U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-SB
General Form For Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Advanced Optics Electronics, Inc.
(Name of Small Business Issuer in its Charter)
Nevada 880365136
(State or other jurisdiction (IRS Employer Identification No.)
Of incorporation or organization)
8301 Washington NE, Suite 4
Albuquerque New Mexico 87113
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (505) 797-7878
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
FORM 10-SB
INDEX
<TABLE>
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PAGE
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PART I
<S> <C> <C>
Item 1. Business ..................................................................................... 1-2
Item 2. Management's Discussion and Analysis or Plan of Operation .................................... 3-4
Item 3. Description of Property ...................................................................... 5
Item 4. Security Ownership of Certain Beneficial Owners and Management ............................... 6
Item 5. Directors, Executive Officers, Promoters and Control Persons ................................. 6
Item 6. Executive Compensation ....................................................................... 8
Item 7. Certain Relationships and Related Transactions ............................................... 9
Item 8. Legal Proceedings ............................................................................ 9
Item 9. Market for Common Equity and Related Stockholder Matters ..................................... 9
Item 10. Recent Sales of Unregistered Securities ...................................................... 10
Item 11. Description of Securities .................................................................... 10
Item 12. Indemnification of Directors and Officers .................................................... 11
PART II
Item 13. Financial Statement .......................................................................... FS 2-15
Item 14. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure ......... 12
PART III
Item 15. Exhibits Table
</TABLE>
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PART I
THIS DISCUSSION, OTHER THAN THE HISTORICAL FINANCIAL INFORMATION, MAY
CONSIST OF FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES,
INCLUDING QUARTERLY AND YEARLY FLUCTUATIONS IN RESULTS, THE PROGRESS OF RESEARCH
AND THE DEVELOPMENT OF THAT RESEARCH AND THE OTHER RISKS DETAILED FROM TIME TO
TIME IN THE COMPANY'S REPORTS, INCLUDING THIS REPORT. THESE FORWARD-LOOKING
STATEMENTS SPEAK ONLY AS OF THE DATE HEREOF, AND SHOULD NOT BE GIVEN UNDUE
RELIANCE. ACTUAL RESULTS MAY VARY SIGNIFICANTLY.
THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-
LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
ITEM 1. Description of Business.
ADVANCED OPTICS ELECTRONICS, INC.
Advanced Optics Electronics, Inc. ("Advanced Optics Electronics, Inc." or the
"Company") is an electro-optic technology company engaged in the research and
development and manufacture of large-scale flat panel displays. The Company was
organized as a Nevada corporation on May 22,1996. Advanced Optics Electronics,
Inc. is located in Albuquerque, New Mexico.
On November 7, 1996, the Company acquired the business and patents of PLZTech, a
company involved in the development of flat panel displays.
BIOMODA. In the first quarter of 1998 a significant equity position in BIOMODA,
Inc. was purchased for the primary reason of allowing Advanced Optics
Electronics, Inc. to participate in the emerging area of a non invasive early
detection of lung cancer and the ability to destroy the specifically identified
cancer. In addition, the technology owned by BIOMODA, Inc. is adaptable to the
early detection of colon cancer. Also, an optical scanning device will be needed
for evaluation of certain samples needed for the various tests and Advanced
Optics Electronics, Inc. will be able to provide these optical scanning devices.
Advanced Optics Electronics, Inc. holds approximately 22% overall stock in
BIOMODA, Inc. an option to increase its holdings to approximately 27% over a
12-month period.
There are no legal actions pending or threatened against Advanced Optics
Electronics, Inc. or to which it or any of its properties are subject, nor to
its knowledge are any such proceedings contemplated.
Advanced Optics Electronics, Inc's, common stock currently trades on the NASD
OTC Bulletin Board under the symbol "ADOT".
1
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Business of Issuer
The patent for the Transverse Pixel Format, Electro-optic spatial light
modulator (SLM) was registered with the United States Patent Office, Recordation
date: August 30, 1994. The date of patent is March 30, 1993. Patent registration
number 5,198,920. Patent pending number 08-298422.
Summary of the Invention
It is a primary objective of the present invention to provide a high density
electro-optic light valve array which has reduced operation voltage, enhanced
speed of operation, minimum crosstalk between pixels, and high brightness.
It is another primary object of this invention to provide a manufacturing
process for a high density electro-optic light valve array using modified
silicon semiconductor photolithography, etching, and thin film deposition
technology and equipment.
It is another object of the present invention to provide a high density
electro-optic light valve array with reduced operation voltages compatible with
current commercially available silicon large scale integration technology and
display circuitry designed for use with liquid crystal displays.
Computer designed mask sets, the polished wafers, will be processed through the
proprietary PLZTech photo lithographic processing equipment in order to
fabricate the individual spatial light modulator (SLM) elements. The wafers will
at this time have metallic electrode connections deposited so that edge contact
to the SLM electrodes can be made. Each element will then be tested for
operation.
Advanced Optics Electronics, Inc. believes its products will provide the
following advantages over existing competitors.
AFFORDABILITY. The main focus will be the benefits of affordability that will
open and expand the existing market of electronic outdoor advertising. The price
of the flat panel remote billboard is approximately $ 1,000,000, as opposed to
the $ 14,000,000 price on the existing market. It is expected that most
customers will be a one time complete package sale with only a monthly fee for
uplink and downlink services. There have been approximately 100 to 125 inquiries
about this product from major outdoor advertising agencies for their high
visibility billboards.
TIME MANAGEMENT. The time sold will be better controlled. When a client's
allotted time has expired, the advertising agency can remove the advertisement
at no cost. This means that the space may be sold in smaller increments than the
traditional month long periods; the time will be cut down to minutes or seconds.
(Fifteen second increments are the U.S. legal minimum).
FREQUENT IMAGES CHANGE. With an electronic display, outdoor advertising will be
able to reach new levels of revenue generation for the advertiser's targeted
high visibility, high traffic areas; the result will be due to the ability to
change the image as often as desired. Graphics can be controlled from a remote
access terminal, and this eliminates the need to produce large physical prints.
The high speed transmission creates a sharp daylight image. Remote satellite
transmission stations can be up to nine hundred miles from the customer's
advertising site.
VISIBILITY. The flat panel board can be viewed straight on or at an angle. For
stadium use the displays will also achieve full motion. The ability to transmit
for daytime bright and clear viewing is one of the benefits of the flat panel
display.
PROGRAM MAINTENANCE AND INTEGRITY. There will be a turn key service available at
a fee, if a customer prefers the Company to maintain their entire program. The
customer's program integrity may be maintained by an hourly, daily or weekly
check from the transmission site.
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Advanced Optics Electronics, Inc. has a periodic update for its stock holders
and interested public on the Internet Web page: address: www.adot.org.
COMPETITION
Advanced Optics Electronics, Inc. faces competition from numerous companies,
some of which are more established, have greater market recognition, and have
greater financial, technological, production and marketing resources than
Advanced Optics Electronics, Inc. These competitors have operating histories,
including greater experience in this market. Greater name recognition and an
established customer base in technology recognition. Currently the largest
competitors are Toshiba, Sharp, Hitactchi, Litton Canada and Xerox. The Japanese
companies in particular have spent several billion dollars trying to improve
both the quality and manufacturing yields of their products.
Advanced Optics Electronics, Inc's, competitors can be expected to continue to
improve the design and performance of flat panel display and to introduce
products with competitive prices and performance features. Maintaining the
technological and other advantages of the company's products over its
competitors' products will require a continued high level of investment by
Advanced Optics Electronics, Inc. in both the research and development
operations.
Advanced Optics Electronics, Inc. has been researching the flat panel technology
for three and one half years and anticipates a minimum of three (3) months more
before production of the panel begins. The total cost of research and
developement is expected to be $ 425,000.00.
Total number of Employees. At the present time Advanced Optics Electronics, Inc.
has nine (9) employees. There are four (4) salaried administrative, two (2) full
time hourly employees, two (2) receiving stock options and (1) Research
Scientist as an independent contractor.
Item 2. Managements's Discussion and Analysis or Plan of Operation.
The following Management's Discussion and Analysis of Financial Conditions and
Results of Operations contains forward-looking statements relating to future
plans, expectations, events or performances that involve risks and
uncertainties. The Company's actual results of operations could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under "Risk Factors" in the
Company's Prospectus dated January 21,1997. The following discussion should be
read in conjunction with the financial statements and notes thereto included in
this 10-SB.
Overview
The Company is a development stage technology company with its principal focus
in the development and production of large-scale flat panel displays. In
November 1996, Advanced Optics acquired PLZ Tech, the developer of the
large-scale flat panel displays. The Company has continued the research and
development for this product and believes it will be in production by the end of
1998.
The markets for the large-scale flat panel displays would include, but not be
limited to, cockpit displays, flat panel computer monitors, and advertising
billboard. Once the research and development is substantially complete Advanced
Optics Electronics, Inc. plans to begin marketing the products.
Advanced Optics is a "Development Stage Company", and has not generated
significant income since inception. The Company was incorporated on May 23,
1996. The discussions for the Results of Operations, Plan of Operation, and
Liquidity and Capital Resources compare the activities for the year ended
December 31, 1997 to the period from inception, May 23, 1996 to December 31,
1996 (herein referred to as "the periods"). The Company does not believe that
its business is seasonal.
3
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Plan of Operations
Upon substantial completion of the research and development on the large flat
panel displays the Company plans to make the transition from a development stage
company to a full production and sales company of these products. Advanced
Optics Electronics, Inc. will focus on producing and selling the large-scale
flat panel displays for outdoor advertising billboards.
Prior to producing the large-scale flat panel displays for outdoor advertising,
the Company will need to purchase additional equipment. The estimated cost of
this additional equipment ranges from $165,000 to $250,000. Once the equipment
is in place, the Company will be able to complete the production of the first
panel in approximately 180 days.
The Company plans to hire four (4) technicians to assist in the setting up of
necessary equipment. The technicians then will be trained to operate the
equipment and production will begin on the large-scale flat panel displays for
outdoor advertising billboards. Advanced Optics also plans to hire a marketing
manager to establish a sales program and oversee the Company's marketing
efforts.
Advanced Optics Electronics, Inc. currently has a Regulation D (filed 3/31/98)
in effect and plans to raise approximately $1,000,000 over the next twelve
months. These funds will be used to complete the remaining research and
development, purchase the additional equipment for production, set up the
equipment, and obtain additional technicians and marketing personnel.
Results of Operations
In October 1997, Advanced Optics Electronics, Inc. executed a contract to supply
large-scale display panels to a customer for approximately $1,700,000. The
contract is anticipated to be complete by December 1998. The customer is being
billed as work progresses on the project and the Company is using the
percentage-of-completion method of accounting for recording revenues for
contractual work. For the year ended December 31, 1997, the Company generated
$72,000 in contract revenue, and generated no revenue for the period from
inception, May 23, 1996, through December 31, 1996.
Administrative expenses increased from $17,970 to $73,421 for the periods ended
December 31, 1996 and 1997 respectfully. This increase is due to additional
expenses to secure contracts, an increase in staffing, and an increase in normal
operating expenses such as rent and insurance.
Expenditures for research and development decreased from $30,474 to $10,521 for
the periods ended December 31, 1996 and 1997 respectfully. The majority of the
research and development for the large-scale flat panel displays was completed
by PZLTech prior to the Company acquiring PLZTech. As a result expenses, for
research and development have decreased. Additional research and development is
needed before the large-scale flat panel displays become fully marketable. The
company believes the remaining research and development will cost approximately
$225,000.00 and will be complete by December 1998.
Expenditures for Professional Services increased from $21,738 to $33,644 for the
periods ended December 31, 1996 and 1997 respectfully. The increase was the
result of professional fees for legal services and engineering services.
The total notes payable for the Company decreased from $44,571 as of December
31, 1996 to $25,455 as of December 31, 1997. As a result of the reduction in
notes, interest expense decreased by $1,194. Interest expense was $3,142 and
$1,948 for the periods ended December 31, 1996 to 1997, respectfully.
The Company has no income tax liability due to the net operating losses for the
period ended December 31, 1996 and 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31,1997 the Company's net working capital was $164,190 as
compared to a negative $9,040 at December 31, 1996. During 1997 the company
increased its working capital through the sale of additional stock. The Company
sold 2,656,213 common shares during 1997, thereby increasing the Company's
equity by $365,052. The average sales price for the stock during this period was
approximately $0.14 per share.
4
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The Company purchased $30,879 of equipment during the year ended December 31,
1997. This included $829 of furniture and fixtures, $2,626 of computers, and
$27,424 of technical equipment used for testing and production of the flat panel
displays. These purchases were funded primarily from the sale of the Company's
stock.
INTERIM PERIOD
Overview
During the three-month period ended March 31, 1998 Advanced Optics Electronics,
Inc. continued its efforts in the research and development of the large-scale
flat panel displays. The Company is also focusing and planning for the
transition from the research and development to the production phase of the
project.
Advanced Optics was involved in several significant transactions for the three
months ended March 31,1998. The discussions for the Results of Operations, and
Changes in Financial Conditions compare the activities for the three months
ended March 31, 1998 to the year ended December 31, 1997.
Results of Operations
Advanced Optics Electronics, Inc. generated $72,000 in revenue during the three
months ended March 31, 1998 as a result of continued work on the contract. The
Company's anticipated completion date for the contract is March 1999.
During the three-month period the Company incurred $60,594 of general and
administrative expenses as compared to $73,421 for the year ended December 31,
1997. The increase is due to the Company's transition from research and
development to production. The Company increased its administrative staff to
support the change in operations.
The Company's expenditures for professional fees were $23,017 for the three
months ended March 31, 1998 as compared to $33,644 for the year ended December
31,1997. The professional expenses were the result of normal legal, accounting
and other fees for the periods.
Advanced Optics Electronics, Inc. incurred a net loss from operations of $19,401
for the three months ended March 31,1998. This loss was offset by the unrealized
gain of the security held by the Company. Advanced Optics Electronics, Inc. owns
21.57 percent (817,470 shares) of BioModa, Inc. and has an option to purchase
248,950 additional shares, which, if exercised, would increase the Company's
ownership to 26.4% of the total number of shares of outstanding common stock.
The investment is accounted for by the equity method. The market value of
BioModa, Inc. increased by approximately $1,129,500 for the three months ended
March 31, 1998 and as a result the Company recorded $243,647 as an unrealized
gain for the period.
Changes in Financial Conditions
The Company sold 4,895,077 shares of its common stock. The Company's net
proceeds from the sales of common stock were $808,450. The average selling price
for the common stock was $0.165 per share.
The Company's net working capital increased from $168,190 at December 31, 1997
to $1,186,203 at March 31, 1998. This increase is due to two factors -- proceeds
from the sale of the Company's common stock and from the unrealized gain of
BioModa, Inc.
Item 3. Description of Property.
Until October 1997, Advanced Optics Electronics, Inc. leased 1,800 square feet
of office space at 901 Rio Grande Boulevard, Albuquerque, New Mexico. The Rio
Grande property did not have the necessary research space, therefore, a move was
made to 5601 Holly NE, Albuquerque, New Mexico 87113, this property consisted of
3,980 square feet of administrative and research space. However, the research
space could not be brought up to specification for the necessary 100 micron
clean room essential for this research.
A management decision was made to upgrade facilities, after an extensive search
a facility was located at 8301 Washington NE, Suite 4, Albuquerque, New Mexico
87113, Advanced Optics Electronics, Inc. has entered into a three year lease
agreement with JMP Company Inc. P.O. Box 5006, Albuquerque, New Mexico 87185,
signed on May 29, 1998 to include the 3,365 square foot administrative, research
and manufacturing space at a set monthly rate of $ 1,325. The term of the lease
is from June 17, 1998 through June 16, 2001.
5
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Item 4. Security Ownership of Certain Beneficial Owners and Management
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Owner Percent of Class
<S> <C> <C> <C>
Common Stock * Francisco Urrea Jr.
901 Rio Grande NW #G-250 341,810 3.21
Albuquerque, NM 87104
Common Stock Leslie S. Robins
8301 Washington NE 1,999,526 18.80
Suite 4
Albuquerque, NM 87113
Common Stock * Grupo Nueve Ltd.
3009 Charleston 1,539,300 14.47
Albuquerque, NM 87109
</TABLE>
* Francisco Urrea Jr. is the managing director of Grupo Nueve Ltd. and a
participant in Grupo Nueve Ltd.
No person holds a voting trust.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The following sets forth the name, age, and position of each current
Director, Executive Officer and Advisor of Advanced Optics Electronics,
Inc.
<TABLE>
<CAPTION>
NAME AGE POSITION SINCE
<S> <C> <C> <C>
MICHAEL PETE 51 President, Treasurer, Dir. July 1994
LESLIE S. ROBINS 59 Executive Vice President, Secretary, Dir. January 1993
FRANCISCO UREA JR. 67 Director January 1993
DR. ROGER A. BOGGS 50 Senior Vice President - Research June 1996
DR. ALBERT GOODMAN 73 Science Advisor April 1995
DR. GARTH W. GOBELI 69 Science Consultant May 1998
</TABLE>
Michael H. Pete
President, Treasurer, Director, age 51, since July 1994 to present. Developed
and coordinated satellite transmission plans. Interface with DOD regarding the
flat panel initiative. From 1990 to 1994 President of SEES New Mexico Inc.
worked with federal R&D labs (Los Alamos and Sandia) creating and implementing
information management systems. From 1982 to 1990 President of Phoenix
Filtration Systems. From 1979 to 1981 Technical Management Consultant Office of
the Secretary, DOE. 1977 to 1979 Booz, Allen and Hamilton, Project Manager. 1975
to 1977 Office director, Low Income Weatherization Federal Energy
Administration, Wash. D.C. Williams College, BA; Stanford University, Business
and private sector management.
6
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Leslie S. Robins
Executive Vice President, Secretary and Chairman, Board of Directors, Age 59,
since January 1993 to present. Supervised scientists and technicians in
completion of final research for end use in flat panel displays. Developed cost
estimates and time lines and manufacturing procedures for a flat panel display
program. Formulated patent strategy. Raised interim financing. From November
1989 to December 1992 Managing Partner of Coronado Group, performing analysis of
small technology companies. From May 1986 to June 1989 Executive Vice President
of Triton Productions Inc. From September 1978 to October 1987 Managing Partner
of Longview Mgt.; investment managers for individuals in the entertainment
industry. University of Miami, B.S.; Harvard University, MBA program.
Francisco Urrea Jr.
Director, Age 68, since January 1993. January 1994 to present, Managing Partner
Grupo Nueve Ltd. February 1988 to November 1993 President of Septima Enterprises
Inc. Chairman, Diagnostek Inc. NYSE 1983 to 1985. Chairman, Summa Medical Corp.
ASE 1978 to 1991. Chairman, Syncor, NASDAQ. 1974 to 1978. Member U.S. Dept. of
Commerce Biotech Advisory Comm. 1988 to 1995. Member of NM Foreign Trade and
Investment Council 1986 to 1990. Member of NM Economic Development Board 1978 to
1982.
Dr. Roger A. Boggs
Senior Vice. President-Research. Age 50, June 1996 to present. Polaroid
Corporation, June 1974 to 1998. Project manager laser media. Responsible for
budget and delivery of laser ablation media for direct digital color products.
Managed 15 material system and analytical scientists in development of product
applications. Led a group of nine professionals in design of infrared dyes and
acid providing compounds for application in electrically imaged media. Led
effort to invent and developed set of three proprietary IR dyes for laser
imaged, photographic three color product. Ph.D. Univ. Wisconsin.
Albert Goodman, Ph.D.,Science Advisor of the Company. Age 73. Dr. Goodman
received his Ph.D. in Nuclear Physics in 1960 from the University of New Mexico
and Los Alamos Laboratories, He acquired an M.S. in Physics and Mathematics from
the University of New Mexico in 1955 and a B.S. in Physics from the City
University of New York in 1946.
Dr. Goodman worked for Hazeltine Electronic Corporation from 1945-1946 where he
analyzed and participated, in the redesign of radar components to be used by the
U.S. Navy. From 1946-1949, Dr. Goodman was with Los Alamos National Labs which
carried out experiments on transmission of neutron beams by materials. From
1949-1956, Dr. Goodman devised and tested optical piezoelectric devices and
associated instrumentation used for detecting mechanical impacts, vibration and
shock transmissions in materials and structures for Sandia National Labs. Again
from 1956-1960, Dr. Goodman worked for Los Alamos National Labs where he
designed and built instrumentation and equipment for use with Van de Graaff
accelerator and operated the accelerator and its instrumentation systems.
Dr. Goodman returned to Sandia National Labs from 1960-1977, where he supervised
and carried out R&D efforts. From 1981-1985, Dr. Goodman was instrumental in the
development of optical motion detector for use in several security functions for
Kalatek Products Inc. Dr. Goodman worked as an independent Science consultant
and adviser from 1977-1985 in which he was involved in the commercialization of
products such as video disk systems, shutter less motion picture projection
system and shaped explosive charge penetrator device. From 1985-1993, Dr.
Goodman worked for Advanced Sciences Inc. where he managed and monitored several
defense R&D programs. From 1992 to the present, Dr. Goodman has been working for
Technologies Specialties Inc. where he is currently the Vice President of
Research.
Dr. Garth Gobeli, Ph.D., 69, Science consultant to Advanced Optics Electronics,
Inc. 1995 to April 1998 Science consultant to various technology companies. 1993
to 1995 head of research for PLZTECH. From January 1990 to April 1992, Senior
Scientist at Foresight in Albuquerque, New Mexico. Dr. Gobeli was responsible
for the design, fabrication and testing of optics and illumination components
developed by Foresight. From 1989 to 1991, principal of Chromex, where Dr.
Gobeli designed and supervised prototype manufacture and marketing of imaging
spectrographs. Also, developed special analysis oriented package. Prepared and
received a number of SBIR grants. 1987 to 1988, Scientist at CVI Laser, Inc.
Responsible for developing and bringing to market double beam spectrometer. 1980
to 1987, Principal at Hanseatic Group in Albuquerque, NM where he developed
computer models for forward hedging of currencies, interest rates and portfolio
immunization. 1966 to 1979, Senior Scientist
7
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at Sandia National Labs Physical Optics Group. 1959 to 1966, Physicist at Bell
Telephone Labs, Murray Hill, New Jersey. Gobeli holds several patents, DOD
secret Clearance, PhD Purdue University, Physics.
There are no family relationships among the directors, executive officers, or
directors. None of the executive officers of Advanced Optics Electronics, Inc.
have any legal proceedings pending at the present time.
There are no bankruptcy petitions filed against any business of which such
persons as general partner or executive offices now or in the past two years.
There are no convictions in a criminal proceeding or pending criminal proceeding
involving the executive officers or directors of Advanced Optics Electronics,
Inc., not being subject to any order, judgement, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities.
The executive officers or directors of Advanced Optics Electronics, Inc. have
not been found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have ever violated a
federal or state securities or commodities law, and no judgement has ever been
brought against them.
DIRECTORS
Michael Pete, Leslie S. Robins and Francisco Urea Jr. are Directors as well as
senior managers of the Company.
Item 6. Executive Compensation.
Executive Compensation from the recently completed fiscal year (December 1997)
was as the following:
Michael M. Pete - $2505.25
Leslie S. Robins - $9709.55
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities Al1
Name and Annual Stock Underlying LTIP Other
Principal Compensation Award(s) Options/ Payouts Compensation
Position Year Salary($) Bonus ($) ($) ($) SARs (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
President, Treasurer
Director
Michael H. Pete 1998 30,000.00 0 0 75,000.00 300,000.00 0 0
Exec. VP, Secretary
Chairman, Board Directors
Leslie S. Robins 1998 54,000.00 0 0 237,500.00 950,000.00 0 0
Science Advisor
Dr. Albert Goodman 1998 36,000.00 0 0 12,500.00 50,000.00 0 1,000.00
Science Consultant
Dr. Garth Gobeli 1998 60,000.00 0 0 50,000.00 200,000.00 0 3,500.00
</TABLE>
<PAGE>
On January 2, 1998 Advanced Optics Electronics, Inc. and Mr. Pete entered into a
three year employment contract. Under the terms of Mr. Pete's employment
contract, Mr. Pete employment contract, Mr. Pete shall serve as president of
Advanced Optics Electronics, Inc. and his salary shall be $30,000.00 per annum
subject to an 8% cost of living increase and increases as determined by the
Board of Directors. In addition, pursuant to Mr. Pete's employment contract, in
the event that Mr. Pete is terminated in connection with a change in control,
Mr. Pete shall be entitled to receive a lump sum payment equal to three time his
then annual salary. Finally, pursuant to his contract, Mr. Pete shall be
indemnified by Advanced Optics Electronics, Inc. for serving as President.
On December 1, 1997 Advanced Optics Electronics, Inc. and Mr. Robins entered
into a three year employment contract. Under the terms of Mr. Robins' employment
contract, Mr. Robins shall serve as Executive Vice President, Secretary and
Chairman, Board of Directors and his salary shall be $54,000.00 per annum
subject to a 8% cost of living increase and increases as determined by the Board
of Directors. In addition, pursuant to Mr. Robins employment contract, in the
event that Mr. Robins is terminated in connection with a change in control, Mr.
Robins shall be entitled to receive a lump sum payment equal to three times his
then annual salary. Finally, pursuant to his contract, Mr. Robins shall be
indemnified by Advanced Optics Electronics, Inc. for serving as Executive Vice
President, Secretary and Chairman, Board of Directors, for Advanced Optics
Electronics, Inc.
ITEM 7. Certain Relationships and Related Transactions.
BIOMADA STOCK. On April 17th, 1998, Advanced Optics Electronics, Inc. purchased
an additional 631,578 common shares from BioModa. The total number of shares
owned by Advanced Optics Electronics, Inc. as of this date is 817,470 or 21.57%
of the outstanding number of common shares. Advanced Optics Electronics, Inc.
also has an option to purchase 248,950 additional shares of BioModa, which, if
exercised, would be 26.8% of the total number of outstanding common stock.
There is no relationship between BioModa and Advanced Optics Electronics, Inc.
No officer, director, five percent or more shareholder of Advanced Optics
Electronics, Inc. is a holder of any securities of BioModa. No member of an
immediate family of officers or directors of Advanced Optics Electronics, Inc.
is a security holder of BioModa.
Item 8. Legal Proceedings.
The Company is not a party to any legal proceedings, the adverse outcome of
which, in management's opinion, would have a material adverse effect on the
Company's operating results.
Item 9. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock began trading on the NASDAQ Bulletin Board Market
("NASDAQ") under the symbol "ADOT" during the first quarter of 1997. Prior to
that time the stock was not listed or traded on any organized market system. The
holders of the Company's Common Stock are entitled to one vote per share. The
Common Stock holders do not have preemptive rights to purchase, subscribe for,
or otherwise acquire any shares of Common Stock.
The table below sets forth the high and low bid prices for the Common Stock as
reported by NASDAQ.
Fiscal 1997 High Low
- ----------- ---- ---
First Quarter $0.92 $0.52
Second Quarter 1.00 0.52
Third Quarter 0.87 0.37
Fourth Quarter 0.87 0.31
Fiscal 1998
- -----------
First Quarter $0.29 $0.15
These over-the-counter market quotations may reflect inter-dealer prices without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions. The Company has never paid cash dividends on its Common Stock and
does not anticipate paying cash dividends in the near future.
9
<PAGE>
Item 10. Recent Sales of Unregistered Securities.
There were no securities which a Regulation A Exemption has been claimed. Shares
sold were under Regulation D 504. Item 701 S-B Securities sale. There were no
securities sold under Item 701 S-B. Securities were sold under Regulation D 504.
There was a Regulation D-504 filled January 21, 1997. There was a Regulation D
504 filed March 11, 1998.
Advanced Optics Electronics, Inc. has never issued unregistered securities.
Item 11. Description of Securities
At March 31, 1998, there were approximately 112 Common Stock holders of record.
The Company estimates that, when including shareholders whose shares are held in
nominee by brokers, there are approximately 230 total holders of common stock.
COMMON STOCK
Each holder of the Common Stock will be entitled to one vote for each share of
stock standing in his name on the books of the Corporation. Material Rights for
each holder of the Common Stock will be entitled to one vote for each share of
stock standing in his name on the books of Advanced Optics Electronics, Inc. The
Company to date has not paid any dividends.
Consideration for Shares. The Common Stock will be issued for such
consideration, and will be fixed from to time by the Board of Directors. In the
absence of fraud, the judgment of the Directors as to the value of any property
for shares will be conclusive. When shares are issued upon payment of the
consideration fixed by the Board of Directors, such shares will be taken to be
fully paid stock and will be non-assessable.
Pre-emptive Rights. Except as may otherwise be provided by the Board of
Directors, no holder of any shares of the stock of the Corporation, will have
any preemptive right to purchase, subscribe for, or otherwise acquire any shares
of stock of the Corporation of any class, now or hereafter authorized, or any
securities exchangeable for or convertible into such shares, or any warrant or
other instruments evidencing rights or options to subscribe for, purchase or
otherwise acquire such shares. Stock Rights and Option. The corporation shall
have the power to create and issue rights, warrants, or options entitling the
holders thereof to purchase from the corporation.
Item 11. Description of Securities.
Advanced Optics Electronics, Inc. total number of shares authorized to issue is
25,000,000 shares of common stock at $ 0.001 par value, per share. As of April
1998 there were outstanding 12,050,280 shares of Common Stock held of record by
stockholders.
10
<PAGE>
Item 12. Indemnification of Directors and Officers.
Advanced Optics Electronics, Inc. has adopted Section 78.751 of the Domestic and
Foreign Corporation Laws of the State of Nevada in its bylaws including any
amendments to this section as they may occur. Section 78.751 states:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit of proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent or another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, does not act in good
faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and that, with respect to any
criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation of for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court or competent jurist\diction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
Advanced Optics Electronics, Inc. has entered into indemnification
agreements with its officers and directors. Pursuant to the agreements, Advanced
Optics Electronics, Inc. has agreed to defend and indemnify such officers and
directors for all expenses and liabilities for acting as such.
In addition, Advanced Optics Electronics, Inc. carries directors' and
officers' insurance pursuant to authority in its Bylaws to maintain a liability
insurance policy which insures directors or officers against any liability
incurred by them in their capacity as such, or arising out of their status as
such.
PART F/S
The financial statements of Advanced Optics Electronics, Inc. follow.
11
<PAGE>
Item 13. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
----
Financial Statements For The Periods Ended December 31, 1997 and 1996
Report of Independent Accountant FS- 2
Statement of Operations FS- 3
Balance Sheet FS- 4
Statement of Changes in Shareholders' Equity FS- 5
Statement of Cash Flows FS- 6
Notes to Financial Statements FS- 7
Financial Statements For The Quarter Ended March 31, 1998
Report of Independent Accountant FS- 8
Statement of Operations FS- 9
Balance Sheet FS-10
Statement of Changes in Shareholder's Equity FS-11
Statement of Cash Flows FS-12
Notes to Financial Statements FS-13
FS-14
FS-15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANT
I have audited the accompanying balance sheet of Advanced Optics, Inc. (a Nevada
corporation) as of December 31, 1997 and 1996 and the related statements of
income, cash flow, and changes in shareholders equity for the year ended
December 31, 1997 and for the period from inception (May 22, 1996) through
December 31, 1996. These statements are the responsibility of Advanced Optics
Electronics, Inc's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amount and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. I believe that my audit of the financial statements provide a
reasonable basis for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Advanced Optics Electronics, Inc.
as of December 31, 1997 and 1996 and the results of operations and cash flows
for the year ended December 31, 1997 and for the period from inception (May 22,
1996) through December 31, 1996 in conformity with generally accepted accounting
principles.
Athena L. McDevitt
Albuquerque, New Mexico
February 5, 1998
FS-2
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
From Inception From Inception
(May 22nd, 1996) (May 22, 1996)
Year Ended to to
December 31, 1997 December 31, 1996 December 31, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenues:
Contract Revenue $ 72,000 $ -- $ 72,000
----------- ----------- -----------
Costs and Expenses:
General and Admininstrative 73,421 17,969 91,930
Research and Development 10,521 30,474 40,995
Amortization and Depreciation 37,156 3,578 40,734
Professional Expenses 33,644 21,739 55,383
Interest Expense 1,948 3,142 5,090
----------- ----------- -----------
Total Expenses $ 156,690 $ 76,902 $ 233,592
----------- ----------- -----------
Net Loss $ (84,690) $ (76,902) $ (161,592)
=========== =========== ============
Earnings (Loss) Per Share ($ 0.0150) ($ 0.0678) ($ 0.0477)
Weighted Ave. Shares Outstanding 5,656,186 1,134,927 3,395,557
</TABLE>
The accompanying notes are an integral part of these financial statements
FS-3
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, December 31,
Assets 1997 1996
------------ -------------
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 74,421 $ 960
Subscription Receivable 31,850 --
Contract Receivable 72,000 --
Note Receivable 11,493 --
----------- -----------
Total Current Assets 189,764 960
----------- -----------
Property and Equipment
Furnitures and Fixtures 13,132 12,303
Computers 2,626 --
Technical Equipment 27,424 --
Less: Accumulated Depreciation (4,483) (673)
----------- -----------
Total Property and Equipment 38,699 11,630
----------- -----------
Other Assets
Organizational Costs, net 84,027 20,565
Goodwill, net 4,854 4,979
Patents, net 227,191 240,132
Other Assets 350 --
Total Other Assets 316,422 265,676
----------- -----------
Total Assets $ 544,885 $ 278,266
=========== ===========
Liabilities and Shareholder's Equity
Current Liabilities
Notes Payable $ 2,000 $ 10,000
Accrued Liabilities 5,425 --
----------- -----------
Total Current Liabilities 7,425 10,000
----------- -----------
Long-Term Liabilities
Long-Term Liabilities 23,455 34,572
----------- -----------
23,455 34,572
----------- -----------
Shareholders' Equity
Common Stock, authorized 25,000,000 shares,
$.001 par value, 7,155,503 and 4,499,290 shares
issued and outstanding, respectively 7,155 4,499
Additional Paid-In Capital 668,442 306,097
Accumulated Deficit (161,592) (76,902)
----------- -----------
Total Shareholders' Equity 514,005 233,694
----------- -----------
Total Liabilities and Shareholder's Equity $ 544,885 $ 278,266
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
FS-4
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
Statement OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
------------ Retained
Additional Earnings Total
Stated Paid-In (Accumulated Shareholders'
Shares Value Capital Deficit) Equity
------ ----- ------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance May 22, 1996 -- $ -- $ -- $ -- $ --
Stock issued in public offering 4,499,290 4,499 306,097 310,596
Net Loss -- -- -- (76,902) (76,902)
--------- ------- -------- ------- -------
Balance December 31 1996 4,499,290 4,499 306,097 (76,902) 233,694
--------- ------- -------- ------- -------
Stock issued in public offering 2,656,213 2,656 362,345 365,001
Net Loss -- -- -- (84,690) (84,690)
--------- ------- -------- ------- -------
Balance December 31 1997 7,155,503 $ 7,155 $ 668,442 $(161,592) $ 514,005
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
FS-5
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
From Inception From Inception
(May 22, 1996) (May 22, 1996)
Year Ended to to
December 31, 1997 December 31, 1996 December 31, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
Cash Flows-Operating Activities
Net (Loss) $ (84,690) $ (76,902) $ (161,592)
Adjustments to Reconcile Net Loss to
Net Cash Flows from Operating Activities
Accumulated Depreciation 3,810 673 4,483
Amortization Expense 33,346 2,905 36,251
Subscription Receivable (31,850) -- (31,850)
Contract Receivable (72,000) -- (72,000)
Note Receivable (11,493) -- (11,493)
Other Assets (350) -- (350)
Accrued Liabilities 5,425 -- 5,425
--------- --------- ---------
Net Cash Flows from Operating Activities (157,802) (73,324) (231,126)
--------- --------- ---------
Cash Flows-lnvesting Activities
Furniture and Fixtures (829) (12,303) (13,132)
Computers (2,626) -- (2,626)
Technical Equipment (27,424) -- (27,424)
Organization Costs (83,742) (21,292) (105,034)
Goodwill -- (5,000) (5,000)
Patents -- (242,289) (242,289)
--------- --------- ---------
Net Cash Flows from Investing Activities (114,621) (280,884) (395,505)
--------- --------- ---------
Cash Flows-Financing Activities
Notes Payable 6,150 46,843 52,993
Debt Repayment (25,267) (2,271) (27,538)
Issuance of Common Stock 365,001 310,596 675,597
--------- --------- ---------
Net Cash Flows from Financing Activities 345,884 355,168 701,052
--------- --------- ---------
Net Increase (Decrease) in Cash 73,461 960 74,421
Cash Balance at Beginning of Period 960 -- --
--------- --------- ---------
Cash Balance at End of Period $ 74,421 $ 960 $ 74,421
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
FS-6
<PAGE>
Notes to Financial Statements
ADVANCED OPTICS ELECTRONICS, INC.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Advanced Optics Electronics, Inc. is a developmental stage technology company
with its principle focus on the development and production of large-scale flat
panel displays. The Company is currently continuing its research and development
of this product. Upon substantial completion of the research and development of
the large flat panel display, the Company plans to make the transition from a
developmental stage company to selling and producing this product. The market
for the large-scale flat panel will include, but not be limited to, cockpit
displays, flat panel computer monitors, and advertising billboards. Advanced
Optics Electronics, Inc. plans to focus on producing and selling the large-scale
flat panel displays for outdoor advertising billboards. Management believes that
it will be in full production by the end of 1998.
Advanced Optics Electronics, Inc. was incorporated on May 23, 1996. During
November 1996, Advanced Optics Electronics, Inc. merged with PLZ Tech, the
developer of the large-scale flat panel displays. PLZ Tech shareholders owned
8,768,842 shares of common stock, which they exchanged for 4,500,000 shares in
Advanced Optics Electronics, Inc.
Basis of Presentation
Advanced Optics Electronics, Inc. prepares its financial statements in
accordance with generally accepted accounting principles which requires that
management make estimates and assumptions that affect the reported amounts.
Actual results could differ from those estimates.
The purchase method of accounting was used to record the merger between Advanced
Optics Electronics, Inc. and PLZ Tech.
Revenue Recognition
Revenues are generally recognized when services are rendered or products are
delivered to customers. Long-term contracts are accounted for using the
percentage of completion method, with revenues recognized in proportion that
costs incurred bear to estimated total costs at completion. Expected losses on
such contracts, if any, are charged to income currently. The Company has entered
a contract to produce flat panel displays for an outdoor advertising billboard.
The amount of the contract is for $ 1.7 million dollars. Management estimates
that the contract will be completed by November of 1998.
Depreciation and Amortization
Advanced Optics Electronics, Inc. will provide for depreciation on a
straight-line basis over the estimated economic lives of their assets. Furniture
and office equipment are being depreciated over 7 years. All computer and
peripheral equipment are being depreciated over 5 years. All manufacturing
equipment, with the exception of the Unitrack testing unit, are being
depreciated over 7 years. The Unitrack testing unit is being depreciated over 15
years.
Organization costs are amortized on a straight-line basis over the period to be
benefited of 5 years. Patents are amortized on a straight-line basis over the
remaining estimated useful life of 15 years. Goodwill is amortized over the
period to be benefited, or 40 years, whichever is less.
FS-7
<PAGE>
Income Taxes
Deferred tax assets and liabilities are established for temporary differences
between financial and tax reporting bases and will subsequently be changed to
reflect changes in tax rates expected to be in effect when the temporary
differences reverse. There has not been any temporary differences between
financial and tax reporting bases.
Earnings Per Share
Earnings Per Share is computed by dividing net income (loss) applicable to
common stock by the weighted average number of common shares outstanding during
the period.
Cash and Cash Equivalents
Cash and cash equivalents include investments in short-term, highly liquid
securities, which have maturities when purchased of three months or less.
Leases
Currently, the only lease agreement is for rent of facilities for the office and
production. The lease agreement is $1,300 per month for 3 years.
2. SHAREHOLDERS' EQUITY
Common Stock
The authorized common stock of Advanced Electronics, Inc. consists of 25,000,000
shares with a par value of $.001 per share.
3. DEBT
Long-term debt as of December 31 consists of a Note Payable in the amount of
$16,150. The terms are 3 years at an 8% interest rate. The note is due May 15th,
1999. The current portion of the note is $ 2,000. There is a demand note in the
amount of $9,305 with a 10% interest rate.
4. RELATED PARTY TRANSACTIONS
There is a Note Receivable from an officer in the amount of $11,493. The terms
are a two year note at a 9% interest rate. The note is due November 10th, 1999.
FS-8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANT
I have audited the accompanying balance sheet of Advanced Optics, Inc. (a Nevada
corporation) as of March 31, 1998 and the related statements of income, cash
flow, and changes in shareholders equity for the quarter ended March 31, 1998.
These statements are the responsibility of Advanced Optics Electronics, Inc's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amount and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. I believe that my audit of the financial statements provide a
reasonable basis for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Advanced Optics Electronics, Inc.
as of March 31, 1998 and the results of operations and cash flows for the
quarter ended March 31, 1998 in conformity with generally accepted accounting
principles.
Athena L. McDevitt
Albuquerque, New Mexico
May 4, 1998
FS-9
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Cumulative
From Inception
For the Three (May 22, 1996)
Months Ended to
March 31, 1998 March 31, 1998
-------------- --------------
Revenues:
Contract Revenue $ 72,000 $ 144,000
------------ ------------
Costs and Expenses:
General and Admininstrative 60,594 151,984
Research and Development 3,800 44,795
Amortization and Depreciation 6,526 47,260
Professional Expenses 23,017 78,400
Stock Transfer Fees 1,371 1,371
Interest Expense 247 5,337
------------ ------------
Total Expenses $ 95,555 $ 329,147
------------ ------------
Net Loss $ (23,555) $ (185,147)
------------ ------------
Other comprehensive income, net of tax:
Unrealized holding gains on securities:
Unrealized holding identified this period: 200,020 200,020
------------ ------------
Comprehensive Income $ 176,465 $ 14,873
============ ============
Earnings (Loss) Per Share $ 0.0158 $ 0.0025
Weighted Ave. Shares Outstanding 11,157,596 5,982,903
The accompanying notes are an integral part of these financial statements.
FS-10
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
BALANCE SHEET
March 31,
Assets 1998
-----------
Current Assets
Cash and Cash Equivalents $ 739,493
Subscription Receivable 31,850
Investments- Securities (Cost $ 35,191) 235,211
Contract Receivable 144,000
Note Receivable 18,993
Total Current Assets 1,169,547
-----------
Property and Equipment
Furnitures and Fixtures 13,132
Computers 3,175
Technical Equipment 27,424
Less: Accumulated Depreciation (5,435)
-----------
Total Property and Equipment 38,296
-----------
Other Assets
Organizational Costs, net 78,776
Goodwill, net 4,823
Patents, net 223,955
Other Assets 350
-----------
Total Other Assets 307,904
-----------
Total Assets $ 1,515,747
===========
Liabilities and Shareholder's Equity
Current Liabilities
Notes Payable $ 16,065
Accrued Liabilities 12,472
-----------
Total Current Liabiiities 28,537
-----------
Long-Term Liabilities
Long-Term Liabilities 5,740
-----------
Shareholders' Equity
Common Stock, authorized 25,000,000 shares, $.001 par
value, 12,050,280 shares issued and outstanding 12,050
Additional Paid-In Capital 1,454,547
Retained Earnings 14,873
-----------
Total Shareholders' Equity 1,481,470
-----------
Total Liabilities and Shareholder's Equity $ 1,515,747
===========
The accompanying notes are an integral part of these financial statements.
FS-11
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Retained
-------------------------- Additional Earnings Total
Stated Paid-In (Accumulated Shareholders'
Shares Value Capital Deficit) Equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance May 22, 1996 -- $ -- $ -- $ -- $ --
Stock issued in public offering 4,499,290 4,499 306,097 310,596
Net Loss (76,902) (76,902)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1996 4,499,290 4,499 306,097 (76,902) 233,694
----------- ----------- ----------- ----------- -----------
Stock issued in public offering 2,656,213 2,656 362,345 365,001
Net Loss (84,690) (84,690)
----------- ----------- ----------- ----------- -----------
Balance December 31, 1997 7,155,503 7,155 668,442 (161,592) 514,005
----------- ----------- ----------- ----------- -----------
Stock issued in public offering 4,894,777 4,895 786,105 791,000
Comprehensive Income 176,465 176,465
----------- ----------- ----------- ----------- -----------
Balance March 31, 1998 12,050,280 12,050 1,454,547 14,873 1,481,470
=========== =========== =========== =========== ===========
</TABLE>
The accompanylng notes are an integral part of these financial statements.
FS-12
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Cumulative
From Inception
(May 22, 1996)
Three Months Ended to
March 31, 1998 March 31, 1998
-------------- --------------
Cash Flows-Operating Activities
Net (Loss) $ 176,465 $ 14,873
Adjustments to Reconcile Net Loss to
Net Cash Flows from Operating Activities
Accumulated Depreciation 952 5,435
Amortization Expense 8,518 44,769
Unrealized Gain-Investment (200,020) (200,020)
Subscription Receivable -- (31,850)
Contract Receivable (72,000) (144,000)
Note Receivable (7,500) (18,993)
Accrued Liabilities 7,047 12,472
----------- -----------
Net Cash Flows from Operating Activities (86,538) (317,314)
----------- -----------
Cash Flows-Investing Activities
Furniture and Fixtures -- (13,132)
Computers (549) (3,175)
Technical Equipment -- (27,424)
Organization Costs -- (105,034)
Goodwill -- (5,000)
Patents -- (242,289)
Investment in Securities (35,191) (35,191)
Other Assets -- (350)
----------- -----------
Net Cash Flows from Investing Activities (35,740) (431,595)
----------- -----------
Cash Flows-Financing Activities
Notes Payable -- 52,993
Debt Repayment (3,650) (31,188)
Issuance of Common Stock 791,000 1,466,597
----------- -----------
Net Cash Fiows from Financing Activities 787,350 1,488,402
----------- -----------
Net Increase (Decrease) in Cash 665,072 739,493
Cash Balance at Beginning of Period 74,421 --
----------- -----------
Cash Balance at End of Period $ 739,493 $ 739,493
=========== ===========
Item. 13 - Item. 310 (c) of Regulation S-B. Have been complied with, the
inclusion of financial statements of June 30, 1998 and September 30, 1998.
The accompanying notes are an integral part of these financial statements.
FS-13
<PAGE>
Notes to Financial Statements
ADVANCED OPTICS ELECTRONICS, INC.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Advanced Optics Electronics, Inc. is a developmental stage technology company
with its principle focus on the development and production of large-scale flat
panel displays. The Company is currently continuing its research and development
of this product. Upon substantial completion of the research and development of
the large flat panel display, the Company plans to make the transition from a
developmental stage company to selling and producing this product. The market
for the large-scale flat panel will include, but not be limited to, cockpit
displays, flat panel computer monitors, and advertising billboards. Advanced
Optics Electronics, Inc. plans to focus on producing and selling the large-scale
flat panel displays for outdoor advertising billboards. Management believes that
it will be in full production by the end of 1998.
Advanced Optics Electronics, Inc. was incorporated on May 23, 1996. During
November 1996, Advanced Optics Electronics, Inc. merged with PLZ Tech, the
developer of the large-scale flat panel displays. PLZ Tech shareholders owned
8,768,842 shares of common stock, which they exchanged for 4,500,000 shares in
Advanced Optics Electronics, Inc.
The 4.5 million shares were issued in the reverse acquisition of a shell and not
a merger or public offering.
Basis of Presentation
Advanced Optics Electronics, Inc. prepares its financial statements in
accordance with generally accepted accounting principles which requires that
management make estimates and assumptions that affect the reported amounts.
Actual results could differ from those estimates.
The purchase method of accounting was used to record the merger between Advanced
Optics Electronics, Inc. and PLZ Tech.
Revenue Recognition
Revenues are generally recognized when services are rendered or products are
delivered to customers. Long-term contracts are accounted for using the
percentage of completion method, with revenues recognized in proportion that
costs incurred bear to estimated total costs at completion. Expected losses on
such contracts, if any, are charged to income currently. The Company has entered
a contract to produce flat panel displays for an outdoor advertising billboard.
The amount of the contract is for $ 1.7 million dollars. Management estimates
that the contract will be completed by November of 1998.
Depreciation and Amortization
Advanced Optics Electronics, Inc. will provide for depreciation on a
straight-line basis over the estimated economic lives of their assets. Furniture
and office equipment are being depreciated over 7 years. Al1 computer end
peripheral equipment are being depreciated over 5 years. All manufacturing
equipment, With the exception of the Unitrack testing unit, are being
depreciated over 7 years. The Unitrack testing unit is being depreciated over 15
years.
FS-14
<PAGE>
Organization costs are amortized on a straight-line basis over the period to be
benefited of 5 years. Patents are amortized on a straight-line basis over the
remaining estimated useful life of 15 years. Goodwill is amortized over the
period to be benefited, or 40 years, whichever is less.
Income Taxes
Deferred tax assets and liabilities are established for temporary differences
between financial and tax reporting bases and will subsequently be changed to
reflect changes in tax rates expected to be in effect when the temporary
differences reverse. There have not been any temporary differences between
financial and tax reporting bases.
Earnings Per Share
Earnings Per Share is computed by dividing net income (loss) applicable to
common stock by the weighted average number of common shares outstanding during
the period.
Cash and Cash Equivalents
Cash and cash equivalents include investments in short-term, highly liquid
securities, which have maturities when purchased of three months or less.
Investments
Advanced Optics Electronics, Inc. has purchased marketable equity securities in
a company. For financial purpose the marketable equity securities are treated as
trading securities as of the date of the issuance of the March 31 financial
statements. Management, since the purchase, has changed their intent and has
purchased additional shares and will be required to account for the investment
as if it were available-for-sale. The basis on which the gain was determined was
specific identification.
The financial statements have been revised by the new accountants to delete the
unrealized gain and the investment is stated under the equity method. The latest
financial statements are filed as an exhibit to these responses to comments.
Leases
Currently, the only lease agreement is for rent of facilities for the office and
production. The lease agreement is $ 1,300 per month for 3 years.
2. SHAREHOLDERS' EQUITY
Common Stock
The authorized common stock of Advanced Electronics, Inc. consists of 25,000,000
shares with a par value of $.001 per share.
3. DEBT
Long-term debt as of March 31 consists of a Note Payable in the amount of
$14,500. The terms are 3 years at an 8% interest rate. The note is due May 15th,
1999. The current portion of the note is $ 8,760.
4. RELATED PARTY TRANSACTIONS
There is a Note Receivable from an officer in the amount of $ 18,993. The terms
are a two year note at a 9% interest rate. The note is due November 10th, 1999.
FS-15
<PAGE>
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Accounting Comments
Reports of Independent Accountant and Balance Sheet
Comments regarding these areas should be answered in the compilations prepared
for us by our new accounting firm of Neff & Co. in Albuqerque, New Mexico. The
compilations are for the periods ending of June 30, 1998 and September 30, 1998.
Attached as Exhibits. The prior accounting firm had 1.5 employees Neff & Co.
with 28 CPA's and approximately 40 employees.
Attached as Exhibits
Item 15. Exhibits.
The Exhibits of Advanced Optics Electronics, Inc. follow.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
Advanced Optics Electronics, Inc.
LESLIE S. ROBINS
By: Leslie S. Robins
Date: June 19,1998 Executive Vice President
<PAGE>
PART III
ITEM 1. TABLE and DESCRIPTIONS TO EXHIBITS
2.1 Plan of Acquisition, Reorganization, arrangement,
liquidation, or succession........................None
3 Articles of Incorporation and By-Laws
i Articles of Incorporation ........................Filed Herewith
ii By-Laws ..........................................Filed Herewith
4 Instruments defining the rights of holders,
iclud. Indentures ................................Incorporated by
reference to Exhibit (ii)
7 Opinion re: liquidation preference................Incorporated by
reference to Exhibit (ii)
9 Voting Trust Agreement............................Not Applicable
10.1 Business Loan Agreement between Advanced Optics
Electronics, Inc. and Western Bank ...............Filed Herewith
10.2 Lease Agreement Advanced Optics
Electronics, Inc. and JMP Company Inc.............Filed Herewith
10.3 State of Nevada Corporate Charter ................Filed Herewith
11 Statement re: computation of per share earning ...This is antidilutive
Reference financial
statements
14 Material Foreign patents .........................Not Applicable
16 Letter on change in certifying accountant ........Not Applicable
21 Subsidiary of registrant .........................Not Applicable
24 Power of Attorney ................................Incorporated by
reference to Exhibit (ii)
27 Financial Data Schedule ..........................Filed Herewith
28 Information from reports furnished to State
Insurance regulatory authorities .................Not Applicable
99 Signatures........................................Filed Herewith
<PAGE>
ARTICLES OF INCORPORATION
OF
ADVANCED OPTICS ELECTRONICS INC.
<PAGE>
TABLE OF CONTENTS
TO THE
ARTICLES OF INCORPORATION
OF
ADVANCED OPTICS ELECTRONICS, INC.
ARTICLE I NAME 1
ARTICLE II RESIDENT AGENT 1
ARTICLE III DURATION 1
ARTICLE IV PURPOSES 1
ARTICLE V POWERS 1
ARTICLE VI CAPITAL STOCK 2
SECTION 1 AUTHORIZED SHARES 2
SECTION 2 VOTING RIGHTS OF SHAREHOLDERS 2
SECTION 3 CONSIDERATION FOR SHARES 2
SECTION 4 PRE-EMPTIVE RIGHTS 3
SECTION 5 STOCK RIGHTS AND OPTIONS 3
ARTICLE VII ASSESSMENT OF STOCK 3
ARTICLE VIII DIRECTORS 3
SECTION 1 SIZE OF BOARD 3
SECTION 2 POWERS OF BOARD 4
SECTION 3 INTERESTED DIRECTORS 6
ARTICLE IX LIMITATION OF LIABILITY OF OFFICERS OR 6
DIRECTORS
ARTICLE X INDEMNIFICATION 6
ARTICLE XI PLACE OF MEETING, CORPORATE BOOKS 9
ARTICLE XII AMENDMENT OF ARTICLES 9
ARTICLE XIII INCORPORATION 10
CERTIFICATE CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY 11
RESIDENT AGENT IN THE MATTER OF ADVANCED
OPTICS ELECTRONICS, INC.
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 22 1996
ARTICLES OF INCORPORATION
OF
ADVANCED OPTICS ELECTRONICS INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a Corporation under and pursuant to the laws
of the State of Nevada, and we do hereby certify that:
ARTICLE I - NAME: The exact name of this Corporation is:
Advanced Optics Electronics Inc.
ARTICLE II - RESIDENT AGENT:
The Resident Agent of the Corporation is Max C. Tanner, Esq., The Law
Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, Las Vegas, Nevada
89121.
ARTICLE III - DURATION: The Corporation shall have perpetual existence.
ARTICLE IV - PURPOSES: The purpose, object and nature of the business for which
this Corporation is organized are:
(a) To engage in any lawful activity;
(b) To carry on such business as may be necessary, convenient, or
desirable to accomplish the above purposes, and to do all other things
incidental thereto which are not forbidden by law or by these Articles
of Incorporation.
ARTICLE V - POWERS: The powers of the Corporation shall be those powers granted
by 78.060 and 78.070 of the Nevada Revised Statutes under which this corporation
is formed. In addition, the Corporation shall have the following specific
powers:
<PAGE>
(a) To elect or appoint officers and agents of the Corporation and to fix
their compensation;
(b) To act as an agent for any individual, association, partnership,
corporation or other legal entity;
(c) To receive, acquire, hold, exercise rights arising out of the
ownership or possession thereof, sell, or otherwise dispose of, shares
or other interests in, or obligations of, individuals, associations,
partnerships, corporations, or governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the corporation, but such shares may only be purchased,
directly or indirectly, out of earned surplus;
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes, and in time of war, to
make donations in aid of war activities.
ARTICLE VI - CAPITAL STOCK:
Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 25,000,000 shares of Common Stock at
$.001 par value per share.
Section 2. Voting Rights of Shareholders. Each holder of the Common Stock
shall be entitled to one vote for each share of stock standing in his name
on the books of the Corporation.
Section 3. Consideration for Shares. The Common Stock shall be issued for
such consideration, as shall be fixed from time to time by the Board of
Directors. In the absence of fraud, the judgment of the Directors as to the
value of any property for shares shall be conclusive. When shares are
issued upon payment of the consideration fixed by the Board of Directors,
such shares shall be taken to be fully paid stock and shall be
non-assessable. The Articles shall not be amended in this particular.
2
<PAGE>
Section 4. Pre-emptive Rights. Except as may otherwise be provided by the
Board of Directors, no holder of any shares of the stock of the
Corporation, shall have any preemptive right to purchase, subscribe for, or
otherwise acquire any shares of stock of the Corporation of any class now
or hereafter authorized, or any securities exchangeable for or convertible
into such shares, or any warrants or other instruments evidencing rights or
options to subscribe for, purchase, or otherwise acquire such shares.
Section 5. Stock Rights and Options. The Corporation shall have the power
to create and issue rights, warrants, or options entitling the holders
thereof to purchase from the corporation any shares of its capital stock of
any class or classes, upon such terms and conditions and at such times and
prices as the Board of Directors may provide, which terms and conditions
shall be incorporated in an instrument or instruments evidencing such
rights. In the absence of fraud, the judgment of the Directors as to the
adequacy of consideration for the issuance of such rights or options and
the sufficiency thereof shall be conclusive.
ARTICLE VII - ASSESSMENT OF STOCK: The capital stock of this Corporation, after
the amount of the subscription price has been fully paid in, shall not be
assessable for any purpose, and no stock issued as fully paid up shall ever be
assessable or assessed. The holders of such stock shall not be individually
responsible for the debts, contracts, or liabilities of the Corporation and
shall not be liable for assessments to restore impairments in the capital of the
Corporation.
ARTICLE VIII - DIRECTORS: For the management of the business, and for the
conduct of the affairs of the Corporation, and for the future definition,
limitation, and regulation of the powers of the Corporation and its directors
and shareholders, it is further provided:
Section 1. Size of Board. The members of the governing board of the
Corporation shall be styled directors. The number of directors of the
Corporation, their qualifications, terms of office, manner of election,
time and place of meeting, and powers and duties shall be such as are
prescribed by statute and in the by-laws of the Corporation. The name and
street
3
<PAGE>
address of the director constituting the first board of the Sole Director,
which shall be one (1) in number is:
NAME ADDRESS
Max C. Tanner 2950 East Flamingo Road
Suite G
Las Vegas, NV 89121
Section 2. Powers of Board. In furtherance and not in limitation of the
powers conferred by the laws of the State of Nevada, the Board of Directors
is expressly authorized and empowered:
(a) To make, alter, amend, and repeal the By-Laws subject to the power of
the shareholders to alter or repeal the By-Laws made by the Board of
Directors.
(b) Subject to the applicable provisions of the By-Laws then in effect, to
determine, from time to time, whether and to what extent, and at what
times and places, and under what conditions and regulations, the
accounts and books of the Corporation, or any of them, shall be open
to shareholder inspection. No shareholder shall have any right to
inspect any of the accounts, books or documents of the Corporation,
except as permitted by law, unless and until authorized to do so by
resolution of the Board of Directors or of the Shareholders of the
Corporation;
(c) To issue stock of the Corporation for money, property, services
rendered, labor performed, cash advanced, acquisitions for other
corporations or for any other assets of value in accordance with the
action of the board of directors without vote or consent of the
shareholders and the judgment of the board of directors as to value
received and in return therefore shall be conclusive and said stock,
when issued, shall be fully-paid and non-assessable.
(d) To authorize and issue, without shareholder consent, obligations of
the Corporation, secured and unsecured, under such terms and
conditions as the Board, in its sole
4
<PAGE>
discretion, may determine, and to pledge or mortgage, as security
therefore, any real or personal property of the Corporation, including
after-acquired property;
(e) To determine whether any and, if so, what part, of the earned surplus
of the Corporation shall be paid in dividends to the shareholders, and
to direct and determine other use and disposition of any such earned
surplus;
(f) To fix, from time to time, the amount of the profits of the
Corporation to be reserved as working capital or for any other lawful
purpose;
(g) To establish bonus, profit-sharing, stock option, or other types of
incentive compensation plans for the employees, including officers and
directors, of the Corporation, and to fix the amount of profits to be
shared or distributed, and to determine the persons to participate in
any such plans and the amount of their respective participations.
(h) To designate, by resolution or resolutions passed by a majority of the
whole Board, one or more committees, each consisting of two or more
directors, which, to the extent permitted by law and authorized by the
resolution or the By-Laws, shall have and may exercise the powers of
the Board;
(i) To provide for the reasonable compensation of its own members by
By-Law, and to fix the terms and conditions upon which such
compensation will be paid;
(j) In addition to the powers and authority herein before, or by statute,
expressly conferred upon it, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or
done by the corporation, subject, nevertheless, to the provisions of
the laws of the State of Nevada, of these Articles of Incorporation,
and of the By-Laws of the Corporation.
5
<PAGE>
Section 3. Interested Directors. No contract or transaction between this
Corporation and any of its directors, or between this Corporation and any
other corporation, firm, association, or other legal entity shall be
invalidated by reason of the fact that the director of the Corporation has
a direct or indirect interest, pecuniary or otherwise, in such corporation,
firm, association, or legal entity, or because the interested director was
present at the meeting of the Board of Directors which acted upon or in
reference to such contract or transaction, or because he participated in
such action, provided that: (1) the interest of each such director shall
have been disclosed to or known by the Board and a disinterested majority
of the Board shall have nonetheless ratified and approved such contract or
transaction (such interested director or directors may be counted in
determining whether a quorum is present for the meeting at which such
ratification or approval is given) ; or (2) the conditions of N.R.S. 78.140
are met.
ARTICLE IX - LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS: The personal
liability of a director or officer of the corporation to the corporation or the
Shareholders for damages for breach of fiduciary duty as a director or officer
shall be limited to acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law.
ARTICLE X - INDEMNIFICATION: Each director and each officer of the corporation
may be indemnified by the corporation as follows:
(a) The corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys fees) ,
judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him in connection with the action, suit or
proceeding, if he acted in good
6
<PAGE>
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation and with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suite or
proceeding, by judgment, order, settlement, conviction or upon a plea
of nolo contendere or its equivalent, does not of itself create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal
action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
(b) The corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the corporation, to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit, if
he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals there from, to be liable
to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction
determines upon application, that in view of all the circumstances of
the case the person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
7
<PAGE>
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections (a) and
(b) of this Article, or in defense of any claim, issue or matter
therein, he must be indemnified by the corporation against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the defense.
(d) Any indemnification under subsections (a) and (b) unless ordered by a
court or advanced pursuant to subsection (e) , must be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be
made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the act, suit or proceeding;
(iii)If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(iv) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
(e) Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of
this subsection do not affect any rights to advancement of expenses to
which
8
<PAGE>
corporate personnel other than directors or officers may be entitled
under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the certificate or articles of incorporation or any bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise, for either an action in his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection
(b) or for the advancement of expenses made pursuant to
subsection (e) may not be made to or on behalf of any director or
officer if a final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(ii) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE XI - PLACE OF MEETING; CORPORATE BOOKS: Subject to the laws of the State
of Nevada, the shareholders and the Directors shall have power to hold their
meetings, and the Directors shall have power to have an office or offices and to
maintain the books of the Corporation outside the State of Nevada, at such place
or places as may from time to time be designated in the By-Laws or by
appropriate resolution.
ARTICLE XII AMENDMENT OF ARTICLES: The provisions of these Articles of
Incorporation may be amended, altered or repealed from time to time to the
extent and in the manner prescribed by the laws of the State of Nevada, and
additional provisions authorized by, such laws as are then in force may be
added. All rights herein conferred on the directors, officers and shareholders
are granted
9
<PAGE>
subject to this reservation.
ARTICLE XIII - INCORPORATOR: The name and address of the sole incorporator
signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
1. Max C. Tanner 2950 East Flamingo Road, Suite G
Las Vegas, Nevada 89121
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 21st day of May, 1996.
/s/ Max C. Tanner
-----------------------------
Max C. Tanner
STATE OF NEVADA )
)ss:
COUNTY OF CLARK )
On May 21st, 1996 personally appeared before me, a Notary Public, Max C.
Tanner, who acknowledged to me that he executed the foregoing Articles of
Incorporation for Advanced Optics Electronics Inc., a Nevada corporation.
/s/ Trisha M. Chapman
-----------------------------
Notary Public
[SEAL]
TRISHA CHAPMAN
96-1694-1
NOTARY PUBLIC--STATE OF NEVADA
CLARK COUNTY
My Appt. Expires March 20, 2000
10
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 21, 1996
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF
ADVANCED OPTICS ELECTRONICS INC.
I, Max C. Tanner, do hereby certify that on the 21st day of May, 1996, I
accepted the appointment as Resident Agent of the above-entitled corporation in
accordance with Sec. 78.090, NRS 1957.
Furthermore, that the principal office in this state is located at The Law
Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, City of Las Vegas
89121, County of Clark, State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of May, 1996.
THE LAW OFFICES OF MAX C. TANNER
By: /s/ Max C. Tanner
----------------------------------
Max C. Tanner, Esq.
Resident Agent
11
<PAGE>
EXHIBIT "C"
BY - LAWS
<PAGE>
TABLE OF CONTENTS
TO THE
BY-LAWS OF
ADVANCED OPTICS ELECTRONICS, INC.
ARTICLE I
MEETINGS PAGE
SECTION 1.01 ANNUAL MEETING 1
SECTION 1.02 SPECIAL MEETING 1
SECTION 1.03 PLACE OF MEETINGS 2
SECTION 1.04 NOTICE OF MEETINGS 2
SECTION 1.05 WAIVER OF NOTICE 3
SECTION 1.06 DETERMINATION OF SHAREHOLDERS OF RECORD 3
SECTION 1.07 QUORUM: ADJOURNED MEETINGS 4
SECTION 1.08 VOTING 4
SECTION 1.09 PROXIES 6
SECTION 1.10 ORDER OF BUSINESS 7
SECTION 1.11 ABSENTEES CONSENT TO MEETINGS 7
SECTION 1.12 ACTION WITHOUT MEETINGS 8
ARTICLE II
DIRECTORS
SECTION 2.01 8
SECTION 2.02 NUMBER, TENURE AND QUALIFICATION 8
SECTION 2.03 RESIGNATION 9
SECTION 2.04 REDUCTION IN NUMBER 9
SECTION 2.05 REMOVAL 9
SECTION 2.06 VACANCIES 9
SECTION 2.07 REGULAR MEETINGS 10
SECTION 2.08 SPECIAL MEETINGS 10
SECTION 2.09 PLACE OF MEETINGS 10
SECTION 2.10 NOTICE OF MEETINGS 10
SECTION 2.11 QUORUM: ADJOURNED MEETINGS 11
SECTION 2.12 ACTION WITHOUT MEETING 11
SECTION 2.13 TELEPHONIC MEETINGS 11
SECTION 2.14 BOARD DECISIONS 11
SECTION 2.15 POWERS AND DUTIES 12
SECTION 2.16 COMPENSATION 12
SECTION 2.17 BOARD OFFICERS 13
ORDER OF BUSINESS
ARTICLE III
OFFICERS
SECTION 3.01 13
SECTION 3.02 ELECTION 14
SECTION 3 03 REMOVAL; RESIGNATION 14
SECTION 3.04 VACANCIES 14
SECTION 3.05 PRESIDENT 14
SECTION 3.06 VICE PRESIDENT 15
SECTION 3 07 SECRETARY 15
SECTION 3 08 ASSISTANT SECRETARY 15
SECTION 3.09 TREASURER 16
ASSISTANT TREASURER
<PAGE>
ARTICLE IV
CAPITAL STOCK
SECTION 4.01 ISSUANCE
SECTION 4.02 CERTIFICATES 16
SECTION 4.03 SURRENDER; LOST OR DESTROYED CERTIFICATES 16
SECTION 4.04 REPLACEMENT CERTIFICATE 17
SECTION 4.05 TRANSFER OF SHARES 17
SECTION 4.06 TRANSFER AGENT 18
SECTION 4.07 STOCK TRANSFER BOOKS 18
SECTION 4.08 MISCELLANEOUS 18
18
ARTICLE V
DIVIDENDS
SECTION 5.01 DIVIDENDS 19
ARTICLE VI
OFFICERS
SECTION 6.01 PRINCIPAL OFFICE
SECTION 6.02 RECORDS 19
SECTION 6.03 FINANCIAL REPORT ON REQUEST 19
SECTION 6.04 RIGHT OF INSPECTION 19
SECTION 6.05 CORPORATE SEAL 20
SECTION 6.06 FISCAL YEAR 21
SECTION 6.07 RESERVES 21
ARTICLE VII
INDEMNIFICATION
SECTION 7.01 INDEMNIFICATION 21
SECTION 7.02 INDEMNIFICATION CONTRACTS 22
SECTION 7.03 INSURANCE AND FINANCIAL ARRANGEMENTS 23
SECTION 7.04 DEFINITIONS 23
ARTICLE VIII
BY-LAWS
SECTION 8.01 AMENDMENT 24
SECTION 8.02 ADDITIONAL BY-LAWS 25
<PAGE>
BY-LAWS OF
ADVANCED OPTICS ELECTRONICS INC.
ARTICLE I
SHAREHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the shareholders shall
be held at such date and time as shall be designated by the board of directors
and stated in the notice of the meeting or in a duly-executed waiver of notice
thereof. If the corporation shall fail to provide notice of the annual meeting
of the shareholders as set forth above, the annual meeting of the shareholders
of the corporation shall be held during the month of November or December of
each year as determined by the Board of Directors, for the purpose of electing
directors of the corporation to serve during the ensuing year and for the
transaction of such other business as may properly come before the meeting. If
the election of the directors is not held on the day designated herein for any
annual meeting of the shareholders, or at any adjournment thereof, the president
shall cause the election to be held at a special meeting of the shareholders as
soon thereafter as is convenient.
Section 1.02 Special Meetings. Special meetings of the shareholders may be
called by the president or the Board of Directors and shall be called by the
president at the written request of the holders of not less than 51% of the
issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the shareholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
<PAGE>
Section 1.03 Place of Meetings. Any meeting of the shareholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the shareholders entitled to vote may
designate any place for the holding of such meeting.
Section 1.04 Notice of Meetings.
(a) The secretary shall sign and deliver to all shareholders of record
written or printed notice of any meeting at least ten (10) days, but not
more than sixty (60) days, before the date of such meeting; which notice
shall state the place, date and time of the meeting, the general nature of
the business to be transacted, and, in the case of any meeting at which
directors are to be elected, the names of nominees, if any, to be presented
for election.
(b) In the case of any meeting, any proper business may be presented
for action, except that the following items shall be valid only if the
general nature of the proposal is stated in the notice or written waiver of
notice:
(1) Action with respect to any contract or transaction between
the corporation and one or more of its directors or another firm,
association, or corporation in which one or more of its directors has
a material financial interest;
(2) Adoption of amendments to the Articles of Incorporation; or
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or dissolution of the
corporation.
(c) The notice shall be personally delivered or mailed by first class
mail to each shareholder of record at the last known address thereof, as
the same appears on the books of the corporation, and the giving of such
notice shall be deemed delivered the date the same is deposited in the
United States mail, postage prepaid. If the address of any shareholder does
not appear upon the books of the corporation, it will be sufficient to
address any notice to such shareholder at the
-2-
<PAGE>
principal office of the corporation.
(d) The written certificate of the person calling any meeting, duly
sworn, setting forth the substance of the notice, the time and place the
notice was mailed or personally delivered to the several shareholders, and
the addresses to which the notice was mailed shall be prima facie evidence
of the manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the shareholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in person or by proxy, such meeting
shall be valid for all purposes without call or notice, and at such meeting any
corporate action may be taken.
Section 1.06 Determination of Shareholders of Record.
(a) The Board of Directors may at any time fix a future date as a
record date for the determination of the shareholders entitled to notice of
any meeting or to vote or entitled to receive payment of any dividend or
other distribution or allotment of any rights or entitled to exercise any
rights in respect of any other lawful action. The record date so fixed
shall not be more than sixty (60) days prior to the date of such meeting
nor more than sixty (60) days prior to any other action. When a record date
is so fixed, only shareholders of record on that date are entitled to
notice of and to vote at the meeting or to receive the dividend,
distribution or allotment of rights, or to exercise their rights, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date.
(b) If no record date is fixed by the Board of Directors, then (1) the
record date for determining shareholders entitled to notice of or to vote
at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record
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date for determining shareholders entitled to give consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which written consent is given;
and (3) the record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto, or the sixtieth (60th)
day prior to the date of such other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
(a) At any meeting of the shareholders, a majority of the issued and
outstanding shares of the corporation represented in person or by proxy,
shall constitute a quorum.
(b) If less than a majority of the issued and outstanding shares are
represented, a majority of shares so represented may adjourn from time to
time at the meeting, until holders of the amount of stock required to
constitute a quorum shall be in attendance. At any such adjourned meeting
at which a quorum shall be present, any business may be transacted which
might have been transacted as originally called. When a shareholders'
meeting is adjourned to another time or place, notice need not be given of
the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, unless the adjournment is for
more than ten (10) days in which event notice thereof shall be given.
Section 1.08 Voting.
(a) Each shareholder of record, such shareholder's duly authorized
proxy or attorney-in-fact shall be entitled to one (1) vote for each share
of stock standing registered in such shareholder's name on the books of the
corporation on the record date.
(b) Except as otherwise provided herein, all votes with respect to
shares standing in the name of an individual on the record date (included
pledged shares) shall be cast only by
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that individual or such individual's duly authorized proxy or
attorney-in-fact. With respect to shares held by a representative of the
estate of a deceased shareholder, guardian, conservator, custodian or
trustee, votes may be cast by such holder upon proof of capacity, even
though the shares do not stand in the name of such holder. In the case of
shares under the control of a receiver, the receiver may cast votes carried
by such shares even though the shares do not stand in the name of the
receiver provided that the order of the court of competent jurisdiction
which appoints the receiver contains the authority to cast votes carried by
such shares. If shares stand in the name of a minor, votes may be cast only
by the duly-appointed guardian of the estate of such minor if such guardian
has provided the corporation with written notice and proof of such
appointment.
(c) With respect to shares standing in the name of a corporation on
the record date, votes may be cast by such officer or agents as the by-laws
of such corporation prescribe or, in the absence of an applicable by-law
provision, by such person as may be appointed by resolution of the Board of
Directors of such corporation. In the event no person is so appointed, such
votes of the corporation may be cast by any person (including the officer
making the authorization) authorized to do so by the Chairman of the Board
of Directors, President or any Vice President of such corporation.
(d) Notwithstanding anything to the contrary herein contained, no
votes may be cast by shares owned by this corporation or its subsidiaries,
if any. If shares are held by this corporation or its subsidiaries, if any,
in a fiduciary capacity, no votes shall be cast with respect thereto on any
matter except to the extent that the beneficial owner thereof possesses and
exercises either a right to vote or to give the corporation holding the
same binding instructions on how to vote.
(e) With respect to shares standing in the name of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a shareholder
voting agreement or otherwise and shares held by two or more persons
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(including proxy holders) having the same fiduciary relationship respect in
the same shares, votes may be cast in the following manner:
(1) If only one such person votes, the votes of such person binds
all.
(2) If more than one person casts votes, the act of the majority
so voting binds all.
(3) If more than one person casts votes, but the vote is evenly
split on a particular matter, the votes shall be deemed cast
proportionately as split.
(f) Any holder of shares entitled to vote on any matter may cast a
portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case
of elections of directors. If such holder entitled to vote fails to specify
the number of affirmative votes, it will be conclusively presumed that the
holder is casting affirmative votes with respect to all shares held.
(g) If a quorum is present, the affirmative vote of holders of a
majority of the shares represented at the meeting and entitled to vote on
any matter shall be the act of the shareholders, unless a vote of greater
number or voting by classes is required by the laws of the State of Nevada,
the Articles of Incorporation and these By-Laws.
Section 1.09 Proxies. At any meeting of shareholders, any holder of shares
entitled to vote may authorize another person or persons to vote by proxy with
respect to the shares held by an instrument in writing and subscribed to by the
holder of such shares entitled to vote. No proxy shall be valid after the
expiration of six (6) months from the date of execution thereof, unless coupled
with an interest or unless otherwise specified in the proxy. In no event shall
the term of a proxy exceed seven (7) years from the date of its execution. Every
proxy shall continue in full force and effect until its expiration or
revocation. Revocation may be effected by filing an instrument revoking the same
or a duly-executed proxy bearing a later date with the
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secretary of the corporation.
Section 1.10 Order of Business. At the annual shareholders meeting, the
regular order of business shall be as follows:
(1) Determination of shareholders present and existence of quorum;
(2) Reading and approval of the minutes of the previous meeting or
meetings;
(3) Reports of the Board of Directors, the president, treasurer and
secretary of the corporation, in the order named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1.11 Absentees Consent to Meetings. Transactions of any meeting of
the shareholders are as valid as though had at a meeting duly-held after regular
call and notice if a quorum is present, either in person or by proxy, and if,
either before or after the meeting, each of the persons entitled to vote, not
present in person or by proxy (and those who, although present, either object at
the beginning of the meeting to the transaction of any business because the
meeting has not been lawfully called or convened or expressly object at the
meeting to the consideration of matters not included in the notice which are
legally required to be included therein), signs a written waiver of notice
and/or consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents, and approvals shall be filed with the
corporate records and made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person objects at
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the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened and except that attendance at a
meeting is not a waiver of any right to object to the consideration of matters
not included in the notice if such objection is expressly made at the beginning.
Neither the business to be transacted at nor the purpose of any regular or
special meeting of shareholders need be specified in any written waiver of
notice, except as otherwise provided in Section 1.04(b) of these By-Laws.
Section 1.12 Action Without Meeting. Any action which may be taken by the
vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or such
greater proportion as may be required by the laws of the State of Nevada, the
Articles of Incorporation, or these By-Laws. Whenever action is taken by written
consent, a meeting of shareholders needs not be called or noticed.
ARTICLE II
DIRECTORS
Section 2.01 Number. Tenure and Qualification. Except as otherwise provided
herein, the Board of Directors of the corporation shall consist of at least one
(1) but no more than nine (9) persons, who shall be elected at the annual
meeting of the shareholders of the corporation and who shall hold office for one
(l) year or until their successors are elected and qualify.
Section 2.02 Resignation. Any director may resign effective upon giving
written notice to the chairman of the Board of Directors, the president, or the
secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board or
the shareholders may elect a successor to take office when the resignation
becomes effective.
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Section 2.03 Reduction in Number. No reduction of the number of directors
shall have the effect of removing any director prior to the expiration of his
term of office.
Section 2.04 Removal.
(a) The Board of Directors or the shareholders of the corporation, by
a majority vote, may declare vacant the office of a director who has been
declared incompetent by an order of a court of competent jurisdiction or
convicted of a felony.
Section 2.05 Vacancies.
(a) A vacancy in the Board of Directors because of death, resignation,
removal, change in number of directors, or otherwise may be filled by the
shareholders at any regular or special meeting or any adjourned meeting
thereof or the remaining director(s) by the affirmative vote of a majority
thereof. A Board of Directors consisting of less than the maximum number
authorized in Section 2.01 of ARTICLE II constitutes vacancies on the Board
of Directors for purposes of this paragraph and may be filled as set forth
above including by the election of a majority of the remaining directors.
Each successor so elected shall hold office until the next annual meeting
of shareholders or until a successor shall have been duly-elected and
qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the shareholders shall
constitute less than a majority of the directors then in office, any holder
or holders of an aggregate of five percent (5%) or more of the total number
of shares entitled to vote may call a special meeting of shareholders to be
held to elect the entire Board of Directors. The term of office of any
director shall terminate upon such election of a successor.
Section 2.06 Regular Meetings. Immediately following the adjournment of,
and at the same place as, the annual meeting of the shareholders, the Board of
Directors, including directors newly
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elected, shall hold its annual meeting without notice, other than this
provision, to elect officers of the corporation and to transact such further
business as may be necessary or appropriate. The Board of Directors may provide
by resolution the place, date and hour for holding additional regular meetings.
Section 2.07 Special Meetings. Special meetings of the Board of Directors
may be called by the chairman and shall be called by the chairman upon the
request of any two (2) directors or the president of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting.
Section 2.09 Notice of Meetings. Except as otherwise provided in Section
2.06, the chairman shall deliver to all directors written or printed notice of
any special meeting, at least three (3) days before the date of such meeting, by
delivery of such notice personally or mailing such notice first class mail, or
by telegram. If mailed, the notice shall be deemed delivered two (2) business
days following the date the same is deposited in the United States mail, postage
prepaid. Any director may waive notice of any meeting, and the attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
unless such attendance is for the express purpose of objecting to the
transaction of business threat because the meeting is not properly called or
convened.
Section 2.10 Quorum: Adjourned Meetings.
(a) A majority of the Board of Directors in office shall constitute a
quorum.
(b) At any meeting of the Board of Directors where a quorum is not
present, a majority of those present may
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adjourn, from time to time, until a quorum is present, and no notice of
such adjournment shall be required. At any adjourned meeting where a quorum
is present, any business may be transacted which could have been transacted
at the meeting originally called.
Section 2.11 Action Without Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if a written consent thereto is signed by all of the
members of the Board of Directors or of such committee. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same force
and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors may be
held through the use of a conference telephone or similar communications
equipment so long as all members participating in such meeting can hear one
another at the time of such meeting. Participation in such a meeting constitutes
presence in person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided in the Articles of Incorporation or
the laws of the State of Nevada, the Board of Directors is invested with
the complete and unrestrained authority to manage the affairs of the
corporation, and is authorized to exercise for such purpose as the general
agent of the corporation, its entire corporate authority in such manner as
it sees fit. The Board of Directors may delegate any of its authority to
manage, control or conduct the current business of the corporation to any
standing or special committee or to any officer or agent and to appoint any
persons to be agents of the corporation with such powers, including the
power to sub-delegate, and upon such terms as
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may be deemed fit.
(b) The Board of Directors shall present to the shareholders at annual
meetings of the shareholders, and when called for by a majority vote of the
shareholders at a special meeting of the shareholders, a full and clear
statement of the condition of the corporation, and shall, at request,
furnish each of the shareholders with a true copy thereof.
(c) The Board of Directors, in its discretion, may submit any contract
or act for approval or ratification at any annual meeting of the
shareholders or any special meeting properly called for the purpose of
considering any such contract or act, provided a quorum is present. The
contract or act shall be valid and binding upon the corporation and upon
all the shareholders thereof, if approved and ratified by the affirmative
vote of a majority of the shareholders at such meeting.
(d) In furtherance and not in limitation of the powers conferred by
the laws of the State of Nevada, the Board of Directors is expressly
authorized and empowered to issue stock of the Corporation for money,
property, services rendered, labor performed, cash advanced, acquisitions
for other corporations or for any other assets of value in accordance with
the action of the Board of Directors without vote or consent of the
shareholders and the judgment of the Board of Directors as to the value
received and in return therefore shall be conclusive and said stock, when
issued, shall be fully-paid and non-assessable.
Section 2.15 Compensation. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board, but shall
not receive any compensation for their services as directors until such time as
the corporation is able to declare and pay dividends on its capital stock.
Section 2.16 Board Officers.
(a) At its annual meeting, the Board of Directors shall elect, from
among its members, a chairman to preside at the meetings of the Board of
Directors. The Board of Directors may also elect such other board officers
and for such term as
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it may, from time to time, determine advisable.
(b) Any vacancy in any board office because of death, resignation,
removal or otherwise may be filled by the Board of Directors for the
unexpired portion of the term of such office.
Section 2.17 Order of Business. The order of business at any meeting of the
Board of Directors shall be as follows:
(1) Determination of members present and existence of quorum;
(2) Reading and approval of the minutes of any previous meeting or
meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
(6) New business;
(7) Adjournment.
ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors, at its first meeting
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (l) year next coming and until
their successors are elected and qualify. Any person may hold two or more
offices. The Board of Directors may, from time to time, by resolution, appoint
one or more vice presidents, assistant secretaries, assistant treasurers and
transfer agents of the corporation as it may deem advisable; prescribe their
duties; and fix their compensation.
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Section 3.02 Removal; Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
officer may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to which
the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 3.04 President. The president shall be the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation. The president shall preside
at all meetings of the shareholders and shall sign the certificates of stock
issued by the corporation, and shall perform such other duties as shall be
prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to act
and to vote at any meetings of the shareholders of any corporation in which the
corporation may hold stock and, at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock.
The Board of Directors, by resolution from time to time, may confer like powers
on any person or persons in place of the president to represent the corporation
for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or more
vice presidents who shall be vested with all the powers and perform all the
duties of the president whenever the president is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the vice president shall perform such other duties as shall be prescribed by
the Board of Directors.
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Section 3.06 Secretary The secretary shall keep the minutes of all meetings
of the shareholders and the Board of Directors in books provided for that
purpose. The secretary shall attend to the giving and service of all notices of
the corporation, may sign with the president in the name of the corporation all
contracts authorized by the Board of Directors or appropriate committee, shall
have the custody of the corporate seal, shall affix the corporate seal to all
certificates of stock duly issued by the corporation, shall have charge of stock
certificate books, transfer books and stock ledgers, and such other books and
papers as the Board of Directors or appropriate committee may direct, and shall,
in general perform all duties incident to the office of the secretary. All
corporate books kept by the secretary shall be open for examination by any
director at any reasonable time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
assistant secretary who shall have such powers and perform such duties as may be
prescribed for him by the secretary of the corporation or by the Board of
Directors.
Section 3.08 Treasurer. The treasurer shall be the chief financial officer
of the corporation, subject to the supervision and control of the Board of
Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper, the treasurer shall endorse on behalf of
the corporation for collection checks, notes and other obligations, and shall
deposit all monies to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments made by the corporation. Unless otherwise
specified by the Board of Directors, the treasurer shall sign with the president
all bills of exchange and promissory notes of the corporation, shall also have
the care and custody of the stocks, bonds, certificates, vouchers, evidence of
debts, securities and such other property belonging to the corporation as the
Board of Directors shall designate, and shall sign all papers required by law,
by these By-laws or by the Board of Directors to be signed by the treasurer. The
treasurer shall enter regularly in the books of the corporation, to be kept for
that purpose, full and accurate accounts of all monies received and paid on
account of the corporation and whenever required by the
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Board of Directors, the treasurer shall render a statement of any or all
accounts. The treasurer shall at all reasonable times exhibit the books of
account to any directors of the corporation and shall perform all acts incident
to the position of treasurer subject to the control of the Board of Directors.
The treasurer shall, if required by the Board of Directors, give a bond to the
corporation in such sum and with such security as shall be approved by the Board
of Directors for the faithful performance of all the duties of the treasurer and
for restoration to the corporation in the event of the treasurer's death,
resignation, retirement, or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
assistant treasurer who shall have such powers and perform such duties as may be
prescribed by the treasurer of the corporation or by the Board of Directors, and
the Board of Directors may require the assistant treasurer to give a bond to the
corporation in such sum and with such security as it may approve, for the
faithful performance of the duties of assistant treasurer, and for the
restoration to the corporation, in the event of the assistant treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
Section 4.01 Issuance. Shares of capital stock of the corporation shall be
issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be evidenced
by certificates for shares of stock in such form as shall be prescribed by the
Board of Directors, shall be under the seal of the corporation and shall be
signed by the president or
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the vice president and also by the secretary or an assistant secretary. Each
certificate shall contain the name of the record holder, the number,
designation, if any, class or series of shares represented, a statement of
summary of any applicable rights, preferences, privileges, or restrictions
thereon, and a statement that the shares are assessable, if applicable. All
certificates shall be consecutively numbered. The name and address of the
shareholder, the number of shares, and the date of issue shall be entered on the
stock transfer books of the corporation.
Section 4.03 Surrender; Lost or Destroyed Certificates. All certificates
surrendered to the corporation, except those representing shares of treasury
stock, shall be canceled and no new certificates shall be issued until the
former certificate for a like number of shares shall have been canceled, except
that in case of a lost, stolen, destroyed or mutilated certificate, a new one
may be issued therefor. However, any shareholder applying for the issuance of a
stock certificate in lieu of one alleged to have been lost, stolen, destroyed or
mutilated shall, prior to the issuance of a replacement, provide the corporation
with his, her or its affidavit of the facts surrounding the loss, theft,
destruction or mutilation and an indemnity bond in an amount and upon such terms
as the treasurer, or the Board of Directors, shall require. In no case shall the
bond be in amount less than twice the current market value of the stock and it
shall indemnify the corporation against any loss, damage, cost or inconvenience
arising as a consequence of the issuance of a replacement certificate.
Section 4.04 Replacement Certificate. When the Articles of Incorporation
are amended in any way affecting the statements contained in the certificates
for outstanding shares of capital stock of the corporation or it becomes
desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the reorganization
of the corporation, to cancel any outstanding certificate for shares and issue a
new certificate therefor conforming to the rights of the holder, the Board of
Directors may order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a reasonable time to
be fixed by the Board of Directors. The order may provide that a holder of any
certificate(s) ordered to be surrendered shall not be entitled to
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vote, receive dividends or exercise any other rights of shareholders until the
holder has complied with the order provided that such order operates to suspend
such rights only after notice and until compliance.
Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the certificate
therefor, accompanied by an assignment or transfer by the registered owner made
either in person or under assignment. Whenever any transfer shall be expressly
made for collateral security and not absolutely, the collateral nature of the
transfer shall be reflected in the entry of transfer on the books of the
corporation.
Section 4.06 Transfer Agent. The Board of Directors may appoint one or more
transfer agents and registrars of transfer and may require all certificates for
shares of stock to bear the signature of such transfer agent and such registrar
of transfer.
Section 4.07 Stock Transfer Books. The stock transfer books shall be closed
for a period of ten (10) days prior to all meetings of the shareholders and
shall be closed for the payment of dividends as provided in Article V hereof and
during such periods as, from time to time, may be fixed by the Board of
Directors, and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power and
authority to make such rules and regulations not inconsistent herewith as it may
deem expedient concerning the issue, transfer and registration of certificates
for shares of the capital stock of the corporation.
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ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of the
laws of the State of Nevada and the Articles of Incorporation, by the Board of
Directors at any regular or special meeting and may be paid in cash, property,
shares of corporate stock, or any other medium. The Board of Directors may fix
in advance a record date, as provided in Section 1.06 of these By-laws, prior to
the dividend payment for the purpose of determining shareholders entitled to
receive payment of any dividend. The Board of Directors may close the stock
transfer books for such purpose for a period of not more than ten (10) days
prior to the payment date of such dividend.
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation in
the State of Nevada shall be the Law Offices of Max C. Tanner, 2950 East
Flamingo Road, Suite G, Las Vegas, Nevada 89121, and the corporation may have an
office in any other state or territory as the Board of Directors may designate.
Section 6.02 Records. The stock transfer books and a certified copy of the
By-laws, Articles of Incorporation, any amendments thereto, and the minutes of
the proceedings of the shareholders, the Board of Directors, and committees of
the Board of Directors shall be kept at the principal office of the corporation
for the inspection of all who have the right to see the same and for the
transfer of stock. All other books of the corporation shall be kept at such
places as may be prescribed by the Board of Directors.
Section 6.03 Financial Report on Request. Any shareholder or
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shareholders holding at least five percent (5%) of the outstanding shares of any
class of stock may make a written request for an income statement of the
corporation for the three (3) month, six (6) month, or nine (9) month period of
the current fiscal year ended more than thirty (30) days prior to the date of
the request and a balance sheet of the corporation as of the end of such period.
In addition, if no annual report for the last fiscal year has been sent to
shareholders, such shareholder or shareholders may make a request for a balance
sheet as of the end of such fiscal year and an income statement and statement of
changes in financial position for such fiscal year. The statement shall be
delivered or mailed to the person making the request within thirty (30) days
thereafter. A copy of the statements shall be kept on file in the principal
office of the corporation for twelve (12) months, and such copies shall be
exhibited at all reasonable times to any shareholder demanding an examination of
them or a copy shall be mailed to each shareholder. Upon request by any
shareholder, there shall be mailed to the shareholder a copy of the last annual,
semiannual or quarterly income statement which it has prepared and a balance
sheet as of the end of the period. The financial statements referred to in this
Section 6.03 shall be accompanied by the report thereon, if any, of any
independent accountants engaged by the corporation or the certificate of an
authorized officer of the corporation that such financial statements were
prepared without audit from the books and records of the corporation.
Section 6.04 Right of Inspection.
(a) The accounting books and records and minutes of proceedings of the
shareholders and the Board of Directors and committees of the Board of
Directors shall be open to inspection upon the written demand of any
shareholder or holder of a voting trust certificate at any reasonable time
during usual business hours for a purpose reasonably related to such
holder's interest as a shareholder or as the holder of such voting trust
certificate. This right of inspection shall extend to the records of the
subsidiaries, if any, of the corporation. Such inspection may be made in
person or by agent or attorney, and the right of inspection includes the
right to copy and make extracts.
(b) Every director shall have the absolute right at any
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reasonable time to inspect and copy all books, records and documents of
every kind and to inspect the physical properties of the corporation and/or
its subsidiary corporations. Such inspection may be made in person or by
agent or attorney, and the right of inspection includes the right to copy
and make extracts.
Section 6.05 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 6.06 Fiscal Year. The fiscal year-end of the corporation shall be
the calendar year or such other term as may be fixed by resolution of the Board
of Directors.
Section 6.07 Reserves. The Board of Directors may create, by resolution,
out of the earned surplus of the corporation such reserves as the directors may,
from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends or to repair or maintain any property of
the corporation, or for such other purpose as the Board of Directors may deem
beneficial to the corporation, and the directors may modify or abolish any such
reserves in the manner in which they were created.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall, unless prohibited by
Nevada Law, indemnify any person (an "Indemnitee") who is or was involved in any
manner (including, without limitation, as a party or a witness) or is threatened
to be so involved in any threatened, pending or completed action suit or
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proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its favor
(collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise, against all Expenses and Liabilities actually and
reasonably incurred by him in connection with such Proceeding. The right to
indemnification conferred in this Article shall be presumed to have been relied
upon by the directors, officers, employees and agents of the corporation and
shall be enforceable as a contract right and inure to the benefit of heirs,
executors and administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific rights
of indemnification in addition to The rights provided hereunder to the fullest
extent permitted by Nevada Law. Such agreements or arrangements may provide (i)
that the Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding, must be paid by the corporation as they are
incurred and in advance of the final disposition of any such action, suit or
proceeding provided that, if required by Nevada Law at the time of such advance,
the officer or director provides an undertaking to repay such amounts if it is
ultimately determined by a court of competent jurisdiction that such individual
is not entitled to be indemnified against such expenses, (iii) that the
Indemnitee shall be presumed to be entitled to indemnification under this
Article or such agreement or arrangement and the corporation shall have the
burden of proof to overcome that presumption, (iii) for procedures to be
followed by the corporation and the Indemnitee in making any determination of
entitlement to indemnification or for appeals therefrom and (iv) for insurance
or such other Financial Arrangements described in Paragraph 7.02 of this
Article, all as may be deemed appropriate by the Board of Directors at the time
of execution of such agreement or arrangement.
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Section 7.03 Insurance and Financial Arrangements. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out of
his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 Definitions. For purposes of this Article:
Expenses. The word "Expenses" shall be broadly construed and, without
limitation, means (i) all direct and indirect costs incurred, paid or
accrued, (ii) all attorneys' fees, retainers, court costs, transcripts,
fees of experts, witness fees, travel expenses, food and lodging expenses
while traveling, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service, freight or other transportation fees
and expenses, (iii) all other disbursements and out-of-pocket expenses,
(iv) amounts paid in settlement, to the extent permitted by Nevada Law, and
(v) reasonable compensation for time spent by the Indemnitee for which he
is otherwise not compensated by the corporation or any third party,
actually and reasonably incurred in connection with either the appearance
at or investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to indemnification under any agreement or
arrangement, this Article, the Nevada Law or otherwise; provided, however,
that "Expenses" shall not include any judgments or fines or excise taxes or
penalties imposed under the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or other excise taxes or penalties.
Liabilities. "Liabilities" means liabilities of any type whatsoever,
including, but not limited to, judgments or fines, ERISA or other excise
taxes and penalties, and
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amounts paid in sett1ement.
Nevada Law. "Nevada Law" means Chapter 78 of the Nevada Revised
Statutes as amended and in effect from time to time or any successor or
other statutes of Nevada having similar import and effect.
This Article. "This Article" means Paragraphs 7.01 through 7.04 of
these bylaws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04, including this
Paragraph, of these Bylaws may be amended by the stockholders only by vote
of the holders of sixty-six and two-thirds percent (66 2/3%) of the entire
number of shares of each class, voting separately, of the outstanding
capital stock of the corporation (even though the right of any class to
vote is otherwise restricted or denied); provided, however, no amendment or
repeal of this Article shall adversely affect any right of any Indemnitee
existing at the time such amendment or repeal becomes effective.
Power of Directors. Paragraphs 7.01 through 7.04 and this Paragraph of
these Bylaws may be amended or repealed by the Board of Directors only by
vote of eighty percent (80%) of the total number of Directors and the
holders of sixty-six and two-thirds percent (66 2/3) of the entire number
of shares of each class, voting separately, of the outstanding capital
stock of the corporation (even though the right of any class to vote is
otherwise restricted or denied); provided, however, no amendment or repeal
of this Article shall adversely affect any right of any Indemnitee existing
at the time such amendment or repeal becomes effective.
ARTICLE VIII
BY- LAWS
Section 8.01 Amendment. Amendments and changes of these By-Laws may be made
at any regular or special meeting of the Board of Directors by a vote of not
less than all of the entire Board, or
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may be made by a vote of, or a consent in writing signed by the holders of a
majority of the issued and outstanding capital stock.
Section 8.02 Additional By-Laws. Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board of
Directors at which a quorum is present by an affirmative vote of a majority of
the directors present or by the unanimous consent of the Board of Directors in
accordance with Section 2.11 of these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the Corporation, do
hereby certify than the foregoing By-laws were adopted by the Board of Directors
on The 22nd day of May, 1996.
/s/ Max C. Tanner
-----------------------------
Max C. Tanner, Secretary
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<CAPTION>
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<S> <C> <C>
WESTERN BANK PLZ Tech, Inc. DT02373H
ALBUQUERQUE NM 87110-4319 120 Madiera Drive NE Loan Number: 5900200
Albuquerque, NM 87108 Date: February 24, 1998
DGN / ss Maturity Date: May 25, 1998
Loan Amount $ **7,400.00**
LENDERS'S NAME AND ADDRESS BORROWERS NAME AND ADDRESS Renewal 5016200
"YOU" means the Lender, its successors "I" Includes each Borrower above,
and assigns jointly and severally
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TERMS FOLLOWING A [_] APPLY ONLY IF CHECKED
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NOTE: For value received, I promise to pay you, or your order, at your address above, the principal sum of *Seven Thousand Four
Hundred Dollars and no/100** Dollars $ ** 7,400.00** plus interest from February 24, 1998 at the rate of WBP** % per year until
May 25, 1998
[x] ADDITIONAL FINANCE CHARGE - I also agree to pay a nonrefundable fee of $95.00 and it will be [_] paid in cash [_] paid pro rata
over the loan term [X] withheld from the proceeds, (if this fee is withheld from the proceeds, the amount is included in the
principal sum)
[x] VARIABLE RATE - The rate above may then change so as always to be 1.0% above the following index rate * Western Bank Prime Rate
to Float (Albuquerque). The interest rate may not change more than n/a% each n/a The annual interest rate in effect on this
note will not at any time be more than n/a% or less than 10.0%. The interest rate in effect on this note may change (as often
as) the 1st day of each calendar month (assuming there is a change in the base rate) and an increase in the interest rate will
cause an increase in: [ ] the amount of each scheduled payment [ ] the amount at maturity [ ] the number of payments
PAYMENT: I will pay this note as follows:
(a) [x] Interest Due: Demand or maturity on May 25, 1998
Principal due: Demand or maturity on May 25, 1998
(b) [_] The note has ________ payments. The first payment will be in the amount of $ _____________ and will be due
___________. A payment of $ ________________ will be due on the ____________ day of each _________________ thereafter. The
final payment of the entire unpaid balance of principal and interest will be due __________________
INTEREST - interest accrue on a 360 basis.
[x] MINIMUM INTEREST CHARGE - I agree to pay a minimum interest charge of $25.00 if I pay this loan off before you have
earned that much in interest.
[x] LATE CHARGE - I agree to pay a late charge on the portion of any payment made more than 10 days after it is due equal
to 5% of the unpaid amount of $ n/a whichever is n/a
POST MATURITY INTEREST - Interest will accrue after maturity on the unpaid balance of this note on the same basis as interest
accrues before maturity unless a specific post-maturity interest rate is agreed to in the new balance
[x] Interest will accrue at the rate of 18.0% per year on the balance of this note not paid at maturity, including maturity by
acceleration.
[_] This loan is made under the New Mexico Bank Installment Loan Act of 1959. THE PURPOSE OF THIS LOAN IS - Business renewal
SECURITY - You have certain notes that may affect my property as explained on page 2. This loan [ ] is [x] is not further secured
(a) [_] The loan is secured by _____________________________________________________________ dated _________________________
(b) [_] Security Agreement - I give you a security interest in the Property described below. The rights I am giving you in
this Property and The obligations this agreement secures are defined on page 2 of this agreement.
Unsecured
This Property will be used for ________________ purposes
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ANNUAL FINANCE CHARGE AMOUNT FINANCED TOTAL OF PAYMENTS I have the right to
PERCENTAGE RATE The dollar amount The amount of credit The amount I will have receive at this time
The cost of my the credit will provided to me or on paid when I have made an itemization of the
credit as a cost me my behalf all scheduled payments Amount Financed.
yearly rate
16.06% $ 289.25 $7,305.00 $7,594.25 [X] [X] YES I want an itemization
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My Payment Schedule will be NO I do not want an itemization
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Number of Payments Amount of Payments When Payments Are Due
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1 $ 7,594.25 Demand or maturity on May 25, 1998 "*" means an estimate
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$ $n/a Filing Fees
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$ $n/a Nonfiling insurance
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$
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[X] This note has a demand feature [_] This note is payable on demand and all disclosures are based on an assumed maturity of one
year.
[X] Variable Rate [_] My loan contains a variable rate feature. Disclosures about the variable rate feature have been provided to
(Check one) me earlier
[X] The annual percentage rate may increase during the term of this transaction if there is an increase in
Western Bank Albuquerque prime rate to Float.
Any increase will take the form of increased interest due if the rate increases by 1.0% [X] February 24, 1998, the total finance
charge will increase to $307.75 on [illegible]. The rate may not increase more often than once a month and may not increase more
than n/a% each n/a. The rate will not go below 10.0%.
Security - I am giving a security interest in [_] (brief description of other property)
[_] the goods or property being purchased.
[X] collateral securing other loans with you may also secure this loan. Unsecured
[X] my deposit accounts and other rights to the payment of money from you.
[X] Late Charge - I will be charged a late charge on the portion of any payment made more than 10 days after it is due equal
to 5% of the unpaid amount, or $ n/a, whichever is n/a
[_] Required Deposit - The annual percentage rate does not take into account my required deposit.
Prepayment - If I pay off this note early, I [X] may [ ] will not have to pay a penalty.
[X] If I pay off this note early, I will not be entitled to a refund or part of the additional finance charge
[_] Assumption - Someone buying the property securing this obligation cannot assume the remainder of the obligation on the original
terms. I can see my contract documents for any additional information about nonpayment, default, any required repayment before
the scheduled date, and prepayment refunds and penalties.
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CREDIT INSURANCE - Credit life insurance and credit disability insurance are not required to obtain credit, and will not be provided
unless I sign and agree to pay the a additional costs.
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Type _________________________ # _________________ Premium ___________________ Term ________________________________________________
Credit Line ________________________________________________________________________________________________________________________
Credit Disability __________________________________________________________________________________________________________________
Joint Credit Line __________________________________________________________________________________________________________________
I [_] do [XX] do not want credit life insurance.
I [_] do [XX] do not want credit disability insurance.
I [_] do [XX] do not want joint credit life insurance.
I [_] do [XX] do not want ____________________ insurance.
X________________________________________________________________________________ DOB
X________________________________________________________________________________ DOB
PROPERTY INSURANCE - I may obtain property insurance from anyone I want that is acceptable to you. If I get the insurance from or
through you I will pay $ - 0 - for n/a of coverage.
SINGLE INTEREST INSURANCE - I may obtain single interest insurance from anyone I want that is acceptable to you. If I get the
insurance through you I will pay $ -0- for n/a of coverage.
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(Optional)
Signed ___________________________________________________________________________________________________________ For Lender
Title _______________________________________________________________________________________________________________________
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ITEMIZATION OF AMOUNT FINANCED
AMOUNT GIVEN TO ME DIRECTLY $_______________________
AMOUNTS PAID ON MY (LOAN) ACCOUNT $_______________________
#5016200 $ 7,305.00
AMOUNTS PAID TO OTHERS ON MY BEHALF
to Insurance Companies $_______________________
to Public Officials $_______________________
W.B LDF
(less) PREPAID FINANCE CHARGE(S) $ 95.00
------------------------
Amount Financed $ 7,305.00
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(Add all items financed and subtract prepaid finance charges)
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SIGNATURES - I AGREE TO THE TERMS SET OUT ON PAGE 1 AND PAGE 2 OF THIS AGREEMENT. I HAVE RECEIVED A COPY OF THIS DOCUMENT ON
TODAY'S DATE.
PLZ TECH, INC. BY:
Signature
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Francisco Urrea, Jr., Director
Signature /S/ LESLIE S. ROBINS
---------------------------------------
Leslie S. Robins, Director
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<PAGE>
ADDITIONAL TERMS OF THE NOTE
DEFINITIONS - "I", "me" or "my" means each Borrower who signs this note and each
other person or legal entity (including guarantors' endorsers and sureties) who
agrees to pay this note (together referred to as "us"). "You" or "your" means
the Lender and its successors and assigns.
APPLICABLE LAW - This note and any agreement securing this note will be governed
by the laws of the state of New Mexico. The Federal Truth in Lending disclosures
on page 1 are disclosures only and are not intended to be terms of this
agreement. The fact that any part of this note cannot be enforced will not
affect the rest of this note. Any change to this note or any agreement securing
this note must be in writing and signed by you and me.
PAYMENTS - Each payment I make on this loan will be applied first to any charges
I owe other than principal and interest, then to interest that is due, and
finally to principal that is due. No late charge will be assessed on any payment
when the only delinquency is due to late fees assessed on earlier payments and
the payment is otherwise a full payment. The actual amount of my final payment
will depend on the interest rates (if variable) and my payment record. If any
payment due under this loan does not equal or exceed the amount of interest due.
You may at your option increase the amount of the payment due and all future
payments to an amount that will pay off this loan in equal payments over the
remaining term of this loan.
PREPAYMENT - I may prepay this loan in whole or in part at any time if I prepay
in part I must still make each later payment in the original amount as it
becomes due until this note is paid in full.
INTEREST - Interest accrues on the principal remaining unpaid from time to time
until paid in full. If "Variable Rate" is checked on page 1, I will pay interest
at the rates in effect from time to time. Decreases in the interest rate for
this note will have the opposite effect on payments that increase would have.
You will figure a change in the interest rate by using the index rate in effect
at the time the interest rate is to change. Changes in the index between
scheduled changes in the interest rate will not affect the interest rate. If the
index specified on page 1 ceases to exist. I agree that you may substitute a
similar index for the original.
INDEX - If you and I have agreed that the interest rate on this note will be
variable and will be related to an index, then the index you select will
function only as a tool for setting the rate on this note. You do not guaranty,
by selecting any index that the interest rate on this note will have a
particular relationship to the interest rate you charge on any other loans or
any type or class of loans with your other customers.
ACCRUAL METHOD - The amount of interest that I will pay on this loan will be
calculated using the interest rate and accrual method stated on page 1. For
interest calculation, the accrual method will determine the number of days in a
year if no accrual method is stated, then you may use any reasonable accrual
method for calculating interest.
POST-MATURITY INTEREST - Interest will accrue on the principal balance remaining
unpaid after final maturity at the rate specified on page 1. For purposes of
this section, final maturity occurs
(a) If this loan is payable on demand, on the date you make demand for payment
(b) If this loan is payable on demand with alternate payment date(s). On the
date you make demand for payment or on the final alternate payment date
whichever is earlier.
(c) On the date if the last scheduled payment of principal, or
(d) On the date you accelerate in the due date of this loan (demand immediate
payment)
REAL ESTATE OR RESIDENCE SECURITY - If this loan is secured by real estate or a
residence that is personal property, the existence of a default and your
remedies for such a default will be determined by applicable law, by the terms
of any separate instrument creating the security interest and, to the extent not
prohibited by law and not contrary to the terms of the separate security
instrument, by this agreement.
DEFAULT - Subject to any limitations in the "REAL ESTATE OR RESIDENCE SECURITY"
paragraph above, I will be in default on this loan and any agreement securing
this loan if any one or more of the following occurs
(a) I fail to make a payment in full when due
(b) I die, am declared incompetent, or become insolvent
(c) I fail to keep any promise I have made in connection with this loan
(d) I fail to pay or keep any other promise on any other loan or agreement I
have with you
(e) I make any written statement or provide any financial information that is
untrue or inaccurate at the time it is provided
(f) Any creditor of mine attempts to collect any debt I owe through court
proceedings set-off or self-help repossession
(g) The Property is damaged, destroyed or stolen
(h) I fail to provide any additional security that you may require
(i) Any legal entity (such as a partnership or corporation) that has agreed to
pay this note merges, dissolves, reorganizes, ends its business or
existence or a partner or majority stockholder dies or is declared
incompetent or
(j) Anything else happens that causes you to believe that you will have
difficulty collecting the amount I owe you. If any of us are in default on
this note or any security agreement you may exercise your Remedies against
any or all of us.
REMEDIES - Subject to any limitations in the "REAL ESTATE OR RESIDENCE SECURITY"
paragraph above, if I am in default on this loan or any agreement securing this
loan you may
(a) Make unpaid principal, earned interest and all other agreed charges I owe
you under this loan immediately due;
(b) Use the right of set-off as explained below;
(c) Demand more security or new parties obligated to pay this loan (or both) in
return for not using any other remedy;
(d) Make a claim for any and all insurance benefits or refunds that may be
available on my default;
(e) Use any remedy you have under state or federal law; and
(f) Use any remedy given to you in any agreement securing this loan.
By choosing any one or more of these remedies you do not give up your right
to use another remedy later. By deciding not to use any remedy should I be in
default, you do not give up your right to consider the event a default if it
happens again.
COSTS OF COLLECTION AND ATTORNEYS' FEES - I agree to pay you all reasonable
costs you incur to collect this debt or realize on any security. This includes,
to the extent permitted by law, reasonable attorneys' fees. This provision also
shall apply if I like a petition or any other claim for relief under any
bankruptcy rule or law of the United States, or if such petition or other claim
for relief is filed against me by another.
SET-OFF - I agree that you may set off any amount due and payable under this
note against any right I have to receive money from you.
"Right to receive money from you" means
(a) Any deposit account balance I have with you
(b) Any money owed to me on an item presented to you or in your possession for
collection or exchange, and
(c) Any repurchases agreement or other nondeposit obligation.
"Any amount due and payable under this note" means the total amount of
which you are entitled to demand payment under the terms of this note at the
time you set off. This total includes any balance the due date for which you
properly accelerate under this note.
If my right to receive money from you is also owned by someone who has not
agreed to pay this note, your right of set-off will apply to my interest in the
obligation and to any other amounts I could withdraw on my sole request or
endorsement. Your right of set-off does not apply to an account or other
obligation where my rights arise only in a representative capacity. It also does
not apply to any Individual Retirement Account or other tax-deferred retirement
account.
You will not be liable for the dishonor of any check when the dishonor
occurs because you set off this debt against any of my accounts I agree to hold
you harmless from any such claims arising as a result of your exercise of your
right of set-off.
OTHER SECURITY - Any present or future agreement securing any other debt I owe
you also will secure the payment of this loan. Property securing another debt
will not secure this loan if such property is my principal dwelling and you fail
to provide any required notice of right of rescission. Also property securing
another debt will not secure this loan to the extent such property is in
household goods.
OBLIGATIONS INDEPENDENT - I understand that my obligations to pay this loan is
independent of the obligation of any other person who has also agreed to pay it.
You [missing text]
ADDITIONAL TERMS OF THE SECURITY AGREEMENT
SECURED OBLIGATIONS - This security agreement secures this loan (including an
extensions, renewals, refinancings and modifications) and any other debt I have
with you now or later. Property described in this security agreement will not
secure other such debts if you fail to give any required notice of the right of
rescission with respect to the Property. Also, this security agreement will not
secure other debts if this security interest is in household goods and the other
debt is a consumer loan. This security agreement will last until it is
discharged in writing.
For the sole purpose of determining the extent of a purchase money security
interest arising under this security agreement
(a) Payments on any nonpurchase money loan also secured by this agreement will
not be deemed to apply to the Purchase Money Loan, and
(b) Payments on the Purchase Money Loan will be deemed to apply first to the
nonpurchase money portion of the loan, if any, and then to the purchase
money obligations in the order in which the items were acquired.
No security interest will be terminated by application of this formula
"Purchase Money Loan" means any loan the proceeds of which in whole or in part
are used to acquire any property securing the loan and all extensions, renewals,
consolidations and refinancings of such loan.
PROPERTY - The word "Property" as used here includes all property that is listed
in the security agreement on page 1. If a general description is used, the word
Property includes all my property fitting the general description property also
means all benefits that arise from the described property (including all
proceeds, insurance benefits, payments from others, interest dividends, stock
splits and voting rights). It also means property that now or later is attached
to, is a part of, or results from the Property.
OWNERSHIP AND DUTIES TOWARD PROPERTY - Unless a co-owner(s) of the Property
signed a third party agreement, I represent that I own all the Property. I will
defend the Property against any other claim. I agree to do whatever you require
to perfect your interest and keep your priority. I will not do anything to harm
your position.
I will keep the Property in my possession (except if pledged and delivered
to you). I will keep it in good repair and use it only for its intended
purposes. I will keep it at my address unless we agree otherwise in writing.
I will not try to sell or transfer the Property, or permit the Property to
become attached to any real estate, without your written consent. I will pay all
taxes and charges on the Property as they become due. I will inform you of any
loss or damage to the Property. You have the right of reasonable access in order
to inspect the Property.
INSURANCE - I agree to buy insurance on the Property against the risks and for
the amounts you require. I will name you as loss payee on any such policy. You
may require added security on this loan if you agree that insurance proceeds may
be used to repair or replace the Property I agree that if the insurance proceeds
do not cover the amounts I still owe you, I will pay the difference. I will buy
the insurance from a firm authorized to do business in New Mexico. The firm will
be reasonably acceptable to you. I will keep the insurance until all debts
secured by this agreement are paid.
DEFAULT AND REMEDIES - If I am in default in addition to the remedies listed in
the note portion of this document and subject to any of the limitations in the
"REAL ESTATES OR RESIDENCE SECURITY" paragraph you may (after giving notice and
waiting a period of time, if required by law)
(a) Pay taxes or other charges, or purchase any required insurance if I fail to
do these things (but you are not required to do so). You may add the amount
you pay to this loan and accrue interest on that amount at the interest
rate(s) in effect from time to time on this note until paid in full.
(b) Require me to gather the Property and any related records and make it
available to you in a reasonable fashion.
(c) Take immediate possession of the Property, but in doing so you may not
breach peace or unlawfully enter onto my premises. You may sell, lease or
dispose of the Property as provided by law. (If the Property includes a
manufactured home you will begin the repossession by giving me notice and
an opportunity to cure my default if required by law.) You may apply what
you receive from the sale of the Property to your expenses and then to the
debt if what you receive from the sale of the Property is less than what I
owe you. You may take me to court to recover the difference (to the extent
permitted by law); and
(d) Keep the Property to satisfy the debt.
I agree that when you must give notice to me of your intended sale or
disposition Of the Property, the notice is reasonable if it is sent to me at my
last known address by first class mail 10 days before the intended sale or
disposition. I agree to inform you in writing of any change in my address.
FILING - A copy of this security agreement may be used as a financing statement
when allowed by law.
ASSUMPTIONS - This security agreement and any loan it secures cannot be assumed
by someone buying the Property from me. This will be true unless you agree in
writing to the contrary. Without such an agreement, if I try to transfer any
interest in the Property I will be in default on all obligations that are
secured by this security agreement.
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THIRD PARTY AGREEMENT
For the purposes of the provisions within this enclosure. "I", "me" or "my"
means the person signing below and "you" means the Lender identified on page 1.
I agree to give you a security interest in the Property that is described
on page 1. I agree to the terms of this note and security agreement but I am in
no way personally liable for payment of the debt. This means that if the
Borrower defaults, my interest in the secured Property may be used to satisfy
the Borrower's debt. I agree that you may, without releasing me or the Property
from this Third Party Agreement and without notice or demand upon me, extend new
credit to any Borrower, renew or change this note or security agreement one or
more times and for any term, or fail to perfect your security interest in,
impair, or release any security (including guaranties) for the obligations of
any Borrower.
I HAVE RECEIVED A COMPLETED COPY OF THIS NOTE AND SECURITY AGREEMENT.
NAME ___________________________________________________________________________
X
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NOTICE TO COSIGNER
You (the cosigner) are being asked to guaranty this debt. Think carefully
before you do. If the borrower doesn't pay the debt, you will have to. Be sure
you can afford to pay if you have to, and that you want to accept this
responsibility.
You may have to pay up to the full amount of the debt if the borrower does
not pay. You also may have to pay late fees or collection costs, which increase
this amount.
The creditor can collect this debt from you without first trying to collect
from the borrower. The creditor can use the same collection methods against you
that can be used against the borrower, such as suing you, garnishing your wages,
etc. If this debt is ever in default, that fact may become part of your credit
record.
This notice is not the contract that makes you liable for the debt.
- --------------------------------------------------------------------------------
Attach FTC Preservation of Consumer Claims and
Defenses Notice if Applicable
<PAGE>
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LEASE
This indenture, made this 27th day of May 1998 by and between JMP Company Inc.,
a New Mexico corporation, whose address is P.O. Box 5006, Albuquerque, N.M.
87185, hereinafter whether singular or plural, masculine, feminine, or neuter,
designated as "Lessor", which expression shall include Lessor's heirs, personal
representatives, assigns, and successors in interest, and Advanced Optics
Electronics, Inc., a Nevada corporation, whose address is 8301 Washington N.E.,
Suite 4, Albuquerque, N.M. 87113, hereinafter whether singular or plural,
masculine, feminine, or neuter, designated as "Lessee", which expression shall
include all Lessees, jointly and severally, and shall include Lessee's heirs,
personal representatives, assigns, and successors in interest. WITNESSETH
I. DEMISE OF PREMISES.
Lessor, for and in consideration of the covenants and agreements herein
contained to be kept and performed by Lessee, Lessee's heirs, personal
representatives, assigns and successors in interest, and upon the terms and
conditions herein contained, does hereby let, lease, and demise to Lessee the
following described premises situated in Albuquerque in the County of
Bernalillo, State of New Mexico, to-wit: Lease space at 8301 Washington N.E.,
Suite 4, Albuquerque, N.M. 87113, containing approximately 2,360 s.f. of office
warehouse space.
Any provision herein to the contrary, notwithstanding, Lessor shall perform all
structural repairs to the roof and building, and Lessee shall perform all other
maintenance, repair and upkeep of the building in accordance with the
requirements of this Lease, excepting therefrom, wear and tear from ordinary use
and provide all supplies, light bulbs, ballasts, repair of broken glass and
janitorial service. Lessor shall maintain and service the HVAC, evaporative
cooling, plumbing equipment and electrical service at Lessor's expense, except
for those repairs resulting out of the negligent acts of the Lessee, its
employees or patrons.
Lessor herein agrees to deliver the premises in clean condition and in good
working order. Lessor will convert the existing office space from evaporative
cooling to refrigerative cooling the lease commencement date.
Lessor and Lessee herein agree that Lessee will have the option to renew this
lease for one year, at a lease rate of $1,350.00 per month, provided Lessee
exercises Lessee's option to renew by April 1, 2000.
II. TERMS OF LEASE.
The term of this lease shall be for a period of 24 months 17 days beginning
on the 13th day of June 1998 and ending on the 30th day of June, 2000.
III. RENT.
Lessee, for and in consideration of this Lease and the demise of the said
premises by Lessor to Lessee, hereby agrees and covenants with Lessor to pay as
rent for the said premises, without notice or demand, the sum of Thirty One
Thousand Nine Hundred Thirty Six and 61/100 --------------Dollars ($31,936.61)
in the following manner, to-wit: Upon execution of this Lease the sum of
$2,336.61 shall be due and payable constituting $736.61 for the June 13, 1998
through June 30, 1998 lease period, June 1, 2000 lease payment of $1,300.00 and
a $300.00 damage deposit to be held by Lessor. Thereafter, monthly lease
payments of $1,300.00 will be due and payable on the first day of each
succeeding month; the first such lease payment being due on July 1, 1998 and the
last such lease payment being due on May 1, 2000.
Should Lessee not pay the lease payment on or before the 10th day of the month,
when the same shall become due, a late charge of 10% of the past due lease
payment shall be assessed Lessee. Within ten days following expiration of this
Lease Agreement, Lessor will refund the $300.00 damage deposit held by Lessor,
provided the Lease space at that time is in good condition, less normal wear and
tear.
All of the rent shall be paid by Lessee to Lessor on Lessor's order in lawful
money of the United States to Sycamore Associates, P.O. Box 90608, Albuquerque,
N.M. 87199-0608.
IV. USE OF PREMISES.
Lessee, for and in consideration of this Lease and the demise of the said
premises by Lessor to Lessee hereby agrees and covenants with Lessor to use and
occupy the said premises for the purpose of office warehouse space for research
and development of optic electronics and for no other purpose without first
obtaining the written consent of Lessor therefor; the Lessee shall not use or
permit the demised premises to be used or occupied, or do or permit anything to
be done on the demised premises, in a manner which will make void or voidable
any insurance then in force with respect thereto, or which will make it
impossible to obtain fire or other insurance required to be furnished hereunder,
or which will cause or be likely to cause structural damage to the demised
premises or any portion thereof, or which will constitute a public or private
nuisance. Further, the Lessee shall not use or occupy or permit the demised
premises to be used or occupied for any business, purpose, or use deemed
disreputable or extra-hazardous, or for any purpose or in any manner which is in
violation of any present or future municipal, state and federal ordinances,
laws, rules and regulations.
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V. CONDITION OF PREMISES AND REPAIRS.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that Lessee has examined the
said premises prior to the execution hereof, knows the condition thereof, and
acknowledges that Lessee has received the said demised premises in good order
and condition, and that no representation or warranty as to the condition or
repair of the said premises has been made by Lessor, and, at the expiration of
the term of this Lease, or any renewal or extension thereof, Lessee will yield
up peaceably the said premises to Lessor in as good order and condition as when
the same were entered upon by Lessee, loss by fire or inevitable accident,
damage by the elements, and reasonable use and wear excepted, that Lessee will
keep at Lessee's own expense, the said premises in good order and repair during
the term of this Lease, or any extension or renewal thereof, and will repair and
replace promptly, at Lessee's own expense, any and all damage, including, but
not limited to damage, to roof, walls, floors and foundations, heating and
cooling units, plumbing, glass, sidewalks, and all other appurtenances that may
occur from time to time; that Lessee hereby waives any and all right to have
such repairs or replacements made by Lessor or at Lessor's expense, and that, if
Lessee fails to make such repairs, and replacements promptly, or, if such
repairs and replacements have not been made within fifteen (15) days after the
occurrence of damage, Lessor may, at Lessor's option, make such repairs and
replacements, and Lessee hereby agrees and covenants to repay the cost thereof
to Lessor on demand.
VI. LIABILITY OF LESSOR.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that Lessor shall not be
liable for any damage to persons or property arising from any cause whatsoever,
which shall occur in any manner in or about the said premises, and Lessee hereby
agrees to indemnify and save harmless Lessor from any and all claims and
liability for damage in persons or property arising from any cause whatsoever,
which shall occur in any manner in or about the said premises. Further, Lessee
hereby agrees and covenants with Lessor that Lessor shall not be liable for any
damage to the said demised premises, or to any part thereof, or to any property
or effects therein or thereon, caused by leakage from the roof of said premises
or by bursting, leakage, or overflowing of any waste pipes, water pipes, tanks,
drains, or stationary washstands, or by reason of any damage whatsoever caused
by water from any source whatsoever, and Lessee hereby agrees and covenants to
indemnify and save harmless Lessor from any and all claims and liability for any
damage to the said demised premises, or to any part thereof, or to any property
or effects therein or thereon.* * Unless caused due to the negligence of the
Lessor, its agents or employees.
VII. REQUIREMENTS OF PUBLIC AUTHORITY.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that during the term of this
Lease, Lessee shall at it's own cost and expense promptly observe and comply
with all present and future municipal, state and federal ordinances, laws, rules
and regulations affecting the demised premises or appurtenances thereto, or any
part thereof whether the same are in force and effect at the time of the
commencement of the term of this Lease or may in the future be passed, enacted,
or directed, and Lessee shall pay all costs, expenses, liabilities, losses,
damages, fines, penalties, claims and demands, including reasonable attorney's
fees that may in any manner arise out of or be imposed because of the failure of
the Lessee to comply with the covenants and agreements of this paragraph VII.
Further, Lessee hereby agrees and covenants with Lessor that if Lessee fails to
comply promptly with any present or future municipal, state and federal
ordinances, laws, rules, and regulations, or fails to comply by such time that
compliance may be required by law, Lessor may, at Lessor's option, take such
actions as may be necessary to comply with all present and future municipal,
state, and federal ordinances, laws, rules and regulations, and Lessee hereby
agrees and covenants to repay the cost incurred by Lessor in taking such action
to Lessor on demand.
VIII. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that Lessee shall not make, or
suffer or permit to be made, any alterations, additions, of improvements
whatsoever in or about the said demised premises without first obtaining the
written consent of Lessor thereof, provided, however, that such consent, if
given, shall be subject to the express condition that any and all alterations,
additions, and improvements shall be done at Lessee's own expense and in
accordance and compliance with all applicable municipal, state, and federal
ordinances, laws, rules, and regulations, and that Lessee hereby covenants and
agrees with Lessor that in doing and performing such work Lessee shall do and
perform the same at Lessee's own expense, in conformity and compliance with all
applicable municipal, state, and federal ordinances, laws, rules, and
regulations, and that no liens of mechanics, materialmen, laborers, architects,
artisans, contractors, sub-contractors, or any other lien of any kind whatsoever
shall be created against or imposed upon the said demised premises, or any part
thereof, and that Lessee shall indemnify and save harmless Lessor from any and
all liability and claims for damages of every kind and nature which might be
made or from judgments rendered against Lessor or against said demised premises
on account of or arising out of such alterations, additions, or improvements.
IX. OWNERSHIP OF ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that any and all alterations,
additions, and improvements, except signs, shelving, moveable furniture and
equipment not affixed to the roof, walls, or floors, made at Lessee's own
expense after having first obtained the written consent of Lessor therefor, in
accordance with the provisions contained in Paragraph VIII hereof, whether or
not attached to the roof, walls or floors, foundations, or the premises in any
manner whatsoever, shall immediately merge and become a permanent part of the
realty, and any and all interest of the Lessee therein shall immediately vest in
Lessor, and all such alterations, additions, and improvements shall remain on
the said premises and shall not be removed by Lessee at the termination of this
Lease. The signs, shelving, moveable furniture and equipment not affixed to the
roof, walls, or floors, shall be removed by Lessee at Lessee's expense on or
before the termination of the Lease, and Lessee shall repair any damage caused
thereby at Lessee's own expense, such that the premises shall be in as good
order and condition as when the same were entered upon by Lessee.
X. ASSIGNMENT AND SUBLETTING.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that neither Lessee nor
Lessee's heirs, personal representatives, assigns, or successors in interest
shall assign this Lease or sublet the said demised premises, in whole or in
part, without first obtaining the written consent of Lessor therefor; that no
assignment of this Lease or any subletting of the said demised premises, in
whole or in part, shall be valid, except by and with the written consent of
Lessor first obtained; that the consent of Lessor to any such assignment or
subletting shall not operate to discharge Lessee or Lessee's heirs, personal
representatives, assigns, or successors in interest from their liability upon
the agreements and covenants of this Lease, and Lessee, Lessee's personal
representatives, assigns and successors in interest shall remain liable for the
full and complete performance of all the terms, conditions, covenants, and
agreements herein contained as principals and not as guarantors or sureties, to
the same extend as though no assignments or sublease had been made; that any
consent of Lessor to any such assignment or subletting shall not operate as a
consent to further assignment or subletting or as a waiver of this covenant and
agreement against assignment and subletting, and that the following any such
assignment or subletting, the assignee and/or sublettee shall be bound by all of
the terms, conditions, covenants and agreements herein contained including the
covenant against assignment or subletting.
XI. UTILITY AND OTHER CHARGES.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor to pay promptly all utility
and other charges of whatsoever kind and nature, including charges for
electrical, gas, telephone, and other services, which may be incurred in
connection with Lessee's use of said premises, and to indemnify and save
harmless Lessor therefrom. Lessor to pay domestic water, sewer and garbage
pickup of once a week.
XII. LESSOR'S RIGHT OF ENTRY AND TO MAKE ALTERATIONS, ADDITIONS, AND
IMPROVEMENTS.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that Lessor, able notice to
Lessee, to enter upon the said premises to inspect the same and to make any and
all improvements, alterations, and additions of any kind whatsoever upon the
said premises, providing such improvements, alterations, and additions are
reasonably necessary or convenient to the use to which the said premises are
being put at the time, but at not time shall Lessor be compelled or required to
make any improvements, alterations, or additions.
XIII. TAXES, OTHER ASSESSMENTS, AND INSURANCE.
Lessee and Lessor hereby covenant and agree that all taxes and special and
general assessments of whatsoever kind and nature, extraordinary as well as
ordinary, which have been or may be levied upon the said demised premises and
upon any alterations, additions, and improvements thereon, shall be paid by
Lessor at the time when the same become due and payable, and that all taxes and
special and general assessments of whatsoever kind and nature, extraordinary as
well as ordinary, which have been or may be levied upon the personal property
located upon the said demised premises shall be paid by Lessee at the time when
the same shall become due and payable Lessee, for and in consideration of this
Lease and the demise of the said premises, hereby agrees and covenants with
Lessor to carry and maintain in full force and effect during the term of this
Lease, and any extension or renewal thereof, at Lessee's expense, public
liability insurance covering bodily injury and property damage liability, in a
form and with an insurance company acceptable to Lessor, with limits of coverage
of not less than $1,000,000.00 for each person and $1,000,000.00 in the
aggregate for bodily injury or death liability for each accident, and
$100,000.00 for property damage liability for each accident for the benefit of
both Lessor and Lessee as protection against all liability claims arising from
the premises. Lessee hereby agrees and
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covenants with Lessor to deliver a copy of the insurance as soon thereafter as
practicable, and to give Lessor not less than ten (10) days written notice
informing Lessor of the expiration any such policy. Fire and extended coverage
insurance upon all buildings, alterations, and improvements upon the said
premises shall be provided for as follows: _____________ by Lessor, and fire and
extended coverage insurance upon all of the contents and other personal property
situated upon the said premises shall be provided for as follows by Lessee. It
is understood and agreed by and between the parties that a copy of each policy
of fire and extended coverage insurance shall be provided to the parties hereto
at the beginning of the term of this Lease, or as soon thereafter as
practicable, and that the party who is responsible for paying the premiums on
each policy of fire and extended coverage insurance shall give the other party
not less than ten (10) days written notice informing the other party of the
expiration of any such policy.
XIV. HOLDING OVER.
Lessee, for and in consideration of this Lease and the demise of the said
premises, agrees and covenants with Lessors that no holding over by Lessee after
the expiration of this Lease, or any renewal or extension thereof, whether with
or without the consent of Lessor, shall operate to extend or renew this Lease,
and that any such holdings over shall be construed as a tenancy from month to
month at the monthly rental which shall have been payable at the time
immediately prior to when such holding over shall have commenced, and such
tenancy shall be subject to all the terms, conditions, covenants and agreements
of this Lease.
XV. BANKRUPTCY AND CONDEMNATION.
Lessee, for and in consideration of this Lease and the demise of the said
premises, hereby agrees and covenants with Lessor that should Lessee make an
assignment for the benefit of creditors or should be adjudged a bankrupt, either
by voluntary or involuntary proceedings, or if otherwise a receiver or trustee
should be appointed by any court of competent jurisdiction for Lessee because of
any insolvency, or any execution, attachment, or replevin, or other court order
should be issued against the Lessee or any Lessee's property, whereby the
demised premises or any building or buildings, or alterations, additions, or
improvements thereon, shall be taken or occupied or attempted to be taken or
occupied by someone other than the Lessee, the occurrence of any such event
shall be deemed a breach of this Lease, and, in such event, Lessor shall have
the option to forthwith terminate this Lease and to re-enter the said demised
premises and to take possession thereof, whereupon Lessee shall quit and
surrender peaceably the said demised premises to Lessor. In no event shall this
Lease be deemed an asset of Lessee after the assignment for the benefit of
creditors, the adjudication in bankruptcy, the appointment of a receiver or
trustee, or the issuance of a Writ of Execution, a Writ of Attachment, a Writ of
Replevin, or other court order against Lessee or Lessee's property whereby the
demised premises or any building or buildings, or alterations, additions, or
improvements thereon, shall be taken or occupied or attempted to be taken or
occupied by someone other that the Lessee. Further, Lessee hereby covenants and
agrees with Lessor that in the event the said demised premises, or any part
thereof, shall be taken for any public or quasi-public use under any statute or
by right of eminent domain, this Lease shall automatically terminate, as to the
part so taken, as of the date possession shall have been taken, and the rent
reserved shall be adjusted so that Lessee shall be required to pay for the
remainder of the term that portion of the rent reserved in the proportion that
the said demised premises remaining after the taking for public or quasi-public
use bears to the whole of the said demised premises before the taking for public
or quasi-public use. All damages and payments resulting from the taking for
public or quasi-public use of the said demised premises shall accrue to and
belong to Lessor, and Lessee shall have no right to any part thereof.
XVI. DESTRUCTION.
Lessee, for and in consideration of this Lease and the demise of the said
premises agrees and covenants with Lessor that if at any time during the term of
this Lease, or any extension or renewal thereof, the said demised premises shall
be totally or partially destroyed by fire, flood, earthquake, or other calamity,
then Lessor shall have the option to rebuild or repair the building or
buildings, and any alterations, additions or improvements on the demised
premises, in as good condition as they were immediately prior to such calamity;
provided, however that such rebuilding or repair shall be commenced within a
period of thirty days after notice in writing to Lessor of such destruction or
damage. In such case, a just and proportionate part of the rental herein
specified shall be abated until such demised premises shall have been rebuilt
and repaired. In case, however, Lessor shall within thirty days following notice
in writing to him of such damage elect not to rebuild to repair said premises,
Lessor shall notify Lessee and, thereupon, this Lease shall terminate and become
null and void. Moreover, in no event shall Lessor have any duty or obligation to
rebuild or repair any signs, shelving, moveable furniture, equipment not affixed
to the roof, walls, or floors as a permanent part of the realty, or any other
personal property owned or leased by the Lessee and used to carry out the
purpose for which Lessee is leasing the demised premises.
XVII. SIGNS.
Lessor and Lessee covenant and agree that Lessee may at Lessee's own
expense erect and maintain a sign or signs to carry out the purpose for which
Lessee is leasing the said demised premises; provided, however, the location,
type and design of all exterior signs shall be first approved in writing by
Lessor. Upon the expiration of this Lease, or any renewal or extension thereof,
Lessee shall remove such sign or signs and shall repair any damage to the
premises caused thereby at Lessee's own expense. Further, at any time within
thirty days prior to the termination of this Lease, or any renewal or extension
thereof, Lessor shall have the right to place upon any part of said demised
premises any "For Rent" or "For Lease" signs that Lessor may select.
XVIII. TERMINATION AND REMEDIES.
It is expressly understood and agreed between the parties hereto, that if
the rent above reserved, or any part thereof, shall be in arrears or unpaid on
the day of payment whereon the same ought to be paid as aforesaid, of if default
shall be made in any of the covenants or agreements herein contained to be kept
by Lessee, Lessee's heirs, personal representatives, assigns, and successors in
interest, it shall and may be lawful for the Lessor. Lessor's heirs, personal
representatives, agents, attorneys, assigns, or successors in interest, at
Lessor's election, to declare said term ended and to re-enter the said premises,
or any part thereof, either with or without process of law, and to expel, remove
and to put out the Lessee, or any other person or persons occupying the demised
premises, using such force as may be necessary in so doing, and to repossess and
enjoy the same premises again as in its first and former state, and to distrain
for any rent that may be due thereon any property belonging to Lessee, whether
or not the same be exempt from execution and distress by law, and Lessee in that
case hereby waives any and all legal rights which Lessee now has or may have, to
hold or retain any such property under any exemption laws now or hereafter in
force in the State of New Mexico, or in any other way. It is the intent of the
parties hereto to hereby recognize in Lessor, Lessor's heirs, personal
representatives, assigns or successors in interest, a valid first lien as
provided by the laws of New Mexico, upon any and all goods, chattels, and other
property belonging to Lessee and located in said premises, as security for the
payment of said rent and fulfillment of the faithful performance of the
agreements, covenants, terms and conditions hereof as herein provided, anything
hereinbefore mentioned to the contrary notwithstanding. And if at any time said
term shall be ended at such election of Lessor, Lessor's heirs, personal
representatives assigns or successors in interest, as aforesaid, or in any other
way, Lessee, Lessee's heirs, personal representatives, assigns or successors in
interest do hereby covenant and agree to surrender and deliver up the
above-described premises peaceably to Lessor, Lessor's heirs, personal
representatives, assigns, or successor's in interest, immediately upon the
termination of said term as aforesaid, and if Lessee shall remain in possession
of the same ten (10) days after notice of such default, or after the termination
of the Lease in any of the ways above named, Lessee shall be deemed guilty of a
forcible detained of said premises under the laws of New Mexico and shall be
subject to all the conditions and provisions above named, and shall also be
subject to eviction and removal forcible or otherwise, with or without process
of law as above stated. Further, it is covenanted and agreed by and between the
parties hereto that at any time after any such termination, the Lessor may relet
the demised premises, or any part thereof in the name of Lessor or otherwise,
for such term and on such conditions as the Lessor, in Lessor's sole and
absolute discretion, may determine, and may collect and receive the rent
therefor. Moreover, in the event Lessor relets the demised premises, or any part
thereof, it is explicitly understood and agreed by and between the parties
hereto that the term may be greater or lesser than the period which would
otherwise constituted the balance of the term of this Lease, and the conditions
may include free rent of other concessions which may be reasonably required to
induce another party to lease the demised premises. Notwithstanding anything
herein to the contrary, the Lessor shall have no obligation hereunder to relet
the demised premises, or any part thereof, and shall in no way be responsible or
liable for any failure to collect any rent due upon such reletting. It is also
covenanted and agreed by and between the parties hereto that no such termination
of this Lease shall relieve the Lessee of its liabilities and obligations under
this Lease, and such liabilities and obligations shall survive any such
termination. In the event of any such termination, whether or not the demised
premises, or any part thereof, shall have been relet, the total remaining
balance of the rent which would be due and payable for the remainder of there
term of this Lease, if this Lease were still in effect, less the net proceeds of
any reletting effected pursuant to the Lessor's sole discretion, after deducting
from the net proceeds all of the Lessor's expenses in connection with such
reletting, including, without limitation all repossessions costs, brokerage
commissions, legal expenses, reasonable attorneys's fees, alteration costs and
expenses of preparation for such reletting, shall become immediately due and
payable, as for liquidated damages of the Lessee's default. Nothing herein
contained, however, shall limit or prejudice the right of Lessor to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which such damages are to be proved, whether or
not such amount be greater than, equal to, or less than the amount of the
difference referred to above, and whether or not such amount shall be
immediately or other wise due and payable. Further, it is covenanted and agreed
to by and between the parties hereto, that in addition to other remedies
provided for in this Lease, the Lessor shall be entitled to restraint by
injunction of the violation, or attempted or threatened violation, of any
agreement or covenant of this Lease, or to a decree specifically compelling
performance of any such agreement or covenant. The Lessee, the Lessee's heirs,
personal representatives, assigns and successors in interest, hereby expressly
waives, so far as permitted by law, the service of any notice of intention to
re-enter provided for in any statute, or of the institution of legal proceedings
to that end. Lessee, the Lessee's heirs, personal representatives, assigns, and
successors in interest, also
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hereby expressly waives any right or redemption or re-entry or repossession or
to restore the operation of this Lease case the Lessee shall be disposed by a
judgment or by a warrant of any court or judge or in case of re-entry or
repossession by the Lessor. It is further covenanted and agreed by and between
the parties hereto, that the Lessee shall pay and discharge all costs,
reasonable attorney's fees, and expenses incurred by Lessor, lessor's heirs,
personal representatives, assigns, or successors in interest, in enforcing the
covenants of this Lease or incurred by Lessor in pursuing any or all remedies
which are or may be available hereunder or allowed at law or in equity, or
incurred by Lessor in connection with reletting the demised premises.
XIX. LESSOR'S REMEDIES ARE CUMULATIVE.
The specified remedies to which the Lessor may resort under the terms of
this Lease are cumulative and are not intended to be exclusive of any other
remedies or means of redress to which the Lessor may be lawfully entitled in
case of any breach or threatened breach by the Lessee of any of the agreements
and covenants herein contained.
XX. WAIVERS.
Lessee, for and in consideration of this Lease and the demise of the said
premises, agrees and covenants with Lessor that the delay or omission in the
enforcement of any of the agreements and covenants herein contained, or in the
exercise of any Lessor's rights hereunder, shall not affect the duty of the
Lessee to thereafter faithfully fulfill and perform all of the agreements and
covenants herein contained, and that the failure, neglect, or omission of Lessor
to terminate this Lease for any one or more breaches of any agreements and
covenants hereof shall not be deemed a consent by Lessor of such breach and
shall not impede, impair, stop, bar, or prevent Lessor from thereafter
terminating this Lease, either for such violation, or for prior or subsequent
violations of any covenant or agreement hereof.
XXI. BINDING ON HEIRS, PERSONAL REPRESENTATIVES, ASSIGNS, AND SUCCESSORS IN
INTEREST.
It is understood and agreed by and between the parties hereto that the
agreements, covenants, terms, conditions, provisions, and undertakings in this
Lease, or in any extension or renewal thereof, shall extend to and be binding
upon the heirs, personal representatives, assigns and successors in interest of
the respective parties hereto, as if they were in every case named and
expressed, and shall be construed as covenants running with the land and
wherever reference is made to either of the parties hereto, it shall be held to
and include and apply also to the heirs, personal representatives, successors,
and assigns of such party, as if in each and every case so expressed.
XXII. ADDRESSES FOR NOTICES.
Any and all notices required or permitted to be given hereunder shall be
considered to have been given in writing and delivered to the respective party
designated below upon the date of such personal delivery, or upon a date three
(3) days following the mailing of any such notice by certified or registered
mail, return receipt requested, addressed to the respective party at the
respective address set forth below, or at such other address as either party may
furnish the other for this purpose by written notification delivered or mailed
to the other as herein provided
NOTICES TO LESSOR as per page 1 NOTICES TO LESSEE as per page 1.
XXIII. DECLARATION OF CONTRACTUAL LIABILITY.
If there is more than one party Lessee, the covenants and agreements of the
Lessee shall be joint and several obligations of each such party.
XXIV. GRAMMATICAL USAGE.
In construing this Lease, feminine or neuter pronouns shall be substituted
for those masculine in form and vice versa, and plural terms shall be
substituted for singular and singular for plural in any place in which the
context so requires.
XXV. COVENANT TO EXECUTE ADDITIONAL INSTRUMENTS.
The parties hereto hereby agree to execute and deliver any instruments in
writing necessary to carry out any agreement, covenant, term, condition, or
assurance in this Lease whenever an occasion shall arise and request for such
instrument shall be made.
XXVI. SEVERABILITY.
If any provision of this Lease, or any application thereof, shall be
declared invalid or unenforceable by any court of competent jurisdiction, the
remainder of this Lease, and any other application of such provision shall
continue in full force and effect.
XXVII. CAPTIONS.
The section headings are for convenience of reference only and shall not
otherwise affect the meaning hereof.
XXVIII. GOVERNING LAW.
This Lease shall be governed by and construed in accordance with the laws
of the State of New Mexico.
XXIX. AMENDMENTS.
It is understood and agreed by and between the parties hereto that this
Lease shall not be altered, changed, or amended except by instrument in writing
executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day
year first above written
JMP Company Inc., a New Mexico Advanced Optics Electronics, Inc.,
Corporation - Lessor A Nevada corporation - Lessee
By /S/ J.A. BACA By /S/ LESLIE S. ROBINS
---------------------------------- -----------------------------
Joel A. Baca, Treasurer Leslie S. Robins, Executive
Vice President
ACKNOWLEDGEMENTS
A. For a corporation or incorporated association
STATE OF NEW MEXICO )
) ss
COUNTY OF Bernalillo )
This instrument was acknowledged before me on May 29, 1998
By /S/JOEL A. BACA, Treasurer, of JMP Company Inc.
- ---------------------------------------------------------
(NAME(S) OF PERSONS)
My commission expires: 11-5-98 /S/ MICHAEL D. LEACH
(Seal) -------------------
NOTARY PUBLIC
E. For a corporation or incorporated association:
STATE OF NEW MEXICO )
) ss
COUNTY OF Bernalillo )
This instrument was acknowledged before me on May 28, 1998
By Leslie S. Robins, Executive V.P., of Advanced Optics Electronics, Inc.,
- -------------------------------------------------------------------------------
(NAME OF OFFICER) (TITLE OF OFFICER) (NAME OF CORPORATION ACKNOWLEDGING)
a Nevada corporation, on behalf of the corporation
(STATE OF INCORPORATION)
My commission expires: 11-5-98
/S/ MICHAEL D. LEACH
-------------------
(Seal) NOTARY PUBLIC
<PAGE>
SECRETARY OF STATE
[GRAPHIC] SEAL OF THE STATE OF NEVADA
STATE OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that ADVANCED OPTICS ELECTRONICS INC. did on the TWENTY-SECOND
day of MAY, 1996 file in this office the original Articles of Incorporation;
that said Articles are now on file and of record in the office of the Nevada
Secretary of State, and further, that said Articles contain all the provisions
required by the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set
my hand and affixed the Great Seal of
State, at my office, in Carson City,
Nevada, this TWENTY-SECOND day of MAY,
1996.
/s/Dean Heller
Secretary of State
By /s/Delaina Marqueeo
Certification Clerk
[GRAPHIC] SEAL OF THE STATE OF NEVADA
<PAGE>
27
Item 13. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
----
Financial Statements For The Periods Ended December 31, 1997 and 1996
Report of Independent Accountant FS-2
Statement of Operations FS-3
Balance Sheet FS-4
Statement of Changes in Shareholders' Equity FS-5
Statement of Cash Flows FS-6
Notes to Financial Statements FS-7
Financial Statements For The Quarter Ended March 31, 1998
Report of Independent Accountant FS-8
Statement of Operations FS-9
Balance Sheet FS-10
Statement of Changes in Shareholders' Equity FS-11
Statement of Cash Flows FS-12
Notes to Financial Statements FS-13
FS-14
FS-15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANT
I have audited the accompanying balance sheet of Advanced Optics, Inc. (a Nevada
corporation) as of December 31, 1997 and 1996 and the related statements of
income, cash flow, and changes in shareholders equity for the year ended
December 31, 1997 and for the period from inception (May 22, 1996) through
December 31, 1996. These statements are the responsibility of Advanced Optics
Electronics, Inc's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amount and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. I believe that my audit of the financial statements provide a
reasonable basis for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Advanced Optics Electronics, Inc.
as of December 31, 1997 and 1996 and the results of operations and cash flows
for the year ended December 31, 1997 and for the period from inception (May 22,
1996) through December 31, 1996 in conformity with generally accepted accounting
principles.
Athena L. McDevitt
Albuquerque, New Mexico
February 5, 1998
FS-2
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Year Ended
December 31 1997
Cumulative
From Inception From Inception
(May 22nd, 1996) (May 22, 1996)
Year Ended to to
December 31, December 31, December 31,
1997 1996 1997
----------- ----------- -----------
Revenues:
Contract Revenue $ 72,000 $ -- $ 72,000
----------- ----------- -----------
Costs and Expenses:
General and Administrative 73,421 17,969 91,930
Research and Development 10,521 30,474 40,995
Amortization and Depreciation 37,156 3,578 40,734
Professional Expenses 33,644 21,739 55,383
Interest Expense 1,948 3,142 5,090
----------- ----------- -----------
Total Expenses $ 156,690 $ 76,902 $ 233,592
----------- ----------- -----------
Net Loss $ (84,690) $ (76,902) $ (161,592)
=========== =========== ===========
Earnings (Loss) Per Share ($ 0.0150) ($ 0.0678) ($ 0.0477)
Weighted Ave. Shares Outstanding 5,656,186 1,134,927 3,395,557
The accompanying notes are an integral part of these financial statements.
FS-3
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, December 31,
Assets 1997 1996
------------ ------------
Current Assets
Cash and Cash Equivalents $ 74,421 $ 960
Subscription Receivable 31,850 --
Contract Receivable 72,000 --
Note Receivable 11,493 --
------------ ------------
Total Current Assets 189,764 960
------------ ------------
Property and Equipment
Furnitures and Fixtures 13,132 12,303
Computers 2,626 --
Technical Equipment 27,424 --
Less: Accumulated Depreciation (4,483) (673)
------------ ------------
Total Property and Equipment 38,699 11,630
------------ ------------
Other Assets
Organizational Costs, net 84,027 20,565
Goodwill, net 4,854 4,979
Patents, net 227,191 240,132
Other Assets 350 --
Total Other Assets 316,422 265,676
------------ ------------
Total Assets $ 544,885 $ 278,266
============ ============
Liabilities and Shareholders' Equity
Current Liabilities
Notes Payable $ 2,000 $ 10,000
Accrued Liabilities 5,425 --
------------ ------------
Total Current Liabilities 7,425 10,000
------------ ------------
Long-Term Liabilities
Long-Term Liabilities 23,455 34,572
------------ ------------
23,455 34,572
------------ ------------
Shareholders' Equity
Common Stock, authorized 25,000,000
shares, $.001 par value, 7,155,503
and 4,499,290 shares issued and
outstanding, respectively 7,155 4,499
Additional Paid-In Capital 668,442 306,097
Accumulated Deficit (161,532) (76,902)
------------ ------------
Total Shareholders' Equity 514,005 233,694
------------ ------------
Total Liabilities and Shareholders' Equity $ 544,885 $ 278,266
============ ============
The accompanying notes are an integral part of these financial statements.
FS-4
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Retained
-------------------------- Additional Earnings Total
Stated Paid-In (Accumulated Shareholders'
Shares Value Capital Deficit) Equity
--------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance May 22, 1996 -- $ -- $ -- $ -- $ --
Stock issued in public offering 4,499,290 4,499 306,097 -- 310,596
Net Loss -- -- -- (76,902) (76,902)
--------- --------- --------- --------- ---------
Balance December 31, 1996 4,499,290 4,499 306,097 (76,902) 233,694
--------- --------- --------- --------- ---------
Stock issued in public offering 2,656,213 2,656 362,345 -- 365,001
Net Loss -- -- -- (84,690) (84,690)
--------- --------- --------- --------- ---------
Balance December 31, 1997 7,155,503 $ 7,155 $ 668,442 $(161,592) $ 514,005
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
FS-5
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
From Inception From Inception
(May 22, 1996) (May 22, 1996)
Year Ended to to
December 31, December 31, December 31,
1997 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows-Operating Activities
Net (Loss) $ (84,690) $ (76,902) $(161,592)
Adjustments to Reconcile Net Loss to
Net Cash Flows from Operating Activities
Accumulated Depreciation 3,810 673 4,483
Amortization Expense 33,346 2,905 36,251
Subscription Receivable (31,850) -- (31,850)
Contract Receivable (72,000) -- (72,000)
Note Receivable (11,493) -- (11,493)
Other Assets (350) -- (350)
Accrued Liabilities 5,425 -- 5,425
--------- --------- ---------
Net Cash Flows from Operating Activities (157,802) (73,324) (231,126)
--------- --------- ---------
Cash Flows-Investing Activities
Furniture and Fixtures (829) (12,303) (13,132)
Computers (2,626) -- (2,626)
Technical Equipment (27,424) -- (27,424)
Organization Costs (83,742) (21,292) (105,034)
Goodwill -- (5,000) (5,000)
Patents -- (242,289) (242,289)
--------- --------- ---------
Net Cash Flows from Investing Activities (114,621) (280,884) (395,505)
--------- --------- ---------
Cash Flows-Financing Activities
Notes Payable 6,150 46,843 52,993
Debt Repayment (25,267) (2,271) (27,538)
Issuance of Common Stock 365,001 310,596 675,597
--------- --------- ---------
Net Cash Flows from Financing Activities 345,884 355,168 701,052
--------- --------- ---------
Net Increase (Decrease) in Cash 73,461 960 74,421
Cash Balance at Beginning of Period 960 -- --
--------- --------- ---------
Cash Balance at End of Period $ 74,421 $ 960 $ 74,421
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
FS-6
<PAGE>
Notes to Financial Statements
ADVANCED OPTICS ELECTRONICS, INC.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Advanced Optics Electronics, Inc. is a developmental stage technology company
with its principle focus on the development and production of large-scale flat
panel displays. The Company is currently continuing its research and development
of this product. Upon substantial completion of the research and development of
the large flat panel display, the Company plans to make the transition from a
developmental stage company to selling and producing this product. The market
for the large-scale flat panel will include, but not be limited to, cockpit
displays, flat panel computer monitors, and advertising billboards. Advanced
Optics Electronics, Inc. plans to focus on producing and selling the large-scale
flat panel displays for outdoor advertising billboards. Management believes that
it will be in full production by the end of 1998.
Advanced Optics Electronics, Inc. was incorporated on May 23, 1996. During
November 1996, Advanced Optics Electronics, Inc. merged with PLZ Tech, the
developer of the large-scale flat panel displays. PLZ Tech shareholders owned
8,768,842 shares of common stock, which they exchanged for 4,500,000 shares in
Advanced Optics Electronics, Inc.
Basis of Presentation
Advanced Optics Electronics, Inc. prepares its financial statements in
accordance with generally accepted accounting principles which requires that
management make estimates and assumptions that affect the reported amounts.
Actual results could differ from those estimates.
The purchase method of accounting was used to record the merger between Advanced
Optics Electronics, Inc. and PLZ Tech.
Revenue Recognition
Revenues are generally recognized when services are rendered or products are
delivered to customers. Long-term contracts are accounted for using the
percentage of completion method, with revenues recognized in proportion that
costs incurred bear to estimated total costs at completion. Expected losses on
such contracts, if any, are charged to income currently. The Company has entered
a contract to produce flat panel displays for an outdoor advertising billboard.
The amount of the contract is for $ 1.7 million dollars. Management estimates
that the contract will be completed by November of 1998.
Depreciation and Amortization
Advanced Optics Electronics, Inc. will provide for depreciation on a
straight-line basis over the estimated economic lives of their assets. Furniture
and office equipment are being depreciated over 7 years. All computer and
peripheral equipment are being depreciated over 5 years. All manufacturing
equipment, with the exception of the Unitrack testing unit, are being
depreciated over 7 years. The Unitrack testing unit is being depreciated over 15
years.
Organization costs are amortized on a straight-line basis over the period to be
benefited of 5 years. Patents are amortized on a straight-line basis over the
remaining estimated useful life of 15 years. Goodwill is amortized over the
period to be benefited, or 40 years, whichever is less.
FS-7
<PAGE>
Income Taxes
Deferred tax assets and liabilities are established for temporary differences
between financial and tax reporting bases and will subsequently be changed to
reflect changes in tax rates expected to be in effect when the temporary
differences reverse. There has not been any temporary differences between
financial and tax reporting bases.
Earnings Per Share
Earnings Per Share is computed by dividing net income (loss) applicable to
common stock by the weighted average number of common shares outstanding during
the period.
Cash and Cash Equivalents
Cash and cash equivalents include investments in short-term, highly liquid
securities, which have maturities when purchased of three months or less.
Leases
Currently, the only lease agreement is for rent of facilities for the office and
production. The lease agreement is $ 1,300 per month for 3 years.
2. SHAREHOLDERS' EQUITY
Common Stock
The authorized common stock of Advanced Electronics, Inc. consists of 25,000,000
shares with a par value of $.001 per share.
3. DEBT
Long-term debt as of December 31 consists of a Note Payable in the amount of
$16,150. The terms are 3 years at an 8% interest rate. The note is due May 15th,
1999. The current portion of the note is $ 2,000. There is a demand note in the
amount of $ 9,305 with a 10% interest rate.
4. RELATED PARTY TRANSACTIONS
There is a Note Receivable from an officer in the amount of $ 11,493. The terms
are a two year note at a 9% interest rate. The note is due November 10th, 1999.
FS-8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANT
I have audited the accompanying balance sheet of Advanced Optics, Inc. (a Nevada
corporation) as of March 31, 1998 and the related statements of income, cash
flow, and changes in shareholders equity for the quarter ended March 31,1998.
These statements are the responsibility of Advanced Optics Electronics, Inc's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amount and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. I believe that my audit of the financial statements provide a
reasonable basis for my opinion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Advanced Optics Electronics, Inc.
as of March 31, 1998 and the results of operations and cash flows for the
quarter ended March, 1, 1998 in conformity with generally accepted accounting
principles.
Athena L. McDevitt
Albuquerque, New Mexico
May 4, 1998
FS-9
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Cumulative
From Inception
For the Three (May 22, 1996)
Months Ended to
March 31, 1998 March 31, 1998
-------------- --------------
Revenues:
Contract Revenue $ 72,000 $ 144,000
------------ ------------
Costs and Expenses:
General and Admininstrative 60,594 151,984
Research and Development 3,800 44,795
Amortization and Depreciation 6,526 47,260
Professional Expenses 23,017 78,400
Stock Transfer Fees 1,371 1,371
Interest Expense 247 5,337
------------ ------------
Total Expenses $ 95,555 $ 329,147
------------ ------------
Net Loss $ (23,555) $ (185,147)
------------ ------------
Other comprehensive income, net of tax:
Unrealized holding gains on securities:
Unrealized holding identified this period: 200,020 200,020
------------ ------------
Comprehensive Income $ 176,465 $ 14,873
============ ============
Earnings (Loss) Per Share $ 0.0158 $ 0.0025
Weighted Ave. Shares Outstanding 11,157,596 5,982,903
The accompanying notes are an integral part of these financial statements.
FS-10
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
BALANCE SHEET
March 31,
1998
-----------
Assets
Current Assets
Cash and Cash Equivalents $ 739,493
Subscription Receivable 31,850
Investments- Securities (Cost $ 35,191) 235,211
Contract Receivable 144,000
Note Receivable 18,993
-----------
Total Current Assets 1,169,547
-----------
Property and Equipment
Furnitures and Fixtures 13,132
Computers 3,175
Technical Equipment 27,424
Less: Accumulated Depreciation (5,435)
-----------
Total Property and Equipment 38,296
-----------
Other Assets
Organizational Costs, net 78,776
Goodwill, net 4,823
Patents, net 223,955
Other Assets 350
-----------
Total Other Assets 307,904
-----------
Total Assets $ 1,515,747
===========
Liabilities and Shareholders' Equity
Current Liabilities
Notes Payable $ 16,065
Accrued Liabilities 12,472
-----------
Total Current Liabilities 28,537
-----------
Long-Term Liabilities
Long-Term Liabilities 5,740
-----------
Shareholders' Equity
Common Stock, authorized
25,000,000 shares, $.001 par
value, 12,050,280 shares
issued and outstanding 12,050
Additional Paid-In Capital 1,454,547
Retained Earnings 14,873
-----------
Total Shareholders' Equity 1,481,470
-----------
Total Liabilities and Shareholders' Equity $ 1,515,747
===========
The accompanying notes are an integral part of these financial statements.
FS-11
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Retained
------------------------ Additional Earnings Total
Stated Paid-In (Accumulated Shareholders'
Shares Value Capital Deficit) Equity
---------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C>
Balance May 22, 1996 -- $ -- $ -- $ -- $ --
Stock issued in public offering 4,499,290 4,499 306,097 -- 310,596
Net Loss -- -- -- (76,902) (76,902)
---------- ------ --------- ------ ---------
Balance December 31, 1996 4,499,290 4,499 306,097 (76,902) 233,694
---------- ------ --------- ------ ---------
Stock issued in public offering 2,656,213 2,656 362,345 -- 365,001
Net Loss -- -- -- (84,690) (84,690)
---------- ------ --------- ------ ---------
Balance December 31, 1997 7,155,503 7,155 668,442 (161,592) 514,005
---------- ------ --------- ------ ---------
Stock issued in public offering 4,894,777 4,895 786,105 -- 791,000
Comprehensive Income -- -- -- 176,465 176,465
---------- ------ --------- ------ ---------
Balance March 31 1998 12,050,280 12,050 1,454,547 14,873 1,481,470
========== ====== ========= ====== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
FS-12
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Cumulative
From Inception
(May 22, 1996)
Three Months Ended to
March 31, 1998 March 31, 1998
----------- -----------
Cash Flows-Operating Activities
Net (Loss) $ 176,465 $ 14,873
Adjustments to Reconcile Net Loss to
Net Cash Flows from Operating Activities
Accumulated Depreciation 952 5,435
Amortization Expense 8,518 44,769
Unrealized Gain-Investment (200,020) (200,020)
Subscription Receivable -- (31,850)
Contract Receivable (72,000) (144,000)
Note Receivable (7,500) (18,993)
Accrued Liabilities 7,047 12,472
----------- -----------
Net Cash Flows from Operating Activities (86,538) (317,314)
----------- -----------
Cash Flows-Investing Activities
Furniture and Fixtures -- (13,132)
Computers (549) (3,175)
Technical Equipment -- (27,424)
Organization Costs -- (105,034)
Goodwill -- (5,000)
Patents -- (242,289)
Investment in Securities (35,191) (35,191)
Other Assets -- (350)
----------- -----------
Net Cash Flows from Investing Activities (35,740) (431,595)
----------- -----------
Cash Flows-Financing Activities
Notes Payable -- 52,993
Debt Repayment (3,650) (31,188)
Issuance of Common Stock 791,000 1,466,597
----------- -----------
Net Cash Flows from Financing Activities 787,350 1,488,402
----------- -----------
Net Increase (Decrease) in Cash 665,072 739,493
Cash Balance at Beginning of Period 74,421 --
----------- -----------
Cash Balance at End of Period $ 739,493 $ 739,493
=========== ===========
The accompanying notes are an integral part of these financial statements.
FS-13
<PAGE>
Notes to Financial Statements
ADVANCED OPTICS ELECTRONICS, INC.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Advanced Optics Electronics, Inc. is a developmental stage technology company
with its principle focus on the development and production of large-scale flat
panel displays. The Company is currently continuing its research and development
of this product. Upon substantial completion of the research and development of
the large flat panel display, the Company plans to make the transition from a
developmental stage company to selling and producing this product. The market
for the large-scale flat panel will include, but not be limited to, cockpit
displays, flat panel computer monitors, and advertising billboards. Advanced
Optics Electronics, Inc. plans to focus on producing and selling the large-scale
flat panel displays for outdoor advertising billboards. Management believes that
it will be in full production by the end of 1998.
Advanced Optics Electronics, Inc. was incorporated on May 23, 1996. During
November 1996, Advanced Optics Electronics, Inc. merged with PLZ Tech, the
developer of the large-scale flat panel displays. PLZ Tech shareholders owned
8,768,842 shares of common stock, which they exchanged for 4,500,000 shares in
Advanced Optics Electronics, Inc.
Basis of Presentation
Advanced Optics Electronics, Inc. prepares its financial statements in
accordance with generally accepted accounting principles which requires that
management make estimates and assumptions that affect the reported amounts.
Actual results could differ from those estimates.
The purchase method of accounting was used to record the merger between Advanced
Optics Electronics, Inc. and PLZ Tech.
Revenue Recognition
Revenues are generally recognized when services are rendered or products are
delivered to customers. Long-term contracts are accounted for using the
percentage of completion method, with revenues recognized in proportion that
costs incurred bear to estimated total costs at completion. Expected losses on
such contracts, if any, are charged to income currently. The Company has entered
a contract to produce flat panel displays for an outdoor advertising billboard.
The amount of the contract is for $ 1.7 million dollars. Management estimates
that the contract will be completed by November of 1998.
Depreciation and Amortization
Advanced Optics Electronics, Inc. will provide for depreciation on a
straight-line basis over the estimated economic lives of their assets. Furniture
and office equipment are being depreciated over 7 years. All computer and
peripheral equipment are being depreciated over 5 years. All manufacturing
equipment, With the exception of the Unitrack testing unit, are being
depreciated over 7 years. The Unitrack testing unit is being depreciated over 15
years.
FS-14
<PAGE>
Organization costs are amortized on a straight-line basis over the period to be
benefited of 5 years. Patents are amortized on a straight-line basis over the
remaining estimated useful life of 15 years. Goodwill is amortized over the
period to be benefited, or 40 years, whichever is less.
Income Taxes
Deferred tax assets and liabilities are established for temporary differences
between financial and tax reporting bases and will subsequently be changed to
reflect changes in tax rates expected to be in effect when the temporary
differences reverse. There have not been any temporary differences between
financial and tax reporting bases.
Earnings Per Share
Earnings Per Share is computed by dividing net income (loss) applicable to
common stock by the weighted average number of common shares outstanding during
the period.
Cash and Cash Equivalents
Cash and cash equivalents include investments in short-term, highly liquid
securities, which have maturities when purchased of three months or less.
Investments
Advanced Optics Electronics, Inc. has purchased marketable equity securities in
a company. For financial purpose the marketable equity securities are treated as
trading securities as of the date of the issuance of the March 31 financial
statements. Management, since the purchase, has changed their intent and has
purchased additional shares and will be required to account for the investment
as if it were available-for-sale. The basis on which the gain was determined was
specific identification.
Leases
Currently, the only lease agreement is for rent of facilities for the office and
production. The lease agreement is $1,300 per month for 3 years.
2. SHAREHOLDERS' EQUITY
Common Stock
The authorized common stock of Advanced Electronics, Inc. consists of 25,000,000
shares with a par value of $.001 per share.
3. DEBT
Long-term debt as of March 31 consists of a Note Payable in the amount of
$14,500. The terms are 3 years at an 8% interest rate. The note is due May 15th,
1999. The current portion of the note is $ 8,760.
4. RELATED PARTY TRANSACTIONS
There is a Note Receivable from an officer in the amount of $ 18,993. The terms
are a two year note at a 9% interest rate. The note is due November 10th, 1999.
FS-15
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL REPORT
JUNE 30, 1998
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
Page
ACCOUNTANTS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statements of Operations 4
Statements of Changes in Stockholders' Equity 5
Statements of Cash Flows 7
Notes to Financial Statements 8
<PAGE>
[LOGO] NEFF & COMPANY, LLP
Accountants' Report
Board of Directors
Advanced Optics Electronics, Inc.
We have compiled the accompanying balance sheet of Advanced Optics Electronics,
Inc. (a development stage company) as of June 30, 1998 and the related
statements of operations, changes in stockholders' equity and cash flows for the
quarter then ended and the period from May 22, 1996 (inception) through June 30,
1998, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Neff & Company LLP
Albuquerque, New Mexico
November 2, 1998
1
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
June 30, 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 372,595
Contract receivable 144,000
Notes receivable from related parties 35,164
-----------
Total current assets 551,759
-----------
PROPERTY AND EQUIPMENT
Furniture and fixtures 17,621
Computers 13,692
Technical equipment 46,571
Less accumulated depreciation (9,610)
-----------
Total property and equipment 68,274
------------
OTHER ASSETS
Investment in Bio Moda, Inc. 325,903
Organizational costs, net of accumulated
amortization of $32,220 72,814
Goodwill, net of accumulated amortization
of $208 4,792
Patents, net of accumulated amortization
of $21,257 221,082
Other assets 350
-----------
Total other assets 624,941
-----------
Total assets $ 1,244,974
===========
2
See accompanying notes and accountants' report.
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 13,784
Accrued liabilities 5,941
-----------
Total current liabilities 19,725
-----------
SHAREHOLDERS' EQUITY
Common stock, authorized 25,000,000 shares,
$.001 par value, 13,998,270 shares issued
and outstanding 13,998
Additional paid-in capital 1,566,551
Deficit accumulated during the development stage (336,748)
Treasury stock, at cost (18,552)
-----------
Total shareholders' equity 1,225,249
-----------
Total liabilities and shareholders' equity $ 1,244,974
===========
3
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Quarter Ended June 30, 1998 and the
Period from May 22, 1996 (Inception)
Through June 30, 1998
<TABLE>
<CAPTION>
5/22/96
Quarter (Inception)
Ended Through
6/30/98 6/30/98
<S> <C> <C>
REVENUES
Contract revenue $ -- 144,000
----------------------------
COSTS AND EXPENSES
General and administrative 117,015 396,030
Research and development 24,820 69,615
----------------------------
Total expenses 141,835 465,645
----------------------------
Operating income (loss) (141,835) (321,645)
OTHER EXPENSES
Loss on equity investment 9,288 9,288
Interest expense 478 5,815
----------------------------
Total other expenses 9,766 15,103
----------------------------
Net loss (151,601) (336,748)
----------------------------
Other comprehensive income, net of tax:
Unrealized holding gains (losses) on securities (200,020) --
----------------------------
Comprehensive loss $ (351,621) (336,748)
============================
Loss per share $ (.012) (.045)
============================
Weighted average shares outstanding 13,024,275 7,545,816
============================
</TABLE>
See accompanying notes and accountants' report.
4
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Quarter Ended June 30, 1998 and the
Period from May 22, 1996 (Inception) Through
June 30, 1998
Common Stock
----------------------------
Stated
Shares Value
Balance, May 22, 1996 -- $ --
Stock issued in public offering 4,499,290 4,499
Net loss -- --
----------------------------
Balance, December 31, 1996 4,499,290 4,499
Stock issued in public offering 2,656,213 2,656
Net loss -- --
----------------------------
Balance December 31, 1997 7,155,503 7,155
Stock issued in public offering 4,894,777 4,895
Comprehensive income -- --
----------------------------
Balance March 31, 1998 12,050,280 12,050
Stock issued in public offering 1,947,990 1,948
Purchase of treasury stock -- --
Comprehensive income (loss) -- --
----------------------------
13,998,270 $ 13,998
============================
See accompanying notes and accountants' report.
5
<PAGE>
Equity
(Deficit)
Accumulated
Additional During the Total
Paid-In Development Treasury Shareholders'
Capital Stage Stock Equity
$ -- -- -- --
306,097 -- -- 310,596
-- -- -- (76,902)
--------------------------------------------------------------
306,097 (76,902) -- 233,694
362,345 -- -- 365,001
-- (84,690) -- (84,690)
--------------------------------------------------------------
668,442 (161,592) -- 514,005
786,105 -- -- 791,000
-- 176,465 -- 176,465
--------------------------------------------------------------
1,454,547 14,873 -- 1,481,470
112,004 -- -- 113,952
-- -- (18,552) (18,552)
-- (351,621) -- (351,621)
--------------------------------------------------------------
$ 1,566,551 (336,748) (18,552) 1,225,249
==============================================================
6
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Quarter Ended June 30, 1998 and the
Period from May 22, 1996 (Inception) Through
June 30, 1998
5/22/96
(Inception)
Through
6/30/98 6/30/98
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (151,601) (336,748)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization and depreciation expense 13,091 63,295
Loss on equity investment 9,288 9,288
Subscription receivable 31,850 --
Contract receivable -- (144,000)
Note receivable (16,171) (35,164)
Accrued liabilities (6,531) 5,941
-------------------------
Net cash flows applied to operating
activities (120,074) (437,388)
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (34,203) (77,934)
Investment in Bio Moda, Inc. (300,000) (335,191)
Increase in other assets -- (352,673)
-------------------------
Net cash applied to investing
activities (334,203) (765,798)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable -- 52,993
Debt repayment (8,021) (39,209)
Issuance of common stock 113,952 1,580,549
Purchase of treasury stock (18,552) (18,552)
------------------------
Net cash provided by financing
activities 87,379 1,575,781
------------------------
Net increase (decrease) in cash (366,898) 372,595
Cash, beginning of period 739,493 --
------------------------
Cash, end of period $ 372,595 372,595
========================
See accompanying notes and accountants' report.
7
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business. Advanced Optics Electronics, Inc. (the Company) is a
developmental stage technology company with its principal focus on the
development and production of large-scale flat panel displays. The Company is
currently continuing its research and development of this product. Upon
substantial completion of the research and development of the large flat panel
display, the Company plans to make the transition from a developmental stage
company to selling and producing this product. The market for the large-scale
flat panel will include, but not be limited to, cockpit displays, flat panel
computer monitors, and advertising billboards. Advanced Optics Electronics, Inc.
plans to focus on producing and selling the large-scale flat panel displays for
outdoor advertising billboards. Management believes that it will be in full
production by the end of 1998.
Cash and Cash Equivalents. Cash and cash equivalents include all cash balances
and highly liquid debt instruments with an original maturity of three months or
less. The Company's cash is deposited in financial institutions and is insured
only up to $100,000 by the Federal Deposit Insurance Corporation at each
institution. As of June 30, 1998, approximately $80,000 was not insured.
Equity Investment. The investment in Bio Moda, Inc. is accounted for using the
equity method. Under this method, income and losses reported by the investee are
recorded by the Company in its proportionate interest at the time they are
recognized by the investee. The original cost of the Bio Moda, Inc. investment
exceeded the Company's proportionate interest in Bio Moda's book value. This
difference is being amortized over a 15 year period.
Contract Receivable. Contract receivable consists of revenue recognized but not
yet billed. No allowance for uncollectible accounts has been recorded, as
management believes the contract to be fully collectible.
Revenue Recognition. Revenues are generally recognized when services are
rendered or products are delivered to customers. Long-term contracts are
accounted for using the percentage of completion method, with revenues
recognized in proportion that costs incurred bear to estimated total costs at
completion. Expected losses on such contracts, if any, are charged to income
currently. The Company has entered a contract to produce flat panel displays for
an outdoor advertising billboard. The amount of the contract is $1.7 million.
Management estimates that the contract will be completed by November 1998.
8
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Other Assets. Organization costs are amortized on a straight-line basis over the
period to be benefited of five years. Patents are amortized on a straight-line
basis over the remaining estimated useful life of 15 years. Goodwill is
amortized over the period to be benefited, or 40 years, whichever is less. The
Company continually reviews other assets to assess recoverability from estimated
future net cash flows. To date, these reviews have not resulted in a reduction
of other assets.
Income Taxes. The Company accounts for its income taxes using the liability
method. Under this method, deferred tax liabilities and assets are determined
based on the difference between the financial statement carrying amounts and tax
basis of assets and liabilities using enacted tax rates in effect in the years
in which the differences are expected to reverse. The Company has provided a
valuation allowance to offset the benefit of any net operating loss
carryforwards or deductible temporary differences
Loss per share. Loss per share is computed on the basis of the weighted average
number of common shares outstanding during the year and did not include the
effect of potential common stock as their effect would be antidilutive. The
numerator for the computation is the net loss and the denominator is the
weighted average shares of common stock outstanding.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Leases. Currently, the only lease agreement is for rent of facilities for the
office and production facility. The lease agreement is $1,300 per monthly for
three years.
9
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
NOTE 2. INVESTMENT IN BIO MODA, INC.
In April 1998 the Company increased its investment in Bio Moda, Inc. to 21.67
percent. Bio Moda, Inc. is a development stage company involved primarily in the
development of technology for the early detection of lung cancer.
A summary of the financial data relative to Bio Moda, Inc. as of June 30, 1998
is as follows:
Assets:
Current assets $ 259,306
Other assets 23,525
---------
$ 282,831
=========
Liabilities and equity
Current liabilities $ 2,801
Notes payable to stockholders 85,147
Common stock 348,623
Deficit accumulated during the development stage (153,740)
---------
$ 282,831
=========
The investment in Bio Moda, Inc. is accounted for using the equity
method. A summary of the investment is as follows:
Original cost $ 335,191
Share of net loss (3,968)
Less: Amortization of excess of cost
over book value (5,320)
---------
Net investment $ 325,903
=========
The investment in Bio Moda, Inc. was reported at market value for the quarter
ended March 31, 1998. Concurrent with the change to the equity method for the
quarter ended June 30, 1998, the investment account was restored to its original
cost. Therefore, during the current quarter, an unrealized holding loss on
securities of $200,020 was recognized as other comprehensive income offsetting
the unrealized holding gain recognized in the March 31 quarter. At June 30,
1998, there is no difference between the deficit accumulated during the
development stage and the accumulated other comprehensive income.
10
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
NOTE 3. INCOME TAXES
At June 30, 1998, the Company had deferred tax assets amounting to approximately
$120,000. The deferred tax assets consist primarily of the tax benefit of net
operating loss carryforwards and are fully offset by a valuation allowance of
the same amount.
The net change in the valuation allowance for deferred tax assets was an
increase of approximately $56,000 in the quarter ending June 30, 1998. The net
change is due primarily to the increase in net operating loss carryforwards.
At June 30, 1998, the Company had net operating loss carryforwards of
approximately $300,000 available to offset future state and federal taxable
income. These carryforwards will expire in 2016 to 2018 for federal tax purposes
and 2001 to 2003 for state tax purposes.
NOTE 4. RELATED PARTY TRANSACTIONS
In addition to advances to related parties, there is a note receivable from an
officer in the amount of $18,993. The note, at 9 percent interest, is due
November 10, 1999.
11
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL REPORT
SEPTEMBER 30, 1998
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
Page
ACCOUNTANTS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statements of Operations 4
Statements of Changes in Stockholders' Equity 5
Statements of Cash Flows 7
Notes to Financial Statements 8
<PAGE>
Accountants' Report
Board of Directors
Advanced Optics Electronics, Inc.
We have compiled the accompanying balance sheet of Advanced Optics Electronics,
Inc. (a development stage company) as of September 30, 1998 and the related
statements of operations, changes in stockholders' equity and cash flows for the
quarter then ended and the period from May 22, 1996 (inception) through
September 30, 1998, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Neff & Company LLP
Albuquerque, New Mexico
November 12, 1998
1
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
September 30, 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 351,194
Certificate of deposit 50,000
Contract receivable 144,000
Other receivables 48,665
-----------
Total current assets 593,859
-----------
PROPERTY AND EQUIPMENT
Furniture and fixtures 28,014
Computers 17,745
Technical equipment 75,573
Equipment under capital lease 100,850
Less accumulated depreciation (15,627)
-----------
Total property and equipment 206,555
-----------
OTHER ASSETS
Investment in Bio Moda, Inc. 318,280
Organizational costs, net of accumulated
amortization of $33,285 71,750
Goodwill, net of accumulated amortization
of $240 4,760
Patents, net of accumulated amortization
of $24,445 217,894
Other assets 350
-----------
Total other assets 613,034
-----------
Total assets $ 1,413,448
===========
See accompanying notes and accountants' report.
2
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 5,384
Accrued liabilities 16,072
Current portion of capital lease obligations 23,043
-----------
Total current liabilities 44,499
-----------
Long-term portion of capital lease obligations 48,474
-----------
SHAREHOLDERS' EQUITY
Common stock, authorized 25,000,000 shares,
$.001 par value, 14,130,000 shares issued
and outstanding 14,130
Additional paid-in capital 1,868,574
Deficit accumulated during the development stage (521,844)
Treasury stock, at cost (40,385)
-----------
Total shareholders' equity 1,320,475
-----------
Total liabilities and shareholders' equity $ 1,413,448
===========
3
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Quarter Ended September 30, 1998 and the
Period from May 22, 1996 (Inception)
Through September 30, 1998
5/22/96
Quarter (Inception)
Ended Through
9/30/98 9/30/98
REVENUES
Contract revenue $ -- 144,000
------------------------------
COSTS AND EXPENSES
General and administrative 130,769 526,799
Research and development 44,408 114,023
------------------------------
Total expenses 175,177 640,822
------------------------------
Operating income (loss) (175,177) (496,822)
OTHER EXPENSES
Loss on equity investment 7,622 16,910
Interest expense 2,297 8,112
-------------------------------
Total other expenses 9,919 25,022
-------------------------------
Net loss (185,096) (521,844)
-------------------------------
Loss per share $ (.013) (.063)
===============================
Weighted average shares outstanding 14,064,135 8,270,073
==============================
See accompanying notes and accountants' report.
4
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Quarter Ended September 30, 1998 and the
Period from May 22, 1996 (Inception) Through
September 30, 1998
Common Stock
---------------------------
Stated
Shares Value
Balance, May 22, 1996 -- $ --
Stock issued in public offering 4,499,290 4,499
Net loss -- --
---------------------------
Balance, December 31, 1996 4,499,290 4,499
Stock issued in public offering 2,656,213 2,656
Net loss -- --
---------------------------
Balance, December 31, 1997 7,155,503 7,155
Stock issued in public offering 4,894,777 4,895
Comprehensive income -- --
---------------------------
Balance, March 31, 1998 12,050,280 12,050
Stock issued in public offering 1,947,990 1,948
Purchase of treasury stock -- --
Comprehensive income (loss) -- --
---------------------------
Balance, June 30, 1998 13,998,270 13,998
Stock issued in public offering 131,730 132
Purchase of treasury stock -- --
Net loss -- --
---------------------------
Balance, September 30, 1998 14,130,000 $ 14,130
===========================
See accompanying notes and accountants' report.
5
<PAGE>
Equity
(Deficit)
Accumulated
Additional During the Total
Paid-In Development Treasury Shareholders'
Capital Stage Stock Equity
$ -- -- -- --
306,097 -- -- 310,596
-- -- -- (76,902)
------------------------------------------------------------------
306,097 (76,902) -- 233,694
362,345 -- -- 365,001
-- (84,690) -- (84,690)
------------------------------------------------------------------
668,442 (161,592) -- 514,005
786,105 -- -- 791,000
-- 176,465 -- 176,465
------------------------------------------------------------------
1,454,547 14,873 -- 1,481,470
112,004 -- -- 113,952
-- -- (18,552) (18,552)
-- (351,621) -- (351,621)
------------------------------------------------------------------
1,566,551 (336,748) (18,552) 1,225,249
302,023 -- -- 302,155
-- -- (21,833) (21,833)
-- (185,096) -- (185,096)
------------------------------------------------------------------
$ 1,868,574 (521,844) (40,385) 1,320,475
==================================================================
6
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Quarter Ended September 30, 1998 and the
Period from May 22, 1996 (Inception) Through
September 30, 1998
5/22/96
(Inception)
Through
9/30/98 9/30/98
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (185,096) (521,844)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization and depreciation expense 10,301 73,596
Loss on equity investment 7,622 16,910
Contract receivable -- (144,000)
Other receivables (3,500) (38,665)
Accrued liabilities 10,131 16,072
------------------------
Net cash applied to operating
activities (160,542) (597,931)
------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (43,448) (121,382)
Investment in Bio Moda, Inc. -- (335,190)
Purchase of certificate of deposit (50,000) (50,000)
Increase in other assets -- (352,673)
-------------------------
Net cash applied to investing
activities (93,448) (859,245)
-------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable -- 52,993
Debt repayment (8,400) (47,609)
Payments on capital lease obligation (29,333) (29,333)
Issuance of common stock 292,155 1,872,704
Purchase of treasury stock (21,833) (40,385)
-------------------------
Net cash provided by financing
activities 232,589 1,808,370
-------------------------
Net increase (decrease) in cash (21,401) 351,194
Cash, beginning of period 372,595 --
-------------------------
Cash, end of period $ 351,194 351,194
=========================
See accompanying notes and accountants' report.
7
<PAGE>
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business. Advanced Optics Electronics, Inc. (the Company) is a
developmental stage technology company with its principal focus on the
development and production of large-scale flat panel displays. The Company is
currently continuing its research and development of this product. Upon
substantial completion of the research and development of the large flat panel
display, the Company plans to make the transition from a developmental stage
company to selling and producing this product. The market for the large-scale
flat panel will include, but not be limited to, cockpit displays, flat panel
computer monitors, and advertising billboards. Advanced Optics Electronics, Inc.
plans to focus on producing and selling the large-scale flat panel displays for
outdoor advertising billboards. Management believes that it will be in full
production by the end of 1998.
Cash and Cash Equivalents. Cash and cash equivalents include all cash balances
and highly liquid debt instruments with an original maturity of three months or
less. The Company's cash is deposited in financial institutions and is insured
only up to $100,000 by the Federal Deposit Insurance Corporation at each
institution. As of September 30, 1998, approximately $70,000 was not insured.
Equity Investment. The investment in Bio Moda, Inc. is accounted for using the
equity method. Under this method, income and losses reported by the investee are
recorded by the Company in its proportionate interest at the time they are
recognized by the investee. The original cost of the Bio Moda, Inc. investment
exceeded the Company's proportionate interest in Bio Moda's book value. This
difference is being amortized over a 15 year period.
Contract Receivable. Contract receivable consists of revenue recognized but not
yet billed. No allowance for uncollectible accounts has been recorded, as
management believes the contract to be fully collectible.
Revenue Recognition. Revenues are generally recognized when services are
rendered or products are delivered to customers. Long-term contracts are
accounted for using the percentage of completion method, with revenues
recognized in proportion that costs incurred bear to estimated total costs at
completion. Expected losses on such contracts, if any, are charged to income
currently. The Company has entered a contract to produce flat panel displays for
an outdoor advertising billboard. The amount of the contract is $1.7 million.
Management estimates that the contract will be completed in 1999.
8
<PAGE>
ADVANCED OPTICS ELECTRONICS,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Other Assets. Organization costs are amortized on a straight-line basis over the
period to be benefited of five years. Patents are amortized on a straight-line
basis over the remaining estimated useful life of 15 years. Goodwill is
amortized over the period to be benefited, or 40 years, whichever is less. The
Company continually reviews other assets to assess recoverability from estimated
future net cash flows. To date, these reviews have not resulted in a reduction
of other assets.
Income Taxes. The Company accounts for its income taxes using the liability
method. Under this method, deferred tax liabilities and assets are determined
based on the difference between the financial statement carrying amounts and tax
basis of assets and liabilities using enacted tax rates in effect in the years
in which the differences are expected to reverse. The Company has provided a
valuation allowance to offset the benefit of any net operating loss
carryforwards or deductible temporary differences
Loss per share. Loss per share is computed on the basis of the weighted average
number of common shares outstanding during the year and did not include the
effect of potential common stock as their effect would be antidilutive. The
numerator for the computation is the net loss and the denominator is the
weighted average shares of common stock outstanding.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
9
<PAGE>
ADVANCED OPTICS ELECTRONICS,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 2. OTHER RECEIVABLES
Other receivables at September 30, 1998, consist of the following:
Due from Bio Moda, Inc. $ 5,000
Due from officer 9,672
Note receivable for officer, bearing interest
at 9% and due November 10, 1999 18,993
Note receivable from former shareholder bearing
interest at 8% and due in February, 1999 15,000
---------
$ 48,665
=========
The note receivable from former shareholder was issued for $10,000 in the
Company's common stock and $5,000 in cash.
NOTE 3. INVESTMENT IN BIO MODA, INC.
In April 1998 the Company increased its investment in Bio Moda, Inc. to 21.67
percent. Bio Moda, Inc. is a development stage company involved primarily in the
development of technology for the early detection of lung cancer.
Summary financial information as of September 30, 1998, was not available.
A summary of the financial data relative to Bio Moda, Inc. as of June 30, 1998
is as follows:
Assets:
Current assets $ 259,306
Other assets 23,525
---------
$ 282,831
=========
Liabilities and equity
Current liabilities $ 2,801
Notes payable to stockholders 85,147
Common stock 348,623
Deficit accumulated during the development stage (153,740)
---------
$ 282,831
=========
10
<PAGE>
ADVANCED OPTICS ELECTRONICS,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 3. INVESTMENT IN BIO MODA, INC. (CONTINUED)
The investment in Bio Moda, Inc. is accounted for using the equity method. A
summary of the investment is as follows:
Original cost $ 335,190
Share of net loss (6,772)
Amortization of excess of cost
over book value (10,138)
---------
Net investment $ 318,280
=========
The investment in Bio Moda, Inc. was reported at market value for the quarter
ended March 31, 1998. Concurrent with the change to the equity method for the
quarter ended June 30, 1998, the investment account was restored to its original
cost. At September 30, 1998, there is no difference between the deficit
accumulated during the development stage and the accumulated other comprehensive
income.
NOTE 4. LEASES
Capital Leases. In July, 1998, the Company entered into a capital lease
agreement for equipment valued at $100,850. The Company made a down payment of
$20,170. The remaining amount was financed on a lease with 36 monthly payments
of $2,810. Future minimum lease payments are as follows for the years ending
September 30:
1999 $ 33,720
2000 33,720
2001 22,480
---------
89,920
Less amounts representing interest (18,403)
---------
$ 71,517
=========
Operating Leases. The operating lease agreement is for rent of facilities for
the office and production facility. The lease agreement is $1,300 per month for
three years.
11
<PAGE>
ADVANCED OPTICS ELECTRONICS,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 5. INCOME TAXES
At September 30, 1998, the Company had deferred tax assets amounting to
approximately $190,000. The deferred tax assets consist primarily of the tax
benefit of net operating loss carryforwards and are fully offset by a valuation
allowance of the same amount.
The net change in the valuation allowance for deferred tax assets was an
increase of approximately $70,000 in the quarter ending September 30, 1998. The
net change is due primarily to the increase in net operating loss carryforwards.
At September 30, 1998, the Company had net operating loss carryforwards of
approximately $480,000 available to offset future state and federal taxable
income. These carryforwards will expire in 2016 to 2018 for federal tax purposes
and 2001 to 2003 for state tax purposes.
<PAGE>
99
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
Advanced Optics Electronics, Inc.
/s/LESLIE S. ROBINS
Date: June 19, 1998 By: Leslie S. Robins
Executive Vice President
