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The following is an excerpt from a 10KSB SEC Filing, filed by IMAGENETIX INC /NV/ on 7/15/2004.
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IMAGENETIX INC /NV/ - 10KSB - 20040715 - PART_III

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.

Directors and Executive Officers

Our directors and executive officers are as follows:

     Name                            Age   Position
William P. Spencer                    50   Chief Executive Officer, President
                                           and Director
Debra L. Spencer                      51   Secretary, Treasurer and Director
Patrick S. Millsap                    50   Vice President - Marketing
Derek C. Boosey                       60   Vice President - International
Barry King                            59   Director

The business experience of each of our executive officers and directors is set forth below.

William P. Spencer has served as our president since January 1999. From January 1986 until December 1996, he served as chief operating officer, chief financial officer, and executive vice- president of Natural Alternatives International, Inc., a company engaged in the formulation and production of encapsulated vitamins and nutrients. He was president of NAI from December 1996 until October 1998 and was a director from January 1986 until October 1998. From 1976 to 1988, he was a regional vice president for San Diego Trust and Savings Bank. Mr. Spencer owns approximately 15% of the outstanding common stock of Integris, one of our larger customers. Integris is a network marketing company offering a variety of health oriented and other products and has been a customer of ours since early 1999. Mr. Spencer earned a B.S. degree in finance and an MBA degree from San Diego State University.

Debra L. Spencer has served as our secretary and treasurer since March of 1999. Her responsibilities also include graphics layout and development of marketing material for our private label products. From 1994 to February 1999, she was a homemaker. From 1987 to 1993, she served as vice president, secretary and treasurer for Vitamin Direct, Inc., a consumer mail order vitamin company. At Vitamin Direct, she was responsible for developing marketing material, generating leads, and customer relations for over 25,000 Vitamin Direct customers.

Patrick S. Millsap has served as vice-president of marketing since May 1999. From January 1990 until May 1999, he was employed by Natural Alternatives International, Inc. as a senior account manager. From 1988 to 1990, Patrick Millsap was director of marketing for Sonergy, Inc., a vitamin distributor. Patrick Millsap graduated in 1990 from San Diego State University with a B.A. degree in history. He received a certificate of international business from the University of San Diego in 1996.

Derek C. Boosey has served as our vice-president-international since September 1999. From 1994 to September 1999, he was new business manager for National Alternatives International, Inc., and from 1990 to 1994 was director of marketing for Atheletics Canada. From 1984 to 1990, Mr. Boosey was a technical advisor to the Korean Ministry of Sports and a sports and marketing consultant for MKC International. He earned degrees in physical education from Keele University (England) and Opu University (England) and is the Senior Olympics world record holder in the triple jump in the age 55 to 60 class.

Barry King joined our board in 2003. He has been the Director of Marketing for the United States Olympic Committee from 1987 to 2002. From 1976 to 1977, he was the executive officer for the Whitaker Corporation directing a multi-million dollar sports development program. His publications include the Olympic Challenge published in association with the United States Olympic Committee and the Olympic Challenge 1988. He was also the technical director of the motion picture, the World's Greatest Athlete, Walt Disney 1972. Mr. King graduated with a B.A. degree from the University of Colorado in 1969. Since 2002, Mr. King has been the Vice President and General Manager of Triactive America.

Directors hold office for one year and until their successors are elected and duly qualified. William P. Spencer and Debra L. Spencer are married to each other.

Consultants

Robert L. Hesslink, Jr. Sc.D., consults on and evaluates clinical research on our products. Dr. Hesslink received his Doctorate of Science from the Department of Health Sciences at Boston University in 1987. Following his 1986 commission into the U.S. Navy Medical Services Corp., he was stationed at the Naval Medical Research Institute, Bethesda, MD from 1986 to 1990. During his tenure, Dr. Hesslink published research pertaining to cold water immersion and cold habituation in the Journal of Applied Physiology and the American Journal of Physiology. Dr. Hesslink has consulted for national and international companies on research projects directed at applied nutrition and physiology since 1990. He has coordinated over 20 studies in the last three years for academic institutions, including the University of Maryland School of Medicine, University of California, San Diego, Department of Animal Sciences, Ball State University, Human Performance Laboratory, University of Utah, Division of Food Sciences and Nutrition and the Uniform Services University of Health Sciences, Department of Military Medicine.

Kenneth Cole, serves as a speaker and marketing consultant to Imagenetix. Ken Cole is a dual Olympian in basketball, and as a coach, his teams' won 13 national Australian titles. In 2000, Mr. Cole carried the Olympic torch in the Sydney torch relay and was awarded the Australian Sports Medal of Honor. Ken Cole was appointed Secretary for the Australian Council for Health, Physical Education and Recreation. Ken Cole is an internationally recognized motivational speaker.

Audit Committee

We have not adopted an audit committee as of the date of this Annual Report. We will disclose when and if we do adopt an audit committee in the future.

Code of Ethics

We have adopted a Code of Ethics and it is attached as Exhibit 14 to this Annual Report. See Part III, Item 13.

Item 10. Executive Compensation.

We do not have employment agreements with any of our officers. We currently pay Mr. Spencer an annual salary of $90,000 and provide him with health insurance benefits.

Stock Option Plan

In August 2000, we adopted a Stock Option Plan (the "Plan") which provides for the grant of stock options intended to qualify as "incentive stock options" and "nonqualified stock options" (collectively "stock options") within the meaning of Section 422 of the United States Internal Revenue Code of 1986 (the "Code"). Stock options may be issued to any of our officers, directors, key employees or consultants.

We have reserved 800,000 shares of common stock for issuance under the Plan, of which 650,000 options have been granted to executive officers, employees and consultants at prices ranging from $.86 to $2.00 per share. We intend to increase the number of shares reserved under the Plan to 1,200,000 shares in the near future. The Plan is administered by the full Board of Directors, who determine which individuals shall received stock options, the time period during which the stock options may be exercised, the number of shares of common stock that may be purchased under each stock option and the stock option price.

The per share exercise price of incentive stock options may not be less than the fair market value of the common stock on the date the option is granted. The aggregate fair market value (determined as of the date the stock option is granted) of the common stock that any person may purchase under an incentive stock option in any calendar year pursuant to the exercise of incentive stock options will not exceed $100,000. No person who owns, directly or indirectly, at the time of the granting of an incentive stock option, more than 10% of the total combined voting power of all classes of our stock is eligible to receive incentive stock options under the Plan unless the stock option price is at least 110% of the fair market value of the common stock subject to the stock option on the date of grant.

No incentive stock options may be transferred by an optionee other than by will or the laws of descent and distribution, and, during the lifetime of an optionee, the stock option may only be exercisable by the optionee. Except as otherwise determined by the Board of Directors, stock options may be exercised only if the stock option holder remains continuously associated with us from the date of grant to the date of exercise. The exercise date of a stock option granted under the Plan may not be later than ten years from the date of grant. Any stock options that expire unexercised or that terminate upon an optionee's ceasing to be employed by us will become available once again for issuance. Shares issued upon exercise of a stock option will rank equally with other shares then outstanding. No stock options will be granted by us at an exercise price less than 85% of the fair market value of the stock underlying the option on the date the option is granted.

Liability and Indemnification of Officers and Directors

Our Articles of Incorporation provides that our directors will not be liable for monetary damages for breach of their fiduciary duty as directors, other than the liability of a director for:

* A breach of the director's duty of loyalty to our company or our stockholders;
* Acts or omissions by the director not in good faith or which involve intentional misconduct or a knowing violation of law;
* Willful or negligent declaration of an unlawful dividend, stock purchase or redemption; or
* Transactions from which the director derived an improper personal benefit.

Our Articles of Incorporation require us to indemnify all persons whom we may indemnify pursuant to Nevada law to the full extent permitted by Nevada law.

Our bylaws require us to indemnify our officers and directors and other persons against expenses, judgments, fines and amounts incurred or paid in settlement in connection with civil or criminal claims, actions, suits or proceedings against such persons by reason of serving or having served as officers, directors, or in other capacities, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to our best interests and, in a criminal action or proceeding, if he had no reasonable cause to believe that his/her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of no contest or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to our best interests or that he or she had reasonable cause to believe his or her conduct was unlawful. Indemnification as provided in our bylaws shall be made only as authorized in a specific case and upon a determination that the person met the applicable standards of conduct. Insofar as the limitation of, or indemnification for, liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling us pursuant to the foregoing, or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such limitation or indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

Compliance with Section 16(a) of the Exchange Act

No reports are required to be filed by members of management or other shareholders because we file our reports under Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth certain information concerning our common stock ownership as of this date, by (1) each person who is known by us to be the beneficial owner of more than five percent of our common stock; (2) each of our directors; and (3) all of our directors and executive officers as a group. The address of each such stockholder is in care of us at 16935 West Bernardo Drive, Suite 101, San Diego, California 92127. Assuming that there are 13,383,750 outstanding shares, 8,722,152 of which are common stock outstanding, 4,011,598 of which are shares underlying outstanding warrants and 650,000 shares underlying outstanding options which are currently exerciseable:

        Name of                        Amount of
    Beneficial Owner           Beneficial Ownership(1)(2) Percent of Ownership
    ----------------           --------------------------    ---------------
William P. and Debra L. Spencer
(3)                                     3,040,000                 22.7%
Patrick S. Millsap(4)                     255,000                  1.9%
Derek C. Boosey                            50,000                   *
Barry King                                    -0-                   -0-
Gary J. McAdam (5)                      2,682,353                 20.0%
James Scibelli (6)                        873,000                  6.5%
All officers and directors
    as a group (5 persons)              6,900,353                 51.6%

*Represents less than 1%

(1) Reflects amounts as to which the beneficial owner has sole voting power and sole investment power.
(2) Includes stock options and common stock purchase warrants exercisable within 60 days from the date hereof.
(3) Comprised of 2,790,000 shares and 250,000 stock options. William P. and Debra Spencer are husband and wife and are deemed to share beneficial ownership of these shares and options.
(4) These shares are held in the Patrick and Cassandra Millsap Revocable Trust dated 10/11/89.
(5) Comprised of 1,348,982 shares and 1,333,371 common stock purchase warrants, all of which are owned by entities controlled by Mr. McAdam.
(6) Includes 305,000 shares and 568,000 common stock purchase warrants, all of which are owned by entities controlled by Mr. Scibelli.

Item 12. Certain Relationships and Related Transactions.

In 1999, William P. and Debra Spencer, officers, directors and principal shareholders of our company, loaned us $288,500 for operating expenses, evidenced by promissory notes bearing interest at 10% per annum. In 2000 the Spencers agreed to extend the notes until July 2002. In consideration of the extension of the notes, we issued to the Spencers in May 2001 options to purchase 225,000 shares of our common stock for $1.00 per share until September 2005. In March 2001 the Spencers reduced the amount due on the notes by $150,000 to reimburse us for expenses we advanced on their behalf. We repaid the loan in 2002.

In October 2001, we entered into a line of credit agreement with Messrs. McAdam and Scibelli, two of our principal stockholders, under which they agreed to advance us up to $1,000,000 for working capital secured by our accounts receivables, inventory, property and equipment, and bearing interest at 12% per annum. As additional consideration for the line of credit, we issued to them a total of 250,000 Class E warrants exercisable at $.70 each until October 2006. At March 31, 2003, we owed $230,280 under the line of credit.

William P. Spencer owns 15% of the outstanding stock of Integris, one of our larger customers. For the year ended March 31, 2003, Integris accounted for 10% of our sales.

In July 2002 we entered into an exclusive supply and distribution agreement ("Agreement") with ChiRx, Inc., a company in which Mr. McAdam is an officer and director and in which a family trust is a principal shareholder and pursuant to which we granted ChiRx the exclusive right to market our Celadrin(TM) products through chiropractors worldwide for at least five years at prices set forth in a schedule to the Agreement. GJM Trading Partners, Ltd, an entity controlled by Mr. McAdam, had previously secured certain Infomercial, E-Commerce, mass market and newsletter marketing rights from Imagenetix.

We believe that the above transactions were fair, reasonable and upon terms at least as favorable to us as those we might have obtained from unaffiliated third parties. In order to avoid potential conflicts of interest, all related party transactions must be approved by a majority of the disinterested members of our Board of Directors. With respect to Mr. Spencer's minority ownership of Integris, all contract negotiations and product pricing decisions are made by our Vice President of Marketing and approved by the disinterested members of our Board of Directors.

Item 13. Exhibits and Reports on Form 8-K.

Reports on Form 8-K

     None.

Exhibits

     Exhibit No.    Title

                3.01     Articles of Incorporation of the Registrant (1)
                3.02     Bylaws of the Registrant (1)
                3.03     Amendment to Articles of Incorporation (Name change)
                         (2)
               10.01     Celadrin(TM)Supply Agreement with Organic
                         Technologies (2)
               10.02     Agreement with Natrol (2)
               10.03     Supply and Distribution Agreement with The Enrich
                         Corporation (Unicity) (2)
               10.04     Office Lease (2)
               10.05     Security Agreement (2)
               10.06     Exchange Agreement dated March 23, 1999 (1)
               10.07     Agreement with Tony and Alicia Gwynn (2)
               10.08     Agreement with J Paul Consulting Corp. (2)
               10.09     Line of Credit Agreement (2)
               10.10     Modification to Enrich (Unicity) Agreement (2)
               10.11     Exclusive Supply and Distribution Agreement (3)
                         (Sanavive)
               10.12     Exclusive Supply and Distribution Agreement (Newport
                         Bioceuticals)(3)
               10.13     Exclusive Supply and Distribution Agreement (ChiRx,
                         Inc.)(3)
               10.14     License and Distribution Agreement
               14        Code of Ethics
               31.1      302 Certification of William P. Spencer
               31.2      302 Certification of Debra L. Spencer
               32        906 Certification

(1) Incorporated by reference to our Registration Statement on Form SB-1, file number 333-87535, filed on September 22, 1999.

(2) Incorporated by reference to our Registration Statement on Form SB-2, file number 333-71756 declared effective on March 4, 2002.

(3) Incorporated by reference to our 10KSB Annual Report for the year ended March 31, 2003.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of the fees billed to Imagenetix by its principal accountants during the fiscal years ended March 31, 2004, and March 31, 2003:

Fee category                      2004           2003
------------                      ----           ----

Audit fees                        $23,830        $24,919

Audit-related fees                $     0        $     0

Tax fees                          $ 1,220        $ 1,125

All other fees                    $     0        $     0

Total fees                        $25,050        $26,044

Audit fees. Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements and the review of financial statements included in our Forms 10-QSB or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.

Audit-related fees. Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under "Audit fees."

Tax fees. Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.

All other fees. Consists of fees for products and services provided by our principal accountants, other than the services reported under "Audit fees," "Audit-related fees" and "Tax fees" above. The fees disclosed in this category include due diligence, preparation of pro forma financial statements as a discussion piece for a Board member, and preparation of letters in connection with the filing of Current Reports on Form 8-K.

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