief Marketing Officer, exercised a total of 3,000,000 shares, and Shaher Hawatmeh, Chief Operating Officer, exercised a total of 2,000,000 shares during 2006. -21-
DIRECTOR COMPENSATION For Fiscal Year Ended 2006 - --------------- ---------------- -------------- --------------- ---------------- ----------------- -------------- ----------------- Name Fees Earned or Stock Awards Option Awards Non-Equity Change in All Other Total Paid in Cash ($) ($) Incentive Plan Pension Value Compensation ($) ($) Compensation and Nonqualified ($) ($) Deferred Compensation Earnings ($) (a) (b) (c) (d) (e) (f) (g) (h) - --------------- ---------------- -------------- --------------- ---------------- ----------------- -------------- ----------------- Iehab Hawatmeh -0- -0- -0- -0- -0- -0- -0- (Note 1) - --------------- ---------------- -------------- --------------- ---------------- ----------------- -------------- ----------------- Trevor Saliba -0- -0- -0- -0- -0- -0- -0- (Note 1) - --------------- ---------------- -------------- --------------- ---------------- ----------------- -------------- ----------------- Raed Hawatmeh -0- -0- -0- -0- -0- -0- -0- (Note 2) - --------------- ---------------- -------------- --------------- ---------------- ----------------- -------------- -----------------
(1) Iehab Hawatmeh and Trevor Saliba also served as executive officers of the Company during the fiscal year ended December 31, 2006. They received compensation for their services as executive officers, set forth above in the Summary Compensation Table. They did not receive any additional compensation for their services as directors of the Company. (2) Mr. Raed Hawatmeh resigned as a director of the Company on May 10, 2006. During his term of service in 2006, he did not receive any compensation for his services as director of the Company. The Company does not have standing audit, nominating, or compensation committees. Those functions are performed by the board of directors. Please note: On February 1, 2007, Fadi Nora was appointed to the Company's Board of Directors. PRIOR YEARS EXECUTIVE COMPENSATION INFORMATION The following table sets forth certain information regarding the annual and long-term compensation for services to us in all capacities for the prior fiscal years ended December 31, 2005, 2004, 2003, and 2002 of those persons who were either (i) the chief executive officer during the last completed fiscal year or (ii) one of the other four most highly compensated executive officers as of the end of the last completed fiscal year. The individuals named below received no other compensation of any type, other than as set out below, during the fiscal years indicated.
- -------------------------------------------------------------------------------------------------------------- Annual Compensation Long-Term Compensation Awards ------------------- ----------------------------- Restricted Bonus/ Stock Stock Name and Salary Commission Awards Options All Other Principal Position Year ($) ($) ($) (#) Compensation - -------------------------------------------------------------------------------------------------------------- Iehab J. Hawatmeh 2005 225,000 114,219 6,000,000 - President, Secretary, 2004 200,000 - - 3,500,000 - Treasurer and Director 2003 175,000 - - 6,500,000 - 2002 175,000 - - 1,850,000 - -------------------------------------------------------------------------------------------------------------- -22- - -------------------------------------------------------------------------------------------------------------- Trevor M. Saliba 2005 120,000 31,895 5,000,000 - Sr. Vice President and 2004 108,000 - - 4,250,000 - Director of CirTran 2003 127,000 - - 3,000,000 - Corporation 2002 118,000 - - 500,000 - -------------------------------------------------------------------------------------------------------------- Raed S. Hawatmeh 2005 - - - 4,000,000 - Director of CirTran 2004 - - - 2,500,000 - Corporation 2003 - - - 3,000,000 - 2002 - - - 500,000 - - -------------------------------------------------------------------------------------------------------------- Shaher Hawatmeh 2005 150,000 30,000 - 2,000,000 - Chief Operating Officer 2004 140,000 - - 4,700,000 - 2003 120,000 - - 8,400,000 - 2002 120,000 - - 2,500,000 - - -------------------------------------------------------------------------------------------------------------- Charles Ho 2005 460,126 500,000 - President of CirTran Asia 2004 - 157,389 - - - 2003 - - - - - 2002 - - - - - - --------------------------------------------------------------------------------------------------------------
Option/SAR Grants in the Year Ended December 31, 2005 - --------------- ------------ --------------- ---------------- --------------- Number of Securities % of Total Underlying Options Granted Options/SARs to Employees in Exercise or Base Name Granted (#) Fiscal Year Price ($/Sh) Expiration Date - --------------- ------------ --------------- ---------------- --------------- Iehab Hawatmeh 6,000,000 30.00% $0.022 - $0.027 Jan - Dec 2010 - --------------- ------------ --------------- ---------------- --------------- Trevor Saliba 5,000,000 25.00% $0.022 - $0.027 Jan - Dec 2010 - --------------- ------------ --------------- ---------------- --------------- Raed Hawatmeh 4,000,000 20.00% $0.022 - $0.027 Jan - Dec 2010 - --------------- ------------ --------------- ---------------- --------------- Shaher Hawatmeh 2,000,000 10.00% $0.023 - $0.027 Jan - Dec 2010 - --------------- ------------ --------------- ---------------- --------------- Charles Ho 500,000 2.00% $0.06 Jan 2006 - --------------- ------------ --------------- ---------------- --------------- Option/SAR Grants in the Year Ended December 31, 2004 - --------------- ------------ --------------- ---------------- --------------- Number of Securities % of Total Underlying Options Granted Options/SARs to Employees in Exercise or Base Name Granted (#) Fiscal Year Price ($/Sh) Expiration Date - --------------- ------------ --------------- ---------------- --------------- Iehab Hawatmeh 3,500,000 14.58% $0.015 - $0.03 Jan - Dec 2009 - --------------- ------------ --------------- ---------------- --------------- Trevor Saliba 4,250,000 17.71% $0.015 - $0.03 Jan - Dec 2009 - --------------- ------------ --------------- ---------------- --------------- Raed Hawatmeh 3,500,000 14.58% $0.015 - $0.03 Jan - Dec 2009 - --------------- ------------ --------------- ---------------- --------------- Shaher Hawatmeh 4,700,000 19.58% $0.01 - $0.03 Jan - Dec 2009 - --------------- ------------ --------------- ---------------- --------------- -23- Aggregated Option/SAR Exercises in the Year Ended December 31, 2005 and December 31, 2004 Option/SAR Values - --------------- --------------- ------------ --------------- ---------------- Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options/SARs Options/SARs at at FY End (#) FY-End ($) Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise (#) Realized ($) Unexercisable Unexercisable - --------------- --------------- ------------ --------------- ---------------- Iehab Hawatmeh 8,000,000 $198,000 - $ - - --------------- --------------- ------------ --------------- ---------------- Trevor Saliba 4,000,000 $100,000 3,000,000/0 $ 71,000/0 - --------------- --------------- ------------ --------------- ---------------- Raed Hawatmeh 3,000,000 $ 73,000 5,250,000/0 $123,500/0 - --------------- --------------- ------------ --------------- ---------------- Shaher Hawatmeh 1,000,000 $ 23,000 2,000,000/0 - - --------------- --------------- ------------ --------------- ---------------- Charles Ho - - 500,000/0 - - --------------- --------------- ------------ --------------- ---------------- Aggregated Option/SAR Exercises in the Year Ended December 31, 2005 and December 31, 2004 Option/SAR Values - --------------- --------------- ------------ --------------- ---------------- Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options/SARs Options/SARs at at FY End (#) FY-End ($) Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise (#) Realized ($) Unexercisable Unexercisable - --------------- --------------- ------------ --------------- ---------------- Iehab Hawatmeh 1,500,000 $ 33,750 - $ - - --------------- --------------- ------------ --------------- ---------------- Trevor Saliba 2,250,000 $ 56,250 - $ - - --------------- --------------- ------------ --------------- ---------------- Raed Hawatmeh 750,000 $ 11,250 2,250,000/0 $ 52,500/0 - --------------- --------------- ------------ --------------- ---------------- Shaher Hawatmeh 3,700,000 $ 56,000 1,000,000/0 $ - - --------------- --------------- ------------ --------------- ---------------- Options issuable in connection with Manufacturing Agreement -- On June 10, 2004, we entered into an exclusive manufacturing agreement with certain Developers, including Charles Ho, the President of CirTran-Asia. Under the terms of the agreement, we, through our wholly owned subsidiary CirTran-Asia, have the exclusive right to manufacture certain products developed by the Developers or any of their affiliates. In connection with this agreement, we identified seven products, in connection with which we agreed to issue options to purchase shares common stock to the Developers upon the sale, shipment and payment for specified amounts of units of a the identified products, as set forth below. The options will be exercisable at $0.06 per share, vest on the grant date and expire one year after issuance. The schedule of units and potential options that will be issued follows:
- --------------------- ------- ----------- ------------- ------------- ------------- Options Options for Each Issued Initial Multiple of Options for Through Initial Units Units Above Each Multiple January 29, Product Units Sold(1) Initial Units of Units 2007 - --------------------- ------- ----------- ------------- ------------- ------------- Ab King Pro 500,000 500,000 100,000 100,000 1,500,000 (3) - --------------------- ------- ----------- ------------- ------------- ------------- Ab Roller 500,000 500,000 200,000 100,000 ________ - --------------------- ------- ----------- ------------- ------------- ------------- Ab Trainer Club Pro 25,000 500,000 15,000 100,000 ________ - --------------------- ------- ----------- ------------- ------------- ------------- Instant Abs 100,000 500,000 50,000 100,000 ________ - --------------------- ------- ----------- ------------- ------------- ------------- Hot Dog Express (2) 300,000 1,000,000 100,000 200,000 ________ - --------------------- ------- ----------- ------------- ------------- ------------- -24- - --------------------- ------- ----------- ------------- ------------- ------------- Condiment Caddy 200,000 250,000 100,000 100,000 ________ - --------------------- ------- ----------- ------------- ------------- ------------- Denise Austin Pilates 200,000 500,000 100,000 100,000 ________ - --------------------- ------- ----------- ------------- ------------- -------------
(1) Except as set forth in Notes (2) and (3), the options set forth in this table are issuable to Charles Ho, President of our subsidiary CirTran-Asia. (2) Of the options for initial units sold for this product, Mr. Ho, President of CirTran-Asia, is entitled to receive 700,000, with the remaining 300,000 going to the other developer. For each multiple of units above the initial units, Mr. Ho and the other developer are each entitled to receive an additional 100,000 options, for an aggregate of 200,000 options. (3) Of the options issued in connection with this product, Mr. Ho received 500,000, and two other developers each received 500,000 options. All of these options expired of their terms in January 2006. As of January 29, 2007, we had issued a total of 1,500,000 options pursuant to the agreement relating to the Ab King Pro, but had not received sufficient orders or shipped sufficient quantities of the other products listed in the table to trigger the issuance of additional options. Of the 1,500,000 options issued, Mr. Ho received 500,000 options. The 1,500,000 options were issued with an exercise price of $0.06 per share, and all 1,500,000 options expired in January 2006 pursuant to their terms. During 2004, Mr. Ho received approximately $157,400 in commissions in connection with the manufacturing agreement. During 2005, Mr. Ho received approximately $460,200 in commissions in connection with the manufacturing agreement. During 2006, Mr. Ho received approximately $328,000 in commissions in connection with the manufacturing agreement. Mr. Ho's commissions are calculated by predetermined percentages from manufacturing agreements and/or appendixes. Most of the commissions are calculated using the sales price less freight and cost of sales to the factory, that amount is then multiplied by the contract percentage, per unit for each product, after the payment has been received. Recent Developments Entry into Amendment Agreements On January 12, 2007, CirTran Corporation (the "Company"), entered into two agreements with Cornell Capital Partners, LP ("Cornell"), both of which amended prior agreements with Cornell. The Company entered into an Amendment Number 2 to Amended and Restated Investor Registration Rights Agreement ("Amendment No. 2") with Cornell, which amended an Amended and Restated Investor Registration Rights Agreement dated as of August 23, 2006, as amended October 30, 2006. The purpose of Amendment No. 2 was to extend the filing deadline for a registration statement to be filed by the Company to register the resale by Cornell of shares of the Company's common stock issuable to Cornell upon conversion of a convertible debenture in the aggregate principal amount of $1,500,000 (the "August Debenture") issued to Cornell in August 2006. The new filing deadline for the registration statement is June 1, 2007. The Company also entered into an Amendment Number 4 to Investor Registration Rights Agreement ("Amendment No. 4") with Cornell, which amended an Investor Registration Rights Agreement dated as of December 30, 2005, as most recently amended October 30, 2006. The purpose of Amendment No. 4 was to extend the filing deadline for a registration statement to be filed by the Company to register the resale by Cornell of shares of the Company's common stock issuable -25- to Cornell upon conversion of a convertible debenture in the aggregate principal amount of $1,500,000 (the "December Debenture") issued to Cornell in December 2005. The new filing deadline for the registration statement is June 1, 2007. Entry into Exclusive Manufacturing and Supply Agreement On November 30, 2006, CirTran Corporation (the "Company"), entered into an Exclusive Manufacturing and Supply Agreement (the "Agreement") with Evolve Projects, LLC ("Evolve"), an Ohio-based limited liability company. The term of the Agreement (the "Term") is for five years from execution, and may be continued on a month-to-month basis thereafter. The Agreement relates to the manufacturing and production of a new fitness product (the "Product"). Under the Agreement, Evolve committed to minimum orders of at least 20,000 units during the first year of the Term, at least 30,000 units during the second year of the Term, and at least 40,000 units during the third year of the Term. During the Term, Evolve agreed to purchase all of its requirements for the Product on an exclusive basis from the Company. The Product is designed to strengthen and rehabilitate the lower back and adjacent areas of the body. Under the terms of the Agreement, Evolve will own all right, title, and interest in and to the Product, and will market the Product under its own trademarks, service marks, symbols or trade names. On December 5, 2006, the Company announced that it had received the first purchase order from Evolve for more than $54,000 of the Product. The Product will be manufactured in China by the Company's Asia-based subsidiary, CirTran Asia, and the Company anticipates that the Products will ship under this first purchase order to the United States during January 2007. Once Evolve has approved the first production run of the Product, the Company and Evolve will confirm the price per unit. New Director As noted above, on February 1, 2007, Fadi Nora was appointed as a director of the Company. ANNUAL REPORT Copies of the Company's Annual Report on Form 10-KSB (including financial statements and financial statement schedules) for the year ended December 31, 2005, filed with the Securities and Exchange Commission may be obtained without charge by writing to the Company - Attention: Richard Ferrone, 4125 South 6000 West, West Valley City, Utah 84128. A request for a copy of the Company's Annual Report on Form 10-KSB must set forth a good-faith representation that the requesting party was either a holder of record or a beneficial owner of common stock of the Company on February 5, 2007. Exhibits to the Form 10-K, if any, will be mailed upon similar request and payment of specified fees to cover the costs of copying and mailing such materials. --------------------------------------------- By Order of the Board of Directors /s/ Iehab Hawatmeh Iehab Hawatmeh President and Director Salt Lake City, Utah February ___, 2007 -26- EXHIBIT 1 ARTICLES OF AMENDMENT FOR ARTICLES OF INCORPORATION -27- CERTIFICATE OF AMENDMENT Certificate of Amendment to Articles of Incorporation ----------------------------------------------------- For Nevada Profit Corporations ------------------------------ (Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock) -Remit in Duplicate- 1. Name of Corporation: CirTran Corporation. 2. The articles have been amended as follows (provide article numbers, if available): The Articles of Incorporation are to be amended by striking out the first paragraph of Article IV, as amended to date, in its entirety, and inserting a new first paragraph of Article IV reading as follows: ARTICLE IV CAPITALIZATION The aggregate number of shares which this Corporation shall have authority to issue is 1,500,000,000 Common Shares having a par value of $0.001 per share. Each share of stock shall entitle the holder thereof to one (1) vote on each matter submitted to a vote at a meeting of the shareholders. All stock of the Corporation shall be of the same class and shall have the same rights and preferences. The capital stock of the Corporation shall be issued as fully paid, and the private property of the shareholders shall not be liable for the debts, obligations or liabilities of the Corporation. Fully paid stock of this Corporation shall not be liable to any further call of assessment. Effective as of the time at which this Certificate of Amendment to Articles of Incorporation (the "Amended Articles") becomes effective (the "Effective Date"), all outstanding shares of common stock of the Corporation automatically shall be subdivided at the rate of 1.20 shares for one share (the "Forward Split") without the necessity of any further action on the part of the holders thereof or the Corporation, provided, however, that the Corporation shall, through its transfer agent and as necessary, exchange certificates representing common stock outstanding immediately prior to the Effective Date of the Forward Split (the "Existing Common") into new certificates representing the appropriate number of shares of common stock resulting from the subdivision ("New Common"). 3. The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as ay be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation have voted in favor of the amendment is:________________________.* 4. Signatures (Required): - ---------------------------------- ------------------------------------------ President or Vice President and Secretary or Asst. Secretary *If any proposed amendment would alter or change any preference or relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless of limitations or restrictions on the voting power thereof. IMPORTANT: Failure to include any of the above information and remit the proper fees may cause this filing to be rejected. -28- - -------------------------------------------------------------------------------- CORRESP 2 filename2.txt ================================================================================ [Letterhead] February 23, 2007 VIA EDGAR AND FEDERAL EXPRESS Securities and Exchange Commission Division of Corporation Finance 100 F Street N.E. Washington, D.C. 20549 ATTN: Peggy Fisher, Assistant Director Thomas A. Jones, Examiner Mail Stop 6010 Re: Cirtran Corporation Preliminary Information Statement Filed February 7, 2007 File No. 0-49654 Dear Ms. Fisher and Mr. Jones: We refer you to the letter of the staff of the Commission (the "Staff") dated February 15, 2007 (the "Comment Letter"), with regard to the above-referenced preliminary information statement (the "Information Statement") of CirTran Corporation (the "Company" or "CirTran"). This letter is directed to you on behalf of the Company and contains its responses to the Staff's comments set forth in the Comment Letter. The Company has revised the Information Statement and has filed contemporaneously with this letter its Amendment No. 1 to the Information Statement. We have provided with the hard copy of this letter two clean copies of the Amendment No. 1 (the "Amendment") to the Information Statement, as well as two redlined copies to show the changes made. The Company has filed, through its EDGAR agent, the amendment to the Information Statements contemporaneously with the filing of this letter on EDGAR. For your convenience, the Staff's comments from the Comment Letter have been restated below and are followed by the Company's responses. U.S. SECURITIES AND EXCHANGE COMMISSION February 23, 2007 Page 2 General - ------- 1. It appears that your solicitation to obtain the consents of holders of a majority of your shares did not comply with Rule 14a-3(a) of Regulation 14A. Please provide your analysis to support your position that the consents were obtained in compliance with the proxy rules. Response to Comment No. 1 - ------------------------- The Company obtained the written consent of the holders of a majority of its shares through personal contact by Iehab Hawatmeh, President of the Company. Each of the shareholders who provided his or her consent (the "Consenting Shareholders") signed a written consent form approving the amendment to the Company's Articles of Incorporation to provide for the increase in the authorized capital and the forward stock split. Such approval by written consent is permitted by Nevada state corporate law. Nevada Revised Statutes, Section 78.320 - Stockholders' meetings: Quorum; consent for actions taken without meeting; participation by telephone or similar method, states as follows: 2. Unless otherwise provided in the articles of incorporation or the bylaws, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required. Neither the Company's Articles of Incorporation nor its bylaws prohibit the taking of a corporate action by written consent. Additionally, section 78.325 - Actions at meetings not regularly called: Ratification and approval, provides: 1. Whenever all persons entitled to vote at any meeting, whether of directors, trustees or stockholders, consent, either by: (a) A writing on the records of the meeting or filed with the secretary; (b) Presence at such meeting and oral consent entered on the minutes; or (c) Taking part in the deliberations at such meeting without objection, the doings of such meeting shall be as valid as if had at a meeting regularly called and noticed. The Company obtained the written consent of a sufficient number of shareholders who would be entitled to vote on such a proposal at a meeting, and such writings have been made part of the records of the Company. As such, the amendment to the Company's Articles of Incorporation by written consent was valid under Nevada state law. U.S. SECURITIES AND EXCHANGE COMMISSION February 23, 2007 Page 3 Moreover, the Commission's Proxy Rules, and specifically Regulation 14C and Schedule 14C, provide for a public company's taking of action by written consent and then providing notice to its shareholders by way of an information statement. Rule 14c-2 describes the requirements for the distribution of an information statement for situations "including the taking of corporate action by the written authorization or consent of the security holders . . . ." The Company believes that it has complied with Regulation 14C by filing the preliminary information statement. As noted above, the Company, through personal contact between Mr. Hawatmeh and the Consenting Shareholders, obtained the written consent of the holders of a majority of the issued and outstanding shares as of January 1, 2007, the record date for the consent resolutions. By way of information, as of January 1, 2007, the Company had a total of 655,716,326 shares of its common stock issued and outstanding. The following table lists the names, number of shares, and the percentage ownership of each of the Consenting Shareholders as of January 1, 2007. - ------- ------------------------------------------------------------------------ Name Number of Shares Percentage Ownership - ------- ----------------------------------------------------------------------- 1. Saliba Private Annuity Trust 62,509,370 9.53% - ------- ----------------------------------------------------------------------- 2. Saliba Living Trust 13,189,620 2.01% - ------- ----------------------------------------------------------------------- 3. Trevor M. Saliba 9,000,000 1.37% - ------- ----------------------------------------------------------------------- 4. Raed Hawatmeh 19,000,000 2.90% - ------- ----------------------------------------------------------------------- 5. Fadi Nora 19,800,000 3.02% - ------- ----------------------------------------------------------------------- 6. Albert Hagar 32,714,286 4.99% - ------- ----------------------------------------------------------------------- 7. Iehab Hawatmeh 60,000,000 9.15% - ------- ----------------------------------------------------------------------- 8. Bishara & Sana Shahin 4,500,000 0.69% - ------- ----------------------------------------------------------------------- 9. Tony M. Rizk 1,000,000 0.15% - ------- ----------------------------------------------------------------------- 10. Isaiah Khoury 1,000,000 0.15% - ------- ----------------------------------------------------------------------- 11. Fady & Mirelle Kadifa 5,300,000 0.81% - ------- ----------------------------------------------------------------------- 12. Sana Fakhoury 4,000,000 0.61% - ------- ----------------------------------------------------------------------- 13. Akef Fakhoury 1,800,000 0.27% - ------- ----------------------------------------------------------------------- 14. Bruno Peroni 1,200,000 0.18% - ------- ----------------------------------------------------------------------- 15. Medhat Faltas 2,300,000 0.35% - ------- ----------------------------------------------------------------------- 16. Steve & Dalida Mardiros 7,364,500 1.12% - ------- ----------------------------------------------------------------------- 17. Thomas Dobyns 4,000,000 0.61% - ------- ----------------------------------------------------------------------- 18. Lisa Baker 200,000 0.03% - ------- ----------------------------------------------------------------------- 19. Saro Marukoglu & Sona Surkcuogi 8,165,200 1.25% - ------- ----------------------------------------------------------------------- 20. Ayed Hawatmeh 5,526,229 0.84% - ------- ----------------------------------------------------------------------- 21. Joseph Diniro 11,000,000 1.68% - ------- ----------------------------------------------------------------------- 22. Abraham Elmadjian 2,200,000 0.34% - ------- ----------------------------------------------------------------------- 23. Viken Almadjian 4,751,715 0.72% - ------- ----------------------------------------------------------------------- 24. P&K Family Trust 5,488,000 0.84% - ------- ----------------------------------------------------------------------- 25. Richard Gilbert 5,000,000 0.76% - ------- ----------------------------------------------------------------------- U.S. SECURITIES AND EXCHANGE COMMISSION February 23, 2007 Page 4 - ------- ----------------------------------------------------------------------- 26. Antranig & Pauline Mardouryan 2,000,000 0.31% - ------- ----------------------------------------------------------------------- 27. Cornell Capital Partners, LP 6,600,000 1.01% - ------- ----------------------------------------------------------------------- 28. Vatche & Silva Elmedjian 9,000,000 1.37% - ------- ----------------------------------------------------------------------- 29. Roger Kokozyon 9,238,540 1.41% - ------- ----------------------------------------------------------------------- 30. Janet Kokozyon 9,238,540 1.41% - ------- ----------------------------------------------------------------------- 31. Khaldoun Hawatmeh 6,150,000 0.94% - ------- ----------------------------------------------------------------------- 32. Sam Atallah 7,825,000 1.19% - ------- ----------------------------------------------------------------------- 33. Enzel Asgiryian 2,978,875 0.45% - ------- ----------------------------------------------------------------------- 34. Narine Asatryan 267,700 0.04% - ------- ----------------------------------------------------------------------- 35. Amo Marukian 638,024 0.10% - ------ ----------------------------------------------------------------------- TOTALS 344,945,599 52.61% - ------ ------------------------------------------------------ Shares Outstanding 1/01/07 655,716,326 % of Shares Voted 52.61% - ------ ------------------------------------------------------ As noted in the above table, none of the Consenting Shareholders holds shares of the Company's common stock sufficient to require inclusion in the Company's beneficial ownership table other than Mr. Hawatmeh and the Saliba Trusts, who are listed in the beneficial ownership table. Accordingly, the Company believes that it has complied with state law and the Commission's rules regarding the taking of corporate actions by written consent and the provision of information to the Company's shareholders. Board of Directors Meetings, Committees and Director Compensation, page 17 - -------------------------------------------------------------------------- 2. Please update this section to include required disclosure for the fiscal year ended December 31, 2006 and the new executive compensation disclosure rules. See Release No. 33-8765, which is available on our website. Response to Comment No. 2 - ------------------------- The Company has revised the Information Statement to include the executive compensation disclosure required by the new rules. Conclusion - ---------- The Company is also sending, by separate cover and by EDGAR, a letter in which it makes the written acknowledgements requested in the Comment Letter. U.S. SECURITIES AND EXCHANGE COMMISSION February 23, 2007 Page 5 Please contact the undersigned (801-415-3056) or Jeff Jones of this office (801-415-3031) with any additional questions or comments. Very truly yours, DURHAM JONES & PINEGAR /s/ C. Parkinson Lloyd C. Parkinson Lloyd, Esq. - -------------------------------------------------------------------------------- CORRESP 3 filename3.txt ================================================================================ [CIRTRAN LETTERHEAD] VIA EDGAR AND FEDERAL EXPRESS Securities and Exchange Commission Division of Corporation Finance 100 F Street N.E. Washington, D.C. 20549 ATTN: Peggy Fisher, Assistant Director Thomas A. Jones, Examiner Mail Stop 6010 Re: CirTran Corporation Preliminary Information Statement Filed February 7, 2007 File No. 0-49654 Dear Ms. Fisher and Mr. Jones: In connection with the response by CirTran Corporation (the "Company") to the comment letter from Commission (the "Comment Letter") dated February 15, 2007, the Company makes the following acknowledgements: 1. that the Company is responsible for the adequacy and accuracy of the disclosure in the filing; 2. that the staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and 3. that the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. Thank you for your assistance in this matter. Very truly yours, /s/ Iehab J. Hawatmeh President CirTran Corporation - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----